by Helmut Wiesenthal, Jürgen
Beyer, and Jan Wielgohs
Among political scientists as well as political actors there is little doubt on the true character of the transformations undergone by former socialist countries during the recent decade. The transition from socialism is widely acknowledged as the substitution of one complete system of societal institutions for a thoroughly different one, i.e. the rare example of a wholesale system change.
Taken seriously, the concept of system change implies a peculiar relationship between factors of continuity and factors of change. Insofar as systems entail a non-arbitrary but complex pattern of relations between their elements, their genuine shortcomings or dysfunctional features will not be overcome by marginal changes of single variables. Instead, a change of the basic pattern, i.e. the system’s identity, might be asked for. In other words: Given that minor changes of single parameters might only endanger the system’s stability and performance, a state of performance that is both acceptable and stable will only be achieved after many parameters become readjusted simultaneously and in a coordinated way. According to this understanding, the change of a societal system appears to be a matter of proper design as well as of adequate political action. It is inaccessible through an evolutionary process, i.e. through a series of steps of incremental improvements. Because the latter will finally stop as soon as a ‘local’ maximum is realized, only design-based investments combined with the ability to say No to the temptation of small but limited improvements might lead to the ‘global’ maximum of a thoroughly different system design.
With the notion of system change - as a series of ‘large-scale’ institutional changes - in mind, it is possible to identify a peculiar theoretical problem associated with any serious analysis of what happened in former socialist countries during the recent decade. At first, this problem poses itself on the level of empirical facts. As is widely acknowledged, neither certain features of the former socialist system nor transferable ‘goods’ from the established democracies and market economies could be employed in order to smooth the path from one system to the other. Secondly, a similar lack of prerequisites was obvious on the level of social (and political) theory. Although Marxist theory once offered some crude hypotheses about the transformation of a ‘ripe’ capitalist system into a nascent socialist one, neither the versions of ‘late’ (or the more sophisticated neo?) Marxism nor Western theories of social change did entail any idea of how to fabricate a modern pluralist political system together with a capitalist market economy from the scratch.
Given the lack of empirical as well as theoretical provisions, the series of system changes in Central and Eastern Europe provide an extraordinary opportunity for the investigation in change processes that, until today, was restricted to single case studies not suitable for comparative analysis. However, whereas the reform process undergone by former socialist societies soon became the focus of much attention within the social sciences, there is little awareness about their suitability for comparative research of thoroughgoing institutional change. Though there is a lot of attention to the introduction or change of single institutions as well as structural changes of industrial sectors, policy areas and distributional patterns, the logic of system change, its management and conditions of success still appear to be beyond the research agenda.
Setting aside the possibility that the entire value of this opportunity for empirical research might not yet been fully understood, one might come up with another explanation for the theoretical indifference toward those rare ‘grand changes’. It refers to some theoretical assumptions broadly held in political science and political sociology. According to them, large-scale social change if intentionally directed is seen not only as extremely unlikely, but also, if attempted nonetheless, bound to fail. Mainstream social sciences and, above all, the theoretically based brands of political science entertain systematic skepticism about the possibility of what they name as ‘holistic reforms’.
In order to provide a proper frame of reference for the papers presented in this volume, the major part of this introduction will concentrate on the gap that appears to exist between theoretically based skepticism, on the one hand, and obvious indications of successful transformations in former socialist countries, on the other. In the next section, the reader is invited to cast a view on the ‘impossibility theorem of holistic reform’ as it became some sort of hidden paradigm of post-war political science. The subsequent section provides a closer look at peculiar problems associated with the departure from socialism that might even enhance what is assumed to be the problem load of ‘ordinary’ system change. This is followed by a discussion of those features of the demise of socialism that could well reduce the task load. Finally some preliminary arguments are presented in order to delineate the ‘possibility space’ that allowed for the historical anomaly: an altogether positive balance sheet of the wholesale institutional changes in former socialist countries.
1 The Impossibility of Holistic
Because of the simultaneous occurrence of thoroughgoing changes in the economic, social and political subsystems of society the institutional transformations in Eastern Europe provide an unique opportunity for social research. At first glance, their attractiveness stems from the considerable number of cases open to comparative analyses. The aims of research might refer to the similarity or diversity of initial conditions, the choices made in order to initiate change, the outcomes achieved at different points in time, the peculiar patterns of ‘local’ prerequisites as well as the obstacles to success. On closer look, the insights to be derived from empirical studies might go far beyond the realm of ‘transformation studies’. They might include provisional answers on the question of how societies might improve their control capacity vis-à-vis a policy agenda made up of large-scale problems such as maintaining economic growth and securing social integration in a ‘globalized’ economy or effectively dealing with developmental problems such as population growth, malnutrition, insufficient water supply, soil erosion and environmental damage.
