The Construction of Market Institutions in Russia: A View from the Institutionalism of Polanyi

By Sanchez-Andres, Antonio; March-Poquet, Jose M. | Journal of Economic Issues, September 2002 | Go to article overview

The Construction of Market Institutions in Russia: A View from the Institutionalism of Polanyi


Sanchez-Andres, Antonio, March-Poquet, Jose M., Journal of Economic Issues


After a decade of economic transition in Russia there is still no theoretic analysis which coherently interprets it. Various analytic approaches have been tried. The ones that stand out as important are those which have stemmed from a neoclassic (orthodox) point of view. According to these studies, the destruction of the traditional institutions related to central planning guarantees the appearance of market economy. This destruction permits economic agents to interact freely, generating what is known as an economic market (Aslund 1995; Blanchard 1997; Lipton and Sachs 1990). Nevertheless, this focus has presented serious limitations in explaining the difficulties of extending and consolidating reforms and, therefore, their positive results. (1) Attempts have been made to explain a part of the problems that have appeared by considering certain political factors such as corruption (Shleifer 1997; Shleifer and Vishny 1993, 1994). Nevertheless, such considerations have not succeeded in resolving the problems of the orthodox focus.

The neoclassic focus has been answered by evolutionist analysis, but frequently the latter has been characterized more as a criticism of the orthodox conception than as a perception of any new specific ways to tackle this economic phenomenon. It is appropriate to note, however, that evolutionary economists have suggested some analysis of a global character (Murrell 1992a and 1992b; Koslowski 1992), In certain cases more novel approaches have been tried, changing the analysis hypothesis (Schlack 1996) or showing other economic visions of the transition, especially those of the Schumpeterian type (Kuznetsov 1992; Egidi 1996).

The explicative problems of the orthodox approach, as well the limitations of alternative visions, have left a very important theoretical vacuum with respect to the analysis of the economic transition in Eastern and Central Europe (March and Sanchez 1999a). In this article we will attempt to fill this analytic vacuum. It is assumed that a deepening of the understanding of the economic transition can not simply make clear that the private interests of the economic parties, together with an absence of intervention by the state, constitute sufficient conditions for the emergence of an economic market but instead must highlight the institutional dimension of the process. That is to say, it is natural that analytic approaches be employed when a more in-depth view of the economic market is required. A first step may be to assume that the market is an organized and institutionalized exchange (Hodgson 1988, 174). However, carrying out a specific analysis of the transition ends up being excessively generic and impreci se.

In this article the above subject will be expanded upon using the institutional conception provided by Karl Polanyi. The contents of this paper will be broken into two parts. First, Polanyi's main ideas will be expounded in regard to his interest in analyzing the transition (in England). These ideas will be adapted to the object of study and then specified so that they will be efficient criteria for analyzing the present economic transition. Second, the results obtained will be applied to the Russian case, and an attempt will be made to draw some conclusions about whether Russia is moving toward a market economy.

Polanyl Institutionalism and the Transition Toward a Market Economy

Although several distinct parts of the work of Polanyi may be of great interest in analyzing the transition process that is occurring in countries that until the 1990s were organized by central planning, in this paper only the aspects which are most closely related to the construction of market economies will be mentioned. According to Polanyi, the commercialization of productive factors and money are among the determining elements for the construction of an economic market. With respect to the concept of commercialization, it is necessary to point out a few details. …

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