‘Transition’ and ‘crash’: Singular or plural?

This collection is not a technical or chronological description of economic crisis in Eastern European countries. It provides a sound radical political economy perspective on the economic crisis as a result of the development of the same socio-economic processes that, for some time, explained the ‘success’ of the countries in question in the eyes of mainstream analysts. This deep theoretical orientation to treat the ‘present as history’ and to explain social and economic contradictions of growth and the ‘crash’ in Eastern European capitalisms is a typical feature of the chapters collected in this volume. Another forte of the contributions to First the Transition, Then the Crash is a careful attention to a complex dialectics of external and internal determinations of social change which neither reduces itself to laments on all-powerful forces of globalisation, nor retreats to the methodological nationalism of mainstream transition paradigm.

In the introduction, Gareth Dale specifies his perspective, held in common with at least some of the contributors, on the nature of Soviet-type societies. He considers them to represent state capitalism as a specific form of catching-up industrialisation of historically backward countries combined with relative autarky from the world economy – a kind of extreme form of capitalism during its statist phase. He locates its demise not in the clashes of 1989 but in political and economic trends of the world capitalist economy from the mid-1970s, such as the decline of ‘national’ models of capitalism including Soviet-type societies, developmentalist import-substitution industrialisation in the Third World, and national planning in the advanced capitalist economies; the slowdown of economic growth and financialisation as its counter-tendency; the rise of neoliberalism as economic policy programme and ideology; the spread of liberal-democratic governments as a tool for legitimation of neoliberal reforms; and the decline of labour movements. In Comecon countries, these trends resulted in the linkage of economic stagnation in the East with rising vulnerability to indebtedness and foreign exchange deficits in relations with the West, and finally to the disappointment of Central and Eastern European (cee) ruling classes with Soviet-type ussr-centred state capitalism. This made adoption of the deeper integration of the Western-led capitalist economy a possible option for ruling classes, despite all the political contradictions and uneasy prospects associated with the opening up to global competition. The rest of the introduction to the book is devoted to the very broad overview of nato and ec roles and to dynamics of economic change from the regional Great Depression to rather unfulfilled promise of foreign direct investment.

The second introductory chapter, written by G. M. Tamás, falls out of step with the general book project due to a very high level of abstraction. While the whole collection is quite sensitive to empirical details, this contribution is a political– philosophical reflection on the hidden and impersonal nature of the rule of capital both in Soviet-type and contemporary cee societies, which brings Tamás to a conclusion that ‘in Eastern Europe, capitalism without a bourgeoisie was replaced by capitalism without a bourgeoisie’ (p. 37) due to the high presence of transnational capital and the creation of ‘the new utopia of a society without industrial and agricultural production’ (p. 39), with bourgeois democracy (the multi-party system and the increased role for the judiciary and media) being ‘the only true novelty’ (p. 40). This conclusion and the whole chapter is largely unsatisfactory because of the vague and over-generalising content of the argument. Despite Tamás’s claims to the continuation of a Marxist tradition of political analysis represented in The Eighteenth Brumaire of Louis Bonaparte and The Civil War in France, his own contribution is a far cry from these theory-laden, but empirical works.

The experience of the Russian ‘transition’ is most extensively covered by the three chapters of Part 1 devoted to it. Mike Haynes provides comprehensive analysis of transformations in the social structure of Russian society, describing changes in the composition of workforce and outlining class relations and class structure. He also proposes the explanation for the passivity of the Russian working class, relating it to the legacy of repressions during the Soviet rule; prolonged economic depression that made workers fight the everyday struggle merely for their survival instead of challenging the power of capital; the confusion of ideas of socialism and trade unionism with the Communist Party of the Russian Federation and the Federation of Independent Trade Unions; and the continuing role of the state in the restraining of independent workers’ organisations. Gonzalo Pozo examines the complex interaction of foreign and global pressures with a change in the foreign policy from Yeltsin to Putin and Medvedev, as foreign policy fragmentation was replaced by vertical reordering and anti-Atlanticism. Owen Worth provides an account of the struggle for ideological hegemony from a neo-Gramscian perspective, describing it as a form of Caesarism, a strong and populist leadership in the situation of structural fragility of civil society combined with Russia’s integration to the global economy, aimed at maintaining popular support and reforming the Russian economy along neoliberal lines.

