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Neoliberalism, embedded neoliberalism and
neocorporatism: Towards transnational capitalism in
Central-Eastern Europe
To cite this Article: , 'Neoliberalism, embedded neoliberalism and neocorporatism:
Towards transnational capitalism in Central-Eastern Europe', West European
Politics, 30:3, 443 - 466
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Neoliberalism, Embedded
Neoliberalism and Neocorporatism:
Towards Transnational Capitalism
in Central-Eastern Europe
DOROTHEE BOHLE and BE
´LA GRESKOVITS
This article analyses the key features and origins of three variants of transnational
capitalism emerging in Central-Eastern Europe: a neoliberal type in the Baltic states,
an embedded neoliberal type in the Visegra
´d states, and a neocorporatist type in
Slovenia. These regimes are characterised by their institutions and performances in
marketisation, industrial transformation, social inclusion, and macroeconomic stability.
Explanations for regime diversity are developed at two levels. First, it is argued that the
legacies of the past, and their perceptions as either threats or assets to these countries’
future, have had deep impact on regime types. Legacies and initial choices were no less
crucial for the degree of democratic inclusion, and the different patterns of protest and
patience on the paths towards the new regimes. Second, the article demonstrates the
importance of transnational influences in industrial transformation and social inclusion.
Three capitalisms emerged from the transformation of Central-East
European (CEE) societies: a neoliberal type in the Baltic states, an embedded
neoliberal type in the Visegra
´d states, and a neocorporatist type in Slovenia.
This diversity is puzzling both in light of where these societies departed from
and where they have been heading. Their point of departure, state socialism,
is widely seen as a system that had been remarkably successful in forcing
uniform economic and political structures and institutions on the CEE
societies. Moreover, once the system fell apart, its pieces moved ‘from the
fire to the frying pan’, as they entered the global economy that many
analysts view as no less powerful a homogenising agent. How to explain,
then, that these countries embarked, in a patterned rather than a random
way, on radically different trajectories, which led to a diversity of market
societies instead of a single post-socialist variant?
Correspondence Address: bohled@ceu.hu
West European Politics,
Vol. 30, No. 3, 443 – 466, May 2007
ISSN 0140-2382 Print/1743-9655 Online ª2007 Taylor & Francis
DOI: 10.1080/01402380701276287
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To understand their origins and logic of emergence, we adopt Pola
´nyi’s
theory of the ‘Great Transformation’, and analyse these regimes above all as
products of a contradictory double dynamics in the uses of state power to
build market economies and simultaneously preserve their social cohesion. In
the following section, we demonstrate that the different vigour with which the
transformation agenda has been pursued led to particular institutional
configurations and varied performances in the key areas of marketisation,
industrial transformation, social inclusion, and macroeconomic stability.
Our explanation of regime diversity stresses the interplay of two main
factors. First, we argue that initial political choices mattered. Subsequently,
we demonstrate that the decisions concerning the new regimes have been
motivated both by the legacies of the past and their perception as either
threats or assets from the viewpoint of national sovereignty and economic
independence. Recognising these differences also helps us to understand the
varied amounts of protest provoked by the three regimes, the pattern of
political competition characterising them, and the variation in the form
of their democracies. Second, we take seriously the formative role of
transnational and international influences as well as their diversity. We then
demonstrate how the pressures of the European Union, and the influences of
varied types of transnational corporations (TNC) in interaction with
inherited industrial profiles and domestic policy choices, have locked the
new regimes into paths able to reproduce many of their features. In the
concluding section we summarise our findings on CEE’s varieties of
transnational capitalism, and specify our own contribution to under-
standing post-socialist diversity.
The Matrix of Regime Performances and Institutions
The first impression one gets from some essential facts on the CEE
transformation paths is that of similarity rather than divergence. In but a
decade, all these countries consolidated some form of democracy. They
became integrated in the global and European economy. Their trade with
the EU approximates or exceeds their gross domestic product (GDP).
Via substantial foreign direct investment (FDI) their assets have been
incorporated into Western systems of production, commerce, and finance.
Foreign control became the norm in their major export industries, services,
and utilities. They are members of important international organisations.
The question, then, is: are these small states anything else than playgrounds
for powerful international forces? Could they at all retain or develop any
measure of influence over their development? Evidence suggests that they
could. Indeed, fair degrees of effectiveness, regulatory, and enforcement
capacities set the CEE states apart from the rest of the former Soviet bloc and
place them among the better-governed states of the world (Kaufman et al.
2002). However, they differ in how vigorously they imposed public constraints
over private economic activity to pursue conflicting aspects of transformation.
444 D. Bohle and B. Greskovits
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Regime Concepts
As Pola
´nyi would have predicted, CEE’s post-socialist development has been
driven by conflicts and compromises between ‘two organising principles in
society’, economic liberalism guiding the establishment and institutionalisa-
tion of markets, and ‘the principle of social protection aiming at the
conservation of man and nature as well as productive organization’ (Pola
´nyi
1957: 132). Accordingly, we define our regimes as capitalist political
economies in which marketisation and social protection has been pursued
and institutionalised with different amounts of vigour and in varied forms.
The unconventional element of our approach is that, in accordance with
Pola
´nyi, we consider economic protectionism, aimed at sheltering inherited
domestic and new transnational industries by tariffs, subsidies and special
regulations, no less as a manifestation of the principle of social protection
than social welfare policies. Although political discourse tends to contrast
industry subsidies with social welfare expenditures on the realistic grounds
that in any given moment spending on one purpose may directly limit
spending on the other, the contradiction of these two kinds of protectionism
might not be all that antagonistic. At the macro-level, state assistance that
helps private actors to save existing jobs or create new ones may substitute
for unemployment benefits or early retirement and disability pensions.
Conversely, public spending on education and healthcare can partly be
viewed as subsidies to firms that rely on skilled and healthy labour forces. In
certain instances businesses’ individual preferences can be compatible with
such macro-social solutions. However, the micro-logic of firms is likelier to
contradict any macro-logic requiring that conflicting social groups take
responsibility for each other. Hence the high probability of collective action
problems and the need for state intervention to solve them (see Table 1).
CEE states have responded differently to the challenges of the new Great
Transformation. In the Baltic states a reincarnation of economic liberalism
as neoliberalism has been pursued in a rather radical and uncompromising
fashion. The Visegra
´d countries are distinguished by their search for
compromises between marketisation and both kinds of social protection.
