the political economy of post socialism

The Political Economy of Postsocialism Author(s): Valerie Bunce Source: Slavic Review, Vol. 58, No. 4, Special Issue: Ten Years after 1989: What Have We Learned? (Winter, 1999), pp. 756-793 Published by: The American Association for the Advancement of Slavic Studies Stable URL: http://www.jstor.org/stable/2697198 . Accessed: 19/12/2010 05:28Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at . http://www.jstor.org/action/showPublisher?publisherCode=aaass. . Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected].

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The Political Economy of PostsocialismValerie Bunce

The Argument for SimilaritiesThere were two good reasons to expect that developments after socialism, whether in the former Soviet Union or in east central Europe, would follow a roughly similar course.' The first was the homogenizing effects of the socialist experience. In contrast to other regions of the world, such as Latin America and southern Europe, where dictatorships had also given way to more liberalized orders, the socialist regimes of eastern Europe and the Soviet Union were remarkably alike in their form and functioning. In particular, they shared three defining characteristics: an ideology hostile to capitalism and democracy and committed to rapid socioeconomic transformation; a fusion between politics and economics; and a leadership, the Communist Party, that functioned as an economic, political, and social monopoly. When combined, these three characteristics shaped in many respects how these systems functioned on a day-to-day basis. These features also go far toward explaining why these regimes collapsed.2 Two incontrovertible facts are perhaps the best testimony to these similarities, however. One is that all of these regimes exhibited relatively similar trends during their final decade. For example, most evidenced deteriorating economic performance, ossification of the elite stratum, rising corruption, and declining central political control over the peripherywhether that periphery was defined as nonpolitical spheres of human activity, such as the economy or the society, or in spatial terms, such as the lower reaches of the party-state itself, eastern Europe within the Soviet bloc, and republics within socialist federations. The other irrefutable observation is that all of these regimes ended at roughly the same timeif by ending we mean, simply, the sudden and formal deregulation of the Communist Party's monopoly that occurred in 1989 and 1990. All of this would seem to suggest that the successors to state socialism began the process of transformation from a roughly similar point of departure. While analysts of transitions to democracy and capitalismMy thanks to RawiAbdelal, M. Steven Fish, Bela Greskovits,Vladimir Popov, Sharon Werning Rivera, Philip Roeder, and two anonymous reviewers for providing comments on an earlier draft of this article. I also benefited from comments on a version of this paper presented at the conference, "Between Past and Future: The Revolutions of 1989 and the Struggle for Democracy in Eastern and Central Europe," organized by Vladimir Tismaneanu and Sorin Antohi and held at Central European University, 26-28 March 1999. 1. Throughout this paper, the units of analysis are those states that, during the Cold War era, were part of the Soviet Union and eastern Europe. Given state dissolution (and the absorption of East Germany), this produces twenty-seven cases. Mongolia, therefore, is ignored in this analysis, as are several other, "semisocialist,"cases-Vietnam and China. Institutions:TheDesign and theDestructionof Socialism 2. See Valerie Bunce, Subversive and theState (Cambridge, Eng., 1999). For a similar argument focusing on the Soviet case and and using an institutionalist framework, see Steven L. Solnick, StealingtheState:Control in Collapse SovietInstitutions(Cambridge, Mass., 1998).Slavic Review 58, no. 4 (Winter 1999)

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(whether occurring recently or long ago) might disagree about both whether and, if so, how the past shapes the character of new orders, economic and political, they would, nonetheless, concur on one point.3 State socialism presents, arguably, the best case social scientists have for a system was internally consistent, powerful past; this political-economic elaborate in structure, unusually invasive in practice, and regionally encased. When combined, these characteristics rendered this system as allencompassing as it was distinctive. Moreover, state socialism remained in place for a long time and was the heir in virtually every instance to a wellestablished tradition of authoritarian politics and state-dominated ecowith nomics. Thus, if we give any credence to historical-institutionalism, its emphasis on the power of the past in narrowing the range of alternative futures, then the sheer depth, ambitions, and longevity of state socialism, along with its nearly simultaneous implosion, should, at the very least, have severely constrained the range of possible postsocialist pathways. The second reason to have anticipated little variance in postsocialist developments is more proximate to regime transition. It is not just that these regimes ended at roughly the same time; it is also that the larger world into which the successor regimes entered was remarkably consensual in its ideological messages. By the close of the 1980s, liberalism in politics and economics had become the hegemonic standard; few incentives were available to countries to embark on other paths of development; and consensus and the the international order, because of unprecedented considerable resources at the disposal of international institutions, had come to exert powerful, as well as consistent, influences on domestic developments. With the collapse of the Cold War order in 1989-1990 and, the thus, the decisive defeat of its "other," liberalism came to occupy-for position of an ideofirst time in its life, either in theory or practice-the logical monopoly.4Just as we cannot escape the irony that an ideology based on competition now enjoys a monopoly, so we cannot understate the impact of this reigning ideology on the postsocialist world. With its weak states, shattered economies, and fragile regimes, this scared new world would seem to be unusually receptive to international guidance.5 Thus, the homogeneity of the socialist past and the homogeneity of the contemporary international political economy pointed in unison to the same prediction: postsocialist regimes would resemble one another in3. For diametrically opposed positions on the influence of the socialist past, contrast, for example, Ken Jowitt, "The Leninist Legacy,"in Ivo Banac, ed., EasternEuropein RevoPolitical and Ecoand the Market: lution (Ithaca, 1992) versus Adam Przeworski, Democracy in nomicReforms EasternEuropeand Latin America(Cambridge, Eng., 1991). For a summary of these arguments and others that propose competing influences on postsocialist developments, that divide along the axes of optimism and pessimism, and that resemble, remarkably, earlier debates concerning the historical transition to capitalism, see Bela Greskovits, "RivalViews of Postcommunist Market Society" (paper presented at Cornell University, 5 October 1998). 4. On socialism as the "other" of capitalism, see Katherine Verdery, WhatWasSocialNext? (Princeton, 1996). ism, and WhatComes Aid 5. Janine Wedel, Collisionand Collusion:TheStrangeCaseof Western toEasternEurope, 1989-1998 (New York, 1998).

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form and functioning. The contentof that resemblance was another issue, however, and depended upon the emphasis placed on the regional past versus the global present and the extent to which either determinant of outcomes was read as facilitating or undermining capitalism and democracy.6Thus, there were those whose scenario for postsocialism was gloomy, with images of disarray,despair, and despots as the "civilizations"of liberalism and state socialism clashed with one another. The picture that emerged in other investigations was a rosy one, however. Here, the argument was either that certain elements of the socialist past were helpful to a liberal outcome, or that the socialist past, while illiberal, had been decisively defeated. In either event, the premise, if not the promise, was that eastern Europe was well positioned to become precisely that: the eastern half of Europe.7 The Reality of Diversity It has now been ten years since state socialism began its formal departure from the European stage. There have been, to be sure, certain commonalities among the postsocialist states. These include their distinctive socioeconomic profile when compared with other countries at the same level of economic development (for example, unusually high rates of literacy, an unusually small agricultural sector, and, even some years into the transition, an unusually egalitarian distribution of income); a contraction in the size of these economies that has been considerable, often of extended duration, and without any historical precedent; 8 continuing political as well as economic difficulties associated with the privatization of large state enterprises; considerable corruption accompanying the establishment of new forms of property and property relations (even, recently, in the Czech Republic, a country widely thought to be "deviant"in this respect); rising crime rates; a political environment that is liberalized in comparison with the state socialist past;9 slow crystallization of party systems; 10substantial public dissatisfaction with the performance of political6. See, especially, Greskovits, "RivalViews." Also see Grzegorz Ekiert, "Patterns of Postcommunist Transitions in Eastern Europe," and Anna Grzymala-Busse, "Political Legacies and Communist Party Adaptation in East-Central Europe" (both papers presented at the Council for European Studies conference, Baltimore, 26-28 February 1998). 7. Bela Greskovits argues, however, that in opting for Europe, eastern Europe has paid a big price: the "Latin-Americanization"these countries were supposed to avoid. Greskovits, "The Unveiled Periphery: Backwardness under Postcommunism" (unpublished manuscript, Cornell University, 1999). East 8. See, for example, Bela Greskovits, ThePoliticalEconomyof Protestand Patience: (Budapest, 1998); Vladimir Popov, Compared Europeanand Latin AmericanTransformations "Explaining the Magnitude of Transformational Recession" (unpublished manuscript,1999).

failed to hold 9. For example, only one country in the region-Turkmenistan-has at least one contested election. See Karen Dawisha, "Post-Communism's Troubled Steps toward Democracy: An Aggregate Analysis of Progress in the 27 New States" (paper, Center for the Study of Post-Communist Societies, University of Maryland, 1997). 10. On the Russian case, see, for example, M. Steven Fish, "The Predicament of RusStudies49, sian Liberalism: Evidence from the December, 1995 PartyElections,"Europe-Asia