Part 2 consists of several country-level accounts of new eu member states in cee, Serbia and Ukraine. Almost all of these chapters have similar structures that combine the discussion of pre-crisis socioeconomic development with examination of the unfolding of the crisis of 2008–10. This is true for chapters by Jeff Sommers and Jaānis Beērzinņš (on Latvia), Marko Bojcun (on Ukraine), Ilona Švihlíková (on the Czech Republic), Adam Fabry (on Hungary), and Martin Upchurch and Darko Marinković (on Serbia).

Stuart Shields’s discussion of Poland is rather different topically, for it is primarily centred on ideological transformations of Polish politics. His treatment of nationalist populism is based on the reading of this phenomenon in the context of regional dynamics of capitalist development and its interpretation as a particular political response to the crisis tendencies of capitalism. Shields examines populism not as an alternative counter-hegemonic project, but as a specific hegemonic project that does not oppose capitalist order as such.

In the final chapter, Gareth Dale and Jane Hardy conclude with a powerful summary of regional trends of credit expansion and foreign indebtedness and effects of the ‘Crash’ on distinct countries. They strike a balance with an assessment of progressive and reactionary responses to crisis.

In terms of the theories applied, this book represents a heterogeneous but rather complementary variety of approaches. Worth and Shields rely on neo-Gramscian international political economy in their accounts of the complex coexistence and determinations of global neoliberalism, and of conservative reactions that oppose it while contributing to ongoing neoliberalisation. Sommers and Bērziņš provide a synthesis of orthodox dependency theory with a Minskyan approach to dynamics of financial crises. Upchurch and Marinković somehow base their discussion on a varieties-of-capitalism approach to comparative political economy, and draw from the notions of ‘patrimonial’ or ‘crony capitalism’ with their designation of Serbia as a form of ‘wild capitalism’. But unlike mainstream accounts of clientelism and corruption that justify neoliberal policies of ‘good governance’ (see Swain et al., 2010), they show deep preoccupation with the effects of ‘wild capitalism’ on the working class and labour relations. Fabry applies Trotsky’s theory of uneven and combined development to show dialectics of external and internal pressures in the unfolding of crisis.

On the whole, this book provides in-depth coverage of singular country experiences, as well as a balanced assessment of structural transformations in the global economy that underpin social change in Eastern Europe and macroeconomic dynamics of crisis in the region. What is largely missing is a comparative perspective regarding existing differences both in middle-term patterns of capitalist development and in the course of crisis in different countries.

Some of the recent middle-level generalisations from a broadly defined perspective of heterodox political economy, concerning sub-regional models of capitalist development and forms of integration to the global economy, seem to be quite complementary to this volume. Despite some important methodological differences and varying initial criteria for the making of typologies, these studies come to largely similar conclusions about distinct sub-regional types of Eastern-European capitalism.

Deriving from distinct production and export profiles and leading sectors, Béla Greskovits (2009 [2005]) distinguishes heavy-complex, heavy-basic, light-complex and light-basic profiles of specialisation of Eastern European countries in the international division of labour inside the European Union, which can be broadly subsumed under labels of semi-core (the Visegrád group) and semi-periphery (the Baltic and south- eastern European states). Heavy-basic and light-basic profiles are seen as subject to ‘developmental traps’ as a result of the national industrial bourgeoisie’s efforts to prevent change through control over the state in the former case, and vulnerability of labour because of the mobility of transnational capital in the latter.

