Ledeneva, A; (2003) Informal Practices in Changing Societies: Comparing Chinese Guanxi and Russian Blat. (Economics Working Papers 45). Centre for the Study of Economic and Social Change in Europe SSEES, UCL: London, UK.

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Abstract

The paper defines the key features of Chinese guanxi and Russian blat networks, explores similarities and differences in the use of these networks both in communist and post-communist economies, and discovers their ambiguous relationship with the formal institutions. Having compared guanxixue and blat in detail, one should conclude that people tend to develop similar responses (as well idioms) in order to survive in state centralised economies characterized by shortages, state distribution system and ideological predicaments. Guanxi and blat networks in pre-reform China and Russia played a similarly ambiguous role in these economies: on the one hand, they compensated for the defects of the formal rules thus enabling the declared principles of the economy to exist; on the other hand, they subverted them. There are also common trends in the transformation of informal practices in post-reform China and Russia. Before the reforms, both guanxixue and blat were often beneficial to ordinary people in allowing them to satisfy their personal needs and in organising their own lives, whereas now their shift into corruption benefits the official-business classes and hurts the bulk of society. Trust and social networks are vital components of both economies and will continue to exist (as elsewhere) but their implications for the transformation may differ. The post-Soviet reforms have changed the Soviet-type blat practices so much that blat has almost ceased to be a relevant term for the use of personal networks both in the state and in the new sectors of the economy. Being more culturally and historically grounded, the term guanxi has sustained and found its new use in contemporary China. There is much more discussion of guanxi and guanxi capitalism in China than ever has been on blat in Russia. The partiality of reforms in China and the communist rulership does not prevent foreign investment and economic success, and corruption is estimated as not as damaging in China as it is in Russia.

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