They arrived too late to the globalising European economy to implement the
dominant post-World War II Western regime of protective industrial
policies and generous welfare states that Ruggie (1982) termed ‘embedded
liberalism’. Thus the Visegra
´d group’s compromises are more reminiscent of
the limited balancing acts observed in the current ‘embedded neoliberal’
regimes of many West European societies, in which social protection has
increasingly lost its former purpose and institutional underpinnings, and
become ‘subordinated to the overriding objective of neoliberal competitive-
ness’ (Van Apeldoorn 2002: 181). Finally, in CEE only Slovenia’s
neocorporatist regime is characterised by a firmly institutionalised balance
between marketisation and both kinds of social protection, whereby
business, labour, and other social groups are accepted as partners in
Transnational Capitalism in Central-Eastern Europe 445
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shaping that balance (Schmitter 1974; for CEE see Tatur 1995). In empirical
terms, our classification rests on a matrix of performances and their
institutional bases in four important areas: marketisation, industrial
transformation, social inclusion, and macroeconomic stability.
Marketisation
The three regimes are least different in their achieved levels of liberalisation,
privatisation, and market-oriented institution building. By the early 2000s
the whole region had adopted the standards and institutional underpinnings
of economic freedom and openness usual in Western market economies.
However, there is systematic variation in the radicalism of the reform paths
that led to this outcome. Assessing radicalism by the rate at which market
reforms have been introduced and new institutions built, and using the
annual advance on the transition index of the European Bank for
Reconstruction and Development (EBRD) as a proxy to measure it, lead
us to conclude that the Baltic states have been the most, and Slovenia the
least market-radical. The Visegra
´d states occupy intermediate positions in
this respect. Two important facts have to be considered to understand this
variation. First, thanks to their long experimentation with reform socialism,
Hungary, Poland, and Slovenia had relatively marketised economies already
in 1989, while the Baltic states had to start ‘from scratch’. Second, since
state socialism persisted until 1991 in the Baltic countries, their reforms
TABLE 1
INDUSTRIAL TRANSFORMATION
Growth rate
of industrial
output (1992–2003
average %)
Complex exports
(2000–04
average % of
total exports)
Complex
manufacturing
FDI stock
per capita
(2002–04, US$)
Sectoral,
ad hoc, and
horizontal
state aid to
firms (2000–04
average
% of GDP)
Estonia 0.5 38 96 0.16
Latvia 72.0 15 29 0.33
Lithuania 73.1 31 107 0.37
Baltic average 71.5 28 77 0.29
Czech Republic 3.1 56 1113 2.23
Hungary 6.5 67 875 1.13
Poland 6.4 44 244 1.30
Slovak Republic 2.5 50 – 0.54
Visegra
´d average 4.6 54 744 1.30
Slovenia 1.0 49 198 0.73
Sources: Column 1: EBRD Transition Reports various volumes; Column 2: authors’ own
calculation based on COMTRADE database of the United Nations Statistics Division.
Complex exports are commodities coded 5 (chemicals) and 7 (machinery and equipment) in
SITC classification; Column 3: Kettnaker (2005), and authors’ own calculation based on data
from national FDI agencies; Column 4: Eurostat.
446 D. Bohle and B. Greskovits
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began later than those of other CEE states. Evidently, it is only due to their
reform radicalism that by the early 2000s the Baltic states could catch up
with the Visegra
´d group and indeed overtake Slovenia.
Industrial Transformation
Compared with other CEE economies the Baltic performance appears
inferior in two key dimensions of industrial transformation, as it is
characterised by deindustrialisation and deskilling (Table 1).
While in 1992–2003 industry recovered in the Visegra
´d group and
Slovenia, the average growth rate of industrial output over the same period
was negative in most Baltic states. Furthermore, in the first years of the new
Millennium, the bulk of Baltic exports originates from resource- or unskilled
labour-intensive industries, and thus exhibits the profile common to many
less advanced countries. In contrast, the Visegra
´d states and Slovenia mainly
export the same products as many advanced countries, which rely heavily on
complex capital, technology, and human skills. Accordingly, we found that
the infusion of FDI in the complex manufacturing industries of the Visegra
´d
states exceeds, in per capita terms, the Baltic figure by a factor of 10. Finally,
the divergence in industrial transformation appears to be consistent with
varied patterns of state institutions aimed at fostering the transformation of
inherited socialist industries into new foreign controlled and invested
operations. The Visegra
´d states tried to mitigate the impact of market shock
on their industrial legacy and at the same time accelerate foreign capital
infusion by protective regulation and tariffs, export zones, foreign trade and
investment agencies, investment support funds, tax exemption regimes, and
public development banks. In contrast, industrial policies have not been
pursued with comparable vigour in the Baltic states.
Social Inclusion
While Gini coefficients, relative income shares, and other indicators of social
inequality do not paint an overly gloomy picture of the region, the Baltic
regime appears rather unequal and socially exclusive. Slovenia represents
the opposite extreme, whereas the Visegra
´d countries are in between these
polar cases in most measures (Eurostat). There is clear variation in the
strength of institutionalised efforts to maintain social welfare (Table 2).
In light of this evidence, the Baltic subregion is hardly the place to live for
anybody whose meagre living standards depend on state assistance. Nor is it
the right place to be a worker. With their virtual lack of any negotiated
industrial relations, the ‘volunteer Scandinavian’ Baltic states appear to be
the least ‘Scandinavian’ in the region. Low union density, decentralised,
uncoordinated wage bargaining and low coverage rates of collective
agreements complete the institutional landscape of these disembedded
societies. Neither do the Visegra
´d regimes perform much better in this latter
Transnational Capitalism in Central-Eastern Europe 447
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respect. Slovenia is the only country where negotiation between business
and labour, as well as coordination among social welfare, industrial, and
macroeconomic policies, is fairly well institutionalised.
Macroeconomic Stability
More than in anything else, it is in macroeconomic stability and balanced
public finance that the strengths of the Baltic countries lie, although
Slovenia is not lagging behind them (Table 3). Both the Baltic and Slovene
regimes adopted the EU’s ‘stability culture’ (Dyson 2006) and came close to
meeting the convergence standards of the Maastricht Treaty that is likely
to earn them early entry to European Monetary Union (EMU). Relative
to their GDP, the Baltic countries operate the smallest and least indebted
fiscal states of the region, continue to rely on the most restrictive monetary
institutions, currency boards, and use most consciously their ERM-2 entry
as an international pillar of their policies to lock in macroeconomic stability
and acquire credibility in financial markets (Feldmann 2006a). In contrast,
in the Visegra
´d states, with the recent exception of the Slovak Republic,
neither the ministries of finance nor the central banks have succeeded so far
in achieving dominance vis-a
`-vis the coalitions of rival institutions shaping
their sizeable and heavily indebted state households.
