This paper uses the concept of social trust to extend the ‘institutional economics’ of North and Olson, and more specifically Hedlund’s ‘path dependence’ account of Russia’s economic development. For this purpose it compares the evolution of Britain and Russia since the eighteenth century. A key determinant of social trust is the relation between the state, money and the population. In Britain trust was mobilised through state fiscal policies, public credit, and the rule of law. In Russia (and the USSR) trust was also placed in a strong state, but one which operated rather through personal patronage and the joint responsibility of local institutions. This crucial difference explains why in the 1990s Russia adapted so poorly to market economics.