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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.

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Presentation on theme: "Association for Studies in Public Economics ANTI-MODERN AND MODERN EFFECTS OF SOCIAL CAPITAL Professor RICHARD ROSE FBA Director, Centre for the Study."— Presentation transcript:

1 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

2 2 MODERN AND ANTI-MODERN ACTIVITIES COMPARED ModernAnti-modern Rule of lawYes, bureaucraticArbitrary, political OpennessTransparentOpaque SignalsPrices, lawsFalse accounts, bribes, personal contacts Cause and effectPredictableUncertain OutputEfficientInefficient

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 5 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 6 DIFFERENT FORMS AND USES OF SOCIAL CAPITAL Positive MODERN ORGANIZATIONS WORK Public sector allocates by law Police will help protect house from burglary43% Social security office will pay entitlement if you claim35% Market allocates to paying customers Buy a flat if it is needed30% Can borrow a week's wage from bank16% INFORMAL ALTERNATIVES Non monetized production Growing food81% Can borrow a week's wage from a friend66% PERSONALIZE Beg or cajole officials controlling allocation Keep demanding action at social security office to get paid32% Beg officials to admit person to hospital22% ANTI MODERN Re allocate in contravention of the rules Use connections to get a subsidized flat24% Pay cash toa doctor on the side23% PASSIVE, SOCIALLY EXCLUDED Nothing I can do to: Get into hospital quickly16% Gets pension paid on time (pensioners only)24%

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 PersonalMarketPassive Russia Ukraine Czech Republic 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 11 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, "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.


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