"Russian villagers operate primarily outside the market economy, making the Russian village the safest place in the country for economic survival," remarked Margaret Paxson at a 29 January 2001 lecture at the Kennan Institute. Paxson, a Title VIII-Sponsored Research Scholar at the Kennan Institute, continued to say that villagers are able to either grow or obtain much of what is needed for survival. This lack of dependency on the market, Paxson stated, reinforces the self-sufficiency of the village.

One of the most popular ways of obtaining what one needs is through exchange, which comes in several forms. Goods and services are often offered in exchange for goods and services. Money is useful, but can be an uncomfortable form of capital, particularly in certain contexts, Paxson noted. The symbolism of "money" inherited negative connotations during the Soviet period. Within the ideology of socialism, the desire for money and endeavors to generate it was seen as a sin of the capitalist enemy. Owning dollars was a criminal offense in Soviet times, and dollars still bear this sort of underworld association, Paxson argued.

Paxson stated that another reason for the negative connotation of money is deeper and has to do with certain fundamental principles of exchange. Money is used in exchange where debts are precisely calculated and promptly erased. Money is comfortable where debt and the social connections it implies are uncomfortable. However, within the village, there are intricate webs of social connection. Money can quantify debt and erase social connection, which is appropriate if there is social distance between the traders. The closer the relationship between people, the more uncomfortable and socially inappropriate the use of money becomes. Exchange of goods and services is something that is done with categories of svoi--one's own people. Money is more appropriate to dealings with chuzhie (outsiders).

The preferred system of exchange is an informal one, where accounts are kept, but where there is a principle of returning more than what you received. In this system, Paxson remarked, villagers are connected by the dynamic of debts they owe each other. According to Paxson, such exchange is viewed as a positive feature of social life. For example, when there is social distance between families, exchange is avoided. Furthermore, when outsiders are involved, the social distance makes monetarized exchange more accepted.

For these reasons, there is a reluctance in the village to formalize economic exchange with money. When villagers occasionally sell each other produce, they are careful to name prices. Conversely, in terms of one's reputation and status in the village, it is absolutely necessary to reimburse people for their services.

Exchange is closely kept track of. An outsider to the village first sees countless examples of generosity. According to Paxson, in head-to-head social confrontations, to "win," it is necessary to be the one who gives more. Paxson referred to this as "one downsmanship"--by spreading out one's surplus one wins status in the community. The "circle" of exchange groups appears to include an aspect of verticality. In short, vertical extremes (of wealth) are avoided in the village economic system in favor of relative social "evenness." Status is won by being an agent of redistribution, not of individual accumulation.

As time passes, it is clear that accounts are carefully kept in the village, even without formalizing them through money, Paxson noted. Giving someone a basket of produce does not imply a similar item in return, but it does create a debt which must be "paid" eventually. The debt is not meant to be quantified and then erased, but will instead continue to encourage future inter-dependence on a local level.

Furthermore, the unspoken rule that one should return more than what was received is the hallmark of a broader system of exchange that encourages economic homogeneity in the village community. In this system, generosity is good and in terms of one's social status, generosity must be met with equal or greater generosity. In the Russian village, Paxson added, an inequality of means can become a social liability.

What does this system say about the prospects for reform in rural Russia? According to Paxson, there are two main issues. First, there is the question of how rural communities interact with non-rural communities. As was noted earlier, the closer the relationship between two parties, the less comfortable exchange involving money becomes. At the same time, Paxson noted, the closer the relationship, the deeper the interdependence. When considering rural reform, this is a problem since villagers should more actively engage with the market. Exchanges do occur involving money, but the question becomes how to continue to exchange through their comfortable "barter" system, Paxson argued.

Second, Paxson stated, in rural Russia, there is a dynamic of social interaction in which an individual gains status from their generosity and risks various forms of social "danger" by private acts of accumulation. This does not mean, however, that villagers will never accumulate wealth or lord it over one another, but that there is an unspoken, powerful mechanism for eliminating the extremes of wealth. Paxson concluded that this is part of an overall dynamic which tries to maintain a certain level of group cohesion. This dynamic, Paxson argued, can discourage the development of rural capitalism in its most extreme forms.