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CREATING SOCIAL CAPITAL in RUSSIA: the Novgorod Model

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CREATING SOCIAL CAPITAL in RUSSIA: the Novgorod Model CREATING SOCIAL CAPITAL IN RUSSIA: The Novgorod Model Nicolai N . Petro University of Rhode Island The National Council for Eurasian and East European Researc h 910 17th Street, N .W. Suite 300 Washington, D .C. 2000 6 TITLE VIII PROGRAM Project Information* Contractor: University of Rhode Island Principal Investigator : Nicolai N . Petro Council Contract Number : 814-10g Date : October 18, 199 9 Copyright Informatio n Individual researchers retain the copyright on their work products derived from research funde d through a contract or grant from the National Council for Eurasian and East European Researc h (NCEEER). However, the NCEEER and the United States Government have the right to duplicat e and disseminate, in written and electronic form, reports submitted to NCEEER to fulfill Contract or Grant Agreements either (a) for NCEEER's own internal use, or (b) for use by the United States Government, and as follows: (1) for further dissemination to domestic, international, and foreign governments, entities and/or individuals to serve official United States Government purposes or (2) for dissemination in accordance with the Freedom of Information Act or other law or policy of the United States Government granting the public access to documents held by the United State s Government. Neither NCEEER nor the United States Government nor any recipient of thi s Report may use it for commercial sale . The work leading to this report was supported in part by contract or grant funds provided by th e National Council for Eurasian and East European Research, funds which were made available b y the U.S. Department of State under Title VIII (The Soviet-East European Research and Trainin g Act of 1983, as amended) . The analysis and interpretations contained herein are those of the author . Executive Summary Many studies indicate a high correlation between social capital, trust in government, an d economic performance . This study finds a similar correlation m the Novgorod region of Russia, an d suggests that the high level of social capital in the region is the result of local government activel y promoting a cultural framework that sets Novgorod's ancient heritage of mercantilism and democracy i n opposition to Moscow's heritage of political and economic centralization . Taking advantage of a consensus among the local elite regarding these liberal "Novgorod" values, the regional government ha s successfully tackled one of the most serious problems facing societies in transition—cultura l discontinuity. Defining reforms as a return to the values of a more prosperous past has eased the anxietie s that inevitably accompany abrupt changes . The Novgorod region's success shows that . even in the absence of a national consensus, loca l governments and elites can forge common values and priorities for their communities . The key to success is minimizing the disruption of old institutions where they continue to serve public needs, whil e simultaneously embracing new institutions and values but placing them firmly within the context o f traditional cultural values . Two Approaches to Social Capital There are two main approaches to the role of social capital in economic and politica l development. One view. which I term "non-statist." holds that voluntary association among members of a polity produces habits of cooperation that lead to social trust, civic engagement and democratic stability . The state's role in generating social capital is viewed as trivial or even destructive, hence the level o f social capital in a society can be directly correlated with the ability of groups to pursue agendas distinc t from and opposed to those of the state (Putnam 1993a; Fukuyama 1995) . One reason frequently given for drawing such a sharp distinction between the state and civil society has been the experience of communist societies . As Tom Nichols puts it. "the hallmark of the Soviet system was the purposeful destruction of what is now understood as 'social capital — (Nichols 1996. p . 631). This was accomplished by rupturing previous social bonds and replacing them wit h ideologically based new ones . Since non-statists believe that trust and social capital can only be generated outside of the government sphere . if it arises within or with the support of government, then, b y definition, it cannot be social capital (Lehning 1998, p . 240) . Opponents of this view, whom I will call "statists. " counter that it is historically inaccurate . In fact, the state usually plays a symbiotic role, either in promoting or destroying civil society, but neve r separate from it. According to Michael Walzer, "civil society requires political agency . And the state i s an indispensable agent — even if the associational networks also, always, resist the organizing impulses o f state bureaucrats." (Foley and Edwards 1998a, p . 9) The example of many East-Asian and Nordic countries, with their dense networks of interactio n between the state and civil society, illustrates to the proponents of the "statist" view of social capita l formation how public/private interaction can encourage mutual interaction and trust (Paraskevopoulo s 1998, p . 