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Association for Studies in Public Economics
ANTI-MODERN AND MODERN EFFECTS OF SOCIAL CAPITAL
Professor RICHARD ROSE FBA
Director, Centre for the Study of Public Policy
U. of Strathclyde, Glasgow email: prof_r_rose@yahoo.co.uk
GRADUATE SCHOOL OF MANAGEMENT
ST. PETERSBURG UNIVERSITY
11 November 2011

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Rule of law
Openness
Signals
Cause and effect
Output
MODERN AND ANTI-MODERN ACTIVITIES COMPARED
Modern
Yes, bureaucratic
Transparent
Prices, laws
Predictable
Efficient
Anti-modern
Arbitrary, political
Opaque
False accounts, bribes, personal contacts
Uncertain
Inefficient

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SOCIAL CAPITAL DEFINED
Networks that produce goods and services in a society.
♦Networks are relational (James Coleman, Granovetter)
♦Networks can be informal, personal between individuals
♦Networks can be formal, organisational, bureaucratic
♦Can combine informal links within and between formal organisations

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SOCIAL CAPITAL IS NOT
♦Attitudes of trust. Trust is a by product of interaction in social networks. So is distrust. Contra Putnam, interpersonal trust does not readily spill over into trust in formal organizations or political institutions.
♦Formal organisations. Significant--but only as one partner in a network e.g. Between individual and government agency e.g. Between public and private organisations providing financial services
♦BUT social capital networks are based on expectations and reputations of how others in a network will react

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DIFFERENT USES OF SOCIAL CAPITAL
♦Exchanges can involve cash payments (bribe) or non-pecuniary forms of blat.
♦Outputs produced are observable, e.g. health care, University admission
♦National income accounts can include outputs from modern social capital networks but exclude outputs form anti-modern networks.

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DIFFERENT FORMS AND USES OF SOCIAL CAPITAL
MODERN ORGANIZATIONS WORK
Public sector allocates by law
Police will help protect house from burglary
Social security office will pay entitlement if you claim
Market allocates to paying customers
Buy a flat if it is needed
Can borrow a week's wage from bank
INFORMAL ALTERNATIVES
Non-monetized production
Growing food
Can borrow a week's wage from a friend
PERSONALIZE
Beg or cajole officials controlling allocation
Keep demanding action at social security office to get paid
Beg officials to admit person to hospital
ANTI-MODERN
Re-allocate in contravention of the rules
Use connections to get a subsidized flat
Pay cash toa doctor on the side
PASSIVE, SOCIALLY EXCLUDED
Nothing I can do to:
Get into hospital quickly
Gets pension paid on time (pensioners only)
81%
66%
32%
22%
24%
23%
16%
24%
Positive
43%
35%
30%
16%

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NETWORKING STRATEGIES IN DEALING WITH PUBLIC SERVICES
Q. What would you do if you had difficulty in getting a public service?
Bureaucratic: Write a letter of complaint, push officials to act
Market:
Anti-modern:
Buy in the private sector
Offer a bribe, use connections, make up a story

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MODERN AND ANTI-MODERN WAYS TO GET HEALTH CARE
Getting treatment for a painful disease when hospital says one must wait for months
Strategy
Russia
Anti-modern connections
57
Personal
13
Market
11
Passive
19
Ukraine
Czech Republic
39
24
12
31
34
31
Sources: Russia Social Capital Survey. New Europe Barometer Survey V.
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14

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SOCIAL CAPITAL AFFECTS INDIVIDUALS:
♦COPING with costs of system failure, transformation e.g. growing food at dacha
♦SUPPLEMENT to goods and services obtained in official economy.
♦COST: Buying nominally free services
Effort, anxiety from storming, unpredictability of bureaucratic services
♦DETERIORATION in human capital from inefficiencies in health, education

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MACRO EFFECTS OF ANTI-MODERN SOCIAL CAPITAL
♦INEFFICIENCY Raises transaction costs
♦ENCOURAGES PROFITS FROM TRADING (especially off the books)
♦DISCOURAGES FIXED DOMESTIC INVESTMENT

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POTENTIAL RISKS OF ANTI-MODERN SOCIAL CAPITAL
♦EQUILIBRIUM TRAP. Persistence of current conditions
.Loss of potential output through inefficiency, under-investment
.Reduction in potential human capital
♦NEGATIVE DISEQUILIBRIA
.Oil prices and revenue fall below equilibrium point
.Social and political protests against unfairness, inefficiencies, corruption

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By Richard Rose
Understanding Post-Communist Transformation: A Bottom Up Approach. London:
Routledge, paperback, 2009.
"Social Shocks, Social Confidence and Health". In Judyth Twigg and Kate Schecter, eds., Social Capital and Social Cohesion in Post-Soviet Russia. Armonk, NY: M.E. Sharpe, 2003,
98-117.
"Uses of Social Capital in Russia: Modern, Pre-Modern, and Anti-Modern", Post-Soviet
Affairs, 16,1, 2000, 33-57.
"How Much Does Social Capital Add to Individual Health? A Survey Study of
Russians", Social Science and Medicine, 51, 9, 2000, 1421-35.
"Getting Things Done in an Anti-Modern Society: Social Capital Networks in Russia". In
Partha Dasgupta and Ismail Serageldin, eds., Social Capital: A Multifaceted Perspective.
Washington, DC: The World Bank, 1999, 147-171.
plus
James S. Coleman 1990. Foundations of Social Theory. Cambridge, MA: Harvard
University Press.