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Polish Experience in a Comparative Perspective
Abstract
This chapter discusses shaping up, evolution and the present situation in the state corporate control of three other post-communist countries where the role of the state-controlled sector is very significant and/or increasing: Hungary, Russia and Belarus comparing their experience with that of Poland and between each other. Analysis of each country, after discussing the specificity of challenges at the beginning of the transition, in an abridged form repeats the structure of the analysis of the Polish case presented in Chapters 4– 6: shaping up and evolution of the state corporate control, its present state, the portrait of the SOE sector and discussion on the factors that lay behind the identified processes and phenomena.
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The aim of this study is to explain the special feature of the contemporary Polish
economy which is the lack of oligarchy after 30 years of the post-communist
transformation.
The article consists of three parts. The first covers the theoretical and methodological
framework for further analysis. We present the definitions and classifications
of oligarchy and oligarchic systems in the modern world and provide
a brief overview of the literature on the subject and the state of knowledge.
In the second part, we explain the lack of an oligarchic system in Poland, linking
this fact with specific elements of the socialist heritage and with the model
of economic transformation and privatisation adopted in this country during
the first years of the systemic reforms.
In the third part, we present two paradoxes that are related to the oligarchisation
of post-communist economies and, indirectly, to the assessment of the Polish
path of economic and political transformation. We show that oligarchy and
the relatively large sector of state-owned enterprises determine two diff erent
models of rent-seeking.
This article discusses political state capture in the context of party patronage. Evidence of this is delivered from state-owned enterprises (SOEs) and the rotations of members of their management and supervisory boards. In this case, it is deemed that an interest group, which consists of politicians and representatives in the government administration, decides about the appointment and dismissal of board members through the corporate governance of SOEs and ownership policy of the state. We analyzed the scale and intensity of rotations in Poland of about twelve thousand joint-stock companies in the years 2001–2017 according to their ownership structure. We show that changes of managers and supervisory board members in state-owned enterprises are higher than in private companies and are related to political elections. We estimated that on average three months after a new government is formed, a peak of changes in the composition of boards is observed, though they are earlier in the case of a supervisory board. We conclude that this can be regarded as an example of state capture by politicians.
Since about 2009, increasing budgetary constraints forced the Russian state to become notably less tolerant of lower-level corruption and predatory behavior by state agencies. In this paper, we argue that after a first stage of decentralized corruption and state capture during the 1990s, and a second period of decentralized corruption and business capture during the 2000s, Russia has entered a third stage of more centralized corruption since 2009. We build our argument on a detailed discussion of property rights relations in Russia, and support it with indicative quantitative data, suggesting that raiding attacks on businesses and corrupt behavior by state agencies have become less frequent and more centralized between 2009 and 2016. The sustainability of this move towards a more centralized mode of corruption remains questionable, however, mainly due to the lack of a long-term vision for the development of the country.
Belarus was among the few post-communist countries to resign from comprehensive market reforms and attempt to improve the efficiency of the economy through administrative means, leaving market mechanisms only an auxiliary role. Since its inception, the ‘Belarusian economic model’ has undergone several revisions of a de-statisation and de-regulation kind, but still the Belarusian economy remains dominated by the state. This paper analyses the characteristic features of the Belarusian economic system – especially those related to the public sector – as well as its evolution over time during the period following its independence. The paper concludes that during the post-Soviet period, the Belarusian economy evolved from a quasi-Soviet system based on state property, state planning, support to inefficient enterprises and the massive redistribution of funds to a more flexible hybrid model where the public sector still remains the core of the economy. The case of Belarus shows that presently there is no appropriate theoretical perspective which, in an unmodified form, could be applied to study this type of economic system. Therefore, a new perspective based on an already existing but updated approach or a multidisciplinary approach that incorporates the duality of the Belarusian economy is required.