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leaders and the newly created political and economic institutions; limitations in, if not the absence in many cases of, the rule of law (including a legal framework for economic activity);"Iand a working class that is weak, disorganized, and dispirited.'2 These rough similarities aside, however, the dominant pattern of postsocialism has been one of variation, not uniformity. Here, I refer not to the obvious differences among these states in their physical and social characteristics, all of which were present at the beginning of the transition.'3 Rather, what is striking is the intraregional contrast in postsocialist economic and political pathways. For example, Slovenia's income per capita today is seventeen times that of Azerbaijan; Poland's gross domestic product (GDP) in 1997 was 11 percent larger than what it had been in 1989 (which is the strongest performance in the region), whereas the Georgian and Bosnian GDPs per capita in 1997 were only slightly more than one-third of their 1989 size; and foreign direct

no. 2 (1997): 199-220; Kathryn Stoner-Weiss, "Democracy in Disarray:Central Governing Capacity in the Provinces and the Weakness of Russian Political Parties" (unpublished manuscript, Princeton University, August 1998). But by some measures, which emphasize stability over time in ideological clustering rather than specific party attachments, Russian party identification does at least seem to be developing. See Joshua A. Tucker and Ted Brader, "Congratulations, It's a Party:The Birth of Mass Political Parties in Russia, 19931996" (paper presented at the annual meeting of the American Political Science Association, Boston, 3-6 September 1998). 11. See, for example, Kathryn Hendley, "Legal Development in Post-Soviet Russia," Affairs13, no. 3 (July-September 1997): 228-51. Post-Soviet 12. On the working class under postsocialism, see, for instance, David Ost, "Labor, Class, and Democracy: Shaping Political Antagonisms in Post-Communist Society,"in BevThe erly Crawford, ed., Markets,States, and Democracy: PoliticalEconomyof Post-Communist (Boulder, Colo., 1995), 177-203; Stephen Crowley, "Barriersto Collective Transformations Politics Action: Steelworkers and Mutual Dependence in the Former Soviet Union," World 46, no. 4 (July 1994): 589-615; Stephen Crowley, Hot Coal, ColdSteel:Russian and Ukrai(Ann Arbor, Transformation nian Workers theEnd of the SovietUnion to thePostcommunist from 1997); Paul T. Christensen, Class/Power/Politics: Labor,Management,and theStateunder Gor(DeKalb, forthcoming, 2000); David Ost and Marc Weinstein, "Unionists bachevand Yeltsin against Unions: Toward Hierarchical Management in Postcommunist Poland," East Euro13, pean Politicsand Societies no. 3 (1999): 1-33. On the more general question of civil society and the constraints on its development, see Martin Krygier, 'Virtuous Circles: Antipodean Reflections on Power, Institutions, and Civil Society," East EuropeanPolitics and Societies11, no. 3 (1997): 36-88; Ekiert, "Patterns of Postcommunist Transitions"; Grzymala-Busse, "PoliticalLegacies"; Karen Dawisha and Bruce Parrott, eds., Conflict,Cleavage, and Changein Central Asia and the Caucasus (Cambridge, Eng., 1997); Karen Dawisha and in Europe(Cambridge, Eng., ofDemocracy East-Central Bruce Parrott, eds., The Consolidation Changesand AuthoritarianReac1997); Karen Dawisha and Bruce Parrott, eds., Democratic Belarus,and Moldova (Cambridge, Eng., 1997); Karen Dawisha and tions in Russia, Ukraine, in Democracy South-EastEurope(CamBruce Parrott, eds., Politics,Power,and the Strugglefor bridge, Eng., 1997); and Dawisha, "Post-Communism's Troubled Steps." 13. For example, to take the regional extremes: the territory of the Russian Federation is 850 times that of Slovenia (though both countries are a product of recent state dissolution); the population of the Russian Federation is 90 times that of Estonia; agriculture occupies 55 percent of the Albanian labor force and only 5 percent of the Slovene labor force; and Poland, Slovenia, and Albania are virtually homogeneous in national terms, while the titular nation of both Bosnia and Kazakhstan is a minority within each of these states.

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investment in Hungary accounts for nearly one-third of all such investment in the region.'4 On the political side (which is less easy to summarize with numbers), we can offer the following examples. Only five of the states in the region existed in their present form during the socialist era (Poland, Hungary, Romania, Bulgaria, and Albania); another three were states during the interwar period, but not during the Cold War era (Lithuania, Latvia, and Estonia); and the remaining nineteen are new formations (though some of these, such as Serbia, have historical claims to independent statehood). Moreover, while some states in the region have secure and uncontested borders, the majority, one can argue, do not.'5 The virtual state argument, so central to debates about the crisis of sub-Saharan Africa, would appear to be relevant to the postsocialist experience as well.'6 Variation is also evident if we shift our attention from issues of the questions of the state-or the spatial contours of political authority-to the organization of political power. Here, the twenty-seven regime-or new regimes in the region represent at this time the full spectrum of political possibilities. On one axis, we can compare regime form, where the range extends from fully democratic to partially democratic to largely authoritarian to fully authoritarian orders. On the other axis, we can look at differences in "regime-ness," or the degree to which there is a single regime in place with full institutional expression, shared identities, and public and elite compliance with the existing ideological contours of the polity. Here, the contrast runs from, say, Hungary, where the regime question is settled, to, for instance, Bosnia, rump Yugoslavia, and Albania, where multiple regimes continue to vie for dominance.'7 The postsocialist experience, therefore, exhibits considerable economic and political diversity. Indeed, once a cohesive area representing an alternative world order, this region has become-and very quickly-a microcosm of the larger world within which it resides. In saying this, however, we must remember that the former Soviet Union and east central Europe are not so "micro." This area represents more than one-fifth of the world's landmass and about one-sixth of its states.Development Report:The State 14. These figures are drawn from the World Bank, World in a ChangingWorld (Oxford, 1997), 218-21, 230-31, 234-37, 242-47; Martin Raiser and of Peter Sanfrey, "StatisticalReview,"Economics Transition6, no. 1 (1998): 258. 15. For an insightful analysis of the Georgian case, where the state and the regime disintegrated and where both are now in the process (albeit unevenly and without any guarantees) of being reconstituted, see Ghia Nodia, "Putting the State Back Together in PostSoviet Georgia" (paper presented at the conference, "Beyond State Crisis: The Quest for the Efficacious State in Africa and Eurasia,"University of Wisconsin, 11-14 March 1999). 16. Virtual states can also mean virtual economies. See David Woodruff, "Barter of the Bankrupt: The Politics of Demonetization in Russia's Federal State," in Michael BuraEthnographies Changein thePostsoof woy and Katherine Verdery, eds., UncertainTransition: cialist World(Lanham, Md., 1999), 83-124. 17. On the Bosnian case, see, especially, Valere Gagnon, "Bosnian Federalism and the Institutionalization of Ethnic Division" (paper presented at the Workshop on Nationalism, Federalism, and Secession, Cornell University, 2 May 1998). For a different perspective, see Robert M. Hayden, "The State as Legal Fiction," East European ConstitutionalReview 7, no. 4 (Fall 1998): 45-50.

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The purpose of this article is to explore in systematic fashion the variegated landscape of postsocialism. I will do so by documenting economic and political variations within the region that once comprised the Soviet Union and eastern Europe and by offering some tentative explanations for these variations. 18 Three postsocialist pathways emerge from this analysis. The first is one where democracy and capitalism coexist in relative and, indeed, mutually supportive harmony, and where political stability and sustained economic growth (after an initial and sharp downturn) are the result. This is the regional exception. The second, also exceptional, is where authoritarian politics coexists with semisocialist economics. Again, the result is relatively stable politics and relatively reasonable economic performance (though less impressive, for the most part, than the performance of the first group). The final cluster, which comprises the majority of the states in the area, represents a middle ground, poised between democracy and dictatorship and between socialist and capitalist economics. Here is where politics tends to be the most unstable and where economic performance is the poorest. If Poland best typifies the first tendency and Uzbekistan the second, Russia represents the third. What explains whether countries have followed the first, the second, or the third path? Here, I suggest that the key factor is the socialist past and whether that past produced a rough consensus about the political and economic successor regimes to state socialism. Where it did, the result was, in the terminology of economists, a relatively stable equilibrium. Where contestation over regime form was the prevailing legacy of state socialism, reflecting diverse preferences and a relatively equal distribution of economic and political resources among preference "camps," political instability and unusually poor economic performance are the pronounced tendencies. Simply put, then, for these cases neither an economic nor a political equilibrium has materialized. The Implications of Diversity In the process of developing this typology of postsocialism, I will necessarily touch on matters of broader theoretical, as well as geographical,18. The comparisons that follow, however, are limited in three ways. First, and most obviously, the comparative thrust of this article means that some important details defining individual cases are glanced over in the search for generalizations. Second, as already noted, this analysis will not deal with Mongolia, China, or Vietnam. Finally, my focus is on the domestic and not the international political economy of postsocialism. For insightful comparisons that incorporate more of these cases with respect to economics, see Popov, "Explaining the Magnitude." For an illuminating study of the consequences of domestic politics, especially nationalism, for the security and foreign economic policies of the successor states of the former Soviet Union (and eastern Europe after the breakup of the Habsburg empire), see Rawi Abdelal, "Economic Nationalism after Empire: A Comparative Perspective on Nation, Economy and Security of Post-Soviet Eurasia" (Ph.D. diss., Cornell University, 1999).

