With everything going on in Russia, I thought it might be a good time to revisit exactly what we know about the political economy of post-communism. I was fortunate enough to attend a wonderful conference last week at George Washington University co-sponsored by PONARS Eurasia, IERES, and the Woodrow Wilson–Kennan Institute. on “Two Decades of Post-Soviet Independence: What Have we Learned?” At the conference, Professor Andrew Barnes of Kent State University presented an excellent overview of how the field of the political-economy of post-communism has evolved over the past 20 years. He was kind enough to write up a version of his remarks for The Monkey Cage, which we will present as a two-part guest post today and tomorrow.
This two-part post discusses how thinking about post-communist political economies has evolved over the last two decades. The one-sentence version is that we have moved from studying the politics of economic reform (which was a limiting approach in a number of ways) to studying the political economy of post-communism more broadly (which allows for greater subtlety and therefore better understanding).
The politics of economic reform
For most of the 1990s, many scholars focused their attention on the conditions under which a particular set of economic reforms could be implemented in a country. The most influential argument at the time, although it was not universally accepted, said that democracy had to be circumvented or postponed so that economic reform could be carried out. Based on the experience of Latin America, analysts thought populations might resent the short-term impoverishment these reforms were expected to bring and then vote reformers out of office before they had a chance to complete their work.[1] Democratization and marketization were expected to work at cross purposes in the short run.
By the late 1990s, though, scholars began to realize that, in the post-communist setting, at least, marketization did not seem to generate negative political reactions that needed to be suppressed. In fact, countries in this region seemed either to build markets and democracies at the same time or not to build either one. Several explanations were offered at the time, and most are at least broadly compatible with each other, although they may weight causal factors differently.
One pointed out that the EU supports both processes—and it had the desire and resources to do so, at least in nearby countries (which is, in fact, where we saw both democratization and marketization). Another focused on the importance of the first, or “founding,” elections after the fall of the old regime: in the post-communist setting, parties that supported democracy also tended to support markets, so where they won the first elections, both sets of reforms were introduced; where they lost, neither was. A third possibility was that the alternation of parties in power that is inherent in democracy means that ineffective policies are abandoned over time, helping to create relatively well-functioning markets.[2]
The most influential argument, however, emphasized that, in contrast to the expectations of the early 1990s, market reforms do not generate powerful forces for further liberalization, but rather create powerful vested interests in what were called “partially reformed” economies. These first-round winners benefited from such arrangements as buying state-subsidized oil and selling it on world markets, opening banks that could funnel money from state coffers to private accounts, or building ownership groups that could defend their own property while taking it from others. In more democratic countries, these economic actors or their patrons could be driven from power by the masses, allowing marketization to continue. But in less democratic ones, their privileged positions seemed all but permanent—winners take all.[3]
Even that significant step forward, however, still left scholars characterizing post-Soviet political economies in terms of the obstacles to and facilitators of (a certain brand of) economic reform. The next post will discuss how scholars have broadened their horizons and come to understand post-communist political economies more deeply.
[1] See, e.g., Stephan Haggard and Robert R. Kaufman, eds., The Politics of Economic Adjustment (1992); John Williamson, ed., The Political Economy of Policy Reform (1994); Adam Przeworski, Democracy and the Market (1991). (Note that Przeworski objects to the political tactics he thinks would be necessary to carry out rapid market reforms.)
[2] On EU influence, see Milada Vachudova, Europe Undivided (2005). On founding elections, Valerie Bunce, “Regional Differences in Democratization,” Post-Soviet Affairs (1998); Steven Fish, “The Determinants of Economic Reform in the Post-Communist World,” East European Politics and Societies (1998); Steven Fish, “Democratization’s Requisites,” Post-Soviet Affairs (1998); Herbert Kitschelt, “The Formation of Party Systems in East Central Europe,” Politics and Society (1992). On the alternation of parties in power, Mitchell Orenstein, Out of the Red (2001).
[3] The most famous example of this argument is Joel Hellman, “Winners Take All,” World Politics (1998), but see also Richard Ericson, “Is Russia in Transition to a Market Economy?” Post-Soviet Affairs (2000); Stephen Holmes, “What Russia Teaches Us Now,” The American Prospect (1997); Michael McFaul, “Russia’s ‘Privatized’ State as an Impediment to Democratic Consolidation,” Security Dialogue (1998); Konstantin Sonin, “Why the Rich May Favor Poor Protection of Property Rights,” Journal of Comparative Economics (2003); Katherine Verdery, What Was Socialism, and What Comes Next? (1996).