We propose the new concept of Caesarean politics to explain democratic deconsolidation in Hungary and Poland. We argue the move towards illiberal democracy in both countries has been made possible by a shift towards Caesarean politics, in which radical changes are framed as “politics as usual”, while in fact these challenge the essence of liberal democracy. Focusing on the three pillars of Caesarean politics: (1) patronal politics, (2) state capture, and (3) identity politics, we show how both countries become cases of Caesarean politics, where, using discourses of “friends” and “enemies”, the leader coordinates vast patronal networks that capture the state.
The foreign direct investment (FDI)-led development path of the East-Central European (ECE) countries has been queried most recently. Using mainly the evidence of Hungary and Poland the paper analyses one of the potential reasons of this strategic turn: the struggle between political elites. One elite was bound to the strong presence of multinational business and the institutions of the ‘competition state’. Their positions were challenged by another political elite that allied mainly with local bourgeoisie. One main arena of conflicts is the economy where political elites try to widen their influence in order to gain financial support. New forms of rent-seeking and corruption became possible after the V4 accession to the European Union (EU) when the flow of financial aid increased. Aid was channelled to partisan firms in public procurement tenders that made legal corruption possible. Political and social control over this practice declined with the demise of classic program parties’ role in politics and the raise of populist ‘business firm’ political parties.
Podstawowym celem artykułu „Społeczna percepcja prywatyzacji w okresie transformacji systemowej w Polsce” jest próba odpowiedzi na pytanie: jak zmienia się społeczna percepcja prywatyzacji, a więc poziom jej akceptacji (w wymiarze deklaratywnym) wraz z postępującym procesem przekształceń własnościowych polskiej gospodarki w latach 1990 – 2006.
Rozważania dotyczące społecznej percepcji prywatyzacji prowadzone są na podstawie wyników badań sondażowych zrealizowanych przez Centrum Badania Opinii Społecznej w latach 1990 – 2006 w odniesieniu do szeregu czynników determinujących otoczenie gospodarcze, polityczne oraz społeczne, które na percepcję tą silnie oddziałują.
Autor szczegółowo charakteryzuje oraz wprowadza podział na okresy, w których następowała istotna zmiana dynamiki percepcji prywatyzacji polskiej gospodarki. Okresy te zostały wyodrębnione na podstawie postrzegania przez Polaków korzyści prywatyzacji w trzech wymiarach tj. wymiarze ogólnogospodarczym, wymiarze indywidualnym (osobistym) oraz wymiarze pracowników sprywatyzowanych przedsiębiorstw.
W artykule została sformułowana hipoteza badawcza, która brzmi: prywatyzacja pomimo systematycznie ewoluującej zmiany struktury gospodarki z państwowej na prywatną jest powszechnie akceptowana jedynie w wymiarze ogólnogospodarczym (warstwie ideologiczno-symbolicznej), a im bliższe są jej konkretne realizacje, które nie są wdrożeniem modelu akcjonariatu pracowniczego, tym więcej budzi wątpliwości i oporów.
Artykuł stanowi przyczynek do teorii transformacji systemowej.
The chapter introduces the reader into developments of illegal corporate raiding ("reiderstvo" in Russian) in post-Communist Russia and explains its interdependency with privatization in the 1990s and persistence of weak property rights protection that followed. It connects the issue to the concept of Russia's network state enabling understanding of how existence and interaction of informal power networks facilitate redistribution of property and economic assets. Typology of reiderstvo is presented in historical perspective and a number of empirical cases of reiderstvo from the 1990s until 2010s are discussed. In particular, the role played by representatives of security services in the state apparatus and business (“siloviki” in Russian) for increase of reiderstvo after 2000 is stressed.
The task of this paper is to study the growing state interventionism in Poland using the state capitalism approach. In particular, we try to refine the state capitalism concept in order to make it more applicable for studying transition economies, and with the help of this to analyse state capitalism manifestations in Poland. State capitalism in the broad and the narrow sense are defined, as well as six major manifestations of state capitalism in transition economies. Using this framework, we study the history of state capitalism formation and its present state in Poland, including specific features of Polish state capitalism, e.g. the importance of political capitalism and the use of SOEs as the source of rents, as well as the varieties of the state control over the enterprise sector. We draw special attention to the role of the state in the enterprise sector in state capitalism formation. The paper contributes to studies in state capitalism, in particular in transition economies, although several unanswered question still remain, such as whether the statist turn in Poland and several other transition countries is the system change, what are the roots of state capitalism, what is the impact of state capitalism on the ability of the governments to meet the social and economic development goals, etc.
