institutional vacuum

Definition and scope

Manokhina defines the institutional vacuum as the absence, in given space-time coordinates, of the actors and the necessary rules of the game that ensure the forward development of a social system. She grounds it in institutional-matrix theory (Kirdina) and Burt's structural holes, and stresses that it can arise not only in transition but also in a formed institutional environment, in formal institutions such as legislation and informal ones such as values, traditions and routines. Applied to the USSR, the 1987 Law on State Enterprises shifted control of enterprise operations from ministries to elected workers' collectives and reduced Gosplan to general guidelines and national investment priorities while the state retained ownership of the means of production, dismantling directive planning before market institutions existed. Dolan gives the English-language formulation: 'Without property rights, contract enforcement and investor protections, you don't get capitalism. You get kleptocracy.'

History

In May 1988 the Law on Cooperatives permitted private ownership of businesses in services, manufacturing and foreign trade for the first time since the NEP was abolished in 1928, the most radical early perestroika reform, while price controls, ruble inconvertibility and state ownership of the means of production remained. Gorbachev's changes gave factory directors more say over production methods, hiring, input sourcing and finances while leaving state ownership, quantitative targets and price controls in place; limited enterprise autonomy without private property, profits or prices proved a toxic mix, producing shortages and repressed inflation on a colossal scale by 1990. In August 1990 the Shatalin-Yavlinsky group issued the 400-page 'Transition to the Market' report, popularly the 500 Days Program, calling for a competitive market economy, mass privatization, market prices and integration into the world economy; it gained Yeltsin's full support and Gorbachev's skeptical support, and was openly repudiated by Council of Ministers chairman Nikolai Ryzhkov. After the dissolution, Yeltsin's government launched radical reforms in January 1992: price decontrol early that year produced hyperinflation (prices rose more than 2,000 percent over the year) and wiped out ordinary savings. Russian radical market reforms began on 2 January 1992 under Yegor Gaidar's team but did not follow the classical shock-therapy scenario; its central condition, a sharp fall in inflation, failed, with average annual inflation of 301.5 percent in 1991 falling to two digits, 21.5 percent, only in 1996. Academician A. D. Nekipelov characterizes the outcome as a poor quasi-market system marked by financial-trade speculation and the stripping of previously created wealth. By the 2000s Manokhina documents the vacuum's persistence in Russia: the absence of an official institution of lobbying, reflected directly in the scale of corruption, of effective institutions integrating large, medium and small business, and of a formed middle-class value system. She concludes that a significant institutional vacuum indicates the failure of the institutional environment.

Distinctions

The vacuum differs from Polterovich's institutional traps, which concern inefficient but stable institutions or norms, that is, the persistence of bad equilibria; the vacuum concerns the absence of actors and rules, though traps reproduce where there are no anti-traps and can themselves generate a vacuum. It differs from the classical planned economy: Gosplan 'had neither the knowledge nor the computing power to tell every factory and farm what to do', setting few priorities within a bargaining, polycentric equilibrium, so the pre-1987 shortage economy was an administered system with rules, whereas the vacuum is the absence of rules when coordinating mechanisms are withdrawn while price controls, targets and state ownership remain. It differs from shock therapy as a policy program, a defined set of simultaneous measures, liberalization of all prices, privatization, trade liberalization and stabilization through tight monetary and fiscal policy, whose hope, per Isabella Weber, was that destroying the command economy would automatically produce a market economy; critics including William Easterly note that a market economy rests on a framework of law, regulation and established practice that cannot be created instantaneously, and the vacuum is the resulting state of the environment, not the policy. It also differs from deliberate illegality or 'wild capitalism': the vacuum is an analytical category, and illegality and shadow activity are its consequences, not its definition. China's reform and opening up was bottom-up, focused on light industry and agriculture, using Special Economic Zones and a dual pricing system that phased out state prices, backed by a reformed banking system and sound fiscal policy, against Soviet fiscal anarchy and revenue collapse; that comparison shows the vacuum is not inherent to socialist reform as such.

Examples

Manokhina cites non-transition examples: the absence of legislation on internet activity, concrete rules for various global markets, effective norms against counterfeit production, and in Russia the missing institution of lobbying, integration institutions for large, medium and small business, and a middle-class value system. The Soviet and Russian case is documented through late perestroika's half-measures, fixed prices with rising demand, shortages of producer and consumer goods, long queues by 1990, and post-1992 hyperinflation and oligarchic accumulation. The counter-case of Poland's Balcerowicz plan, widely treated as a positive shock-therapy application, abolished regulatory measures, price controls and subsidies immediately but deliberately stretched out privatization of state companies until denationalization became socially painless, precisely to avoid the Russian situation of wild capitalism, evidence that sequencing institutions mattered.

Complicating account

Dolan argues that institutional voids alone do not explain the outcome and adds a cultural-values dimension: a kto-kovo zero-sum outlook, mutual gains from trade seen as a rarity, and black envy as a poor basis for productive rivalry. This coexists with, rather than replaces, the institutional explanation.