Limits of a Post-Soviet State: How Informality Replaces, Renegotiates, and Reshapes Governance in Contemporary Ukraine

ibidem Press, Stuttgart

Table of Contents

Acknowledgements

Foreword

Introduction: where is informality?

How much of this book is about Ukraine?

What is informality?

Main themes of this book: (Over) Regulation and informality

'In spite of the state' and 'beyond the state'

Morality, compliance Informality and the cubic watermelon paradigm

Cited works

Informality and the (welfare) stateFirst published as Abel Polese, Jeremy Morris, Borbála Kovács, Ida Harboe (2014) Welfare States' and Social Policies in Eastern Europe and the Former USSR: Where Informality Fits In? Journal of Contemporary European Studies 22 (2). London: Taylor & Francis (http://www.informaworld.com). Reprint with kind permission.

1 Introduction

2 Welfare and the role of the state in post-socialism

3 Individual agency and bottom-up welfare provision

4 Reforms to the pension system from the bottom: Uzbekistan

5 Access (or lack thereof) to healthcare: Lithuania

6 Welfare as childcare: Romania

7 Conclusion

Cited works

Informality, borders and boundariesFirst published as Abel Polese (2012) Who has the right to forbid and who to trade? Making sense of illegality on the Polish-Ukrainian border. In: Bettina Bruns and Judith Miggelbrink (eds.). Subverting Borders. Doing Research on Smuggling and Small-Scale Trade. Wiesbaden: VS Verlag für Sozialwissenschaften/Springer. Fachmedien Wiesbaden GmbH. Reprint with kind permission.

1 Redefining borders and their morality

2 Scenes from a border

3 A false bottom train

4 Alternative ways of crossing

5 Concluding remarks

Cited works

Border crossing, petty trade and the role of informality in breaking artificial monopolies This chapter was originally published as Abel Polese (2006) Border Crossing as a Daily Strategy of Post Soviet Survival: the Odessa-Chisinau Elektrichka. Anthropology of East Europe Review 24(1): 28–37; and as Abel Polese (2013) The Ambiguity and Functions of Informality: Some Notes from the Odessa-Chisinau Route. In: C. Giordano and N. Hayoz (eds.) Informality in Eastern Europe: Structures, Political Cultures and Social Practices. Bern: Peter Lang. Reprint with kind permission.

1 Introduction: a running bazaar

2 Hum, I am Sorry. . . Where is the Border?

3 Smugglers or Traders?

4 Do you have a Tomato? Scenes of Legal Corruption

5 Conclusion

Cited works

Informality and grey areas: introducing the brift This chapter is a rewritten and updated version of the following article: Abel Polese (2014) Informal Payments in Ukrainian Hospitals: On the Boundary between Informal Payments, Gifts, and Bribes. Anthropological Forum: A Journal of Social Anthropology and Comparative Sociology 24(4): 381–395. London: Routledge.

1 If I receive it, it is a gift. If I demand it, then it is a bribe.

2 Informal payments and the role of the state

3 Switching moralities

4 The academic 'moral code'

5 'Survival techniques' of hospitals

6 Concluding remarks

Cited works

Informality between private and state initiativeFirst published as Abel Polese and Thom Davies (2015) Informality and Survival in Ukraine's Nuclear Landscape: Living with the Risks of Chernobyl Journal of Eurasian Studies 6(1). Oxford: Elsevier. Reprinted with kind permission.

1 Introduction

2 Informality and (lack of) Welfare

3 Structure and agency in debates on informality

4 Chernobyl

5 Chernobyl Welfare

6 Food and welfare

7 Rejecting welfare and embracing place

8 Conclusion

Cited works

The guest at the dining table: economic transitions and informal renegotiations of hospitalityFirst published as Abel Polese (2009) The Guest at the Dining Table: Economic Transition and the Reshaping of Hospitality, Reflections from Batumi and Odessa Anthropology of East Europe Review 27 (1): 65–77. St. Bloomington: Indiana University. Reprint with kind permission.