In this paper, we pursue two related research questions. First, we enquire whether state owned enterprises (SOEs) perform better than privately owned firms in a large variety of emerging markets. To test this, we develop a unique dataset using firm-level data from the World Bank Enterprise Survey (WBES), resulting in a sample of over 50,000 firms from 57 understudied countries including emerging capitalist, former socialist and state capitalist ones. Our results suggest that SOEs do display productivity advantages over private firms in these understudied economies. Our second research question asks whether the performance of state-owned firms in these understudied countries is context specific, namely whether performance depends on the institutional system to which a country is classified. We refer to these systems as configurations. In particular, we are interested in whether state owned firms perform better in “state capitalist” countries including China and Vietnam. We find empirical support for the argument that the “state led” configuration provides better institutional support for the ownership advantages of SOEs than others.
The article focuses on the problem of the civil service’s dependence on its political superiors in Poland in 1996–2017. It aims to analyse the motivations of politicians responsible for civil service reforms and to assess the impact of these reforms on the effectiveness of the corps’ functioning. The authors conceptualise the problem of politicisation of the civil service by referring to the theory of politicisation adding an extra dimension of political ideas and institutions as an important factor of change in Poland’s public administration system. The article describes the stages of civil service reform in Poland over the last twenty years, taking into account the political context, the most important postulated changes and the associated controversies with reference to the concepts outlined in the theoretical part. The study also comprises a relevant literature review based on a number of sources, including the reports published by the Head of the Civil Service in Poland, international databases (including Quality of Government) and specialist reports with a particular emphasis on research devoted to Central Europe. The findings paint a multi-layered and nuanced picture of the evolution of the Polish civil service and its strong associations with the issue of the so-called “unfinished transformation”. In addition the article confirms that both the instrumentalisation of institutions by the “camp” of political opportunists and their formal, radical reconstruction by the “ideological contrarians” resulting in the centralisation of power around the ruling parties have had a negative effect on the quality of civil service functioning in Poland.
A könyv a privatizációt a posztszocialista rendszerváltás kontextusában tárgyalja. A szerző által kidolgozott új modell a szocialista vállalatok tulajdonosi-irányítási rendszerét, illetve ezen vállalatok privatizációját három szereplővel írja le. Az első szereplő az országot irányító pártállam vezére, a totalitárius vezető, illetve 1990 után a kancellári hatalommal rendelkező pártelnök-miniszterelnök. A második szereplő a (párt)állami bürokrácia, a harmadik a vállalati menedzsment. A privatizációs tranzakciók végrehajtásában, illetve a folyamatok utólagos elemzésében a nehézségek nem a bonyolultságból, hanem az összefüggések szerteágazó voltából adódnak. A bőséges terjedelemnek ez a legfőbb oka. Mivel a gazdaság alapvető termelőeszközeiről van szó, minden esetben sokféle érdek, szabályrendszer és szervezet érintettsége merül fel. Ezeket is meg kell érteni, ha értékelni akarjuk, hogy mi miért történt, és történhetett-e volna lényegesen másképpen. Három évtized munkája van ebben a monográfiában. A szerző kezdetektől változatlan, mély meggyőződése, hogy a rendszerváltás körülményei között a központilag vezényelt, gyors magánosításnak nem volt alternatívája. Ennek hiányában az állami vagyont ellenőrizetlen körülmények között – aki bírja, marja alapon - széthordták volna. Ezt a kényszert a III. Magyar Köztársaság első, szabadon választott kormánya felismerte, pontosabban szólva elfogadta a rendszerváltás előtti reform-közgazdász nemzedék helyzetértékelését, és ennek nyomán alapjában véve helyes utat választott a privatizáció módszereit illetően is.
