Favour exchange substituting for absent markets: access obtained through acquaintance rather than price.
Ledeneva's interviews with Soviet-era participants describe an economy in which scarce goods moved through networks of mutual obligation rather than through purchase, and in which participants did not regard it as corruption because no money changed hands. Blat was how a shortage economy actually allocated, and it was invisible in every official figure.
In practice
- A hospital that cannot buy a part obtains one from a colleague at another hospital who will need something later.
- A company with a formal procurement process runs on the buyer who knows which supplier will answer at the weekend.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The theories behind every argument about money