Support and Contestation: The Politics of Regime Paths
The significance of varied structures of state performance and institutions
cannot be fully grasped without understanding how it came to be that way.
TABLE 2
SOCIAL INCLUSION
Total expenditure
on social protection
(2000–04 average
% of GDP)
Per capita total
expenditure on
social protection
(2000–03
average euro PPS)
Spending
on passive
and active
labour market
policies (late
1990s, %
of GDP)
Collective
bargaining
coverage rate
(early 2000s,
%of
employed)
Estonia 13.6 1300 0.16 21–30
Latvia 14.2 1120 – 11–20
Lithuania 14.5 1264 – 11–20
Baltic average 14.1 1228 14–23
Czech Republic 19.8 2752 0.50 21–30
Hungary 20.4 2439 0.96 31–40
Poland 21.3 2020 2.20 41–50
Slovak Republic 19.1 1982 1.10 41–50
Visegra
´d average 20.1 2298 1.19 34–43
Slovenia 25.0 3920 1.72 91–100
Sources: Columns 1, 2: Eurostat; Column 3: Riboud et al. 2002: 13; Column 4: Visser 2005.
448 D. Bohle and B. Greskovits
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As we know from Gourevitch (1986: 17), ‘Policy requires politics ...if an
idea is to prevail as the actual policy of a particular government, it must
obtain support from those who have political power’. How much support
have the CEE regimes generated?
Social Protest and Electoral Challenges
All in all, the policy choices of the CEE countries have met little social
protest over the whole period of economic transformation, crisis, and
recovery. This is the more surprising that especially the first half of the 1990s
brought about extreme economic hardship and dislocation for massive
groups (Greskovits 1998). However, within the generally low level of
contention there is some variation across country groups. While strikes have
been almost entirely absent in the Baltic states and Slovenia, contentious
action has been somewhat more frequent in at least some of the Visegra
´d
countries (Bohle and Greskovits 2006).
The outcome of democratic elections can be seen as a second indicator of the
degree to which particular policy choices are approved or politically contested.
In this respect, too, a quite consistent regional pattern prevails. Until most
recently, citizens both in the Baltic states (with the exception of Lithuania), and
in Slovenia regularly re-elected parties which represented the same political
colour, economic philosophy, and, when forming new governments, ranked
their tasks in much the same way as their predecessors. Thus over the whole
period following the collapse of state socialism, centre-right parties and
governments enjoyed broad support and uninterrupted hegemony in Estonia
and Latvia. Slovenian politics exhibited no less continuity. However, in that
country it was the centre-left that remained in power for a long period.
TABLE 3
MACROECONOMIC STABILITY
General
government
balances
(2000–03
average % of GDP)
General
government
debt (2003,
% of GDP)
General
government
expenditure
(2000–03
average %
of GDP)
Estonia þ2.3 5.3 35.5
Latvia 72.1 13.4 35.7
Lithuania 72.1 21.9 31.7
Baltic average 70.6 13.5 34.3
Czech Republic 77.2 38.8 42.4
Hungary 75.4 57.4 49.8
Poland 73.4 45.3 42.9
Slovak Republic 76.9 42.6 50.4
Visegra
´d average 75.7 45.9 46.4
Slovenia 72.6 29.3 48.1
Sources: EBRD Transition Report 2005.
Transnational Capitalism in Central-Eastern Europe 449
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In turn, politics in the Visegra
´d countries has been marked by the regular
alternation of right-wing and left-wing parties in power with incumbents
usually voted out by the electorate. In Poland (and Hungary until 2006), no
incumbent was able to govern for more than one term. In the Czech and
Slovak Republics the left–right alternation occurred in two-term long
intervals with the second term usually bringing about a weakened minority
government of the left or the right. How can we explain the different
patterns of support and contestation of the three regimes? More
provocatively, how could the Baltic regime that neglected social inclusion
be less contested than the Visegra
´d regime that made more efforts to protect
society?
Legacies, Initial Choices and Consequences for Politics and Polities
In his influential ‘Capitalism by Democratic Design?’ Offe (1991) painted a
pessimistic picture of the prospects for democracy in Eastern Europe. In his
view, the state socialist countries faced a ‘triple transformation’ to
nation state, capitalism, and democracy, which had to occur simultaneously
rather than, as long ago in the west, in a sequence. This overloaded
agenda was not only full of social conflicts, but its tasks also contradicted
each other. Hence Offe’s conclusion that a whole Pandora’s box was
opening, in light of which democratic breakdown was the most likely
outcome.
In our cases, history proved Offe’s prediction wrong, since the CEE states
mastered all challenges of transformation. Moreover, the reformers seem to
have made choices about which task to prioritise and whether to perceive
the legacies of the socialist system as a threat or an asset when performing
them. Below we argue that different legacies, and the way they were
perceived, as well as different reform priorities impacted on the patterns of
political cleavages and conflicts, and the features of democracy. As a result,
rather than democratic breakdown, we observe, with the sole exception of
Slovenia, a variety of ‘low-level equilibrium’ democracies (Greskovits 1998).
To characterise the variation, we adapt the terms elaborated for the Latin
American context by Acuna and Smith (1994).
The Baltic States: National Independence, Neoliberal Economics,
and the Emergence of Exclusionary Democracy
Among our cases the Baltic situation fell closest to Offe’s transformation
trilemma. These countries could neither take their nation nor their state
institutions for granted, and inherited the least favourable legacies in terms
of economic institutions from state socialism. At the same time, these states
felt the strongest urge to distance themselves from the legacies which
equalled Soviet domination. How could they solve the trilemma in such a
way that the solution even elicited permanent popular support?
450 D. Bohle and B. Greskovits
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Similar to other authors, we see a major reason in the fact that the
revolutionary processes in all three countries started in the field of identity
politics, that is the redefinition of the Estonian, Latvian and Lithuanian
nation in time and space, and of their relations with Russia, the Russian
minority, and the West (e.g. Lagerspetz and Vogt 2004: 71–3). Identity
politics remained a major issue over the last 15 years, and shaped the form
of democracy and capitalism in these countries. It allowed for democratic
institutions to gain support even if the new democracies did not bring about
social and economic progress: ‘gaining democracy, a parliament, president,
political parties, was – and is – very important from the perspective of
identity politics; acquiring all these was a confirmation of the Estonians’
‘‘Europeanness’’’ (Lagerspetz and Vogt 2004: 73).