This paper combines national accounts, survey, wealth and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and distribution of income and wealth in Russia from the Soviet period until the present day. We find that official survey-based measures vastly under-estimate the rise of inequality since 1990. According to our benchmark estimates, top income shares are now similar to (or higher than) the levels observed in the United States. We also find that inequality has increased substantially more in Russia than in China and other ex-communist countries in Eastern Europe. We relate this finding to the specific transition strategy followed in Russia. According to our benchmark estimates, the wealth held offshore by rich Russians is about three times larger than official net foreign reserves, and is comparable in magnitude to total household financial assets held in Russia.
The expansion of public ownership after 2008 occurred in many European countries as a crisis-management tool. Is the new wave of Hungarian nationalisation a part of this general trend or a component of a unique, ‘unorthodox’ economic policy? The article sums up the main features of recent European nationalisation and reveals similarities and differences in this context. It argues that although current ownership changes in Hungary are outwardly consistent with those that have occurred in other European countries (and in the United States), they in fact reflect the particular agenda of the post-2010 Orbán government. The key peculiarity of the recent Hungarian nationalisations is their embeddedness in a complex system of political and economic changes rather than being aimed at short-term crisis management.
The article examines how the roles of state institutions and state owned enterprises have been changed in Ireland since its independence, with special regard to the role of state ownership and crisis management. The history of planning and social partnership, the courses of nationalisation and privatisation and the problem of damaging the state are discussed as well. The author concludes that the crisis has not resulted in the strengthening of the developmental or welfare role of the state, the evolution of a "developmental welfare state" has become less likely in Ireland in the course of crisis management. Another lesson is that the state can manage certain bad assets of the private sector in a way that yields a profit to the public. There are other costs of the crisis management, however, which are to be paid by the people and result in a decrease of state ownership and a shrinking of the welfare systems.
Manifestations of patrimonialism such as corruption and state predation on business are widespread in many emerging economies. This paper presents the case of Russian political economy, dubbed ‘statist-patrimonial capitalism’, which is marked by state threats to private property rights through bureaucratic extortion or legal harassment. How can we explain the resilience of Russia’s statist-patrimonial capitalism? Predominant accounts focus on the lack of institutional constraints on state predation. The paper offers a different perspective by exploring the often-overlooked contribution of small- and medium-sized enterprises (SMEs). First, statistical data show a steady rise of SMEs in the 2000s despite increasing state predation, suggesting that SMEs are not simply subjugated by the state. Second, in-depth interviews with Russian entrepreneurs reveal that business contributes to the maintenance of the statist-patrimonial system through the mechanism of the ‘informality trap’: firms that choose the informal strategy have difficulties to return to the legal sphere and get stuck in informality. The drivers of informality include firm-specific characteristics, institutional factors and socio-cultural factors dubbed ‘normality’. The mechanism of the ‘informality trap’ highlights the agency of firms in corrupt polities and may be applicable to other emerging economies.
In this paper the authors make a critical distinction between inequalities arising from profits and wages and inequalities arising from rents, following Sorensen and 19th century economist Ricardo. Their new contribution is to articulate how rents are especially important in post-communist capitalist transition. Without the concept of rents, the mechanisms of corruption cannot be understood. The authors identify three types of rent-seeking behavior, which can be observed in any capitalist country, that play a particularly important role in post-communist transition: (i) market capture by political elites; (ii) state capture by oligarchs; (iii) capture of oligarchs by autocratic rulers through selective criminalization and the redistribution of their wealth to loyal new rich.
The case-by-case approach is viewed as the most salient feature of the Hungarian privatisation which stands in contrast with various mass divestiture methods applied in other transition economies. The paper examines the origins, the raison d'etre of the case-by-case approach as well as its consequences. It is shown that this privatisation technique has, by necessity, led to mixed ownership where private owners have to live for a while in partnership with state or quasi-state organs. From a corporate governance perspective the states's residual shares pose an undesirable burden on the privatisation process. Moreover, the subsequent sell-offs have proved to be much less successful as it had been anticipated.
