1. Association for Studies in Public Economics1
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
GRADUATE SCHOOL OF MANAGEMENT
ST. PETERSBURG UNIVERSITY
11 November 2011

2. 2
MODERN AND ANTI-MODERN ACTIVITIES COMPARED
Modern
Anti-modern
Rule of law
Yes, bureaucratic
Arbitrary, political
Openness
Transparent
Opaque
Signals
Prices, laws
False accounts, bribes, personal contacts
Cause and effect
Predictable
Uncertain
Output
Efficient
Inefficient

3. 3
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

4. 4
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

5. DIFFERENT USES OF SOCIAL CAPITAL5
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.

6. DIFFERENT FORMS AND USES OF SOCIAL CAPITAL6
DIFFERENT FORMS AND USES OF SOCIAL CAPITAL
Positive
MODERN ORGANIZATIONS WORK
Public sector allocates by law
Police will help protect house from burglary
43%
Social security office will pay entitlement if you claim
35%
Market allocates to paying customers
Buy a flat if it is needed
30%
Can borrow a week's wage from bank
16%
INFORMAL ALTERNATIVES
Non‑monetized production
Growing food
81%
Can borrow a week's wage from a friend
66%
PERSONALIZE
Beg or cajole officials controlling allocation
Keep demanding action at social security office to get paid
32%
Beg officials to admit person to hospital
22%
ANTI‑MODERN
Re‑allocate in contravention of the rules
Use connections to get a subsidized flat
24%
Pay cash toa doctor on the side
23%
PASSIVE, SOCIALLY EXCLUDED
Nothing I can do to:
Get into hospital quickly
Gets pension paid on time (pensioners only)

7. 7
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: Buy in the private sector
Anti-modern: Offer a bribe, use connections, make up a story

8. 8
MODERN AND ANTI-MODERN WAYS TO GET HEALTH CARE
Getting treatment for a painful disease when hospital says one must wait for months
Strategy
Anti-modern
connections
Personal
Market
Passive
Russia 57 13 11 19
Ukraine 39 12 34 15
Czech Republic 24 31 14
Sources: Russia Social Capital Survey. New Europe Barometer Survey V.

9. 9
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

10. 10
MACRO EFFECTS OF ANTI-MODERN SOCIAL CAPITAL
♦INEFFICIENCY Raises transaction costs
♦ENCOURAGES PROFITS FROM TRADING (especially off the books)
♦DISCOURAGES FIXED DOMESTIC INVESTMENT

11. POTENTIAL RISKS OF ANTI-MODERN SOCIAL CAPITAL11
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

12. 12
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,
"Uses of Social Capital in Russia: Modern, Pre-Modern, and Anti-Modern", Post-Soviet Affairs, 16,1, 2000,
"How Much Does Social Capital Add to Individual Health? A Survey Study of Russians", Social Science and Medicine, 51, 9, 2000,
"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,
plus
James S. Coleman Foundations of Social Theory. Cambridge, MA: Harvard University Press.