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import. One is the typicality of postsocialism when compared with other regions of the world undergoing what appears to be similar processes of economic reform and democratization. Here the question is whether postsocialism, because of its past and because of its remarkable agenda of transformation, exhibits distinctive characteristics. Another issue goes to the heart of current (and past) paradigmatic disputes in the social sciences. Put succinctly: is a given phenomenon best analyzed as a product of immediate or more distal influences? Just as the answer to this question divides, say, some game theorists from most historical institutionalists, it also taps into competing understandings of our is, the transition from dictatorship to despecific concerns here-that mocracy and from socialism to capitalism.19 A third issue is how democratization relates to economic reform. While many have argued that the two are in tension with each other, others have suggested either that they are mutually supportive or that they can be so, given certain political-economic conditions.20 The final issue involves matters of interpretation. Should we use democratization or revolution as our theoretical touchstone for analyzing recent developments in the postsocialist world, and, if we opt for the former (as has been the pronounced tendency), should we rely on those theories that deal with "quick" democratization or on older theories that treat democratic governance as the product of a long, circuitous, and often accidental proceSS?21 Should we conceptualize postsocialist countries as following, if not being locked into, different and increasingly divergent economic and political trajectories, or as following a roughly similar traeven stuck-at different points jectory, with countries located-perhaps along the way?22 The answers to these questions are notjust matters of intellectual taste; they also affect in significant ways our very reading of the19. For example, contrast Guillermo O'Donnell, Philippe C. Schmitter, and Lauvols. Perspectives, from AuthoritarianRule: Comparative rence Whitehead, eds., Transitions Political Crisesand 1-4 (Baltimore, 1986) with Grzegorz Ekiert, The State against Society: Their Aftermathin East-CentralEurope (Princeton, 1996), or contrast Jeffrey Sachs and Michael Lipton, "Creating a Market in Eastern Europe: The Case of Poland," Brookings Paperson EconomicActivity 20, no. 1 (1990): 75-147, with Kazimierz Poznanski, Poland's ProtractedTransition:Institutional Change and EconomicGrowth,1970-1994 (Cambridge, Eng., 1996). 20. See, for example, Juan Linz and Alfred Stepan, Problems DemocraticTransition of Europe (Baltimore, SouthernEurope, South America, and Post-Communist and Consolidation: 1996); Valerie Bunce, "Sequencing Political and Economic Reforms," in John Hardt and Richard Kaufman, eds., East-CentralEuropeanEconomiesin Transition (Washington, D.C., 1994); M. Steven Fish, "The Determinants of Economic Reform in the Postcommunist Politicsand Societies no. 2 (1998): 31-78; Kurt Weyland, "Swallow12, World,"East European ing the Bitter Pill: Sources of Popular Support for Neoliberal Reform in Latin America," PoliticalStudies31, no. 5 (October 1998): 539- 68. Comparative 21. On the question of democratization versus revolution, see Valerie Bunce, "The First Postsocialist Decade," East EuropeanPoliticsand Societies13, no. 3 (1999). 22. For two quite stimulating discussions of these various interpretations, see Peter 10, Perspectives no. 2 Murrell, "HowFar Has the Transition Progressed?"JournalofEconomic (1996): 25-44; Vesna Pusic, "Mediteranskimodel na zalasku autoritarnih drzava,"Erasmus 29 (January 1997): 2-18.


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postsocialist experience-and, socialist experience.23

for that matter, the socialist and even pre-

Economic Reforms and Economic Performance Let us begin our survey of postsocialism with the economic side of the equation. In tables 1-3, I have presented some economic data that provide a comparative overview of postsocialist developments. The picture that emerges is, of course, one of remarkable diversity-in such areas as level of development, the size of the agricultural labor force, economic growth, income distribution, and implementation of economic reforms (or the size of the private sector in the economy and a combined measure that includes this, along with liberalization of markets, foreign trade, and domestic prices). A closer look at these tables (supplemented by some other data) reveals some important patterns. First, there is the disastrous economic performance of postsocialism, particularly in the early years. For example, the region's economies declined by an average of 7.6 percent from 19901992; the average economic "growth"of the region from 1989-1998 was -1.0 percent (a figure that would be even lower if we were able to include the Bosnian and rump Yugoslav economies and, most recently, the regional, as well as domestic impact of the current Russian economic criSiS); 24 it was only in 1997 that the postsocialist region as a whole first registered any economic growth (a whopping 1.4 percent); and only two countries in the region-Poland and Slovenia-have managed to register an actual growth in real GDP from 1989 to (projected) 1998.25 These trends are all the more striking once we place them in a larger context. Here, it is useful to note the following. First, the economic23. For example, in the many debates about Russia's future, one source of disagreement is whether Russia is outside the European experience and thereby likely to carve out a distinctive niche, or whether Russia, located on the fringes of Europe, but in Europe nonetheless, will end up slowly, and with detours, but surely as a typically European state. Eyes:Fromthe BronzeHorsemanto the See, for instance, Martin Malia, Russia under Western Lenin Mausoleum(Cambridge, Mass., 1999). Similar arguments have also been central to debates about the Balkans. See Pusic, "Mediteranski model," and Maria Todorova, "The Balkans: From Discovery to Invention," Slavic Review 53, no. 2 (Summer 1994): 453-82. 24. See "IMFLowers Growth Forecasts for Transition Economies," Transition9, no. 6 (1998): 29. On the Russian crisis, see Vladimir Popov, "Pochemu rukhnul rubl'?" NG23, Politekonomiia no. 1 (December 1999): 3; Steven Solnick, "Russiaon the Edge,"East EuReview7, no. 4 (Fall 1998): 70-72; David Woodruff, "WhyMarket LibropeanConstitutional Review7, eralism and the Ruble's Value Are Sinking Together," EastEuropeanConstitutional no. 4 (Fall 1998): 73-76; Sergei Kiriyenko, "Sergei Kiriyenko on the Russian Economic Crisis," East European ConstitutionalReview 8, nos. 1/2 (Winter-Spring 1999): 56-60; Archie Brown, "The Russian Crisis:Beginning of the End or End of the Beginning?" PostSovietAffairs15, no. 1 (January-March 1999): 56-73. 25. Just as telling are the disturbing data on poverty. While in Estonia, 8.4 percent of the population falls below the poverty line, the figures for Russia, Ukraine, the KyrgyzRepublic, Hungary, and Poland are, respectively, 31 percent, 32 percent, 40 percent, 25 per1998-1999 (Oxford, forDevelopment, cent, and 23 percent. See the World Bank, Knowledge 1999), 190-97.

764 Table 1 Economic Development and Economic GrowthGNP per capita, 1995 Albania Armenia Azerbaijan Belarus Bosnia Bulgaria Croatia Czech Republic Estonia Georgia Hungary Kazakhstan Kyrgyzstan Latvia Lithuania Macedonia Moldova Poland Romania Russia Slovakia Slovenia Tajikistan Turkmenistan Ukraine Uzbekistan Average 670 730 480 2070 765 1830 3250 3870 2860 440 4120 1330 700 2270 1900 860 920 2790 1480 2240 2950 8200 340 920 1630 970 2111 GDP Percent Annual of Labor Rate of Index, Force GDP Growth 1997 in Agri(1990(1989 culture 1997) 100) 55 17 31 20 na 14 15 11 14 26 15 22 32 16 18 22 33 27 24 14 12 5 na na 20 34 21.6 -2.1 -8.1 -10.1 -4.0 na -5.5 -3.4 -0.4 -2.8 -10.6 -1.1 -6.3 -5.8 -5.8 -8.9 -6.9 -11.4 1.6 -2.2 -7.7 -0.3 0 -10.3 -9.8 -11.1 -1.7 -5.3 79.1 41.1 40.5 70.8 na 62.8 73.3 95.8 77.9 34.3 90.4 58.1 58.7 56.8 42.8 55.3 35.1 111.8 82.4 52.2 95.6 99.3 40.0 42.6 38.3 86.7 64.8

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Growth in Real GDP, 1998 12 6 7 2 na 4.5 5 2 5 10 4.3 2.5 5.9 5 5.5 5 1 5 -3 1.5 3 4 4.4 13.5 0 2.0 4.45

Proj. GDP, 1998 (1989 100) 89 41 43 72 na 66 76 99 82 38 94 59 68 58 45 58 34 117 82 58 98 103 39 47 37 89 67.6

Sources: World Bank, World The Development Report: Statein a ChangingWorld (Oxford, 1997), 214-15, 220-21; Grzegorz Kolodko, "Equity Issues in Policy-Making in Transition Economies" (paper presented at the conference on economic policy and equity, 8-9June 1998), 40; Martin Raiser and Peter Sanfrey, "StatisticalReview,"Economicsof Transition6, no. 1 (1998): 248, 251. The figures for Bosnia, Tajikistan, and Turkmenistan are very rough estimates and may not be comparable to those for the other countries in this table.

decline of the region in the first five years or so of postsocialism has been greater than that registered by western economies during the Great Depression.26 Second, if we take comparable years and comparable measures (or average annual GDP growth, 1990-1995, as measured by the World Bank), the economic growth rates for southern Europe (Portugal, Spain,26. See Greskovits, PoliticalEconomy.