Although social change is an ubiquitous phenomenon, instances of change are extremely rare in which political planning, conscious decision-making and coordinated efforts result in outcomes close to what was aimed at on the outset. Thus, the non-arbitrary way in which political actors as well as ordinary citizens in socialist countries have organized a process of consciously chosen changes could reveal certain insights into a broader set of factors contributing to ‘the possibility of rational politics’ as put by Jon Elster (1987).
However, a successful system change contradicts the common knowledge that, up to 1990, was associated with a peculiar feature of ‘state of the art’ political science concerning voluminous intentional reforms. Nothing less credible and sensible about which to seriously theorize existed - perhaps except the idea of a legitimate world government or an encompassing global religion. The idea of consciously redesigning an entire society was deemed a genuinely unconvincing one. Of course, that the idea has not been taken seriously has something to do with the bitter experiences endured under socialist institutions and, in particular, the Soviet attempts to construct a communist social order. Skepticism about holistic reforms was fed by information about the enormous social costs that the people in the socialist world had to bear during former attempts at wholesale societal change - during the course of establishing a socialist social order. The recent project appears to be of similar scale. On the one hand, it comes close to what the Leninist avantgarde once attempted to achieve, on the other, it obviously outdoes all major changes experienced in 20th century Western Europe: from the collapse of monarchies and autocratic regimes, the introduction of state-governed social welfare or the ‘war-far’ regimes of World War II up to the post-war reconstruction periods.
Part of the common understanding of Western political scientists before 1990 - as far as there was an opinion about wholesale social reforms - was a ‘negative’ paradigm associated with what might be called ‘the impossibility theorem of holistic reforms’. Various empirical and theoretical insights had amounted to a body of knowledge that strongly impacted on theoretical politics as well as political theory. Its basic skepticism - or the postulated ‘impossibility of holistic reform’ - evolved at the crossroads of some different, however complementary if not converging findings such as the public policy analyses of Charles Lindblom (1959), the research findings of the Carnegie Mellon School’s studies on decision-making in organizations (Simon 1976; March/Olsen 1976), the studies of the implementation failure in public service reforms (Pressman/Wildavsky 1973) and, last but not least, the discussion about the assumed non-governability of democratic systems (Crozier et al. 1975).
The paradigm’s epistemic foundations were already in place before 1970. Thus, the aforementioned findings met with a particular framework of social theory and epistemic reasoning. Major components are the well-founded anti-historicism and critical rationalism of Karl Popper (1972), as well as Herbert A. Simon’s approach to the ‘bounded rationality’ of decisions made under uncertainty. In Germany, the anti-holistic skepticism received strong support in the writings of Niklas Luhmann whose sociological theory of social systems draws as extensively on the empirical findings of Herbert Simon and his collaborators as it was inspired by Talcott Parsons and the cybernetic brands of general systems theory (e.g. Luhmann 1995). Several authors succeeded in advancing their skeptical vision of policy-making and social reform through concise phrases such as ‘the science of muddling through’ (Lindblom 1959), ‘the garbage can’ model of decision-making (Cohen et al. 1972), the exclusive option of ‘piecemeal technologies’ (Popper 1972) or ‘the tragedy of the politicians’ empty hands’ (Luhmann 1989).
The systematic skepticism about any demanding policy-making approach as exemplified by well-known phrases appears to be based on broadly acknowledged theories and axioms. One major pillar is founded on significant insights into the limits of forming rational beliefs and acting according to the rules of substantive rationality (to which a proper cue is the notion of ‘bounded rationality’). Another pillar consists of what is known about the obstacles to the provision of public goods as well as organizing collective action in the presence of free-riders (a proper cue is Mancur Olson’s ‘logic of collective action’). A third pillar is the body of knowledge associated with the term public policy (amounting to serious problems of collective or ‘social’ choice). Finally, a fourth pillar is to be seen in the well-known impossibility of constructing a notion of an all-encompassing system rationality (due to positive value pluralism as well as limits on information).
Whereas the aforementioned axioms and assumptions would hint at some systematic deficits and intrinsic problems with which all modern democracies are burdened, it might be even more likely that they will impinge on those societies that lack the institutions of democracy as well as a market economy. There is no doubt that a ‘socialist system’ going to abandon itself is confronted with a problem load that will easily exceed anything similar in a well-established democratic decision-making environment. In accordance with this view, several hypotheses were developed that claim to circumscribe the peculiar risks of the politically guided departure from socialism.