This handbook presents the latest theoretical and applied thinking on state capitalism, i.e., the institutional, policy, and ownership arrangements that reflect the direct influence of the state on the economy and firm behavior. It is a timely volume given the worldwide changes regarding the role of the state in the economy. Starting in the 1980s, there was an apparent process of retrenchment from earlier statism that had dominated most world economies since the 1940s, with state-owned enterprises becoming partially and fully privatized, industries becoming deregulated, and economies becoming liberalized by governments. However, in the 2010s the process saw a reversal, both in advanced economies (with governments regulating industries and nationalizing banks and firms to deal with the aftermath of the Great Recession that started in 2008) and in emerging economies (with governments using domestic firms as extensions of economic policy and supporting the international expansion of state-owned firms). This trend has resulted in new and more complex realities of the influence of the governments on firms. This volume explores the processes through which state capitalism has emerged and is sustained, and what sets new state capitalism apart from the old. State capitalism is approached in this volume through a variety of disciplinary perspectives, including history, political economy, finance, public administration, sociology and law.
This handbook presents the latest theoretical and applied thinking on state capitalism, i.e., the institutional, policy, and ownership arrangements that reflect the direct influence of the state on the economy and firm behavior. It is a timely volume given the worldwide changes regarding the role of the state in the economy. Starting in the 1980s, there was an apparent process of retrenchment from earlier statism that had dominated most world economies since the 1940s, with state-owned enterprises becoming partially and fully privatized, industries becoming deregulated, and economies becoming liberalized by governments. However, in the 2010s the process saw a reversal, both in advanced economies (with governments regulating industries and nationalizing banks and firms to deal with the aftermath of the Great Recession that started in 2008) and in emerging economies (with governments using domestic firms as extensions of economic policy and supporting the international expansion of state-owned firms). This trend has resulted in new and more complex realities of the influence of the governments on firms. This volume explores the processes through which state capitalism has emerged and is sustained, and what sets new state capitalism apart from the old. State capitalism is approached in this volume through a variety of disciplinary perspectives, including history, political economy, finance, public administration, sociology and law.
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Anders Åslund foresaw the collapse of the Soviet Union in his book Gorbachev's Struggle for Economic Reform (1989). He depicted the success of Russia's market transformation in How Russia Became a Market Economy (1995). After Russia's financial crisis of 1998, Åslund insisted that Russia had no choice but to adjust to the world market (Building Capitalism, 2001), though most observers declared the market economic experiment a failure. Why did Russia not choose Chinese gradual reforms? Why are the former Soviet countries growing much faster than the Central European economies? How did the oligarchs arise? Who is in charge now? These are just some of the questions answered in How Capitalism Was Built, covering twenty-one former communist countries from 1989 to 2006. Anybody who wants to understand the confusing dramas unfolding in the region and to obtain an early insight into the future will find this book useful and intellectually stimulating.
This study considers the financial performance of state-owned enterprises (SOEs) in relation to non-commercial goals. We focus on enterprises operating in the production of electricity sector in the EU countries and analyse their profitability conditioning on the level of electricity prices. We reveal that SOEs underperform as compared to their privately owned counterparts when they operate in those markets that have lower prices. This suggests that their profitability is likely to be substantially affected by pursuing goals other than profit-maximisation - providing crucial products and services at affordable prices - and emphasises a need to consider the non-commercial objectives of SOEs in the empirical research.
This book presents a comprehensive analysis of socialist economics. It addresses the reasons for the early successes of socialist systems, and the reasons for their gradual breakdown. There are twenty‐eight chapters, of which the first two (in Part One of the book) are introductory. The remaining chapters are arranged in two further parts. Part Two, (chapters 3–15), deals with classical socialism, defined as the political structure and economy that developed in the Soviet Union under Stalin and in China under Mao Zedong, and emerged in the smaller countries of Eastern Europe and in several Asian, African, and Latin American countries. Part Three, (chapters 16–24), deals with the processes of reform, such as the changes started in Hungary under Kádár in 1968 or in the Soviet Union under Gorbachev in 1985, which were designed to renew the socialist system. The final, political conclusion is that Stalinist classical socialism is repressive and inefficient, but nevertheless constitutes a coherent system which slackens and contradicts itself when it starts to reform; hence reform is doomed to fail. An appendix provides a bibliography on the post‐socialist transition.