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Table 2 Economic Reform and Income DistributionPrivate Sector Share of GDP, 1995 Albania Armenia Azerbaijan Belarus Bulgaria Croatia Czech Republic Estonia Georgia Hungary Kazakhstan Kyrgyzstan Latvia Lithuania Macedonia Moldova Poland Romania Russia Slovakia Slovenia Tajikistan Turkmenistan Ukraine Uzbekistan Average 60 45 15 45 45 70 65 65 30 60 25 40 60 55 40 30 60 40 55 60 45 15 15 35 30 42.6 Composite Economic Reform Score 6.7 5.2 3.5 3.0 4.9 6.7 8.2 7.7 4.4 7.5 4.1 6.1 7.0 7.1 5.9 4.9 7.4 5.5 6.4 7.3 6.2 2.7 1.9 4.7 4.2 5.5 Gini Coefficient, 1993-1995 (1987-1989) na na na 28 (23) 34 (23) na 27 (19) 35 (23) na 23 (21) 33 (26) 55 (26) 31 (23) 37 (23) na 36 (24) 28 (26) 29 (23) 48 (24) 19 (20) 25 (22) na 36 (26) 47 (23) 33 (28) 33.5

Sources: Kolodko, "EquityIssues in Policy-Making," 18; M. Steven Fish, "The Determinants of Economic Reform in the Postcommunist World,"EastEuropean Politics and Societies12, no. 1 (Winter 1998): 34; Nicholas Stern, "The Transition in Eastern Europe and the FSU: Some Strategic Lessons from the Experiences of 25 Countries in Six Years" (working paper, European Bank of Reconstruction and Development, 18 April 1997), 19.

and Greece) and Latin America-two other regions undergoing democratization and economic reforms-were approximately three times as high as those registered for the postsocialist countries.27 At the same time, the variance in postsocialist economic performance -or the contrast between 2.4 percent for Poland and -26.9 percent for Georgia-is far27. See the World Bank, World Development Report,234-35. More recent data suggest, for example, that the Russian economy declined by 5 percent in 1998, whereas the Polish economy grew by approximately the same amount. See the World Bank, GlobalEconomic Perspectives theDevelopingCountries: and BeyondFinancial Crisis (Oxford, 1999), 194.

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Slavic Review Table 3 Annual Growth of Real Gross Domestic ProductEast Central Europe and the Baltic States -6.8 -10.6 -4.2 0.6 3.4 5.3 4.2 3.2 3.5 Former Soviet Union (minus the Baltic States) -3.7 -5.8 -14.3 -9.3 -13.6 -4.9 -4.6 .4 1.6

Entire Region 1990 1991 1992 1993 1994 1995 1996 1997 1998 -4.9 -7.7 -10.4 -5.5 -7.1 -1.0 -1.2 1.4 2.3

Source: Raiser and Sanfrey, "StatisticalReview,"251.

the spread between 6.1 percent greater than that for Latin America-or for Chile and -5.4 percent for Nicaragua.28 What I am suggesting, therefore, is that the new regimes in the postsocialist world are distinctive with respect to both their economic diversity and the overall severity of their recent economic downturns. This is not the only way in which postsocialism stands out, however. These countries of which testify, as do the are also unusual in three other respects-all costs of economic transformation, to the powerful impact of the socialist past. One is that the agrarian sector in these countries is very small, given the norm for all countries at a matching level of economic development. Another is that income distribution is (still) unusually equal, even when we control for level of economic development.29 Finally, there is the problem, unusually pronounced in the postsocialist context, of states that fail to provide a stable and predictable business environment. On the basis of a recent survey of local entrepreneurs in sixty-nine countries, the World Bank concluded that the Commonwealth of Independent States in parReport, Development 28. These figures were calculated from the World Bank, World 214-15. For a discussion of the difficulties of estimating economic performance in the postsocialist context, see Kasper Bartholdy, "Old and New Problems in the Estimation of of National Accounts in Transitional Economies," Economics Transition5, no. 1 (1997): 13146. Also refer to Greskovits, "Unveiled Periphery," for a discussion of the instability of World Bank estimates of economic performance in the postsocialist world, especially with respect to what has become an ever-downward estimation of economic performance during the last years of socialism. Report,222-23. For example, while the avDevelopment 29. See the World Bank, World erage Gini coefficient for all those countries outside the postsocialist region that fall in the lower middle income category is 45.2, the postsocialist countries that are in that category, such as Moldova, Bulgaria, Kazakhstan, Lithuania, Belarus, Poland, and Slovakia, register Gini coefficients of 34.4, 30.8, 32.7, 33.6, 21.6, 27.2, and 19.5, respectively. The contrast is even more glaring for the upper middle income countries of the Czech Republic, Hungary, and Slovenia. While their Gini coefficients are, respectively, 26.6, 27.0, and 28. 2, the remaining countries in this category average a Gini coefficient of 55.4.


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ticular stood out among the world's regions -of east central Europe, subSaharan Africa, Latin America and the Caribbean, the Middle East and North Africa, south and southeast Asia, and the countries of the Organization for Economic Cooperation and Development-in its failure to provide law and order, security of property rights, and predictability of both rule application and policy implementation (given, in particular, corruption, an unreliable judiciary, and unstable governments) .30 Tables 1-3 also illustrate several other characteristics of postsocialist variation. One is that two distinct "regions"seem to exist. Thus, the economic profile of the former Soviet Union contrasts sharply with that of east central Europe-whether the focus is on adoption of economic reforms or on measures of economic performance. The Baltic states are situated between these two areas, given their relatively high economic reform scores, but their poor economic performance. Put simply, then, political leaders in the Soviet successor regimes have been less likely than their counterparts in east central Europe to introduce economic reforms, and the economies in the former Soviet Union have, on the whole, contracted far more sharply than the postsocialist economies to the west. The other and related consideration is temporal. Although the recessionary effects of the economic transformation were undeniably large in the early years of postsocialism, these effects seem generally to have been short-lived.3' Thus, for example, beginning in 1993, the east central European economies, when taken as a whole, began to grow, and they have continued to do so in subsequent years. Economic performance in the former Soviet Union, however, although similar in its overall pattern, varies in its details. There, the economic downturn appeared later, and it has lasted a good deal longer. What seems to distinguish east central Europe (including the Baltic states) from the Soviet successor states, therefore, are three related factors: whether there was an economic reform, how long the economic slide lasted, and whenthe economy began to recover.3230. World Bank, World Development Report,5, 37. More specifically, the Commonwealth of Independent States led in unpredictability of changes in policies; tied with the Middle East and sub-Saharan Africa in unstable government; tied with Latin America with respect to insecurity of property; and led all the other regions in the unreliability of the judiciary and levels of corruption. One example provided of the "state problem" in the former Soviet Union is Ukraine, where both decision-making and policy implementation are sabotaged by a political structure that is unusually complex and that allows for remarkable overlap in administrative jurisdictions (see the chart on 85). 31. There has also been a dramatic decline in inflation. In 1992, the average rate of inflation in east central Europe and the Baltic states was 199.2 percent and it was 13,525 percent in the former Soviet Union (minus the Baltic states); the comparable figures for 1997 are 10 and 13.1, respectively. See Raiser and Sanfrey, "StatisticalReview,"252. To put these figures in another perspective, however, it should be noted that the average rate of inflation in Russia from 1991-1997 was 340 percent. See the World Bank, Global Economic 194. Perspectives, 32. For evidence on these points, also see Grzegorz Kolodko, "EquityIssues in Policymaking in Transition Economies" (paper presented at the conference on "Economic Policy and Equity,"Washington, D.C., 8-9 June 1998). Also see Giovanni Andrea Cornia and Vladimir Popov, "Transition and Long-Term Economic Growth: Conventional versus Non-Conventional Determinants," MOST 1 (1998): 7-32.

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Tables 1-3 also allow us to address in a limited way a question that has received considerable attention: the typicality of the Russian experience.33 Usually this question has been framed in terms of comparisons among Russia and, say, the west, the Weimar Republic, or the new democracies of southern Europe and Latin America. However, another way to think about Russia in comparative terms-and one that allows for more controlled comparisons-is to view Russia through the lenses of the postcommunist experience. When doing so, the Russian case looks familiar in certain respects and unusual in others. Thus, for example, the Russian level of economic development is slightly above the regional average,34 as is the size of its urban sector; its economic reform score is slightly above average for the region as a whole, as is the private sector share of the economy; and its rate of economic growth is somewhat below the regional average for 1990-1997 (or -7.7 versus -5.3). On the other hand, Russia does seem to be exceptional-at least by regional economic standards-in certain ways.35 For example, the distribution of income in Russia, while typical of the region at the beginning of the transformation, is now unusually unequal (though more typical of "intermediate reformers" in the region and of all countries outside the re36 social trends gion at roughly the same level of economic development); in Russia, such as male life expectancy, exhibit alarming trends;37 and Russia is a rare example within the region of economic reforms introduced midstream.3833. For a helpful analysis of the Russian economy that brings in a number of comparative cases, see Paul Gregory, "Has Russia's Transition Really Been Such a Failure?" Problems Postcommunism no. 6 (1998): 58- 64. Also quite helpful in analyzing the Rusof 44, sian case is a review essay by Richard Ericson, "Economics and the Russian Transition," SlavicReview57, no. 3 (Fall 1998): 609-25. 34. Of course, the recent downturn in the Russian economy suggests that some care is needed when making these generalizations. Several other countries have also shown significant problems in the past few years-most obviously, Albania and Bulgaria. 35. For instance, it has been argued that the Russian experience is unusual from the perspective of theories of democratization. See Richard Anderson, Jr., "The Russian Anomaly and the Theory of Democracy" (paper presented at the annual meeting of the American Political Science Association, Boston, 3-6 September 1998). For a somewhat different perspective, see Philip Roeder, "The Triumph of Authoritarianism in Post-Soviet Regimes" (paper presented at the annual meeting of the American Political Science Association, Boston, 3-6 September 1998). 36. I have taken the phrase "intermediate reformers" from Joel Hellman, "Winners Take All: The Politics of Partial Reform in Postcommunist Transitions," World Politics 50, no. 2 (January 1998): 203-34. 37. About one-half of the countries in the postsocialist region have registered a small decline in male life expectancy, but the Russian decline is, even by that sad standard, unusually large. See Murrell, "How Far Has the Transition Progressed?" table 3, p. 38, and Timothy Heleniak, "Dramatic Population Trends in Countries of the FSU," Transition 6 (1996): 1-5. To place the Russian figures in a comparative perspective, Russian males live about as long on average as their counterparts in Bolivia-a country having about onethird the gross domestic product per capita of Russia's. See the World Bank, KnowledgeforDevelopment, 190.