2 Obstacles to Transformation
As we are taught by historians, Western democracies with their well-established market economies emerged in a certain temporal order: the market - or capitalism - came first together with liberation from the feudal rule. Democracy, however, was achieved only after the vast majority of citizens had found their new market-related roles as either workers, owners of capital or members of the, later on, rapidly growing middle classes. In fact, the right of political participation appears to be a logical extension of the (real or formal) freedom enjoyed in the economic sphere and it precedes the acquisition of a right to social security as established by systems of social welfare (Marshall 1964). Given that the collapse of socialism had its take-off in the political sphere, the current transformations in the political and economic spheres obviously follow a reversed temporal order. As a consequence, the process of system change is subjected to certain risks and problems that appear extremely difficult to be dealt with successfully. Some of them deserve closer inspection.
The dilemma of simultaneity. In an influential paper entitled ‘The necessity and impossibility of economic and political reforms’ Jon Elster (1990) outlines the genuine problematics of simultaneously establishing the institutions of representative democracy and a market economy. What later on was named the ‘dilemma of simultaneous reforms’ (Offe 1991) points to a problem that was even more fundamental than the passionate controversy between radical and gradualist reformers. The dilemma theorem maintains that an unavoidable blockade of the reform process results or that tremendous costs of transaction are incurred when crucial decisions over the allocation of property rights have to be made after the introduction of universal suffrage and responsive democratic governments. Because democratization involves the effective extension of opportunities for political participation as well as the sensitizing of politicians to popular feelings and demands, the result of the social costs of economic change will be an inevitable backlash against the agenda of reforms. If a parliamentary opposition eager to gain office already exists, it will become the natural protagonist of anti-reformism, i.e. the parliamentary arm of those segments of the electorate that appear unwilling to bear the transitory costs of change. Thus, it is assumed that almost any attempt by a democratic government to engage in long-term projects of institutional change but unable to deliver the fruits of their labor before a certain period of time is bound to fail. Therefore, the process of system change appears to be endangered by the risk aversion and opportunism of self-interested politicians who rank their chances of re-election higher than the quality of policy choice.
The limits on society’s capacity for ‘institutional learning. There is a reasonably solid assumption that the simultaneous implementation of numerous interdependent new institutional rules might expect too much of a society’s capacity to adopt new ways of behavior and social coordination. This does not mean that the capacity of individual or collective actors is restrained by obsolete beliefs and traditions such as the often mentioned ‘socialist legacies’. Instead, the argument points to the sheer volume of altered facts, norms and social expectations that actors have to take into consideration when choosing a course of action. Evidence of a limited capacity to adapt to environmental change is provided by consolidated democracies. In many instances of reform, the latter appeared capable of adapting to only minor portions of intended change. Given the high level of institutional inertia and widespread vested interests, even moderate projects of reform turned out to be too demanding. The reproach of ‘holism’ as effectively pursued by critical rationalism (Popper 1972) zeroes in on the same phenomenon: political intention overshooting the complex and opaque features of social reality. Moreover, there is hardly a project imaginable that would meet the demands of information quality and design complexity associated with thoroughgoing reforms. Arguments raised in favor of gradualism as opposed to the notorious shock therapy typically draw on the limited ‘learning’ capacity of existing societies (see e.g. Brada 1993).
The inadequacy of institutions introduced by arbitrary decisions. Another objection to the possibility of large-scale reforms refers to the peculiar mode of institution building after a revolutionary turmoil. Under such circumstances, (new or changed) institutions do not emerge in an evolutionary process of random variation and subsequent selection according to the criterion of transactional efficiency. Rather, institutions are created by ‘fiat’, i.e. as the outcome of deliberative processes which aim at making a final choice, perhaps by majority vote. If, however, the acceptance and efficacy of institutions depends on their appearance as unique and highly legitimate solutions to current problems, their recognition might be hampered. Common rules and norms that apparently come into effect by discretionary decision-making bear an air of contingency or even arbitrariness. Because they obviously were not the only option possible, people might doubt their value and undermine their validity by reasoning ‘they could well have chosen a rule that better suits my own situation!’. It has to be acknowledged that the discretionary weakness of new institutions resembles one problem inherent in the holistic approach to reform. The more things come under scrutiny and the more they are changed through a once-and-for-all strike, the more the procedure resembles an act of sheer arbitrariness. Or, to put it the other way around: The more changes the agents of reform wish to effect simultaneously, the less social acceptance and institutional validity they may count on.