However, identity politics led to exclusionary democracies. It is well known
that Latvia and Estonia (but not Lithuania) introduced extremely restrictive
citizenship laws in the early 1990s. In both countries citizenship initially was
automatically only granted to pre-1940 citizens and their descendants. This
excluded all those Russians who had arrived under the Soviet era – about
28 per cent of the Estonian and 32 per cent of the Latvian population.
Moreover, both laws made it very difficult for minorities to acquire citizen-
ship. Although – mainly due to the pressure of EU – the citizenship laws were
later liberalised, still in 2003 22 per cent of registered residents of Latvia were
non-citizens, most of them Russian-speaking (Smith-Sivertsen 2004: 102–3).
In Estonia in 2002, some 13 per cent of residents did not have any citizenship
at all, and some 6 per cent still held Russian citizenship (Lagerspetz and Vogt
2004: 75–6). The citizenship laws muffled potential conflicts. First, although
the Russian minority was less enthusiastic about leaving the Soviet Empire
than ethnic Latvians or Estonians, it had been deprived of a democratic voice
to oppose independence. Second, it also lacked the political and organisa-
tional means of social contention.
Radical economic reforms were equally crucial for the defence of newly
acquired national independence, since they were most suitable for cutting
the ties with the Russian economy on which these countries depended
heavily. In this respect, the reforms were successful: within a short period
of time, external trade was reoriented towards the West, and national
currencies were institutionalised. These achievements had high costs in
social dislocation, which also had an ethnic dimension. Russian-speakers
suffered most, as they were typically occupied in the industries built up
under the Soviet Empire. However, since the crisis and reforms fragmented
the organisations and dismantled the power of trade unions and business
groups, the Russian minority that potentially could have become a strong
opponent of the neoliberal regime was silenced as much in interest groups as
in democratic politics. Political exclusion was coupled with and buttressed
by social exclusion.
The goal of national independence also can explain why macroeconomic
stability became a priority for the Baltic states. The national currency is an
Transnational Capitalism in Central-Eastern Europe 451
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important means and symbol of sovereign statehood. To establish the new
currencies, the principles of sound money had to be respected. Fixed
exchange rate regimes, and in Estonia and Lithuania currency boards,
became guarantors of credible new currencies and thus the new nation states
(Feldmann 2006a). At the same time, independent central banks and
currency boards depoliticise monetary policy, as they ‘insulate key aspects
of the economy from the influence of politicians or the mass of citizens by
imposing internally and externally binding constraints’ (Gill 2003: 182).
Slovenia: Favourable Legacies and the Emergence of Inclusionary
Democracy
In terms of the tasks it set itself, Slovenia seems at first sight to be closest to
the Baltic states. Similar to them, it faced the challenges of transformation
to nation state, democracy, and capitalism. In terms of its politics, however,
it can be found at the opposite extreme, as it exhibits all features of an
‘inclusionary democracy, based on strong actors and an activist state’
(Acuna and Smith 1994: 44–6). How to explain the different outcome?
The fact that Slovenia could build on significantly different legacies
provides an important part of the answer. Slovenia’s ‘triple transformation’
was a long and gradual process that had started way back under Tito’s
Yugoslavia. As a republic of the Yugoslav federation, Slovenia had a long
experience of relatively autonomous self-management that added a level of
participatory decision-making unknown in other state socialist countries,
and produced managers, unionists, and bureaucrats who had the skills and
were habituated to seeking accommodation between economic and social
considerations. Moreover, the Slovene economy was not only the most
liberalised but also the most developed and western-oriented economy of
former Yugoslavia and of the whole Soviet bloc. It was also much less
dependent on Serbia than the Baltic states were on Russia. As a result,
Slovenia’s transformation recession was the one of the less severe among the
CEE countries (Stanojevic 2003: 288).
Last but not least, since the quest for democratic and economic reforms
preceded nation building, identity politics never assumed as crucial a role in
Slovenia as in the Baltic states. In fact, national self-determination became
an important issue in Slovenian politics mostly only as a reaction to the
attempts of recentralisation in the Yugoslav federation after Tito’s death
and the victory of the hard-line faction in Serbia’s communist party in 1987
(Harris 2002: 155). Given this country’s ethnic homogeneity, nationalism
could become a framework for an inclusive polity, not one which had to be
defended against enemies from within and outside. Evidently, there was a
moment when Slovenia’s national independence seemed to be under threat.
Luckily, however, the war for independence was short.
Thus, Slovenia could build on a wide array of favourable legacies and use
them as assets for inclusion. Self-management was transformed into
452 D. Bohle and B. Greskovits
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neocorporatist institutions, which included labour more thoroughly than
many of their Western counterparts. The relatively mild transformation crisis
served as a catalyst to remove the right-wing coalition that won the first
independent parliamentary elections from power, and laid the foundation for
rather stable centre-left hegemony. As Stanojevic (2002: 290) argues, ‘From
then on political exchange between centre-left governments and organized
economic interests became a permanent feature and the key mode of interest
concertation, giving social legitimacy to market reforms’.
The Visegra
´d Countries: Compensation without Institutionalised
Inclusion and the Emergence of Dual Democracy
In terms of their legacies, the Visegra
´d countries seem to be located on the
continuum between the Baltic states and Slovenia. Thus both the Czech and
the Slovak Republics inherited rather unreformed state socialist systems.
Their degree of dependency on the Soviet economy was lower, however, and
their industries more competitive than those of the Baltic states. Both
countries faced the tasks of nation-state building, but this process was
perceived as much less threatened by external actors than in the Baltic
countries. As a consequence, nation building never became the same
overwhelming issue: least in the Czech Republic, the more developed and
ethnically homogenous part of the federation. In the poorer and ethnically
more heterogeneous Slovak Republic, nation building came into conflict
with democratic state building for a period in the 1990s. Poland and
Hungary had reform socialist legacies, which, as in the Slovene case, could
become assets for the turn to democratic capitalism and its consolidation. In
addition, both countries were lucky enough to escape the task of nation-
state building. They were, however, severely constrained by the huge
amount of external debts they had accumulated over the 1980s.
The distinct challenges posed by the legacies, and the political elites’
reaction to them, seem to be at the origin of the intermediate position the
Visegra
´d countries occupy with regard to social and political inclusion, as
well as of the more fragile support for their regime paths. Visegra
´d
reformers were well aware of the social hardship caused by the collapse and
market reforms, but they could not fall back upon identity politics and
disenfranchise large parts of the affected population to muffle protest as
the Baltic states did. At the same time, they shied away from offering
institutionalised voice to unions and the losers of reforms, the way Slovenia
did. Rather, they decided to offer ad hoc compensation in the form of
relatively generous targeted social protection packages in order to overcome
opposition to reforms.