Dorothee Bohle and Béla Greskovits (2007a; 2007b) propose a more nuanced (and geographically comprehensive, for it also includes cis counties) perspective on types of capitalism in the region in question. Departing from patterns of economic internationalisation, state capacity, social inclusion/exclusion, industrial transformation and macroeconomic stability, they contrast neoliberal vs. embedded neoliberal regimes and ‘state-crafted’ vs. spontaneous development of these distinct types. cis countries are seen as neoliberal in terms of the size of their welfare states and their macroeconomic stability, and ‘directly world-market driven’ with powerful social forces that emerged in key sectors on which these states are dependent in their integration to the global economy. The Baltic countries share with the cis a minimal size of welfare state and low labour protection, but their neoliberal transformation is qualitatively different, for it was a result of the conscious choices of neoliberal reformers. Visegrád countries are considered to be embedded neoliberal political economies that came into existence as a result of complex interactions of fdi-oriented industrial transformation, and political struggles that resulted in compensations in the form of rather significant social protection. Finally, Slovenia is the only representative of a neo-corporatist type of capitalism, with the institutionalised influence of trade unions and a limited role for foreign capital. Although Dale and Hardy correctly criticise Bohle and Greskovits for their pre-crisis assessments of future perspectives of the types of capitalism under consideration (p. 252), it seems that they were correct in identifying differences in East European capitalisms, if not in exact estimates of their actual prospects.

Joachim Becker and Johannes Jäger (2010) apply regulation theory to cee countries and provide a distinction of ‘dependent industialisation’ (Visegrád group and Slovenia) and ‘dependent financialisation’ (Baltic and Southeastern European contries) as different models of accumulation under general conditions of ‘dependent development’ due to foreign capital penetration.

Elsewhere, Martin Myant and Jan Drahokoupil (2010: 299-312) derive their idea of emerging varieties of capitalism from different forms of international integration and their institutional preconditions. They provide a number of distinct forms of integration, such as the dependence on fdi in export-oriented complex sectors, export-oriented complex production without fdi, simple manufacturing subcontracting to transnational companies, dependence of commodity export, dependence of remittances and foreign aid and dependence of financialised growth, with corresponding forms of social relations that make these forms of integration possible. From their point of view, these forms of dependence result in distinct varieties of capitalism, as they refer to the ‘fdi-based (second-rank) market economies’ of the Visegrád states, the ‘peripheral market economies’ of the Baltic and Southeastern European states, the ‘oligarchic or clientelistic capitalism’ of cis, ‘order states’ of cis countries with only limited reforms, and ‘aid- and remittance-based economies’ of low income cis and Eastern Europe countries. This typology seems to be useful for the explanation of the variegated unfolding of crisis in different states of Eastern Europe, as statistical analysis shows a considerable degree of correspondence of different forms of dependence on integration with the world economy and the actual effects of economic crisis from 2008 on concrete countries (Myant and Drahokoupil, 2012).

This extended review essay is not the place to weigh and evaluate all the different approaches to the comparative political economy of Eastern Europe. I would rather like to point out that this is precisely a kind of analysis largely absent from the volume that is under review, and that a great extent of similarity in distinguishing between varying models of capitalist development indicates that these approaches manage to catch something essential to the understanding of Eastern European capitalisms. Of course, this criticism cannot be considered as an intention to downplay or reject analysis proposed in the collection discussed. Rather, what is needed is to complement and expand the perspective proposed.

Besides different models of capital accumulation, the other important division in Eastern Europe is eu membership. It would be unjust to say that the question of the eu was omitted in the volume discussed. Shields points to the role of the eu in the neoliberalisation of cee countries, and Dale estimates that European integration resulted in the establishment of a core-periphery division inside the eu. What remains largely undisclosed is the difference eu membership means inside the vast region of Eastern Europe, for member-states and those left outside. In his seminal study of European integration, published before successive waves of eu enlargement in 2004 and 2007, Guglielmo Carchedi (2001: 116-17) suggested that a distinct form of eu imperialism exists, which refers not to particular national imperialisms but to the eu as a whole. The question of participation of cee/eu member-states in the structures of eu imperialism and of the degree of this participation is complicated and requires a serious discussion. It seems that the recent experience of capitalist development and crisis in cee shows that European enlargement was a contradictory process that merged their exposure to dependence and crisis with protective countermeasures (Rae, 2011).