1 What's So Special about Eating? What All that Food Means

2 What is Hospitality?

3 Who is a Guest? Who is a Stranger?

4 Step I: Entertaining the Host's Belly

5 Food without Borders: The Dinner

6 Discovering your Limits: Drinking

7 Final Reflections on Hospitality, Food and Guests

Cited works

Why bazaars are not wiped out by supermarkets: reflections on a possible bazaar economyFirst published as Abel Polese and Aleksandr Prigarin (2013) On the Persistence of Bazaars in the newly Capitalist World: Reflections from Odessa Anthropology of East Europe Review 32 (2): 110–136. St. Bloomington: Indiana University. Reprint with kind permission.

1 Introduction: the role of bazaars in Odessa

2 On the persistence of informal economic practices in the (post-Soviet) world

3 The origins of bazaars in Odessa

4 The morphology and function of bazaars of Odessa

5 Post-1991 bazaars and their challenges

6 The transformation of bazaars

7 The future of bazaars in Odessa

Cited works

New directions in informality studies? policy making and implementation

1 Methodological considerations

2 The context: evolution of language statuses in Ukraine

3 Domesticating Ukrainian identities

4 Concluding remarks

Cited works

By way of conclusion: on current and further directions in informality research

Acknowledgements

In our frenetic rush to satisfy our national ranking systems, mostly based on quantitative criteria, social scientists have been hearing with increased frequency that many journal articles can be regarded as evidence of academic quality. Keen to emulate a model that has been widely accepted in science and in countries where a book is considered slightly better than an article and thus not worth the effort, we have been indoctrinated that we need to publish more with little or no incentive to publish better. I have to admit that I have not been immune to this pressure and, whilst this being my seventh book in six years it is my first, and sole, monograph.

In my attempts to publish a plethora of articles every year, I had little or no time for a book. However, I was faced with a double necessity, from which the idea for this book arose. On the one hand, I had to adjust to the formal criteria when competing for positions in some countries, including my own, where a lack of a monograph could be used as a reason to exclude you from a job panel. On a more positive none, there was the necessity to make the point of showing what over ten years of my research on informality has found. My initial attempts to challenge a too normative framework on corruption have gradually expanded into attempts to find the place for informality in a number of aspects related to theory and practice of governance, understanding social and cultural change.

The result was a hybrid work, containing some reprinted articles for which I thank the original publishers for their permission to reprint and some parts that were written ex novo for this book. This was partly due to the limitations in reusing my own material, which I was not aware of when I started thinking of a collection of articles. However, given the speed at which I was able to produce the new parts, or update the old ones, I am no longer afraid to write a monograph.

This book was also my first attempt to go beyond the geographical area that has adopted me since 2002. I was born (academically speaking) as an area study specialist and I initially saw myself as such. I think it is now time to go past this classification. Most of my empirical work has been focussing on post-USSR spaces from a number of perspectives. The most interesting result has been, so far, that political scientists see me as an anthropologist and anthropologists see me as a political scientist with an interest in ethnographic methods. I am neither, and this inspired me to search for employment in a geography department at the University of Edinburgh. My colleagues studied stones, fossils, soil but also development, medical geography and were interested in the accounts of the first geographical expeditions. I am grateful to each and every one of them for intriguing me with many different pieces of something that we all like, knowledge. It is in the same period that I was accepted to join the Scottish Crucible, which brings together the 30 most promising researchers of Scotland (well, we were 31 that year) from any discipline. I befriended colleagues from engineering, ICT, history, psychology, medical and nutritional sciences and I was even invited to give a talk in the School of Medicine at the University of Glasgow (thanks to Emilie Combet for believing in my idea on food democracies and to Ruth Neiland for her support many years after the Crucible).

While most of the material contained in this book draws from examples from post-USSR spaces it has to be said that if my academic work has been focusing on the region, my practical work on development, capacity building of NGOs, and empowerment of marginalised and vulnerable groups has happened mostly elsewhere. Since 2007 I regularly work in Vietnam; I have also had the chance to work extensively in Cambodia, China, Laos, Myanmar and, more recently, India and Nepal, visits that have helped me put things in perspective.