161 ; Kenworthy 1997, p . 647). The government should not merely remove obstacles t o voluntary association, but help social actors recognize their mutual dependence and encourage the proces s of collective interest formation (Paraskevopoulos 1998, p . 162) . By emphasizing the cumulativ e 1 character of social capital formation. statists argue for a symbiotic view of relations between civil societ y and the state . This essay looks at the role that social capital plays in one of Russia's most economicall y developed and politically stable regions — Novgorod. Because Novgorod has done so much better than it s neighbors at implementing economic and governmental reforms (Petro 1999 : Ruble and Popson 1998), a closer examination should reveal which approach , the statist or non-statist, more accurately explains th e unusually high level of social capital in the region . and perhaps suggest further insights into the factor s that encourage social capital formation in transition societies . The key to measuring social capital is finding tangible measurements of trust . One of the first t o discern a linkage between trust and social capital was James S . Coleman. who argued that social capital was very much like other forms of capital : .. social capital is productive . making possible the achievement of certain ends tha t would not be attainable in its absence . Like physical capital and human capital, social capital i s not completely fungible, but is fungible with respect to certain activities . Social capital .. is created when the relations among persons change in ways tha t facilitate action ... it is embodied in the relations among persons. Physical capital and human capital facilitate productive activity, and social capital does so as well . For example, a group whose members manifest trustworthiness and place extensive trust in one another will be able t o accomplish much more than a comparable group lacking that trustworthiness and trust" (Colema n 1990, pp. 302, 304) . Social capital should thus be expected to have tangible economic and political benefits . Trust i s especially good for economic activity because it enhances the flow of information essential fo r entrepreneurial activity, making long-term investments in projects and fixed assets more attractiv e (Wilson 1997, p. 745). Some even go so far as to say that such trust is "a precondition for economi c success" (Paraskevopoulos 1998, p . 159) . To these economic benefits Robert Putnam has added another — efficiency . Social capital "improves the efficiency of society by facilitating coordinated action" (Widner and Mundt 1998, p. 2) . This sort of efficiency also generates trust, which can be measured in two ways : first, by looking at norms of reciprocity sustained by socialization and sanction — trust in institutions; second, from dense 2 networks of civic engagement that result in "generalized trust ." While Putnam does not specificall y equate interpersonal trust with trust in government, others have argued that high levels of trust i n government reflect a high level of social capital (Foley and Edwards 1998b . p. 133; Levi 1996, p. 46). In sum, the performance of both government and the economy should be expected to match the levels of social capital, and several studies seem to support this finding (Paraskevopoulos 1998 ; Stolle and Rochon 1998; Fox 1996; Putnam 1993a) . Another measure of social capital particularly favored by non-statists is associational activity . But while there is widespread agreement that dense networks of active local organizations indicate a high level of social capital, there is little consensus on how to measure density, or whether all types of social networks have an equal impact on the formation of social capital . Putnam, perhaps the best known advocate of the non-statist position, argues that almost any kin d of associational activity (bowling leagues, birding societies, choirs) generates generalized trust. He therefore puts great store in measuring aggregate associational activity, equating it with the very "flesh and bones" of civil society . His critics, however, question whether trust among members of one grou p automatically extends to members of other groups . They suggest that different types of association s create different types of social capital ( Stolle and Rochon, 1998, pp . 57, 61). Moreover, there can also be what Elinor Ostrom calls a "dark side" to social capital, when intens e allegiance to one group undermines trust for other groups in society (Levi 1996, p . 52). When generalized trust extends only to immediate family and relations, "an excess of community occurs" tha t can thwart innovation (Woolcock 1998, p . 171 : Levi 1996, p . 51). In his well known study of social patterns in southern Italy, Edward Banfield terms this type of negative or unproductive social capita l "amoral familism" (Banfield 1958) . Some of the recent literature on the Russian economy provides a fascinating description of ho w negative social capital is formed.
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