Mapping the Borders of Informality: Social Networks Economies of Favours Corrupt Practices Alena Ledeneva, UCL/IEA Paris University of Fribourg, Switzerland 22 November 2013 a.ledeneva@ucl.ac.uk Russia is the best lab for research into economy of favours, informal practices, corrupt networks, especially with a rear mirror methodology, studying the know-how that no longer work (Academia.edu) In the Soviet Union… was BLAT! ‘Neformal’noe – eto prirodnoe’ • The use of personal networks for obtaining goods and services in short supply and for circumventing formal procedures • Know-how of socialism • An informal ‘exchange of favours’ that enabled socialist system to operate contrary to the system’s own acclaimed principles Themes of boundaries and ambivalence of Russia’s economy of favours: • Sociability of blat made people unaware of boundaries between friendship and use of friendship: Better have 100 friends than 100 rubles, friendship vs. use of friendship • Friend is a convertible asset in the economy of shortage, where money play little role • Alternative currency that introduced market elements • Reverse side of the over-controlling centre • Enabling power of constraints Typology of favours, given and received through strong or weak ties and at the expense of private or public resources • Moral gain • Private resources • Moral gain • Public resources • Material gain • Private resource Family and friendship Networks created and maintained Favours as (free) gift Favours as investment Favours as endowment Favours as commodity Nepotistic/ clan/ patronage networks Mediated by brokers networks • Material gain • Public resources The most interesting puzzle is hidden in the ambivalent functionality of non-codified practices Supportive but also subversive Blat – the use of personal networks for getting things done (‘informal institution’???) – solved the double puzzle in the history of authoritarian regimes • enabled people to cope with economic, political, ideological and social pressures of socialism and • enabled the regime to survive under similar constraints Blat is not the only one 6 paradoxes of late socialism • No unemployment but nobody works. • Nobody works but productivity increases. • Productivity increases but shops are empty. • Shops are empty but fridges are full. • Fridges are full but nobody is satisfied. • Nobody is satisfied but all vote unanimously. • … Non-codified practices with functional ambivalence • No unemployment but nobody works. [Absenteeism] • Nobody works but productivity increases. [Potemkin villages, pripiski] • Productivity increases but shops are empty. [Shortages] • Shops are empty but fridges are full. [Blat] • Fridges are full but nobody is satisfied. [Privileges – authorised blat] • Nobody is satisfied but all vote unanimously. [Doublethink, ‘cynical reason’] [Informal practices] adapt to the purpose of transition Changes in politics are accompanied by informal practices of black PR, kompromat, krugovaia poruka that promote these new institutions but also make use of them in a manipulative way Competitive elections Media and civil society The rule of law Economic changes are accompanied by barter, financial scheming, alternative enforcement— informal practices that manipulate the law (obsessively observing the letter of law but undermining its spirit) Competitive Markets Transparency, Accountability, Disclosure Property Rights and Contract Enforcement I argue against stigmatization of informal practices and explore their functional ambivalence: • Informal practices can play both supportive & subversive role • They are both problem & solution • IP serve as important, and measurable, indicators in assessing models of governance • Russia’s model of governance is reliant on informal networks, practices, and methods of governance, as illustrated below ‘krugovaya poruka’: Informal governance in the 1990s Edward Keenan’s (1986) 4 features of governance, 7th paradox, conversations with Putin and frequency of use turned my attention to sistema: • the operational basis of each setting is informal and traditional (weak correlation between real power and formal status) • decision-making is corporate and conspiratorial • stability and risk-avoidance are favored over innovation and progress • there is a reluctance to promulgate systematic codified law (those who need to know the rules know them). Sistema is a network-based system of governance • Sistema is complex, anonymous, unpredictable and seemingly irrational, but it serves to glue society together, to distribute resources and to mobilise people; it contributes to both stability and change; and it ensures its own reproduction (see diagram of sistema). • Its unpredictability lies in the ambivalence of networks (diagrams of Putin’s networks). • Sistema works!!! Present-day sistema incites people to work, offers effective stimuli and adequate motivation, but does so in an ambivalent and even paradoxical way Friends of Putin: new business elite of Russia by Irina Mokrousov, Moskva, Eksmo, 2011 Olga Kryshtanovskaya and Stephen White Judo University KGB service Germany years Mayor’s Sobchak’s office Dacha cooperative ‘Ozero’ Strength of ties, strength of trust School and university St. Petersburg Mayor’s office Judo, dacha Security service Functionality of networks Strong ties 1 ‘Inner circle’ (family and the most trusted, private affairs) INCENTIVES 3 ‘Core contacts’ sharing career (patrons and clients, public affairs) AGENDA Private contexts 4 ‘Periphery 2 ‘Private friends’ Contacts’ sharing leisure (sport, dacha) (alumni, associates, RESOURCES co-members) SUCCESSION Weak ties Public contexts Functional ambivalence of networks Strong ties Safety net Back-up LOCK-IN EFFECT FREE-RIDING Private contexts Survival kit LIMITED RIGHTS Public contexts