This book examines the rise and fall in the twentieth-century Western world of state-owned enterprises, a chief instrument of state economic intervention. It offers historical perspective on the origins and purpose of state-owned enterprises, their performance, and the reasons for their precipitate decline from their heyday in the 1960s to the waves of privatization in the 1980s and 1990s. Looking to the future as well as the past of state business, this book explores the concept of state-owned enterprise and its context in Western political economy, as well as the permutations and future prospects of the institution in practice. The contributors present studies of the development of state-owned enterprises in seven Western European countries and the United States.
The paper analyzes the shifts in government priorities in terms of support of big and medium manufacturing enterprises amid 2008—2009 and 2014—2015 crises. Based on the data of 2009, 2014 and 2018 surveys of Russian manufacturing firms, using logit regressions we identify factors that affect the receipt of financial and organizational support at different levels of government. The analysis shows that in 2012—2013 the share of manufacturing firms that received state support shrank significantly as compared to 2007—2008; moreover, the support concentrated on enterprises that had access to lobbying resource (such as state participation in the ownership or business associations membership). In 2016—2017 the scale of state support coverage recovered. However, the support at all levels of government was provided to firms that carried out investment and provided assistance to regional or local authorities in social development of the region, while the factor of state participation in the ownership became insignificant. The paper provides possible explanation for these shifts in the criteria of state support provision in Russia.
Purpose
This paper aims to look at the linkage of Foreign Direct Investments and Round Tripping in the Cyprus – Russian corridor.
Design/methodology/approach
The paper is divided into two chapters. The first chapter looks at the relationship between Foreign Direct Investments and Round Tripping in Cyprus and Russia. The second chapter discusses and combines statistical data from different sources about illicit financial flows from Russia and the linkage of Foreign Direct Investments and Round Tripping with Cyprus.
Findings
Evidence suggests that, despite the obviously numerous and varied legislative provisions and initiatives, the movement of vast amounts of capital to or through the Cypriot financial system is a phenomenon, which has absolutely not been removed. The illegal outflow of money seems to grow rapidly over the years instead of decreasing. What actually happens is that after a dramatic decline in the years 2013-2015 the Foreign Direct Investments of the Russians to and from Cyprus in 2016 returned to pre-crisis levels of 2013 and so far it seems the inflows-outflows system returned to "normal" levels. Cyprus ranks first in Inward Foreign Direct Investment and Outward Foreign Direct Investment with almost 35% of total flows from Russia. An element, that demonstrates the presence of round-tripping, is the sharp and rapid parallel increase of Inward Foreign Direct Investment and Outward Foreign Direct Investment and that the category of total deposits in Cyprus by non-residents, including Special Purpose Entity, recorded significant fluctuations due to the large size of deposits, but also due to the short time remaining in the banking sector. Russia ranked in the second position of largest average illegal capital outflows countries in the years 2004-2013. Movement of capital to exploit the particularly beneficial Cyprus tax system is still a tax backdoor for Europe and worldwide (hence the neologisms like Cyp-Rus), especially after the “de-offshorization” Russian law since January 1, 2015.
Research limitations/implications
-
Practical implications
Evidences presented in this paper are important for national and super-national supervisory anti-money laundering bodies and compliance authorities to understand bad practices between Russia and Cyprus financial transactions.
Originality/value
Evidences presented in this paper are important for national and super-national supervisory anti-money laundering bodies and compliance authorities to understand bad practices between Russia and Cyprus financial transactions.
The influence of the state on firms in the global economy is alive and well. States have become dominant owners of companies in many countries around the world. Firms have also increasingly established political connections to access resources and improve their competitive positions. Nonetheless, our understanding of how state ownership and political connections affect firm performance remains limited and marked by conflicting findings. Using meta-analytical techniques on a sample of 210 studies spanning 139 countries, we examine two key research questions: (a) How do state ownership and political connections affect firm strategies and financial performance? and (b) How does firm-level strategic decision making mediate the relationships between state ownership, political connections, and firm financial performance? Our findings show that state ownership has a small negative effect on firm financial performance and that political connections have no direct consequences for performance. However, we find evidence that both state ownership and political connections have a profound effect on the strategies firms pursue, such as financial leverage, R&D intensity, and internationalization, and that these strategies play a mediating role in the state ownership–firm performance relationship. We conclude with some suggestions for fruitful future research in further connecting these two important and timely research fields.