Poland offers a good example of this choice. Its reformers knew that
‘shock therapy’ would hurt industrial workers and the rural population,
and create a pool of people left, at least temporarily, deprived of resources
for survival (Balcerowicz 1995: 262–3). In light of this, they considered the
Transnational Capitalism in Central-Eastern Europe 453
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trade union wing of Solidarity a threat rather than an asset for the new
polity. Thus, the initial reform package was prepared in a highly isolated
institutional setting, while Solidarity leaders were asked or volunteered
to silence the feared mass militancy. Inherited institutions of labour re-
presentation as well as local citizen committees that had emerged around
the changes were dismantled (Grabowski 1996). As compensation, Poland
introduced unemployment benefits, minimum wage regulations, and
massive early retirement schemes ‘from above’ (Orenstein and Haas 2005).
While the Polish example is unique because of the Solidarity legacy, the
transformational pattern of compensation without institutionalised interest
representation is not. Hungary’s social welfare system, extensively using
disability and early retirement schemes (Vanhuysse 2006), is among the most
generous in the region, while its record in institutionalising tripartite
relations between labour, capital and the state has been less convincing. In
the Czech and Slovak Republics, relatively encompassing systems of welfare
were adopted too. In addition, both countries kept supporting their large
enterprises and thus could slow down the dynamics of unemployment
(Drahokoupil 2007: 11–12). The Czech and Slovak Republics initially
offered labour institutionalised inclusion, but the governments’ commitment
to the tripartite bodies has been shaky in the Czech Republic, and broke
down entirely in the Slovak Republic (Ost 2000: 512–13). It is because of the
above pattern that we term the Visegra
´d polities ‘dual democratic regimes’,
where selective and limited inclusion parallels, and occurs at the expense of,
the exclusion ‘of the remaining social actors by disarticulating and
neutralizing their capacity for collective action’. This dual logic is
complemented by an ‘unequal distribution of resources, where benefits are
only extended to allied sectors of business and labor’ (Acuna and Smith
1994: 47).
Appeasing large social groups through ad hoc targeted welfare policies
has, however, faced increasing political difficulties. In the Visegra
´d polities,
political contention has been closely, albeit not exclusively, linked to the issue
of social protection, i.e. its focus on economic versus welfare protectionism,
as well as its conflicts with macroeconomic stability. Interestingly, as Pola
´nyi
would predict, there has been no clear division of labour between the left and
the right in the sense that the former has protected vulnerable social groups
while the latter only the economy. Rather, all parties that hoped for mass
popular support usually stressed the intrinsic relationships between eco-
nomic and welfare protectionism, promised both kinds, and, once in power,
tried pragmatically to implement some mix.
This is the background against which the nature of the Visegra
´d
democracies, as well as their pattern of recurrent protest, be it in the form
of strikes or punishing incumbent governments, can be understood. It is not
least for their embedded neoliberalism’s complex, contradictory, and
institutionally unregulated agenda that the trial and error pattern of
political success remains an inherent feature of Visegra
´d polities.
454 D. Bohle and B. Greskovits
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Indeed, as demonstrated by the new coalitions of the mid-2000s, under
certain conditions these dual democracies can become vulnerable to illiberal
challenges. The 2005 and 2006 elections put an end, albeit in different ways,
to the hitherto prevailing centrist alternation. For the first time in Hungary’s
post-communist history, voters granted a second term to the incumbent left-
liberal coalition, while extremist parties lost even their limited support. After
the Czech elections, while support for communists as the only sizeable non-
centrist party declined, both the left and the right seem incapable of forming
a government. The prospects are even gloomier for Poland and the Slovak
Republic, where alliances of a third force took over, involving radical
nationalist, xenophobic, and anti-western parties.
The contrast in the political fortunes of illiberals invites the question:
why are they on the rise in the latter and on the decline in the former
group of countries? While a convincing answer requires in-depth research,
our elaboration so far may offer helpful clues. Poland and the Slovak
Republic have had to face unusually difficult social structural problems.
Despite efforts to embed neoliberalism (at least until the early 2000s)
these societies lag far behind other Visegra
´d countries in terms of actual
achievements in social cohesion. They are not just leaders in CEE but in
the whole of the EU in the rate of both unemployment and long-term
unemployment. Moreover, the risk of becoming poor remains very high
in both cases even after social transfers (Eurostat). Last but not least,
both countries are plagued by grave sectoral and regional inequalities.
Even if their elites for most of the transformation period have tried, they
have so far failed to avoid the perils of dualistic societies, in which
gratitude over the advance of others is rapidly overwhelmed by the
apathy or fury of those who just cannot make it (Hirschman 1981: 49).
Persistent deep social gaps combined with grave ideological and political
divisions within elites prepared the ground for the rise of illiberals in
Poland and the Slovak Republic, while in Hungary social dualism at
least, and in the Czech Republic both social and elite divisions, have so
far remained within safer limits.
EU Pressures, TNC Preferences, and the Socioeconomic Logic
of Regime Diversity
We found that early political choices mattered for the emergence of regime
clusters. But is democratic national politics the only factor that has been
important? After all, the regimes did not evolve in a closed national
economy, or in a social vacuum. Consequently, all of the relevant
opportunities and constraints might not be captured at the level where
democratic national politics rules. Below we argue that although domestic
politics has not lost its significance, by the late 1990s it had become
increasingly constrained by the pressures of the EU and the preferences of
transnational corporations.
Transnational Capitalism in Central-Eastern Europe 455
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The Role of the EU
Left on their own, the CEE regimes would have perhaps ended up as even
more divergent: the Baltic states more market-radical, politically and
socially more exclusive, the Visegra
´d states less macroeconomically stable,
and Slovenia more protectionist. However, through (and beyond) the acquis
communautaire proper, the EU seems to have promoted a certain model of
capitalism too. That model consists of four pillars, the Single Market, the
EMU, the Lisbon Agendas, and, subordinated to the former, a social
dimension, each of which prioritises the very issue areas where the CEE
regimes diverge. During and after accession various EU bodies and actors
made efforts to keep divergence under control, cut back ‘extremities’, and
guide the CEE regimes towards some balance. Thus, to comply with EU
requirements, Estonia had to deliberalise its trade policies before entering
the EU, whereas Slovenia was pressed to speed up its sluggish privatisation
process, and let foreign capital take over its strategic sectors (Lindstrom
2005). Several Visegra
´d countries were repeatedly criticised for failure in
keeping their macro-fundamentals in line with the Stability and Growth
Pact, or, alternatively, for trying to catch up with old members by tax
competition and social dumping. It can perhaps be argued that – albeit in a
somewhat ad hoc fashion – the EU has tried to promote a form of
embedded neoliberalism in CEE that mixed the contradictory regime
features of older member states.