The lack of cultural prerequisites. One of the objections raised most frequently against a wholesale change of the institutional order and, at the same time, a first-hand explanation of institutional failure refers to a mismatch of cultural givens and the functional prerequisites of institutions. It is said e.g., that the core institutions of a market economy such as private entrepreneurship, contractual law, market prices and competition must rely on certain individual habits and collective values that the citizens of socialist countries were denied the opportunity to adopt. These habits and values could only emerge during an extended period of practical experience and situational learning. In his study on two different political cultures in Italy, Robert Putnam (1993) discusses certain virtues and dispositions that are said to be at the root of a (partly) self-governing civil society. Among them is the readiness to participate in public debate as well as associate with like-minded people. Again, these symptoms of ‘social capital’ were extremely rare under socialism. Accordingly, insiders lament the deficit in public spirit, the prevalence of pre-modern feelings of community and a common lack of political culture (e.g. Ekiert 1991). Piotr Sztompka even claims that the emergence of a civic culture in postcommunist societies is badly endangered by a legacy of ‘civilizational incompetence’ (Sztompka 1993).
The functional deficits of imported institutions. An implicit assumption of almost all efforts made by the internal as well as the external participants of transformations is that unambiguous ends and means are given in form of Western models. However, on closer inspection, this assumption might turn out a heroic simplification. Shifting the focus of attention to the debates on public policy and institutional reforms in Western democracies, one might recognize numerous doubts about the adequacy and performance of institutions that, without exception, were invented at the end of the 19th century or during the first half of the 20th century. Given the need to accommodate rapidly integrating global markets, few of these institutional ‘legacies’ could claim to be the most efficient solutions to current problems. Two possible consequences have to be mentioned. First, the disputed character of imported institutions might hamper their implementation in a ‘foreign’ context. Second, given that imported institutions are implemented with maximum precision, they will probably display the exact same shortcomings which, at least today, attract criticism in their original context.
The unacceptable social costs of institutional innovation. Competitive representative democracy is prone to inconsistent decision-making and the risks such entails. Individual citizens, ruling parties and even an entire society may choose to embark on a difficult and demanding project of institutional reforms and, at the same time, claim they will be spared all the risks and costs the chosen policy would necessarily entail. In fact, only in the very beginning did the citizenry of transiting countries appear willing to accept a ‘blood-sweat-and-tears’ strategy of change. When after a two or three years period the fruits of change were seen as insufficient, popular support for thoroughgoing reforms plummeted. Only for a short period of time did the recently won ‘negative’ freedom of true democracy appear to be an adequate compensation for the ‘positive’ freedom of guaranteed incomes (irrespective of individual performance) lost over the course of the system change (Bauman 1994). Macroeconomic data suggest that the social costs of transition amount to a 25-50 per cent decline of the gross domestic product during the first years after transition. Above all, the width and depth of this ‘valley of tears’ (Sachs 1991) depends on how political systems could cope with the popular demand for immediate gains. Since there is no natural or economic law determining a steep right-hand part of the U- or J-curve of GDP growth, the political management of the transition crisis appears to be decisive.
The counter-intuitive effects of simultaneously introduced institutions. Whereas the objection to holism refers in a very general way to the lack of calculability of grand designs, some facts of limited importance became visible that illustrate very clearly the inherent risks of large-scale reform. A good example is provided by a comparison between the newly established political parties and interest associations which emerged following the political turmoil. Even after a decade, all postsocialist countries show the same pattern: while political parties succeeded in establishing themselves as major actors in the political system, interest associations (be they trade unions or business and professional associations) have as yet failed to gain significant influence as pressure groups or providers of sectoral information and assistance within the process of policy implementation.There is good reason why parties proved superior under conditions of increasing competition over individual and public resources for collective action (Wiesenthal 1996). They profit from a high level of public attention as well as from their function as gatekeepers to governmental and public positions. Because elections are constant-sum games, parliamentary representation as such remains immune from the organizational capacity of parties, the nature of political cleavages and even voter turn-out. With respect to interest associations, there is nothing resembling this comparative advantage of parties. Their development depends exclusively upon individual expertise and contributions for collective action. Furthermore, the well-known problem of free-riding sets either narrow limits to growth or triggers a departure from collective goals when the organization attempts to survive by means of selective incentives and/or the fabrication of community feelings. As a consequence, it is not possible for government and administration in new democracies to relieve themselves of the heavy burdens of actively regulating nearly everything by delegating responsibility to ‘private’ interest governments (as described by Streeck/Schmitter 1985).