I have to thank Chris Schoen and Andreas Umland for believing in this project and giving me all the freedom I needed. My gratitude also goes to all the people and institutions that have offered their support by hosting me, giving me the chance to discuss my ideas or simply informally and formally discussed and criticised my ideas. First and foremost, the institutions I am currently affiliated with. At the School of Law and Governance of Dublin City University I am grateful to my old friend and colleague Donnacha Ó Beacháin but also to John Doyle, Eileen Connelly and Karolina Stefanczak. At Tallinn University I wish to thank all my colleagues from the School of Governance, Law and Society and especially Emilia Pawlusz and Raivo Vetik, the latter being the main reason why I ended up working in Estonia. I also thank Peeter Muursepp at Tallinn University of Technology for his constant support since my early Estonian days. I wish to thank Firouzeh Nahvandi who has adopted me at the Centre for International Development at the Free University of Brussels, to which I became affiliated with recently, and Sarah Murru who was the main initiator of the collaboration.

My initial idea was that this book would be written, at least partly, at the Jawaharlal Nehru University in Delhi. Unexpected, but welcomed, opportunities made this impossible but I have still benefited of the hospitality and support of my colleagues in the School of International Studies and in particular my friend Rajan Kumar, for whom I have no words to express my gratitude. Most of my understanding of Vietnamese informal practices, Vietnamese society and Vietnam in general is due to the hospitality and friendship of Don Tuan Phuong, his wife Que and his staff at the Centre for Sustainable Development Studies, where I have always been welcomed as part of the family. The list of people to thank is long and includes Thazin and Chan Aung at Charity Oriented Myanmar; Borith, Kalyan and Sitha at the Khmer Youth for Sustainable Development; Cui Shoujun at Renmin University of China. A special thank goes to Colin Williams at the University of Sheffield, who has always been supportive of my ideas and has kindly accepted to write the foreword to this book; to Sally Cummings for all her encouragements and help, to my friend and partner in crime Jeremy Morris at the University of Birmingham who has had a role in virtually anything that I have written on informality since 2011 to Oleksandra Seliverstova, who had a role in anything I have written on informality before that and on many other things after that, and to Sergey Seliverstov, to whom I owe some of the best insights on informality I have had.

In the course of the last few years I have also been lucky enough to find more and more amazingly nice people with whom I share the informality approach and that I wish to thank. Bori Kovacs and Lela Rekhviashvili, Nicolas Hayoz, Tanya Stepurko (whom I also with to thank for her help with the figures in this book), Christian Giordano, Gul Berna Ozcan, Ioana Ursachi, Rodica Ianole, Ida Harboe, David Jancsics, Alena Ledeneva, Huseyn Aliyev, Bettina Bruns, Olga Sasunkevich, Lale Yalçın-Heckmann, Kristine Müller, Judith Miggelbrink, Ida Harboe, David Karjanen, Ioana Ursachi, Anna Cieślewska, Aet Annist, Karla Koutkova, Anna Danielsson, Thom Davies, Jingqing Yang and Aleksandr Prigarin. May I be forgiven by the ones I have forgotten here.

Finally, I am thankful to a number of people who do not necessarily study informality but make me realise, every time I meet them, how lucky I am to have the chance, thanks to my work, to meet such amazing people: Raquel Freira and Licinia Simao at Coimbra, Heiko Pleines at Bremen, Bruno De Cordier at Ghent, Simon Tordjman at Toulouse, Ilona Baumane at Riga, Markku Lonkila who is now in Jyvaskula, Jan Kohler in Berlin, Filippo Menga at Manchester, Rick Fawn at St Andrews; Pal Kolsto at Oslo, Rico Isaacs at Oxford Brookes University. Finally, I wish to thank Gina Mzourek for proofreading most of the manuscript and the editorial team at Ibidem and in particular Florian Boiter and Valerie Lange who have been extremely helpful with editing and support. The encouragements and moral support are to be credited to them. Else, for anything you might not like in the book I am the one to blame.

