Seminar "Challenging economic models: embedded economies of Russian individual entrepreneurs". Speaker: Kamil Wielecki

On the 24th of September LSES "Sociology of Markets" seminar series is very glad to guest a lecture "Challenging economic models: embedded economies of Russian individual entrepreneurs" 

by Kamil Wielecki, PhD, University of Warsaw

Annotation:

It was petty trade, or individual entrepreneurship in general, that allowed vast amounts of people to survive the crisis faced by post-Soviet Russia. As a result of the collapse of industry, many workplaces simply vanished and millions of people virtually landed out on the street, having no other opportunity to provide for their living than to engage in trade activities. The crisis of the state consisted also in the fact that it was unable to fulfill its duties: to provide social services for the citizens, to guarantee them safety or to enforce its own law regulations. In consequence, the sphere of informality around private entrepreneurial activities – already significant in late socialism – vehemently expanded in the new Russia. Informal institutions substituted the state in ensuring basic conditions for entrepreneurship.

In general, it is the factor of informality which strongly influences the business strategies of Russian entrepreneurs. The claim this paper puts forward is that mainstream economic theories such as methodological individualism or rational choice theory fail to grasp the dynamics of what is taking place at open-air markets in Russia. Despite the fact that state structures have been strengthening since the 2000s, there are still areas in which informal arrangements prevail in shaping business relations of petty traders, such as trade minorities, immigrant communities and small companies relying on their social capital. As a result, business strategies are often embedded in non-economic factors, such as ethnic ties, family and friendship obligations, religious beliefs, etc. Thus, the economic behavior of entrepreneurs is not only of purely economic character but also includes alternative rationalities of action.