It is important to note, however, that in its interaction with would-be
members the EU never merely functioned as a purely ‘external’ factor. Its
influence is perhaps more adequately viewed as one implanting international
and transnational dimensions and reference points into domestic politics
without actually participating in it. On the one hand, domestic actors have
frequently used EU requirements, and the voice of community actors and
institutions monitoring them, for their own political purposes (Dyson 2006).
On the other hand, the EU accession process has opened the CEE
economies to TNC, which, similar to the EU, have not been enmeshed in
domestic politics, but have had other means to intervene in, and leave their
mark on, the emergence of regime diversity.
The Systemic Power of TNC
Most importantly, capital enjoys ‘‘‘systemic power’’ embedded in the
institutional substructure of the economy . . . Perhaps the simplest way to
think about the systemic power of business is in terms of ‘‘exit options’’’
(Pontusson 1992: 233). This general concept can be tailored to fit the context
of CEE transformation. First, given the scarcity of capital in the region, it is
unsurprising that TNC became the leading fraction of the emerging business
communities. Second, TNC disposed of systemic power before entering
these economies: this stemmed from the option to refuse to enter and invest.
456 D. Bohle and B. Greskovits
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Third, after FDI materialised, the whole dynamics of exit, voice, and loyalty
(Hirschman 1970) came fully into play, and shaped, depending on TNCs’
strategies and cross-border mobility, the actual form and degree of their
power vis-a
`-vis national governments. How have TNC responded to the
signals of public authorities? How much have they invested and what have
they invested in?
Foreign-led Reindustrialisation versus Deindustrialisation
Above we pointed out that the divergence of regime performances in
industrial transformation coincided with the variation in FDI inflows into
complex industries. How did this variation come about, and what are the
consequences? In the mainstream view, FDI is endogenous to the advance of
market reforms. For this view, the meagre achievements of the Baltic states
in attracting complex-industry FDI and the resulting deskilling of Baltic
exports should present a puzzle. Why have these states proved so ineffective
in attracting the main drivers of industrial upgrading if they have been so
capable of creating many of its alleged conditions: radically reformed stable
economies, low taxes, political stability, and national security? Why
have complex-industry TNC consistently preferred Visegra
´d locations to
the Baltic area? Our answer is that TNC location choices responded to the
incentives stemming from a dynamic interplay between inherited and
restructured industry profiles, inherited and newly-built market institutions,
and special subsidy packages.
To account for TNC motivation we adapt Vernon’s product-cycle theory
(1971), and on that basis we argue that export-oriented, complex FDI had to
flow first to those former socialist economies whose initial supply structures
(that we proxy by the export structures of the late 1980s–early 1990s) had
been relatively complex (i.e. intensive in technologically sophisticated
physical capital and human skills). As a consequence, the Visegra
´d countries,
which already specialised in the automobile, machinery or electronics
industries during late socialism (Csaba 1984), could rightly expect larger
inflows of industry-specific FDI than other (e.g. the Central Asian) states
where this sector was virtually absent. In this respect, the Baltic states, which
by the last decade of state socialism increasingly exchanged technology and
skill-intensive goods with natural resources from other parts of the empire,
had not been particularly disadvantaged. Given that on the basis of their
supply structures all CEE countries initially seem to have had comparable
attractions as new locations for transnational complex-export production,
product-cycle theory alone cannot account for the diverging path taken by
the Baltic and Visegra
´d states. How then did investors choose among them?
For an answer we have to consider that even similar supply structures
might fail to raise investors’ interest if institutional and policy barriers
hamper access to the demanded local factors of production. It follows, then,
that countries which, by the time investors were ready and able to cross the
Transnational Capitalism in Central-Eastern Europe 457
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former Cold War borders, advanced furthest in removing entry barriers and
rebuilding their institutions and policy regimes were better able to attract
FDI. Our evidence confirms that in the first half of the 1990s the Visegra
´d
states outcompeted the Baltic states, which could start their quest for
institutional convergence with the West only after a delay and from scratch
(Figure 1). In the first phase of the transformation, then, in the context of
rather similar supply structures, institutional advantages tilted the balance
of investors’ preferences in favour of the Visegra
´d countries. Complex FDI
inflows had been endogenous to the initial levels of marketisation.
However, the interplay of structural and institutional factors seems to
have fully reversed, and the endogeneity of complex FDI to marketisation
levels failed to materialise after the mid-1990s. The Baltic states gradually
worked off their institutional disadvantage, and by 2003 arrived at a high
degree of institutional similarity with their regional rivals and the West.
However, their institutional catching up does not seem to have been
appreciated by transnational complex-industry investors. What seems to
explain the Baltic states’ inability to attract complex industry FDI after the
mid-1990s is that their radical institutional convergence has been achieved at
the expense of increasing divergence in supply structure terms (Figure 2). In
the late 1990s, in the context of increasing institutional similarity, TNC
continued to prefer the same Visegra
´d area locations mainly because of their
enhanced structural similarity with the West, whereas the Baltic countries
might have lost out due to the increasing divergence of their supply profile.
Initial investor preferences, motivated by a combination of structural and
institutional factors, seem to have launched both virtuous and vicious circles
of foreign-led capital accumulation. Their driving forces included the
contrasting trends of industry upgrading versus deindustrialisation; the
tendency for many more TNCs to ‘follow the leaders’, their rivals and
buyers, to the initially preferred Visegra
´d locations; the concomitant
FIGURE 1
AVERAGE TRANSITION INDEXES
Sources: authors’ own calculation based on EBRD Transition Report various volumes.
458 D. Bohle and B. Greskovits
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clustering of the complex industries in the same area; and lastly the generous
subsidy packages offered by the Visegra
´d states to TNCs.
Through FDI, the complex industries of the Visegra
´d states gained access
to much needed tangible and intangible factors of production, upgraded
their activities, and developed competitive strengths even in the more
demanding Single Market. In contrast, deprived of the abovementioned
means of upgrading and restructuring, these same industrial sectors could
not stand the intense global competition in the Baltic countries. Thus the
same sectors that propelled development in the Visegra
´d area all but lost
their markets, factors of production, and policy influence in the Baltic states.
Moreover, the radical course of liberalisation, rather than breaking the
vicious circle, accelerated the atrophy and collapse of the complex
industries. In a short time an entirely different sectoral profile emerged
with traditional light and resource-based industries at its core.
