Trading favors. A note on informal institutions and culture

By Camelia Vasilov

Helmke and Levitsky (2004) propose a research agenda on informal institutions based on their interaction with the formal ones. They start their analysis by saying what informal institutions are not – and one of the things they are not is culture. In contrast, for Nunn (2012) informal institutions are, at their core, culturally determined heuristics, or “shortcuts” for decision-making.

In this post I will explore the tensions between the two views using the example of the informal exchanges of goods and services that arose under the Communist regimes in Soviet Union and China: blat and guanxi, respectively.

Helmke and Levitsky give blat as an example of accommodating institutions, which according to their definition are “often created by actors who dislike outcomes generated by the formal rules but are unable to change or openly violate those rules” (p. 729). In both the Soviet Union and China, informal exchange performed the same functions: it was needed for maintaining the livelihood of people unable to support themselves only on the basis of the received wages, and for meeting the impossible targets of state planning.

Ledeneva (2008) notices that there are differences between these practices that fulfill essentially the same goal, namely the reciprocity considered moral, their legitimacy and their incipient codification. She argues that these differences are rooted in the culture. For example, while blat was pervasive in the entire Soviet Union, few could articulate when asked what its rules were. On the contrary, “the code of guanxi is derived from the kinship ethics and popular Confucianism” (p. 127), and this new practice was thus planted into an old cultural field, thus increasing its stability and even legitimacy.

The separation between culture and informal institutions evident in this case seems to support Helmke and Levitsky’s argument. However, one could make the case that Confucianism itself, taken here as culture, was also a set of informal institutions that shaped the decision-making of people for so long that it became the norm. Nunn might point out that although blat and guanxi performed the same role, their came about in society in a rather distinct ways, which would make them historically different practices.