Abstract
In this work Dorothee Bohle and Béla Greskovits aim to provide a comprehensive analysis of the development of diverging kinds of capitalism in eastern and central Europe over the period since 1989. The framework is developed from Karl Polanyi’s classic 1944 study of capitalist development, The Great Transformation: The Political and Economic Origins of our Time. In that work Polanyi built his view of capitalist development as embodying a continual tension between a push towards self-regulating markets and a spontaneous resistance to the subordination of society to market forces (p.13). This tension could lead to a wide variety of outcomes which are not predetermined and depend to a significant extent on the autonomy of a political sphere. Based on this framework, the authors identify groupings of types of capitalism in the region, each the result partly of definable historical conditions and partly of particular choices made by the countries’ elites. Although set up first as ideal types, real cases fit quite easily, as demonstrated with data on diverging forms and levels of welfare state provision and other forms of protection against the effects of the market. The authors present this as a superior framework to that provided by adaptations from the varieties of capitalism literature. Categories such as liberal or coordinated market economies, or derivatives developed for former state socialist countries, they argue, are flawed by their weak coverage of the political sphere.
Under the authors’ analysis, at one extreme are the neoliberal Baltic Republics. These provide the least protection for citizens against the effects of economic transformation and the freeing of markets. The background lies in their experience of incorporation into the Soviet Union which enabled emerging elites to use ‘identity politics’, linking markets to national independence and revival and seeing nothing worth preserving in past social policies or industrial capacities. At the other extreme is the lone neocorporatist case of Slovenia with the highest level of social protection and with the most permanent structures for representation of social interests. This they explain partly in terms of the strength of Slovenia’s trade unions and partly by particular decisions by the elite.
The intermediate case they call ‘embedded neoliberalism’, an awkward term used to signify the persistence of substantial welfare provision which the authors see as a factor keeping radicalism at bay. It is also related to a more positive view overall of the state socialist past. In Poland, the authors argue, there was a high degree of continuity in expertise, in policy thinking and in practices in the welfare field. In the Czech Republic there was considerable pride in the country’s economic past and perceived level which led to a very different thinking on industrial policy from that prevalent in the Baltic Republics.
A final possibility is a ‘nonregime’. Failure to find a means to balance the conflicting objectives, starting with the most general of markets versus social protection, leads towards instability and disintegration. That they see as the tendency in Bulgaria and Romania in their early years. Those countries are later seen moving closer to the neoliberal model, albeit without the support provided by identity politics in the Baltic Republics.
To judge the value of Bohle and Greskovits’s work we can set specific tests. We can ask whether their accounts of developments in individual countries are accurate, whether the way they incorporate politics into the picture is satisfactory, whether they have accurately portrayed the international dimension and whether they can explain changes over time, both as regards the emergence of their types and as regards their further development.
On individual countries, they generally tell convincing stories. They are covering a huge sweep of information and they are inevitably brief on many points of detail. However, they have enough accurate detail to support their broad classifications and grouping of countries and hence the framework that they have developed.
The incorporation of politics is a more difficult test and there are two big areas for further debate here. The authors are keen to emphasize the degree of autonomy for the political sphere, but also show the extent to which political decisions reflected past heritages. The balance between the two is not easy to find. In the conclusion, they contest a view that choices ‘have largely resulted from “objectively” given differences in inheritances’ (p.261). On the contrary, they argue, ‘nothing was preordained’ and every country could have taken a different course. However, in earlier chapters they do show the enormous importance of past heritages. The more one explores a particular divergence between countries the more seems to be traceable back to those countries’ pasts. It can be added that, even when policies seemed to diverge, for example over forms of privatization, the final outcomes were often similar. Thus in central European countries inherited industries generally failed, no matter whether or how they were privatized, and their place was taken by incoming multinationals. Here ‘geographical determinism’, a notion referred to but disliked by the authors, was relevant to the attractiveness of locations for inward investors close to western Europe. Thus there is plenty to argue about and clarify on the respective roles of different kinds of determinants without which the nature and degree of autonomy of the political sphere also remains unclear.
The second problem area on the incorporation of politics relates to the nature of political decision-making. The authors’ picture is of an elite taking decisions. This is not discussed systematically and there is some vague terminology. Thus, the leading Czech politician Václav Klaus is classified within a ‘technocratic elite’ while he could maybe as well be described as a political ideologue always battling with a range of opponents. A missing element here is the importance of conflict between political and social actors as a driver for development. Outcomes reflected differing balances of forces, with those forces themselves dependent on various heritages from the past.
Thus, taking Klaus again, he was forced into a number of compromises and concessions that he did not like – over privatization, over welfare, over employment protection, over industrial policy – because others were strong enough to impose part of their will too. Part of this was indeed fear at the prospect of social unrest, fully in line with the Polanyian framework, but there were also varied interpretations of the state socialist past. In one strongly held view, it had failed in areas such as welfare and in employment protection as much as in other spheres. Resulting pressure for improvements from the state socialist past led to some differences from western European practice, for example with low unemployment protection but often substantial support for parents to stay at home with young children. This reflected thinking developed under state socialism, when unemployment from economic causes was hardly known but state provision of child care very widely considered to have been inadequate. Thus neither continuity, nor the desire to head off potential social unrest are fully adequate as explanations for the development of new welfare systems.
On international influences, the authors wisely reject any notion of external coercion. That would anyway not stand up in view of the diversity they demonstrate between individual countries. It was, they argue, largely an internal issue whether external advice was sought or taken. It can be added that a number of notorious neoliberal measures took root in eastern and central European countries and their inventors, for example in the case of voucher privatization in the Czech Republic, having convinced international agencies of their apparently outlandish ideas, then became advisers on policies in other former state socialist countries.
Our final test is Bohle and Greskovits’s ability to explain change and to predict developments. Here their emphasis on the scope for political actors to make their own decisions leads them to conclude with an open-ended outline of different possible scenarios. However, it does seem that there has been a strengthening trend in the neoliberal direction which must reflect some shifting balance in political forces. They indicate a contributory factor here as the requirements of EU membership (p.87) and suggest that resulting welfare state retrenchment has led to ‘popular disenchantment’, with varied political consequences. This applies better to some countries than others. Overall, their framework appears better equipped to consider the consequences of such a trend than to explain its origins or driving forces.
Thus, to conclude, Bohle and Greskovits have produced a generally solid comparative study of developments in former state socialist countries that firmly buries ideas of a simple transition towards any notional western European model or indeed towards any common end result at all. They have developed a comprehensive framework for explaining the divergences. They do not provide answers to all the difficult questions, but their framework enables us to see what remains to be explained. They have thereby given us a much better starting point for comparative analysis of the development of types of capitalism in the region they study than any other currently available.
In June 2013 this publication was awarded the 2013 Stein Rokkan Prize for Comparative Social Science Research.