Morelia, April 2016

Foreword

All societies develop a way of producing, distributing and allocating the goods and services required by its citizens. In consequence, all societies have an economy of some type. Economies, however, can take different forms. To understand how an economy can be structured, it is common to differentiate between three modes of producing, distributing and allocating goods and services, namely the 'market' (private sector), the 'state' (public sector) and the 'informal' sector, even if different labels are sometimes attached to these realms. In recent decades, the widespread view has been not only that there has been a transition to the use of the 'market' in post-Soviet societies, but that globally the market is increasingly becoming hegemonic. In other words, there is firstly a view that in all economies goods and services are being increasingly produced and delivered through the formal (market and state) sphere rather than through the informal sphere (known as the 'formalization' thesis) and secondly, that this formal production and delivery of goods and services is increasingly occurring through the market sector, rather than by the public sector, (the 'marketization' thesis).

Given the dominance of this discourse regarding the trajectory of economies, it might be assumed that a voluminous evidence-base exists supporting this view of the direction of economies. However, the worrying and disturbing finding once one starts searching for evidence is that hardly any is ever provided. Put simply, it is such a widely accepted canon of wisdom that evidence is all true frequently deemed unnecessary. Indeed, perhaps the growing hegemony of the formal market economy is so obvious and uncontroversial to all that evidence is not required. Perhaps, however, it is not. No other idea in the social sciences is accepted without an evidence-base and there are no grounds exist for exempting this meta-narrative regarding the totalising shift towards a formal market economy.

The importance of this book by Abel Polese is that it begins to contest the belief that there is an irreversible, inevitable and inescapable shift towards a formal market economy in post-Soviet societies by re-evaluating the role of informal economies in this region of the world and the limits of the state and market. In doing so, it provides a seminal contribution to the much wider scholarship on post-Soviet spaces that addresses the recurring question of 'transition' in order to dispute not only the past hegemony of the command economy system but importantly also the notion that there is a universal linear trajectory of development in post-Soviet spaces towards a hegemonic ideal-type formal market economy system as some end point. What this book reveals through its in-depth analysis of informality is the need for a more nuanced argument to be adopted that allows recognition of how there has been a transformation of post-Soviet economies in varying ways from different starting points and along different economic development trajectories.

On the issue of the past hegemony of the command economy system, this book through its rich and nuanced understanding uncovers that this was never the case and that the 'second economy' was a pervasive force in such systems. More importantly however, and on the inevitability of a formal market economy, this book makes it very clear that a future where the formal market economy becomes hegemonic is far from being cast in stone. Instead, it reveals that to assert that the formal market economy is inescapable and inevitable would be to fly in the face of the empirical evidence presented here on not only the trajectories of post-Soviet economies but also the lived practices in post-Soviet societies.

By revealing how the advent of a formal market economy is not a natural process, but has to be facilitated with massive intervention and encouragement, and how informality sometimes replaces the formal market economy and renegotiates and reshapes the role of the state and state intervention, this book begins to make readers question quite how expansive the formal market realm would have been if left to its own devices. The outcome is a rethinking of the 'economic' and a move beyond a closed view of economic development as a transition towards market hegemony. Instead, it reveals that economic development is an open-ended, heterogeneous and transformative process. This book in other words deconstructs the all too familiar and comfortable notion of economic development as a transition to a formal market economy by revealing that formal market economic practices are just one of a plurality of economic practices in post-Soviet spaces. In doing so, it thereby decentres the formal market economy from its pivotal position and recovers alternative futures for economic development so as to disrupt those dominant economic discourses about the future of post-Soviet economies as being one in which the formal market economy is hegemonic, totalising and universal.

However, the intention in doing so is not simply to replace one universal conceptualisation of the trajectory of economic development with another alternative universal. Instead, the contribution of the chapters in this book is to reveal that the informal economy may be persistent and even growing in many post-Soviet spaces (negating the formalization and marketization theses) but also that the role it plays in contemporary post-Soviet spaces is not always the same and that it varies according to both the type of informal work being considered and the population groups and places being evaluated. In doing so, this book brings out of the shadows the important and varying role that informal economies play in not only people's livelihood practices but also renegotiating and shaping governance and the role of state in post-Soviet spaces. In doing this, readers are being asked to re-think not only the discourse of 'transition' in the post-Soviet world but also the meanings of the 'economic' and 'economy'.