In other words, the real picture of capitalist development in Eastern Europe appears to be more complicated and uneven than we can conclude from the book under review. By no means do generalisations made in this volume reject this unevenness: they even claim and stress it, but they do not clarify and specify the detail. There is also some lack of clarity in various contributions that use the notion of semi-peripherality of the whole region (e.g. Dale, p. 14), or at the level of single countries (e.g. Fabry, p. 222; or Worth, p. 110). Dale and Fabry use this notion rather ad hoc, without a proper definition of what it means to be semi-peripheral according to the theories they use, and whether they derive notions of the semi-periphery from dependence theory and world-systems analysis, or apply it in a somehow different meaning. This remark is particularly relevant in the case of Fabry, who incorporates a kind of theoretical coda on the meaning of uneven and combined development and its underpinning in the imperative of the law of value in his chapter on Hungary. Despite his theoretical explanations, it remains rather unclear what is the relation of the operation of the law of value on a world scale with a structural location that seems to be assumed in the notion of semi-peripherality, and whether he agrees with dependency or world-systems explanations of this relation (e.g. Amin, 2010). There may well emerge a fruitful synthesis of the survey of structural locations within the world capitalist economy with the recognition of, to cite Fabry, ‘the importance of local conditions (historical and institutional dimensions and the role of the state) as crucial to the variegated ways these countries have been reinserted in the global economy’ (p. 216), but I am not certain about this author’s own intentions. Worth’s usage of the notion of semi-peripherality is certainly distinct from dependency or world-systems accounts, as indicated in his critique of these theories (also see Worth, 2009), but the exact meaning of semi-peripherality as a result of the ‘comparative advantage primarily in hydrocarbons’ (p. 110) is also rather ambiguous.

As indicated by studies that relate systematically the notion of semi-periphery to the analysis of Eastern Europe, initial definitions matter and may result in different categorisations. So David Lane (2010) relies on statistical criteria of foreign capital penetration and the ratio of foreign trade to gdp, and considers the semi-periphery to be a potential counterpoint to the core. He attributes the notion of semi-periphery primarily to Russia and Ukraine, while Arjan Vliegenthart (2010) uses a understanding of ‘dependent development’ drawn from Fernando Henrique Cardoso in his discussion of the Visegrád four as a semi-peripheral region. Contributors to the volume reviewed do not come close to Lane or Vliegenthart in their internal consistency when it comes to notions of semi-peripherality in Eastern European countries.

The last remark I have to make concerns the notion of state capitalism in Soviet-type societies. As we know, there are alternative theories of Soviet-type societies, like theories of the degenerated workers’ state and the non-capitalist exploitative mode of production (van der Linden, 2007). At least some of the contributors to the volume in question (Dale, Tamás, Haynes, Fabry) consider ‘transition’ to be a transformation of state capitalism to privately owned capitalism. What is unclear, however, is whether there are any particular advantages of the state capitalist designation of Soviet-type societies for the understanding of their transition. Are there any specific socio-historical legacies of state capitalism that explain the trajectory of the development of societies on its ruins better than alternative theories? Is there any special advantage of this concept from the past that helps in understanding the present-day of Eastern European countries, or is this theoretical designation of Soviet-type societies important only for historians and future revolutionaries? It seems that there are no particular advantages of the theory of state capitalism in this respect. While there is virtually nothing to disagree with Dale in his discussion of the way that trends of the world capitalist economy have contributed to the demise of the Soviet model in empirical terms, this discussion does not necessarily presuppose the concept of state capitalism as it was applied. For example, André Gunder Frank produced a largely similar just-in-time account of the unfolding of crisis of the 1970s in the world economy and its effects on the Soviet-type societies, but considered them to be ‘transitional’, and lamented that the ‘socialist countries of Eastern Europe will be and are already importing capitalism’ (Frank 1980: p. 227). Tamás is the only contributor who tries to deal systematically with the relation of the present to the assumed state capitalist past, but his essay is deeply anti-empirical. Haynes opposes the idea of the making of the ruling class and new relations of production, and suggests that ‘the essence of transition is more a sideways move, a change of form and a process of recomposition’ (p. 61), but again, this distinction is more speculative than vital for his solid analysis of class structure.

First the Transition, Then the Crash is an indispensable book that would definitely become a reference point for anyone interested in social change in Eastern Europe. This is precisely the reason for taking its arguments seriously, as it certainly deserves.