Various characterisations exist of the model of post-social capitalism. While most typologies underscore the prominent role of the state in post-socialist capitalism compared to Western economies, the literature is less clear about what exactly this role consists of. For the case of East Central Europe, some authors underscore the weakness of the state and its ‘capture’ by business interests, while others attribute to the state a benign role in successful industrial restructuring. We show that both views are of limited use to understand the phase of ‘backsliding’ that these economies are currently experiencing. We draw on anthropological models of post-socialist states that focus on elite dynamics within the state and show that this focus allows us to interpret backsliding in Hungary as a reversal of the developmental state into a clan-state.
After widespread privatization in the 1990s, the early 2000s witnessed the reemergence and consolidation of state owned industries in the postsocialist states of Central and Eastern Europe (CEE). To counter views that state owned industries have largely disappeared from postsocialist CEE due to extensive privatization, the paper demonstrates the continued economic significance of state owned industries across the region. The paper then offers a typology of state-firm relations and highlights differences in empirical cases of large state-owned firms that have emerged in the region, distinguishing between market-oriented and politicized firms. Finally, the paper develops a comparative, macro-level processual analysis accounting for the institutional and political factors that explain why some postsocialist states have developed state-owned industries that operate successfully in competitive markets while others have developed highly politicized state-controlled firm. It finds that political factors are what chiefly account for the emergence of successful state sectors in the region.
This article explores the economic performance of state ownership in the largest non-financial enterprises operating in 13 post-socialist Central and Eastern European (CEE) countries over the period 2007–2013. The largest state-owned enterprises (SOEs) are selected based on the ‘Coface – 500 Top Companies in CEE’ list in 2013. Of these 500 enterprises, 69 were identified as state-owned. All originated in the socialist period. The majority of them are from Poland and Ukraine. SOEs hold a dominant position in energy supply, the oil and gas sector, and transport. We find that the persistence of state ownership in post-socialist countries is caused by incomplete privatisation and the presence of SOEs within strategic sectors. The economic performance of the largest state-owned companies is, on average, comparable to their private counterparts.
The objective of this paper is to shed light on the antecedents of managerial support for privatisation of State-Owned Enterprises (SOEs). The results of the study, based on 134 Polish SOEs, reveal that managerial autonomy (conceptualized as the extent to which CEOs are free from stakeholder pressure) is negatively related to CEOs’ support for privatisation. Moreover, firm performance has an indirect impact on CEOs’ support for privatisation, that is, it enhances CEOs’ positive attitude towards state control, which, in turn, negatively relates to CEOs’ support for privatisation. The study brings important theoretical and practical implications, indicating that privatisation efforts may meet with strong resistance from managers who enjoy a high level of discretion in SOEs.
In an article in 2001 the author analyzed the way Fidesz, the party on government for the first time then, was eliminating the institutional system of the rule of law. At that time, many readers doubted the legitimacy of the new approach, whose key categories were the ‘organized over-world’, the ‘state employing mafia methods’ and the ‘adopted political family’. Critics considered these categories metaphors rather than elements of a coherent conceptual framework. Ten years later Fidesz won a two-third majority in Parliament at the 2010 elections: the institutional obstacles of exerting power were thus largely removed. Just like the party, the state itself was placed under the control of a single individual, who since then has applied the techniques used within his party to enforce submission and obedience onto society as a whole. While in many post-communist systems a segment of the party and secret service became the elite in possession of not only political power but also of wealth, Fidesz, as a late-coming new political predator, was able to occupy this position through an aggressive change of elite. The actions of the post-communist mafia state model are led by the logic of power and wealth concentration in the hands of the clan. But while the classical mafia channeled wealth and economic players into its spheres of interest by means of direct coercion, the mafia state does the same by means of parliamentary legislation, legal prosecution, tax authority, police forces and secret service. The new conceptual framework is important and timely not only for Hungary, but also for other post-communist countries subjected to autocratic rules.
