Paper short abstract:

The paper offers an anthropological perspective on economy in Latvia. Looking at household ethnography, it traces mechanisms of social solidarity ensuring stability and security for household members. It makes Latvian society prone to crisis but hinders the economic development of the country.

Paper long abstract:

Ex-prime-minster of Latvia has published a book on Latvian path through the recent economic crisis, introducing strict austerity measures as European success. The paper offers an anthropological perspective on economic behaviour of population in originating from 3 year-long fieldwork in Latvian households, conducted in collaboration with anthropology students. It allows arguing that social solidarity at family, community and national level rather than governmental policy allowed the population to pass the crisis. Informal economy linking households and generations plays more important role in providing social security than formal safety mechanisms offered by government or municipalities. So, the low governmental funding of healthcare and education is compensated by households, providing for a range of services starting from inter-generational support for education or health care to nation-wide donations to people whose healthcare has been denied by the public health authority. Household economies are based on two zero cycles adjusting spending to income- a monthly cycle and lifetime cycle, the later expressing solidarity among generations. In this system keeping income (and work) is much more important than improving work conditions and amount of salary. Household economy thus is tuned towards its survival and can easily adjust to crisis. Lack of bank savings, wide-spread tax avoidance are side-affects which influence the whole formal economy and in a long run costs the country economic growth.