Barter hysteresis in post-Soviet Russia: an institutional and Post Keynesian perspective

Barter in Russia mainly comes from liquidity shortage. However, barter persists despite the conditions of its emergence having vanished. This paper proposes an institutional and Post Keynesian interpretation of this fact, qualified as "barter hysteresis." In a context of radical uncertainty, the lack of liquidity generates adaptative behaviors and institutional creations that will survive the monetary shortage. Network-organized barter acts as an alternative payment and financing institution while supporting the production activities. Hysteresis then stems from the fact that the entry into such a private payment system may be viewed as an uncertain irreversible investment with sunk costs.