38. Russia incurred costs, of course, from introducing economic reform later in the transitional process. In particular, because dominant interests in the socialist era had the

The Political Economy of Postsocialism Explaining Economic Policies and Economic Outcomes

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We can now move from description to explanation. Here, two obvious issues present themselves. What factors account for variations in economic reform and for variations in economic performance? We can begin to answer this first question by noting a modest correlation between level of economic development and economic reform (see table 4). If we expand the range of explanatory factors and deal with the question more systematically, however, we find, as Steven Fish has suggested, that the most robust explanation appears to be the outcome of the first competitive election.39 Put simply, economic reform is far more likely when the noncommunist opposition forces triumph and far less likely when the excommunists succeed in maintaining political power (albeit in new political circumstances). This is a point that will be followed up later in this article. The other issue-or the determinants of economic performance in the postsocialist contextelicits more divided opinion. On the one hand, there is a widespread assumption, which lies at the core of the World Bank's and the International Monetary Fund's mission, that policies matter. Indeed, as table 4 suggested, there is a positive correlation, albeit imperfect, between economic reform and economic performance. This leads in turn to an obvious question: with what kinds of payoffs? The verdict in fact is not yet in, for instance, with respect to shock therapy- or what has been succinctly characterized as "liberalize as much as you can, privatize as fast as you can, and be tough in fiscal and monemore evolutionary approaches to economic retary matters" -versus gime transition.40 In particular, the actual cases of shock therapy are veryopportunity to recast their economic and political portfolios in anticipation of reform, their interests shaped the course of the reform while contributing in the process to both unusually high levels of corruption and an unusually prolonged period of economic recession. Their interests also stalled the reform process. The winners, in the short-term, therefore, did not sustain the reform. Instead, they used their privileged positions to maintain a regime of rent-seeking. See, especially, Hellman, "WinnersTake All."Also see Hilary Appel, "Voucher Privatisation in Russia: Structural Consequences and Mass Response in the Second Period of Reform," Europe-AsiaStudies49, no. 8 (1997): 1433-49. For a more historical account of asymmetric resources and asymmetric gains from the Russian economic reform, see Georgi Derlugjian, "Russia'sImperial Bankruptcy: The Process and Its Medium-term Prospects," forthcoming in Derlugjian and Scott Greer, eds., The ChangingGeopolitics of the WorldSystem (Westport, 1999).

39. Fish, "Determinants of Economic Reform." For a similar observation, absent the statistical support, see Bunce, "Sequencing Political and Economic Reforms."This conclusion, however, must be read as a matter of tendencies, not laws (which is invariably the case for social inquiry). Here, one must note, for example, some difficulties in terms of measuring economic reforms (for instance, with respect to institutional development); problems of coding certain types of opposition parties; and recent instances of backtracking from economic reforms in conditions of either political instability or de-democratization. 40. The description of shock therapy is taken from "Interview with Grzegorz Kolodko: Economic Neoliberalism Became Almost Irrelevant," Transition9, no. 3 (1998): 2. This debate has far too many participants, papers, and books to cite. For a sampling, see Anders Aslund, Peter Boone, and Simon Johnson, "How to Stabilize: Lessons from PostCommunist Countries," Brookings Papers on Economic Activity 1 (1996): 217-313; andJeffrey

770 Table 4 Economic Reform and Economic PerformanceConsiderable to Moderate Albania Croatia Czech Republic Estonia Hungary Kyrgyzstan Latvia Lithuania Macedonia Poland Russia Slovakia Slovenia Average reform score Average GDP per capita Average growthSources: See tables 1 and 2.

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Limited to None Armenia Azerbaijan Belarus Bulgaria Georgia Kazakhstan Moldova Romania Tajikistan Turkmenistan Ukraine Uzbekistan

6.87 $2,542 -3.4

3.7 $1,189 -7.6

few;41 some strong economic performers feature at most therapy, but little

shock; and some of the shock therapy cases, in the face of political turmoil, evidence recent and serious economic difficulties. Moreover, the strongest economic performance in the region is registered by countries with either considerable or minimal economic reform, with Poland exemplifying the former and Belarus and Uzbekistan the latter. Such countries as Russia, Ukraine, Bulgaria, and Moldova fall in between and exhibit the poorest economic performance (leaving out those cases, such as Georgia and Bosnia, that are war-ravaged economies).42 At the same time,Economy(Cambridge, Mass., 1993). For those who question Sachs, Poland'sJumpto a Market shock therapy, see Gerard Roland, "The Role of Political Constraints in Transition of Economies," Economics Transition2 (1994): 27- 42; Grzegorz Kolodko and D. Mario Nuti, "The Polish Alternative: Old Myths, Hard Facts, and New Strategies in the Successful Transformation of the Political Economy" (paper, UNU/ WIDER project/ UNU World InTransistitute for Development Economics, Helsinki, 1997); Poznanski, Poland's Protracted tion;Peter Murrell, "ConservativePolitical Philosophy and the Strategy of Economic Transition," East European Politics and Societies 6, no. 1 (1992): 3-16.

41. This point is obscured in many measures of economic reform, because such measures are snapshots of outcomes and, as a result, fail to recognize such important considerations as: 1) gain scores (Hungary, for instance, began postsocialism with substantial reforms already in place), and 2) the many policy roads to an outcome of strong reform scores. 42. See, especially, Hellman, "WinnersTake All."Also seeJoel Hellman, "Competitive Advantage: Political Competition and Economic Reform in Postcommunist Transitions" (unpublished manuscript, 1997).


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with respect to Poland, the regional leader in economic performance and the exemplar of shock therapy, one can argue that what was crucial for Polish economic growth was that the shock-which, it has been suggested, was more costly than it had to be and which would have been disastrous if continued-was followed by therapy, with the latter understood as a matter of both correcting the faults of Leszek Balcerowicz's reforms and building sound economic institutions sensitive to certain aspects of the socialist past.43 To all these complications can be added several more. One is that the best predictor of economic performance in the postsocialist world may very well be the growth of the "denovo" private sector-a development that seems to be encouraged by a variety of economic policy levers.44 The other is that quick privatization through vouchers (as was carried out in Russia and the Czech Republic) may not be as desirable as sometimes presumed. As Giovanni Cornia and Vladimir Popov have suggested: "quick privatization is generally inferior to a more cautious approach, both in terms of raising economic efficiency and of containing the surge in inequality and poverty. Fast give-away privatization is now perceived as less efficient as it provides little revenue and can create negative incentives and governance problems, which can be very costly over the long-term."45 The most thought-provoking position in the debate over the determinants of economic performance in the postsocialist world, however, has been staked out by Vladimir Popov.46 Rather than proceeding from the familiar and rarely questioned premise that policies matter (with the debate then centering on more and less desirable policy options), Popov has posed a more fundamental question. What happens when we try to explain economic performance by assessing the effects of assets and liabilities available at the beginning of the transformation? What he discovers in a regression analysis that incorporates the entire postsocialist region, plus China and Vietnam, is that two variables are crucial: 1) initial conditions (or distortions in industrial structure and trade patterns), and 2) the collapse of institutions during the transition (or, for example, a sharp decline in the revenue base of the government). It is significant that these two factors account for a substantial proportion of the variance, and economic reform adds little in the way of explanatory power.43. This, at least, is the argument of Grzegorz Kolodko (who succeeded Leszek Balcerowicz as Finance Minister) and D. Mario Nuti. See their "The Polish Alternative." 44. See "Interview with Grzegorz Kolodko"; Cornia and Popov, "Transition and Long-Term Growth." 45. Cornia and Popov, "Transition and Long-Term Growth," 28. Also see Appel, "Voucher Privatisation";Nevenka Cuckovic, "Nesluzbeno gosodarstvo i proces privatizacije,"Financijskapraksa21, nos. 1-2 (1997): 259-76; and Michael McFaul, "When Capitalism and Democracy Collide in Transition: Russia's Weak State as an Impediment to Democratic Consolidation," Working Paper Series, no. 1 (paper presented at Davis Center for Russian Studies, Program on New Approaches to Russian Security, Harvard University, 1998). 46. Popov, "Explaining the Magnitude." Also see Popov, "Krakhiugo-vostochnoi Azii 2 po-svoemu unikalen," NG-Politekonornziia(December 1998); Popov, "Pochemu rukhnul rubl"';and Cornia and Popov, "Transition and Long-Term Growth."