Weapon of the weak/ Buffer effect PATH DEPENDENCY Weak ties Putin’s ‘manual control’ creates incentives for sistema insiders that focus on: • short-term profit at the expense of long-term sustainability, • loyalty at the expense of professionalism, • safety and collective responsibility at the expense of leadership, and • innovative circumvention of sistema constraints at the expense of productive innovation. Insecure property rights (where access to wealth and business opportunities is achieved through cronies and informal channels, the property rights cannot be fully legitimate and secure) Vulnerability of economic actors should be preserved in order to enhance political stability and corporate control. …subtleties of the wine will eventually unfold for those who can: Factors of Factors of change continuity Soviet ‘Bottling’: Monetisation: administrative administrative business system culture integration Russian patrimonial ‘Barrelling’: Technology/ rule political culture infrastructure: legal culture Universal roots of ‘Soil and vine’: Globalisation: informal power social network reflexivity culture Universal patterns of informal power add to the ambivalence of governance Connections: lift, but also a hook Universal patterns of informal power control and leverage, but also vulnerability Universal patterns of informal power Personalised loyalty: provides security/immunity, but entails compliance/dependence/lack of innovation Universal patterns of informal power: ‘carousel’ Porous boundaries (informal affiliation enables informal governance/ informal control/corrupt deals) Similar to carousel: ambivalence of favours, given and received through strong or weak ties and at the expense of private or public resources, link to corrupt exchanges – porous internal boundaries • Moral gain • Private resources • Moral gain • Public resources • Material gain • Private resource Family and friendship Networks created and maintained Favours as gift Favours as investment Favours as endowment Favours as commodity Nepotistic/ clan/ patronage networks Mediated by brokers networks • Material gain • Public resources Blurred boundaries of informality • Blurred boundary between friendship and use of friendship • Helping a friend at the expense of public/state/corporate resources • In fact, the use/redirection of public resources is what distinguishes friendship from the use of friendship (blat) • 3 types of ambivalence Ambivalence • • • Sociological ambivalence: contradictory demands upon the occupants of a status in a particular social relation (Merton 1976) Possibility of assigning an object or an event to more than one category, language disorder inability to choose a correct action (similar to ambiguity, uncertainty, unpredictability, illogicality, irrationality, ambivalence, brought about by modernity with its desire to organise and to design (Bauman 1991: 7). Ambivalence of favour(s) pictured towards the centre of the diagram is intermittently displaying contradictory features, depending on state of mind and perspective 3 types of ambivalence • substantive ambivalence of favours/ the degree of uncertainty of obligation in social relations and intermittent display of features of gift and commodity exchanges, as well as features of benefiting from and investing into networks’ expansion. • functional ambivalence/ whereby favours derive from certain structural conditions and play supportive but also subversive roles for the formal and informal constraints that frame them. • attitudinal ambivalence on the part of both individuals and governments, relying on economies of favours, but also denying engagement, criticizing EoF but also accepting. Attitudinal ambivalence: George Orwell’s ‘doublethink’ (1984) Joseph Brodsky’s ambivalence (1986) If one had brains, one would certainly try to outsmart the system by devising all kinds of detours, arranging shady deals with one’s superiors, piling up lies and pulling the strings of one’s [semi-nepotistic] connections. This would become a full-time job. Yet one was constantly aware that the web one had woven was a web of lies, and in spite of the degree of success or your sense of humour, you’d despise yourself. That is the ultimate triumph of the system: whether you beat it or join it, you feel equally guilty. The national belief is – as the proverb has it – that there is no Evil without a grain of Good in it and presumably vice versa. Ambivalence, I think, is the chief characteristic of my nation. (Brodsky 1986) The next step is to distinguish blat/IP from corrupt practices, but to explore the boundaries between informality and corruption is difficult: • Some of the reasons for this are pragmatic: in studying sensitive issues associated with informal institutions, networks and practices, researchers encounter methodological challenges, pressures to work cross-discipline, and unwelcoming attitudes from respondents. • Yet there are also conceptual puzzles in integrating the informal dimension into disciplinary research and in breaching moral resistance to unearth inconvenient facts about the functionality of grey areas in politics, economy and society. • Paradox and ambivalence Ambivalence, further research Ledeneva,A. (2013). “Beyond Russia’s Economy of Favours: The Role of Ambivalence,” Chapter 2 in Nicolette Macovetsky and David Henig (eds.) Economies of Favour. Oxford: Oxford University press, forthcoming. Ledeneva,A. “Open Secrets and Knowing Smiles,” East European Politics and Society, 25(4), November 2011. Ledeneva,A. (2013). “A Critique of the Global Corruption ‘Paradigm’” in Kubik, Jan and Amy Linch, eds. forthcoming. PostCommunism from Within: Social Justice, Mobilization, and Hegemony. New York: SSRC/NYU Press. !!!!!!! Invitation to contribute to Encyclopedia of Informality !!!!!!!!