3 Facilitating Factors of
Although the list of obstacles and risks to purposeful transformations as outlined above is in no way conclusive, it may serve as an indication of the peculiar problems that add to the standard problem load which is assumed to account for the impossibility of holistic reforms. Fortunately, after a decade of thoroughgoing change in former socialist countries, one no longer feels compelled to rely on general theories or fortune telling in order to assess the variance of outcomes of the system change. Even a regular glance in the newspapers might provide a realistic impression of what has happened in recent years in Central and Eastern Europe. Taken altogether, there seems to be little ground for maintaining the skeptical position as suggested by the impossibility theorem. Obviously, in many cases the system change as such, as well as the subsequent transformations in certain spheres of society, were complicated by the problems discussed in the preceding section, not to mention the problems rooted in national peculiarities and the common shortage of resources. Nevertheless, there are significant indicators of success. With the exception of countries that formerly were part of the USSR, as well as Serbia and Albania, there is literally no one country that could not claim to have made some progress. Of course, there are huge differences among the sample. Countries differ with respect to the level of democratization achieved as well as the degree to which their economy has been restructured and regained growth (Hellman 1998).
From this perspective, a theoretically based explanation of the transformation processes not only has to question the assumptions implicit in the impossibility theorem but also to look out for positive factors that allowed for outcomes which more or less resemble the original intentions and goals of change. An assessment of both, the ‘false’ premises of the impossibility theorem and the alleviating might tell us which elements of the theorem are to be dropped or in need of refinement.
This theoretical point of view deserves more attention than it was given in the early transformation studies. Even today, there is much ignorance of both the presence of a theoretical corpus that suggests systematic skepticism, and of the mere fact that the outcomes of transformations tend to contradict the hypothesis of necessary failure. As a step to a more differentiated and empirically testable set of assumptions on the possibility of large-scale reforms, one has to give credit, in particular, to those positions that claim to name alleviating factors of change. Even proponents of the impossibility theorem might wish to highlight features that contradict the subsuming of the recent cases of system change under the rule of a general theory. In light of the theory of scientific discovery (Kuhn 1964), these features might indicate the presence of includable (and in principle explainable) anomalies.
On the one hand, there are factors that appear to be self-explanatory when correctly stated. First, one has to mention the absence of an articulated socio-economic cleavage in the largely egalitarian socialist society. Above all, this factor contributed to a low level of strain in government formation and parliamentary decision-making. Second, almost everywhere broad popular support for the project of a radical transformation of the institutional order has been enjoyed because of the myth (or false belief) that pluralist democracy together with economic freedom guarantees an immediate rise in the standard of living. Third, in several countries governments very early on created tripartite commissions of interest articulation and compromise that called upon trade unions to enter into binding agreements on wage restraint with government officials. Although these commissions lost influence over the process of consolidation, they at least worked as a kind of ‘preemptive strike’ that indirectly contributed to a low level of industrial conflict.
On the other hand, certain courses of action chosen by strategic actors might be seen as adequate responses to problems that proponents of the impossibility theorem assume unresolvable. A prominent candidate among the factors of success might be the so-called shock therapy of economic change. Although the catalogue of measures prescribed by economic advisers (e.g. Sachs 1989; Fischer/Gelb 1991) could nowhere be implemented completely and in ideal fashion, it did not cause all the negative consequences that were announced by its opponents (see Hellman 1998). At least, the incomplete shock therapies worked as a kind of insurance against political failure by concentrating many painful interventions at the start of the transition. This enabled reform governments to persevere despite the opposition provoked by harmful intermediate results. If reformers were lucky to give priority to stabilization policies (see the analysis of Jürgen Beyer in this volume), they were rewarded with an above average probability of economic recovery which in turn protected them against the ‘populist threat’ to functionally interdependent policy measures as it is described in the ‘dilemma of simultaneity’. In a theoretical perspective, the exact composition of the bundle of measures appears to mark the distinction between the impractical ‘utopian’ and the more realistic ‘imitative’ holism (see Ellman 1997).
Contrary to the skeptical assumption that the new institutions might be lacking in the necessary prerequisites, there is evidence of an opposite cause-effect relationship in the process of new institutions gaining validity. Even if insufficiently based on a proper functional understanding in the early stage of implementation, new social and legal rules could well become effective through increasingly positive feelings among the popular as well as a certain ‘educational’ impact. This process resembles the emergence of democratic political cultures in different societies. A prominent example is provided by Alexis de Tocqueville (1956) in his famous work on early democracy in North America. A similar case is the development of democracy under the rule of the Western allies in post-war West Germany and Italy. It was only after the emergence of a public sphere constrained by formally democratic institutions that citizens became used to publicly discuss individual and collective interests as well as associate with other people.
