The future of agricultural cooperatives in Russia: Does theory matter?

Abstract

The article aims at identifying theoretical and practical reasons for the failure of the agricultural cooperation development in Russia. Authors suggest that rural cooperatives in Russia do not develop due to the general features of the formation of social capital in the Russian countryside, the lack of necessary institutional conditions, and the wrong idea that cooperatives based on the classical principles of cooperation can operate successfully in the contemporary economy and society. The first theoretical barrier to cooperation is that in the contemporary high-technology agriculture, hybrid structures (cooperatives) are less efficient than the hierarchical one used by agroholdings. The second theoretical barrier is the inconsistency of seven classical principles of cooperation formulated at the time of Raiffeisen (i.e. outdated) with today's economic realities and their transformations. The third practical barrier is the rapid degradation of rural areas and the low level of trust and interaction between members of agricultural cooperatives, which is why there are no trends of the bottom-up development of cooperation. The authors conclude that a high level of social capital is the necessary condition for cooperation: at the formation stage, this level is high due to interpersonal relationships developed from the informal social interactions of its members and a high level of trust among members and between members and management, but cooperatives start to lose their social capital as they enlarge - the sense of community, trust and mutual assistance disappears, the atmosphere becomes more business-oriented.