TNC usually follow their rivals and buyers to new production locations,
while the first investors try to fend off rival followers not least by enlarging
their already existing facilities (Vernon 1971). This strategy, observed in all
Visegra
´d countries, further contributed to the virtuous circles of accumula-
ting complex-industry FDI. To be sure, the evolving TNC-led systems of
production did not have much of a true national character. Rather, the
clustering of complex industries brought about the tight cross-border
integration of the Czech Republic, south-western Poland, the north-west of
the Slovak Republic, and north-western Hungary that further enhanced their
attraction. The Baltic states, due to the increasing divergence of their supply
capacities, could neither establish linkages to the Visegra
´d cluster, nor attract
adequate FDI to build their own complex manufacturing growth pole.
The competition within the Visegra
´d group that intensified in the first
half of the 2000s made it even more difficult for outsiders to acquire new
investments in these industries. More than the TNC themselves, which by
that time could produce efficiently virtually anywhere within the cluster,
these states, and especially ambitious latecomer the Slovak Republic, have
FIGURE 2
COMPLEX EXPORTS’ SHARE IN TOTAL EXPORTS (%)
Sources: authors’ own calculation based on United Nations COMTRADE database. Complex exports are
SITC 5 (chemicals) and 7 (machinery and equipment).
Transnational Capitalism in Central-Eastern Europe 459
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cared a great deal about whether a new car assembly or electronics transplant
operated on their own, or their neighbour’s, territory. The resulting ‘bidding
war’ in incentives magnified the overall cost of complex FDI inflows and
exacerbated the competitive disadvantages of countries outside the cluster,
especially if they were structurally handicapped too.
Slovenia has been no less an outsider to this competition than the Baltic
states. Even so, its complex industries could become more competitive in
international markets. As mentioned above, this is mainly due to Slovenia’s
exceptional legacy: it could improve competitiveness essentially on the basis
of its inherited domestic industries, and by much less transnationalisation
than the Visegra
´d economies.
Social Consequences
Industrial transformation is not the only area where the ambitions of
national states might not suffice for certain regime properties to develop,
because adequate TNC responses are indispensable for success. In a similar
vein, social and labour inclusion is not purely a matter of political decisions
either. Especially in small open economies, so characteristic of CEE, welfare
and labour market policies depend on the consent of the business groups
which mark the competitive edge of the economy, and on their willingness to
enter, or not to use the exit option but to stay put.
How have TNC preferences and decisions played out in the course of the
region’s industrial transformation? Drawing on authors who trace various
instances of labour-inclusive policies to business preferences (Frieden 1988;
Shafer 1994; Iversen 1996), in an earlier study we proposed that TNC
preferences and their impact have not been uniform, but varied over time
and across leading industries (Bohle and Greskovits 2006). In other words,
divergent paths of transnationalisation have posed different challenges both
for labour and social welfare.
The collapse of the state socialist heavy industry core had the most
profound impact during the recession of the early 1990s. Output and exports
collapsed, and labour was crushed. Real wages dropped from two-thirds to
half their level in 1989, firm-based social benefits disappeared, union density
halved. Masses of workers became unemployed, were forced into early
retirement, or sent back to the household. Fast re-employment at com-
parable terms had hardly been an option since foreign capital had not been
in hurry to take over the giant steel mills, coal mines, and fertiliser com-
bines. Yet Slovenia and the Visegra
´d states, front-runners in market
reforms, did attract foreign involvement in their traditional light industries
early on. Transnational businesses started to set up export-oriented sub-
sidiaries and subcontracting operations. In combination, the collapse of the
inherited heavy industry and the emerging transnational division of labour
in the light industries produced an extremely hostile environment for labour.
In the former sector, state managers sometimes tried but could do little to
460 D. Bohle and B. Greskovits
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protect workers from mass social dislocation. In the latter, union-free
sweatshops of low-cost, low-skilled labour dominated the scene.
After the mid-1990s – earlier in Slovenia and the Visegra
´d countries than
in the Baltic states – the decline of socialist heavy industries bottomed out
and transnational capital took over in restructuring. Following the ‘leaders’
of the early 1990s, Western FDI began to pour into the capital- and skill-
intensive industries of the Visegra
´d states (and in more modest amounts to
Slovenia). Especially after 2000, we can observe signs of further upgrading:
the relocation of more sophisticated production processes, as well as R&D
facilities, marketing, logistics and other production-related services. Still,
these processes that signal fair prospects for economic and social progress
are unevenly distributed across CEE. First, the collapse of socialist core
industries plagued the Baltic states longer than Slovenia and the Visegra
´d
countries. Second, while no significant amount of capital- and skill-intensive
manufacturing FDI has entered the Baltic economies, the accelerating
eastward migration of transnational light industries from Western (and now
even Visegra
´d) locations transformed them into hosts of many of the low-
cost assembly sweatshops of the EU.
The diversity of CEE’s transnationalisation paths has had social
consequences. We can detect its main impact in the superior performance
of Slovenia and the Visegra
´d economies in terms of real wages and work
conditions. Partly, this progress can be traced to their new industries’ reliance
on high-skilled labour that is able to handle complex technological processes
and equipment. Businesses are likely to be more willing to accommodate
skilled workers’ demands, while skilled labour is in a better position to press
for such an accord (Gourevitch 1986; Estevez-Abe et al. 2001; Mares 2003).
The chances for a compromise are also improved by the relatively limited
cross-border mobility of these industries that stems from the scarcity of high-
skilled versus unskilled labour, the sizeable fixed costs of huge invest-
ments, as well as locally and regionally established supplier–buyer networks
(and other agglomeration effects), which conspire against rapid relocation.
However, the overall picture is not uniformly positive. To attract and keep
complex-industry TNC loyal, generous incentives have to be provided which
at the extreme may undercut welfare provisions. Thus, while firms in complex
industries tend to be friendlier with their own employees, the incentives
offered to them might force the rest of society, and especially its marginalised
less vocal groups, to pay the costs of foreign-led industry upgrading.
In all the above respects the Baltic states’ situation differs. Their light
industry TNC, rather than significantly investing in local facilities, usually
subcontract production to a multitude of small or medium-sized domestic
firms. Above all, it is keeping labour markets flexible, wages low, work
conditions unregulated, and workers docile that these firms expect from
their hosts, while they are less demanding in terms of protectionist state
intervention. Cross-border hyper-mobility is their means to keep national
authorities under pressure. In essence, then, the Baltic leading export
Transnational Capitalism in Central-Eastern Europe 461
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industries seem to make their own employees pay the costs of precarious
transnational integration.
