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Extra info for Brokers and Bureaucrats: Building Market Institutions in Russia

Sample text

Self-Governance and Social Capital Self-governing organizations are often cited as examples of groups possessing a high degree of social capital. According to this view, these groups allow members to trade without resorting to an external enforcer and often exhibit the forms of deep generalized trust that are characteristic of social capital. For example, Putnam discusses at length the role of social capital in promoting TABLE 2. Types of Organizations Self-Governing Organization State Primary type of goods produced Basis in territory Residual claimants Club goods Public goods Private goods Private goods No Individual members Yes State agents No The firm Third-party enforcement Makes legally binding rules No Yes Not necessarily The private protection organization N/A Yes Often Yes Yes No No Private Protection Organization Firm Institutions and Social Order 23 decentralized trade in a wide variety of settings (Putnam 1993, 167-81).

Like the sociological approach, this view examines features internal to a group to determine the likelihood of self-governance. It suggests that self-governance is more likely to be successful when group members are few in number, come from relatively homogeneous groups, and have low discount rates. I label these theories as economic for two reasons. First, they focus only on economic agents-the members of the groupwithout focusing on political agents external to the group. Second, they are driven primarily by the economic notion that group members are seeking to rectify a market failure.

Second, it allows us to check the logical consistency of the theory before it is subjected to empirical examination. Third, it can make it easier to identify causal mechanisms. To assess the sociological, economic, and political approaches to selfgovernance empirically, I conduct five comparative case studies. Case studies are helpful because they allow us to link the logic of the theory to observed behavior and to reduce the potential for spurious correlations between pre- 14 Brokers and Bureaucrats dictions and outcomes.

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