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Simply stated, then, the socialist past, not proximate policy choices, emerges as critical (though inflation rates, and, hence, macroeconomic stabilization policies, are helpful). This is an argument that leaves us with a seeming puzzle. While economic reform seems to be shaped by proximate politics, economic performance seems to be heavily influenced by distal economics. As I will argue below, however, this seeming tension between the legacies of the socialist past and contingent circumstances is more apparent than real.47 Political Diversity Measuring the political variations among postsocialist regimes is far more difficult than providing measures of economic reform and performance. This is not just because power-the metric of politics-lacks the quantitative simplicity of money (though money is not, as already noted, without some serious estimation problems). Other complications also play a role. One problem is the lack of consensus regarding the meaning or measurement of the three most important aspects of politics that speak directly to the nature and quality of governance in the postsocialist world: political stability,state strength, and regime type (or the continuum ranging from democracy to dictatorship). Another is that each of these political indicators is multidimensional; these dimensions do not necessarily correlate; and neither, for that matter, do the three indicators. For instance, Kazakhstan is stable, but not very democratic; Bulgaria is unstable, but far more democratic; Estonia looks quite democratic with respect to the provision of political liberties and civil rights, but its exclusionary policies regarding voting rights for minority populations make it less democratic; and Russia has a fully inclusive electorate and free and fair elections, although the weakness of its state and the continuing war of laws between the center and the regions mean that elected officials there, particularly at the center, lack the capacity to translate public preferences into public policy and, therefore, to meet the democratic standard of genuine accountability. In addition, however country "scores"are measured, there is some flux over time in these indicators. Thus, if we were to focus on the first years of the transformation, Albania, Armenia, and the Kyrgyz Republic might emerge with an impressive democratic profile. Subsequent developments in these three countries, however, suggest that such a conclusion would have been premature -or at least, timebound. Perhaps the best way to begin our political assessment is to define some terms. Political stability, in my view, is the capacity of the regime (or the organization of political power) and the state (or a political entity defined by space and granted a monopoly in the exercise of coercion) to provide political order. It implies such characteristics as relatively constant rules of the political game that are recognized by all and inform the behavior of all; the existence of a hegemonic regime (as opposed to com47. One study that recognizes the duality of the socialist past in this respect is Crowley, Hot Coal, ColdSteel.


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petitive regimes); governments that function effectively; and physical boundaries that are clearly defined and uncontested. Instability, therefore, is indicated by high levels of social disorder; secessionist pressures; contestation over the form of the regime; high rates of governmental turnover; and governments that cannot decide, or, if deciding, cannot implement. Put simply, then, instability testifies to the failure of a regime or a state to be hegemonic-or without ideological or spatial competitorsand to function effectively. The other aspect of politics that is of interest is regime type, or the contrast between democracy and dictatorship and the many variations situated between these two poles. There are, of course, any number of definitions of democracy.48Some focus on substance and others on procedures; some are detailed and others parsimonious; and some set a high standard that relatively few countries can meet, whereas others are less discriminating. For our purposes, we can follow the lead of Adam Przeworski by defining democracy as that system of governance that combines freedom, uncertain results, and certain procedures (a definition which,by the way, works for capitalism as well).49 This implies three clusters of

conditions. One is freedom, or whether members of the political community have the full array of civil liberties and political rights.50The second is whether political results are in fact uncertain; that is, whether

publics are fully enfranchised, whether politics is competitive and competition institutionalized through parties that offer ideological choice, whether elections are regularly held and are free and fair, whether governing mandates are provisional, and, as a result of all these factors, whether politicians are fully accountable to the electorate. The final category, procedural certainty, refers to rule of law, the control of electedofficials over the bureaucracy, and a legal and administrative order that is hegemonic and transparent, commands compliance, and is relatively consistent in its operation across time, circumstances, and space.5' Beneath these three aspects of democracy, therefore, are complex clusters of preconditions. Moreover, implied in this elaboration is a hierarchy of traits that distinguish among dictatorships (where none of the three conditions are met); incomplete democracies (or those countries that meet, say, the first condition, but that fall short on the remaining two); and political orders that are full-scale democracies, or what has been termed, variously, sustainable or consolidated democratic orders (where all three sets of conditions are present).48. For a sampling, see Robert Dahl, Polyarchy:Participation and Opposition (New Haven, 1971); Przeworski, Democracy and the Market;Philippe C. Schmitter and Terry Lynn Karl, "WhatDemocracy Is.. . . and Is Not,"Journal of Democracy no. 3 (Summer 1991): 75-88. 2, 49. See Przeworski, Democracy and the Market; Dahl, Polyarchy; and Valerie Bunce, "De-

mocracy, Stalinism, and the Management of Uncertainty," in Gyorgy Szoboszlai, ed., TheTransition to Democracy in Hungary (Budapest, 1991).

50. As defined in detail by Freedom House. See "The Comparative Survey of Freedom," Freedom Review28, no. 1 (1997). 51. On the importance of a capable state for the functioning of democracy, see Stephen Holmes, "WhenLess State Means Less Freedom," Transition5, no. 1 (1996): 5-15.

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We can now apply these definitions of stability and democracy to the postsocialist world. With respect to stability, we can assign these countries (with a great deal of trepidation, I must admit) to three groups: 1) highly stable countries, where both the regime and the state are consolidated and where government is reasonably effective (Poland, Hungary, the Czech Republic, Slovenia, Lithuania, Estonia, Latvia, and, arguably, Kazakhstan, Turkmenistan, and Belarus); 2) less stable countries, where regimes are not fully consolidated (often combining democratic and authoritarian elements), where state boundaries are in some dispute, or where governments lack the political (including constitutional) support, the ideological consensus, and the legal-administrative capacity to govern effectively (Bulgaria, Romania, Slovakia, Croatia, Macedonia, rump Yugoslavia, the KyrgyzRepublic, Russia, Ukraine, Moldova, and Azerbaijan); and 3) unstable countries, where the regime or the state are -or at least have been-in serious question (Albania, Bosnia, Armenia, Georgia, and Tajikistan). We can certainly debate whether some of these country assignments are correct-for example, whether Russia, rump Yugoslavia, or Azerbaijan should be downgraded, and whether Georgia should, on the basis of recent developments, be upgraded. Whatever our different readings of these cases, however, one point of consensus would nonetheless emerge. The great majority of the regimes and states in the postsocialist region are not stable. This is hardly a surprising situation, given that, at most, only ten years have passed since the end of Communist Party hegemony and given, as well, the revolutionary character of postsocialism. By the latter, I refer to the fact that all the building blocks of politics, economics, and society- or, put bluntly, state, nation, class, economic regime, political regime, and the relationship between the state and the international system-are being reformulated. What is more, this process is happening simultaneously. This is hardly a climate that would seem to be conducive to stable politics. If we assess democratization in the region, we are on somewhat (but only somewhat) firmer ground. In table 5, I have summarized recent rankings by Freedom House with respect to the provision of civil liberties and political rights. What these data suggest is that the postsocialist countries vary from liberal to decidedly illiberal, but that one-third of the region (or Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovenia) comes reasonably close to the standards of well-established democratic orders. What the Freedom House measures also suggest is that the Latin American countries (including and the Caribbean) are freer than the countries of the Central Anmerica postsocialist world (the average score in Latin America is 2.5 compared to 3.7 in the postsocialist countries). This is not terribly surprising, since many of the Latin American countries have had a democratic past to recycle, authoritarianism in those contexts was less invasive and ambitious than was the case for state socialism, and their return to democracy has taken longer and been more carefully prepared. Finally, the economic costs accompanying the breakdown of authoritarian rule have been lower.


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Table 5 Freedom RatingFree Bulgaria* Czech Republic Estonia** Hungary Latvia Lithuania Poland Romania** Slovenia Partly Free Albania* Armenia* Bosnia** Croatia* Georgia** Kazakhstan Kyrgyzstan Macedonia Moldova** Russia Slovakia* Ukraine Not Free Azerbaijan Belarus* Serbia-Montenegro Tajikistan Turkmenistan Uzbekistan**

Note:A single asterisk indicates a recent decline in the score for civil liberties and political rights or both, and a double asterisk shows a recent improvement. Review 28, no. 1 (1997): 21-22. Source:"The Comparative Survey of Freedom," Freedom

Attention to the second standard of democratization, however, lowers the number of robust democracies in the postsocialist world. As Philip Roeder has recently argued, on the question of electoral inclusion at least, the postsocialist states divide into three groups: those states that have fully inclusive electorates and thereby meet a necessary precondition for democracy (which describes most of the region, albeit at varying times during postsocialism); those states that exclude 10 to 25 percent of the potential electorate (at various points, Georgia, Kazakhstan, Moldova, Kyrgyzstan,Tajikistan, and Albania); and those that consistently exclude one-quarter or more of the potential electorate (Estonia and Latvia).52 When placed beside the Freedom House measures, these indicators of electoral inclusion suggest only a modest overlap. This leads to two observations. One is that democratization in the postsocialist context is a highly uneven process-not just across countries, but also over time and across dimensions. Within rump Yugoslavia, as within the Russian Federation and Bosnia, moreover, one can also speak of substantial regionaldifferences in democratization-for example, the sharply contrasting politics of, say, Serbia versus Montenegro (since January 1998).5 The other observation is that very few of the postsocialist regimes could be termed full-scale democracies-that is, fully inclusive and fully free. In particular,52. See Roeder, "The Triumph of Authoritarianism," 7. Also see Andrejs Plakans, "Democratization and Political Participation in Postcommunist Societies: The Case of Latvia,"and Toivo U. Raun, "Democratization and Political Development in Estonia," both 245-89, 334-74. Recent policy in Dawisha and Parrott, eds., Consolidationof Democracy, changes in Latvia, however, will move this country toward a more inclusive definition ofcitizenship.