At the heart of this book is therefore a critique of the notion that economic transition is at an end in post-Soviet societies and that the move from the command system to the market economy is complete. Through examining the lived experiences of people and the everyday, this book reveals that post-Soviet societies are composed of a diverse repertoire of practices and that if the 'economic' and 'economy' are to be understood, it is necessary to move beyond such simplified accounts where one mode of production or another assumes a hegemonic status and all other systems of exchange disappear. Rather, it reveals that the processes of transformation are about a shift in the balance afforded to different systems of exchange and that these transformations are in different directions in different populations, places and sectors.

This book thus unpacks the diverse relationships that can exist between the market, state and informal economy across the post-Soviet world and unravels how these relationships vary in different contexts. The outcome is a very rich and nuanced understanding of the multifarious nature of the relationships that can and do exist between informality, the state and the market in contemporary post-Soviet societies. I hope that you enjoy reading it.  

Colin C. Williams, June 2015

Sheffield

Introduction: where is informality?

July 2015, Cambodian-Vietnamese border. People are waiting in a line to get their passports stamped. From time to time some people enter the room, skip the line and go directly to the passport window. They handed their passport to the border guard and get it back stamped almost immediately. When bypassed the first two or three times I felt outraged by the lack of formal rules and this apparent favouritism. However, after a few more of them passed I thought I understood the typology of the person and the secret pattern behind it. The border control was equipped with two indistinctly separate lines: tourist and business track. Many airports and other busy hubs have it. You pay for the privilege to be passed through customs, passport or security control thanks to an annual subscription fee. It is an exclusive club only for a few fortunate and busy people. At that border this was not an option. Instead, customers were subscribed to a pay-as-you-go service. They would pay only when they needed the service.

Corruption is often defined as the use or abuse of a public function for a private benefit. The border guards were using their position to earn some extra cash. However, I would ascribe this, and other situations presented in this book, to a broader category where individual and state morality diverge, or simply do not overlap (Polese 2008, 2014). In a market-like fashion this gap between supply and demand could be seen as the beginning of a new business. There is a demand by a significant number of customers that is not matched from the supply side. There are a number of people who need to regularly get through border control quickly but there is no mechanism or practice allowing this. I would expect that one day someone approaches the head of the post with a proposition to train and pay extra staff, which would allow for a designated passport control for business customers and thus formalise this informal practice.

In a standard situation, the state would welcome a private initiative as long as it does not invade its competencies or challenges the symbolic order, which it is based upon. At other times the state decides to outsource a service to cut down on fees but, until this happens, any intrusion into state-regulated areas can be seen as an infraction. Therefore, state rules and state morality are not static and immutable things. They evolve along with the state, its people and institutions so that new generations, products, systems of productions and dynamics generate new moral standards, or stretch current ones. In general, innovation generates new challenges, new demands and new needs. Initial views on informality would, at least in some cases, tolerate these informal practices. Transitionalists would see them as the starting point, slowly evolving into formal institutions (Geertz 1963, Lewis 1959) while ultra-liberals would see it as a way to make things work better in transitional countries (Leff 1964). This book certainly shares the vision that informality may be seen as a starting situation, a mechanism that may then be formalised and be used to propose new formal rules; it argues, however, that formalisation of an informal practice is not the end of a story but a phase in a cycle that might bring informality back in or might not.

If we take an area that is unregulated or under-regulated (that is, where the state has only started adopting formal rules to manage a particular aspect of a community life or of society) most habits and rules will be informal. If we take a country where migration is only a recent phenomenon, most of the services delivered will be managed by non-state actors (sometimes NGOs, sometimes informal groups or personal connections with no regularity and on a case-by-case basis) since institutions are busy regulating what they see as more urgent needs. How migrants gain access to education, healthcare and a number of other services and opportunities is outsourced to the people themselves, and can remain like this for a long time, even if the migrant population grows exponentially. At some point the state will feel the need to regulate certain aspects, create new services, obligations, prohibitions and opportunities. If they address all the urgent needs then informal rules will be gradually sided by formal rules, regulating most aspects, and might be swallowed by them. However, any inelastic and dysfunctional aspects of the new system, sets of rules and institutions will rely, for a solution, on informal renegotiations, person-to-person interaction and the use of a human agency. Assuming that the new set of rules and institutions