Two more observations are to be mentioned because they might help to inform hypotheses aimed at sound explanations of the more successful cases. One refers to the significance of mental ‘socialist legacies’, i.e. common values and attitudes. Whereas in early papers on the social structure and the elite composition in postsocialist countries the assumption was made, that ‘socialist values’ might hamper a proper understanding of democracy and market economy (Crawford/Lijphart 1997), today there is more evidence of the opposite effect: ‘socialist values’ appear to lose their impact quite rapidly. Even more surprising might be, that their role in the early years of thorough transformations was not all negative. As far as etatist attitudes prevailed among the population, reform elites were capable of counting on more compliance for top-down interventions than their counterparts in Western democracies. The same is true for the initial weakness of interest associations and trade unions. Both ‘communist’ feelings of social harmony and the, in fact, less inegalitarian social structure, provided a rather unfriendly environment for old and new interest groups. Their failure to turn into powerful pressure groups gave reform governments the opportunity to act with considerable elbow room.
Another observation obviously contradicts the original assumptions. According to a broadly held opinion, the reform project was endangered by those parts of the population that would suffer from the inevitable decline of real wages and the lay-off of large segments of the workforce. However, this expectation turned out wrong. While popular dissatisfaction eventually led to a change in office - usually with the new government continuing on the path of their predecessors - the strongest opposition was exerted not by the temporary victims of reform but by the winners (Hellman 1998). Those who succeeded in rent-seeking strategies or gained from the loopholes in early privatization schemes strongly resisted any attempt to deprive them of their beneficial conditions. Though their actions and powers are not always transparent, the early beneficiaries of the collapse of the communist system often appear to be the major obstacle to further democratization and, above all, the rule of law.
Taken altogether, there is little ground for maintaining the suspicion that all incidents of change exhibit the signs of ‘path dependence’ (e.g. Stark 1992). Apart from the trivial meaning that there are very few phenomena that lack any mark of the past, path dependency in the strict sense occurs less frequently than originally expected. This observation leads back to the initial theme of this introduction, the question of large-scale holistic reform. As the theory of path dependence provides an adequate background for assessing the outcomes of system change (as far as they are already visible), we might reach at two, of course preliminary, conclusions. First, efforts for the consistent implementation of a series of designed reforms did not turn out as strictly impossible. Given certain functional prerequisites and sufficient political skills (which, by the way, often appeared to be of astonishing quality) most parts of the envisaged wholesale societal change were successfully mastered. Second, there are only few examples that fit to the pattern of path dependence as they demonstrate the survival of institutions that appear inferior (or less efficient) than some available alternative.
4 Fruits of Scrutiny and Comparative
Though the bird’s-eye view of general factors either complicating or facilitating large-scale reforms sorts out some basic features of the project of reorganizing the society’s institutional backbones, a proper understanding of how intended changes were achieved needs a closer inspection of significant phenomena. This is what the subsequent chapters of this volume will do. They rely on scrutinized investigations of the empirical process as it manifested itself in selected policy arenas such as economic and financial reform, privatization policy and entrepreneurship, social reform and regional development.
By analyzing large samples of postsocialist countries Jürgen Beyer, Herbert Kitschelt and Luoana Santarossa Dulgheru elucidate certain aspects of policy-making and politics that enable us to explain the considerable variation in economic performance. Thus, we not only can distinguish the more successful cases from the less successful ones but also explain which and why particular factors proved helpful.
In early debates, the idea was raised that the outcomes of the transformation process would be determined by the ‘right’ sequencing of reforms as well as the speed of the entire process. Nevertheless, the sequencing of reforms was rarely analyzed empirically, as yet. Jürgen Beyer (in chapter 2) shows that the importance of sequencing for economic development is considerably greater than that of speed, although the latter was assumed essential in the debate about shock therapy versus gradualism. According to his analysis, the temporal positioning of the stabilization attempt is of crucial importance. Countries where the inflation problem was attacked early on in the reform process accomplished a much higher level of (relative) economic growth than others. To the contrary, countries where stabilization is lagging behind face serious problems of recovering from the transitional recession.
