Defining and Defending a Progressive Market Square: Bringing Institutionalist Development Discourse in Line with the Reality of Post-Soviet Transition Experiences

Abstract:

This article is a response to two crucial ideas about progressive institutional change: the first is J. Fagg Foster’s principle of “minimal social dislocation,” which asserts that socio-economic changes should be implemented gradually, to avoid unraveling the social fabric of the community; the second is Karl Polanyi’s principles of redistribution of rights and powers by relevant authorities and reciprocity, a symmetrical and highly personalized exchange system, which is likewise a protective mechanism that society employs against anonymity and disintegration brought about by unregulated market. Using lessons learned in the thirty-year transition to market in post-Soviet countries, this article argues that to commence progressive institutional change in the honesty- and transparency-resistant cultures of former Soviet states, impersonal exchange and impartial rule of law must be given far greater weight than personalization of contacts and continuation of cultural traditions.

Keywords:

• community
• reciprocity
• Soviet planning
• barter
• corruption
• informality

JEL Classification Codes::

• B25
• B31
• B52
• P16
• P21
• P52

Notes

1 Countries with little experience of the key institutionalized liberties—private property and the rule of law.

2 Polanyi did not actually identify himself as an institutionalist: as Jack Amariglio observes, there is a “complete lack of references in Polanyi’s greatest work, The Great Transformation, to the earliest and most important of the Institutionalists (no mention of Veblen, Commons, Ely, and Hamilton, passing reference to Mitchell and so forth)” (Amariglio 1988, 684). Nevertheless, as Walter Neale points out in “A Strange Case of Convergence,” Karl Polanyi’s contributions fit just about perfectly into American institutionalist tradition in all the important ways that mark that tradition” (Neale 1990, 150; cf. Stanfield 1980).

3 Polanyi’s definition of “double movement” (the second half of which is the countermovement referred to in this article) is as follows: “For a century the dynamics of modern society was governed by a double movement: the market expanded continuously but this movement was met by a countermovement . . . for the protection of society, in the last analysis it was incompatible with the self-regulation of the market, and thus with the market system itself” (Polanyi 1944, 130, italics added).

4 For a discussion of how the oligarchy was created in Russia, including the subsequent and inevitable rise of Putinism, see Marshall Goldman (2008).

Additional information

Notes on contributors

Anna Klimina

Anna Klimina is an Associate Professor in the Department of Economics, St. Thomas More College/University of Saskatchewan