53. On the Russian case, see, for instance, Matthew Evangelista, "Russia'sFragile 55, Union," Bulletinof theAtomicScientists no. 5 (1999): 50 -55; Kathryn Stoner-Weiss, Local Heroes: The Political Economyof Russian Regional Governance(Princeton, 1997); Solnick, "Russiaon the Edge."

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only Poland, Hungary, the Czech Republic, Slovenia, Lithuania, and, perhaps, Latvia- or less than one-quarter of the region-meet this very high standard.

The Procedural Side of DemocracyThe third dimension of democracy, procedural certainty, is harder to measure. The secondary literature suggests that there are three reasons why this is a problem (albeit in varying degrees) for all the postsocialist countries. The first is that political institutions in the region are new and represent, in theory at least, a marked departure-in design and practhe past. One could hardly expect, therefore, that the procetice-from dures governing politics would be easily, quickly, or thoroughly regularized, let alone rendered transparent or fully capable of producing widespread compliance. This generalization would seem to be particularly apt under certain conditions prevalent in the postsocialist world: where states, along with regimes, are new; 54where there is no democratic or at least parliamentary past; where there is a significant gap between the premises underlying constitutional design and actual practice; and where constitutions have only recently been enacted and, thus, reflect the tense and asymmetric distribution of power between, say, the communists and the opposition, or the center and the regions.55 Another constraint on procedural certainty is the socialist past. As many analysts have observed, state socialism was long on institutions and short on administrative regularities.56 To use communist parlance for a moment, this was not accidental. Just as political leaders in these systems maximized their power through coercion and through the construction of a dense web of institutions, so did they create a climate of uncertainty for those within this institutional web with respect to roles, rules, responsibilities, rights, and resources. This had several consequences, in addition to inefficiency and atomization. One was to render decision making highly capricious. If the ideology enshrined the importance of change from above, the design of the system ensured that leaders would matter. The other consequence worked in the opposite direction. Power at the top was maximized only to be severely compromised, because leaders lacked the capacity to implement. This contains a dual lesson. In the state socialist case at least, large and intrusive states were not necessarily capable or strong ones. At the same54. Brand new state institutions might be preferable to institutions recycled from the socialist era, however. This point is made by Alexander Motyl in "StructuralConstraints and Starting Points: The Logic of Systemic Change in Ukraine and Russia," Comparative Politics29, no. 4 (July 1997): 433-47. 55. On these problems, see, for example, Robert Sharlet, "LegalTransplants and Political Mutations: The Reception of Constitutional Law in Russia and the Newly-Independent States," East European Constitutional Review 7, no. 4 (Fall 1998): 59-68; mocracy and the Market. Przeworski, De-

56. A weak tradition in rule of law is also a problem in much of Latin America. See Guillermo O'Donnell, "Notes on Democratic Theory and Comparative Politics" (paper presented at the Mellon-Sawyer Seminar on Democratization, Cornell University, 12 April1999).

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time, the institutional density of state socialism did not indicate institutionalization. Indeed, precisely because their power was not institutionalized, political leaders in the Second World kept inventing new institutions and reinventing old ones in order to narrow the yawning gap between their reach and their grasp.57 The legacy of state socialism, then, was a weak state and a capricious leadership. This led, in turn, to a particular dynamic, wherein political leaders responded to their constraints by, first, giving up power in order to stay in power, and, second, by intervening in politics in unpredictable ways. For followers of the contemporary Russian scene, of course, this sounds familiar. Lilia Shevtsova's characterization of Boris El'tsin's Russia in is one that describes Leonid Brezhnev's Soviet Union as well-and, some respects, Alexander II's Russian empire: "One of the many paradoxes on the current Russian political scene is that keeping afloat a 'vertical Presidential' structure of government is possible only by turning over more power to the regions and various interest groups and thus weakening it as well as the state system as a whole."58 Why has procedural uncertainty and its co-conspirator, rogue leadership, survived the transition to postsocialism? Part of the answer lies, of course, in the very nature of the postsocialist project, with its extraordinary fluidity in roles, rules, and resources.59 But the other part of the answer is constitutional design. As Peter Murrell has recently observed: "Russia has only half-succeeded in following Napoleon's dictum that the best constitutions are short and confused."60 This is a generalization that applies equally well to the recently enacted constitution of Ukraine.57. These observations about state socialism are drawn from several sources. SeeElemer Hankiss, East European Alternatives (Oxford, 1990); Maria Csanadi, Party-States and Their Legacies in Post- Communist Transformation (Cheltenham, Eng., 1997); Valerie Bunce,

"Stalinismand the Management of Uncertainty," in Szobaszlai, ed., TransitiontoDemocracyin Hungary.

58. Lilia Shevtsova, "Russia:Retreat of Democracy?" and Michael McFaul, "The Human Factor in State Dissolution: Economic Reform, Political Change, and State Effectiveness in the Soviet Union and Russia," (both papers presented at the conference, "Beyond State Crisis?The Quest for the Efficacious State in Africa and Eurasia,"University of Wisconsin, 11-14 March 1999). Also see Timothy Colton, "Super Presidentialism and Russia's Backward State,"Post-Soviet Affairs11, no. 2 (April-June 1995): 144-48. For historical and comparative perspectives on this question, see Valerie Bunce, "The Political Economy of the Brezhnev Era: The Rise and Fall of Corporatism," BritishJournal of PoliticalScience13, no. 1 (January 1983): 129-58; Bunce, "Domestic Reform and International Change: Gor47, bachev in Historical Perspective," InternationalOrganization no. 3 (1993): 107-38; Bela Greskovits, "Brothers-in-Armsor Rivals in Politics? Top Politicians and Top Policy-Makers in the Hungarian Transformation" (discussion paper, Collegium Budapest, November 1998). 59. See Valerie Bunce and Maria Csanadi, "Uncertainty in the Transition: PostCommunism in Hungary," EastEuropean Politics and Societies 7, no. 2 (1993): 240-75.

60. Murrell, "How Far Has the Transition Progressed?" 33. For a more charitable interpretation of Russian political institutions, see George Breslauer, "Political Succession and the Nature of Political Competition in Russia,"Problems Post-Communism no. 5 of 44, (1997): 32-37. For further insights into the impact of institutional design, see Joel Hellman, "Competitive Advantage: Political Competition and Economic Reform in Postcommunist Transitions" (paper presented at the annual meeting of the American Political Science Association, San Francisco, 3-6 September 1996).

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But the problem goes deeper and has a larger geographical scope. Most of the postsocialist countries have opted for presidential, not parliamentary, government.61 As specialists in democratization have argued in virtual unison, presidentialism encourages conflict among institutions, immobilizes policy-making, undermines the development of effective political parties, exacerbates polarization of the public, and tempts presidents to respond to all of this by ignoring, circumventing, or suspending the constitution. This is a summary, of course, of Latin American political history and the interwar politics of Germany and Poland.62 At the same time, in the postsocialist context, the decision to introduce presidentialism reflects a particular balance of forces, wherein the power of the communists was either equal to or superior to that of the liberal opposition.63 All of this leads to a straightforward conclusion. Presidentialism is a problem for democracy in general, because it undermines political routines, encourages willful politicians, and, in the extreme, tolerates, if not encourages democratic breakdown. At the same time, it is a problem for the postsocialist democracies in particular, because presidentialism augments the power of the communists (by helping ensure their continuation in political office) while reinforcing the procedural irregularities and the leadership interventions so characteristic of the past. With these considerations in mind, let us now draw some distinctions among the postsocialist regimes with respect to their provision of certain political procedures. In fact a considerable gulf seems to separate those few countries where procedures have managed to become relatively rouHungary, the Czech Republic, Slovetinized and transparent-Poland, Baltic states (despite the contrasting timing in nia, and, perhaps, the the rest of the region, where the adminconstitutional adoption)-from61. See, for example, Gerald Easter, "Preference for Presidentialism: Postcommunist Politics49, no. 2 (January 1997): 184-211; Regime Change in Russia and the NIS," World Timothy Frye, 'A Politics of Institutional Choice: Postcommunist Presidencies," Comparative PoliticalStudies30, no. 5 (October 1997): 523 -52; Valerie Bunce, "Presidents and the Transition in Eastern Europe," in Kurt von Mettenheim, ed., PresidentialInstitutions and Regionaland National Contexts(Baltimore, 1997), 161-76. Politics:Comparing Democratic Alfred Stepan Transition; of 62. See, for example, Linz and Stepan, Problems Democratic and Cindy Skach, "Constitutional Frameworks and Democratic Consolidation: ParliamenPolitics46, no. 1 (October 1993): 1-22; M. Steven tarianism versus Presidentialism," World Fish, "Reversaland Erosion of Democracy in the Postcommunist World" (paper presented at the annual meeting of the American Political Science Association, Boston, 3-6 September 1998); Michael Bernhard, "Institutional Choice and the Failure of Democracy: The Case of Interwar Poland," East EuropeanPoliticsand Societies13, no. 1 (1999): 34-70. 63. The Polish case, with its mixed presidential-parliamentary system, might seem to provide an exception. What we must remember here, however, is that Poland was the first country in the region to begin a transition from dictatorship to democracy. While public support of Solidarity (which included in its ranks many members of the Polish United Workers Party [PUWP]) certainly outstripped the support of the PUWP (as theJune 1989 elections revealed), this could not, given the highly uncertain political climate surrounding Polish developments at the time, translate into an adoption of parliamentary government. Put simply, being the first worked in favor of exaggerating the capacity of the communists to protect their interests through the adoption of presidential government. Indeed, recognition of this fact is a major reason why Solidarity was so crucial to the selection of WojciechJaruzelski as the first "quasi-communist" president.

