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Demand for Law and the Security of Property Rights: The Case of Post-Soviet Russia

  • JORDAN GANS-MORSE (a1)
Abstract

Studies of property rights overwhelmingly focus on whether states expropriate or protect property, overlooking the crucial issue of whether private sector actors will use state institutions. By contrast, I argue that the “supply” of formal legal institutions often fails to ensure firms will rely on the state for property rights protection. Instead, firms frequently avoid formal legal institutions and turn to illegal strategies based on violence or corruption. Whether firms adopt legal strategies depends on: (1) firm-level practices and beliefs that impede the use of law, (2) the effectiveness of illegal strategies, and (3) coordination problems resulting from firms’ expectations about each other’s strategies. Drawing on interviews with firms, lawyers, and private security agencies, as well as an original survey of Russian enterprises, I illustrate how “demand-side” factors led to a surprising increase in Russian firms’ reliance on formal legal institutions over the past two decades. The findings suggest that comprehensive understanding of property rights and the rule of law requires not only attention to state institutions’ effectiveness, but also to private actors’ strategies.

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Corresponding author
Jordan Gans-Morse is Assistant Professor, Department of Political Science, Northwestern University, 601 University Place, Evanston, IL 60208 (jordan.gans-morse@northwestern.edu).
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The author thanks Neil Abrams, Karen Alter, Marc Berenson, Jose Cheibub, Georgy Egorov, M. Steven Fish, Timothy Frye, Scott Gehlbach, Anna Grzymala-Busse, Kathryn Hendley, Alisha Holland, Sarah Hummel, William Hurst, PJ Lamberson, Benjamin Lessing, Pauline Jones Luong, James Mahoney, Stanislav Markus, Israel Marques, Evgeniia Mikriukova, Stephen Nelson, Simeon Nichter, Robert Orttung, Andrew Roberts, Jason Seawright, David Szakonyi, Kateryna Vago, Steven Vogel, Jeffrey Winters, Matthew Winters, Andrei Yakovlev, Dong Zhang, and John Zysman. This research has received support from an NSF DDIG grant (SES-0921635), the Fulbright-Hays DDRA program, the SSRC Eurasia program, the American Bar Foundation, and the Kellogg School of Management Dispute Resolution Research Center.

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