Structures of Trust: Britain and Russia Compared

Abstract

This paper uses the concept of social trust to extend the 'institutional economics' of North and Olson, and more specifically Hedlund's 'path dependence' account of Russia's economic development. For this purpose it compares the evolution of Britain and Russia since the eighteenth century. A key determinant of social trust is the relation between the state, money and the population. In Britain trust was mobilised through state fiscal policies, public credit, and the rule of law. In Russia (and the USSR) trust was also placed in a strong state, but one which operated rather through personal patronage and the joint responsibility of local institutions. This crucial difference explains why in the 1990s Russia adapted so poorly to market economics. Structures of Trust: Britain and Russia ComparedIn the early 1990s most western politicians and economists assumed that if one introduced to Russia the framework of elective democracy together with western-style legal and financial systems, then the society would inevitably, though perhaps not quickly, become westernised. There was even a word for the process: 'transition', and a whole new science encapsulating its wisdom: transitology. What many transitologists ignored was that the 1) I am grateful to the Institute for Advanced Study, Princeton, for an Elizabeth and J. Dilworth Fellowship, which enabled me to spend a year there working on the history of trust.