The dual nature of postsocialist transition implies that economic reforms go along with constitutional ones which themselves impact on economic progress. Relying on a sample of twenty four postsocialist states, Herbert Kitschelt (chapter 3) examines the impact of constitutional design on the outcomes of economic reform. In contrast to mainstream studies he reaches at the conclusion that this relationship itself is contingent upon contextual forces. If new democratic regimes emerged from clientelistic traditions strong presidential powers prove favorable for economic reform. However, the highest probability for successful reforms accrues to cases, where parliamentary systems with narrowly restricted presidential powers rely on favorable historical preconditions as well as institutional incentives for the formation of political parties along programmatic cleavages.
To a large extent the econometric analyses presented by Luoana Santarossa Dulgheru (see chapter 4) provide evidence of certain factors that account for different policy options as responses to country-specific circumstances. Her findings point to one crucial variable which appears to be essential for both the long and the short term progress during the transition to viable market economies with balanced growth: the availability of financial resources. Whereas countries like Bulgaria, Romania and the CIS states (as former parts of the USSR) appear to be trapped in a ‘vicious fiscal circle’, countries like Hungary, Poland and Slovenia achieved an expansion of domestic credit and were able to attract (more) foreign investments. According to Santarossa Dulgheru the diverging indicators of economic progress are to be attributed to policy choices, international factors and certain initial constraints that cannot easily be overcome given a lack of financial resources.
Whereas economic and political starting conditions - or: the legacy of the past -undoubtedly matter, they are not the only factors that constitute the opportunity structure of economic reforms. Opportunities can be used in quite different ways with more or less impressing results. This, in turn, depends on how political actors perceive the options and constraints given in a certain situation. In other words, contextual settings, ideas and ideologies as well as a propensity to policy learning always play an important role. One also has to consider that the opportunity structure of actors competing in interrelated policy fields will change over time, in particular during the early period of transformation with its high-level dynamics. That is why in many cases the structural features of the initial conditions do not prove sufficient to ‘explain’ the course and the outcomes of the subsequent transformation process. Because there is a lot of variation in the interplay of legacies, contextual settings, initial strategies and political dynamics, quite different ways of achieving successful reforms can be observed. Moreover, as previous studies already revealand several chapters of this volume confirm it, the preconditions for reform, the problem load of policy-makers and the capability of governments to control the process of transformation vary not only across countries but also between policy fields. Therefore, we envisage both national and sectoral ‘logics of success’. Thus, accounting for progress in postsocialist institution building presupposes detailed comparative studies that pay attention to structural variables, the rapidly changing environment and the strategic interactions between relevant groups of actors. This is exactly what the authors of the case studies mentioned below have in mind.
John Campbell and Frank Bönker, from different points of view, examine the project of fiscal reform in Hungary, Poland and the Czech Republic. According to John Campbell (chapter 5), the postcommunist governments of these countries favored the cutting of taxes and spending. In Poland, however, the trade unions prevented spending cuts from being sustained initially. As a consequence, serious budget deficits emerged. In Hungary, intense electoral competition had similar effects. In the Czech case, there was only weak opposition to fiscal reforms; here, budget deficits were largely avoided. In each case, institutional legacies inherited from the old regime shaped the context within which governments had to implement the fiscal reforms. However, new political institutions were also significant. Governments were more successful in sustaining neoliberal reforms when they could rely on a ‘corporatist’ setting for negotiations. Without the help of ‘tripartism’ in consensus building, neoliberalism floundered. Thus, ‘social-democratic’ tripartism appears to have worked as an antidote for political conflicts surrounding ‘neoliberal’ fiscal reform.
Chapter 6 written by Frank Bönker highlights a number of factors that created extraordinary opportunities for reform during the early period of transformation. Due to features of the old regime, new democratic governments could capitalize excessively on a ‘honeymoon effect’. Other features that favored the adoption of reforms include the demobilization of society, the weakness of interest organizations and the strong involvement of external actors, most notably the international financial organizations and the European Union. Bönker shows that besides these advantageous circumstances the single cases do not differ very much from the wisdom inherent in political-economic studies on the initiation of reforms in less developed countries. The postsocialist cases underline the importance of change teams, they underscore the role of mandates and they lend support to the view that executive authority is more important during the period of consolidation than during the initiation of reforms.
Large-scale privatization of state-owned enterprises - a core project of the transition to a market economy - was expected to become a very delicate matter. Although policy-makers were lacking in sufficient instrumental knowledge with regard to appropriate privatization methods, governments acted suprisingly successful in this field of reform. There is little evidence of intense conceptual conflicts or high political risks as they were predicted with reference made to the ‘impossibility’ theorem. Analyzing subsequent periods of the Hungarian privatization policy, Eva Voszka (in chapter 7) characterizes the privatization process as progressing through trial and error. She shows how repeated policy shifts caused by changes in the balance of power between political parties and executive branches as well as the experience of partial failure eventually resulted in the acceleration of privatization. While inappropriate and highly contested programs were quickly removed, approaches that proved functioning were continued. The dominant strategy - consisting of direct sales to strategic investors - became complemented with additional methods that allowed to satisfy different social groups, thereby preventing, or at least calming down, public discontent.