Finally, no matter how varied its paths have been, the recovery phase of
industrial transformation has not led to the recovery of unions and
negotiated industrial relations anywhere in the region (except in Slovenia,
where labour power was never dismantled in the first place). Even the major
skill-intensive investors seem to prefer individual case-by-case deals with
their workers and public administrations to nationally or sectorally
organised interest mediation.
Summary and Conclusions
In our study we set out to map and explain different capitalist political
economies that emerged from the transformation of CEE societies. We
established the following regime variation. The neoliberal Baltic states
excelled in market radicalism as well as macroeconomic stability, but
lagged behind other states in industrial transformation and social
inclusion. In the absence of significant protection by industrial policy or
social welfare institutions, most social groups have been exposed to world
market pressures. Fiscal and monetary institutions, small budgets, currency
boards, and independent central banks acquired dominance in mediating the
relationships between the international and the Baltic political economies.
In contrast, the embedded neoliberal and less market-radical Visegra
´d
states achieved better results in building complex, competitive export
industries. At the same time, they have been somewhat more socially
inclusive too. It is precisely the established measures and institutions of
industrial policy and social welfare that make their neoliberalism embedded
and distinctive. This regime has mobilised substantial resources to ‘pamper
in their infancy’, and later assist the expansion of, new transnational
industries. In turn, welfare schemes helped large social groups to avoid, or at
least slow down, their decline to underclass status. However, the institutions
safeguarding macroeconomic stability have not become established in most
Visegra
´d states so far.
Finally, only the least market-radical, neocorporatist Slovenia succeeded,
in a balanced manner, in all the above areas simultaneously. Competitive
industries and better social indicators did not come at the cost of
macroeconomic instability. Dominant neocorporatist institutions, such as
legally enforced negotiated management–labour relationships, and extended
collective agreements have so far been able to deliver the compromises
required for a balanced and inclusive agenda.
Our explanation of regime variation stressed the interplay of two groups
of factors. On the one hand, we argued that initial political decisions
mattered. The legacies of the past, and their perceptions by the reform elites
as either threats to or assets for their countries’ future, had a deep impact on
regime types. Legacies and initial choices were no less crucial for the degree
462 D. Bohle and B. Greskovits
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of democratic inclusion, and the different patterns of protest and patience
on the paths towards the new regimes. On the other hand, we demonstrated
the importance of transnational influences in mediating and consolidating
the shape of industrial transformation and social inclusion. On these
grounds we conclude that while initially politicians had considerable
freedom of choice concerning their new regimes, later on their freedom
has been constrained by the EU and TNC. Thus by the early 2000s we see
the development of CEE societies as increasingly path-dependent.
This leads us to specify our own conceptual contribution. Clearly, we are
not the first to discover and explore post-socialist diversity. Rather, in our
study we build on earlier influential approaches. Among them, we drew on
the core proposition of ‘neoclassical sociology’ that post-socialist ‘capitalism
can be most fruitfully perceived as a variety of possible destinations ...a
world of socioeconomic systems with a great diversity of class relations and
institutional arrangements’ (Eyal et al. 1998: 16; see also Stark and Bruszt
1998). Although these accounts rightly stress the salience of the varied
inheritance of elite structures, institutions, and political decisions for the
emergence of different types of capitalism, we found them wanting for
neglecting international and transnational influences (Bohle 2000). Accord-
ingly, we believe that our approach helps to think in a consistent manner
about all important factors of post-socialist diversity, that is past legacies,
political choices, and internationalisation, as well as their dynamic inter-
action over time and across a large number of cases.
Recent work in the neoclassical sociology tradition took the international
dimension more seriously (Bruszt 2002; King 2002). King (2002: 28) defined
two varieties of post-socialist capitalism: ‘a patrimonial variety dependent on
raw materials exports which produces ‘‘involution,’’ and a liberal variety that
is dependent on capital imports and manufactured exports, and that leads to
some development’. These types are helpful to understand some of the
contrasting features of post-Soviet and CEE capitalism. Yet, they sit uneasily
with evidence on the considerable variation within CEE regarding growth,
equity, and stability, and their sources. Compared with the internationalised
version of neoclassical sociology, our contribution lies in unpacking the
broad and general terms and separating varied patterns of transnationalisa-
tion, capital imports, and manufactured exports as factors of growth versus
involution as well as social equity versus disparity. We also hope to have
offered a more sophisticated picture of the politics of emerging diversity.
For example, while King (2002: 8), following Eyal et al. (1998), argues that in
CEE ‘Monetarism and neoliberalism served as ideologies uniting the techno-
crats and dissidents intellectuals’, we suggest a more complex interplay
between neoliberalism and nationalism that highlights the importance of
non-economic factors for the divergent CEE paths.
Attention to identity politics also characterises some of the most recent
inquiries into the contrasts between Estonia and Slovenia (Buchen 2005;
Feldmann 2006b). To contrast the extreme cases of these mini-states, these
Transnational Capitalism in Central-Eastern Europe 463
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authors adopt the Varieties of Capitalism (VoC) approach. We find their
comparisons inspiring apart from one shortcoming that originates in the VoC
framework. Authors in that group assume the prior existence, and hence the
explanatory power of, established and consolidated national institutions,
which can withstand global pressures towards uniformity (Hall and Soskice
2001). However, this assumption cannot hold in the same way in the post-
socialist regimes, as most institutions coordinating their economic activities
currently were not in place before their transformation and internationalisa-
tion. Rather, as we have argued, their emergence and consolidation were
much more thoroughly shaped by the influence of transnational factors than
in the case of Western liberal market and coordinated market economies.
That is why in our future research, rather than directly importing the VoC
framework, we prefer to elaborate on the details of our own approach to
Eastern Europe’s varieties of transnational capitalism.
Acknowledgements
Gregory Luebbert’s path-breaking book (1991) gave us ideas and
inspiration for our study. We thank an anonymous reviewer for very
helpful comments. We also gained much from discussions of earlier versions
of our paper at the Comparative Politics Workshop ‘Post-Communist
Political Economy and Democratic Politics’ in the Department of Political
Science at Duke University, and at the Varieties of Transnational
Capitalism Doctoral Seminar at the Central European University. Our
special thanks for criticism and encouragement go to Attila A
´gh, La
´szlo
´
Bruszt, La
´szlo
´Csaba, Klaus Goetz, Bob Hancke
´, Herbert Kitschelt, Zdenek
Kudrna, and A
´da
´mTo
¨ro
¨k.
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