ThePoliticalEconomy Postsocialism of

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istrative environment is confused, capricious, chaotic, and, therefore, highly unpredictable.64 Indeed, this is precisely the picture that emerges for the Commonwealth of Independent States in particular in the already noted 1996 World Bank survey of entrepreneurs in sixty-nine countries. The uncertainty of the commercial environment, in brief, correlates highly with the uncertainty of the political environment. The culprit is a weak state-as much a problem for democracy and political stability as it is for capitalism and economic growth. Explaining Political Patterns We can now step back from this discussion and these various measures of political stability and democratization and draw a straightforward conclusion. A majority of regimes and states in the region are unstable and, at best, partially democratic. Therefore, the Czech Republic, Hungary, Slovenia, and Poland are not the regional norm. Instead, it is Russia, with its fuzzy state, its fuzzy democracy, and, to echo an earlier observation, its fuzzy property. How can we explain these patterns? There are a variety of factors that, while logical and suggestive, do not seem to produce a robust explanation. For example, while all the stable and fully democratic cases are, by regional comparative standards, both rich and homogeneous, some relatively rich states score low on both democratization and political stability (Slovakia, Croatia, and Ukraine) and some homogeneous states do the same (Albania and Armenia).65 Moreover, state age is not all that helpful a factor, given, for instance, the inclusion of Slovenia and the Czech Republic in the group of stable and fully democratic orders. Finally, such factors as religion, imperial lineage (or inclusion in the Habsburg versus the64. This contrast reflects, most obviously, the degree to which the revolution that ended Communist Party hegemony was both liberal and full-scale. Another historical factor, however, considerably predates even socialism: whether these areas were influenced by Roman law. Where they were, the legal-administrative tradition accepts the possibility of a law-based state. See, for example, Jeno Szucs, "The Three Historical Regions of Europe: An Outline," Acta Historica:Revue de l'academiedes Sciencesde Hongrie 29, nos. 2-4 (1983): 131-84. Also see Perry Anderson, Lineagesof the AbsolutistState (London, 1974). 65. Here I am referring to those arguments regarding the impact of economic development on democratization and the greater difficulties that heterogeneous national settings-or settings where the national and the state questions have yet to be resolvedhave in creating stable and durable democratic orders. See, for instance, Dankwart Rustow, "Transitions to Democracy: Toward a Dynamic Model," Comparative Politics 2, no. 3 (April 1970): 337-63; Arend Lijphart, "Unequal Participation: Democracy's Unresolved Dilemma," American PoliticalScience Review91, no. 1 (March 1997): 1-14; Adam Przeworski and Fernando Limongi, "Modernization: Theories and Facts,"World Politics49, no. 2 (January 1997): 155- 83; Tim Snyder and Milada Vachudova, "AreTransitions Transitory?Two Types of Political Change in Eastern Europe since 1989,"East EuropeanPoliticsand Societies 11 (Winter 1997): 1-35. Although the three "quick"but poor democracies in the region have, recently, become decidedly less democratic (Albania, Armenia, and Kyrgyzstan), some of the richest democracies in the region have also backtracked in recent years (Slovakia and Croatia). Thus, there is some question concerning whether economic development has as much impact on democratic sustainability as Przeworski and Limongi have argued.

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Russian or Ottoman empires), and institutional design (or parliamentary government versus forms of presidentialism) do not seem to account all that well for these differences.66 One factor does seem to correlate with democratization, however: economic reform.67 Put simply, all of the robust democracies score high on economic reform (with an average score of 7.3); all of the postsocialist dictatorships score quite low (with an average of 3.2); and the remaining countries, or incomplete democracies, fall in between these two extremes with respect to economic reform. This introduces a question that allows us to combine this discussion of politics with the earlier discussion of economics, and that moves us toward an explanation that accounts for the political-economic patterns of postsocialism. Why does democratization correlate with economic reform? Democratization and Economic Reform

There are two reasons to have expected that democratization and economic reform would go together in the postsocialist region. First, all democracies have had capitalist economies. Second, democracy and capitalism are based on precisely the same principles, albeit applied to different arenas of human activity: uncertain results combined with certain procedures. Just as democracy is based on the notion of competition within well-specified rules of the game, so capitalism is premised on competition in a context of secure property rights. In both realms, moreover, the state bears primary responsibility for ensuring the desired mix of competition and constraint. However, alongside these arguments must be placed a series of others that tilt the balance in the direction of presuming tension, not compatibility, between democratization and the transition to capitalism. First, capitalist economies, we must remember, have often coexisted-and quite happily-with dictatorial politics. Moreover, just as it would not be in the interests of accountable politicians to introduce painful economic policies (especially when they are courting fickle constituencies lacking strong party identification), so such economic policies in a context characterized by a combination of freedom and resentment could very well encourage66. See, for example, Fish, "Determinants of Economic Reform"; Stepan and Skach, "Constitutional Frameworks and Democratic Consolidation," 1-22; Colton, "Super Presidentialism and Russia'sBackward State," 144 - 48; Easter, "Preference for Presidentialism," 184-211; Valerie Bunce, "Presidents and the Transition in Eastern Europe," in von Mettenheim, ed., Presidential Institutionsand Democratic Politics, 161-76. As both Gerald Easter and I have argued, however, institutional design may not be the culprit as much as the politics- or the relative strength of the ex-communists versus the opposition forces-behind the adoption of parliamentary versus presidential government. Moreover, as Steve Fish has argued, what may really matter is presidential interpretation of presidential power in new democracies. See his "Reversaland Erosion." 67. See M. Steven Fish, "Democratization'sPrerequisites," Post-Soviet Affairs 14, no. 3 (July-September 1998): 212-47; Valerie Bunce, "Sequencing of Political and Economic Reforms."


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massive popular protests.68 In the first instance economic reform would be avoided or blocked, but in the second instance the result would be political instability and, perhaps, democratic breakdown. Indeed, democratic breakdown would appear to be likely in cases where, as in much of the postsocialist world, political institutions are new and weak; where the elite's commitment to democracy, although present and more pronounced than such commitments among mass publics, is nonetheless far from habitual; 69 where publics in some instances have just learned that collective action pays off; and, to echo an earlier observation, where semipresidentialism offers the possibility, especially if publics are restive and polarized, of a sequence wherein deadlock is followed by the concentration of power in the executive's hands, which is followed in turn by suspension of civil liberties and political rights. This is a scenario that describes, of course, Weimar Germany in the first half of the 1930san observation not lost on some analysts of the contemporary Russian scene. 70 Third, in the postsocialist context, vested interests in capitalism are, by definition and tradition, minimal, and public support of capitalism is more qualified than public support of democracy.7' Finally, even if we68. See John Walton and David Sweddon, FreeMarketsand Food Riots: The Politics of GlobalAdjustment(Oxford, 1994). 69. A number of studies of the elite's commitment to democracy in the postsocialist world have been written. For the Russian case, see, for example, William Zimmerman, "Mar10, kets, Democracy, and Russian Foreign Policy,"Post-SovietAffairs no.2 (April-June 1994): 103-26; Stoner-Weiss, Local Heroes;Arthur Miller, Vicki L. Hesli, and William Reisinger, Journal "Conceptions of Democracy among Mass and Elite in Post-Soviet Societies," British of PoliticalScience27, no. 3 (July 1997): 157-90; Sharon Werning Rivera, "Explaining Elite Commitments to Democracy in Postcommunist Russia" (paper presented at the MellonSawyer Seminar on Democratization, Cornell University, 3 May 1999); Sharon Werning Rivera, "Communistsas Democrats: Elite Political Culture in Postcommunist Russia"(Ph.D. diss., University of Michigan, 1998). Rivera's research has several notable characteristics that need to be highlighted. First, she has interviewed both central and regional elites. Second, she has interviewed both bureaucratic and elected political officials (with the latter emerging as more supportive of democracy than the former). Finally, among her many findings is a challenge to the assumption, so central to the literature on democratization, that political leaders are self-interested in their preferences and, thus, their behavior. This assumption serves as the basis for much theorizing about the games political leaders play during democratization, and it has often been used as the point of departure for solving the puzzle of why authoritarian elites adhere to the new democratic rules of the game. 70. See Stephen E. Hanson and Jeffrey S. Kopstein, "The Weimar/Russia Comparison," Post-Soviet Affairs 13, no. 3 (July-September 1997): 252-83; Stephen D. Shenfield, Af"The Weimar/Russia Comparison: Reflections on Hanson and Kopstein," Post-Soviet fairs 14, no. 4 (October-December 1998): 355-68; Jeffrey S. Kopstein and Stephen E. Hanson, "Path to Uncivil Societies and Anti-Liberal States: A Reply to Shenfield," PostSovietAffairs14, no. 4 (October-December 1998): 369-75. For a highly insightful, if depressing, analysis of the contemporary Russian scene that speaks to the debilitating interaction between economic r

the political economy of post socialism

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