Privatization success would not have been achieved if the diverse elite factions, while competing over the exact methods and preferred target groups, would not have shared a general pro-privatization consensus. Nonetheless, a comparative view on privatization in Estonia, Poland and the Czech Republic makes clear that the mere existence of such a consensus is far from guaranteeing a smooth process. Focusing on the general barriers to successful privatization as they are implied by ‘impossibility’ assumptions, Jan Wielgohs (in chapter 8) describes the various endeavors of the political elites to achieve a strategic compromise in the interaction between state and organized labor. Almost everywhere, governments were capable of integrating the latter into the reform consensus. Wielgohs points at structural variables of the initial situation regarded to be responsible for much of the variance in the outcomes. At the same time, he emphasizes the significance of ideologies, ideas, learning processes and factors of political stability. As an overall result of the investigation of the more successful cases, we learn that the actual courses of political action appear to be highly contingent whereas their outcomes resemble a pattern of ‘equifinality’.
The political process of socio-economic and institutional reform is dependent on a complex set of factors: the particular situation of countries, policy-specific circumstances, the more ore less hierarchical mode of decision-making, the degree of horizontal interest coordination and, last but not least, the participation of external actors. Moreover, as the chapters of this volume indicate, political success - in terms of progressing enterprise privatization, welfare-state reform, regional development and effectively coping with other issues at the intersection of state regulation and market forces - presupposes a certain amount of political skills as well. However, on closer inspection, not all changes appear to be triggered by rational intentions and coordinated action. Akos Rona-Tas (in chapter 9) describes the impressive boom in the small private enterprise sector of Hungary, Slovakia and the Czech Republic. He characterizes it as a success story that might embarrass both ‘shock-therapists’ and the advocates of gradual reforms. Neither of them could claim this unexpected development to be a result of well-chosen policies. Instead, as small private business presents itself first of all as a form of self-employment, the flourishing of small enterprises appears to be the unintended by-product of two factors: the early liberalization and marketization of labor relations, on the one hand, and the overburdening of the large enterprise sector with high payroll taxes, on the other. This might remind us of the limits set to rational aspirations as well as explanations relying on a rational choice approach.
The analytical significance of ideas, ideologies and problem perceptions is particularly obvious in the field of old age pension reform. Although Poland, Hungary and the Czech Republic, right after 1989/90, shared common pre-war and state-socialist legacies as well as a similar agenda of short-term targets, the outcomes of the strategic policy choices on long-term pension reform differ significantly. While Czech policy-makers choose a moderate reform path close to the Western-European mainstream with reliance on a significant welfare-state component, their Polish and Hungarian colleagues adopted a much more radical strategy inspired by the neoliberal model of a largely privatized pension system. In the latter cases experts from the World Bank were able to significantly influence domestic policy-making. Katharina Müller (in chapter 10) explains the different policy approaches and analyzes the contextual settings, the diverging perceptions of opportunity structures as well as the possibilities open to external actors for shaping domestic policy choices.
The impact external actors had on the
process of defining the given options and, thereby, influencing
postsocialist institution building, becomes even more apparent in the
emergence of regional development policy frameworks. As Martin Brusis
(chapter 11) shows, in this policy area, the European Commission proved
to be the decisive promoter of ‘success’. While the starting conditions
in the six countries under consideration were characterized by very
similar legacies of the past, the policy approaches that emerged after
the regime change diverge significantly in response to economic
conditions and the composition of the political actors set. In this
field of institution building, also ‘learning’ processes gained
importance. Whereas right after the collapse of the old regime, policy
measures for the support of disadvantaged regions were often regarded
as a relic of the socialist planning ideology, the problem awareness
for regional disparities increased the more, the accession to the EU
became a realistic perspective. By now, the candidates for the first
wave of accession to the EU successfully developed administrative
capacities for implementing EU-compatible policies that target at
reducing regional disparities. However, the analysis presented by
Brusis - with further support by findings of Katharina Müller (in
chapter 10) - clearly indicates that external actors can act
successfully only to the degree that their advice is compatible with
interests and problem perceptions of relevant domestic actors. As a
concurring result not only of these two studies, but as an overall
result of the entire volume, there remains little ground for regarding
path-dependence as an appropriate approach to the explanation of
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