This book uses comparative economic analysis to provide a common conceptual framework for all current European Union member states. Based on empirical investigation, the author identifies the Nordic, North-western, Mediterranean, and Central and Eastern models of capitalism on the threshold of the 2008 global financial and economic crisis. The chapters also examine the resulting institutional responses to the crisis and the methods of crisis management adopted by each member state. The analysis reveals that the crisis has not triggered radical institutional change but, instead, highlighted deep institutional differences not between the old and new member states, but between the Nordic, North-western, Mediterranean, and Central and Eastern European countries. These institutional differences are so significant that they require the rethinking of European integration theory.
Models of Capitalism in the European Union serves as a useful handbook for academics, advanced students, policy-makers and advisors who are interested in European economic issues.
This chapter represents an attempt at a synthesis of six studies of the reform process in Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS). The six countries are the Czech Republic, Estonia and Poland among the CEECs and Russia, Ukraine and Uzbekistan among the CIS.1 We present the results of the studies thematically as follows. First, in Section 4.2, we present a framework for classifying the reforms. In Section 4.3 we discuss the causative factors that got the reform process underway as well as the goals of the reforms. The next section deals with the issue of capacity for implementing reform. It is followed by a section analyzing the institutions of critical importance for the success of the reforms. In Section 4.6 we discuss the impact of political culture on the reform process. The following section describes the breadth, depth and speed of the reform process in the countries studied. In Section 4.8 we turn to the role of stakeholders and interest groups. Section 4.9 is devoted to the role of external factors such as global trends and international institutions. In Section 4.10 we turn to the crucial task of analyzing the differences between the countries with respect to reform outcomes. In Section 4.11 we deal with the political, social and cultural institutions that affect the sustainability of the reforms.
This article analyses the difference between the state’s formal and real shares in the Polish economy. We identify two basic types of corporate control exercised by the state over enterprises through ownership (in the case of majority ownership) and non-ownership tools (in the case of minority ownership). Consequently, we distinguish between two types of state enterprises: state-owned enterprises (SOEs) and state-controlled enterprises (SCEs). In post-communist economies, SCEs mainly originate from so-called reluctant privatisation, in which the transfer of ownership rights takes place without the appropriate transfer of control rights. We discuss the tools of non-ownership control used by the state. Our estimates of the real share of state enterprises in the Polish economy (which include both SOEs and SCEs) show that it is almost two times higher than the formal share (only SOEs). The share of state enterprises is also highest in the group of Poland’s largest and most important firms. We conclude that the real importance of state enterprises in the Polish economy is much higher than might be expected if only the formal share of state ownership is taken into account.
The main ambition of this study is to explain the unexpected change in the transition process of some Central and Eastern European (CEE) countries starting in the second half of the 2000s. Special attention is paid to changes in and the attitudes of governments toward state ownership. Although statist approaches gained momentum in the economic policy of various states in and after the 2008/2009 crisis, this did not mean a fundamental reorientation expressed in changes in the main economic conditions such as ownership patterns. Nevertheless, governments in some CEE countries seem to fl irt with such ideas too in the general policy of increasing state economic intervention. The privatisation process was stopped and in a number of cases, formerly privatised assets were re-nationalised. Governments strengthened their influence in the governance structure in mixed-ownership companies. The main body of the present paper provides a better understanding of this change in state property policies. We also call attention to the risks of a reversal of the privatisation logic. An increasing role of the state as proprietor may today strengthen similar negative political and economic consequences and risks as the ones against which the privatisation agenda of the 1990s was suggested. It can reduce competition, give way for political and personal rentseeking, and weaken the functions of market economic institutions.
Conventional models of the politics of economic reform tend to be based on an assumption about the costs and benefits of reform, known informally as the J-curve. Reforms are expected to make things worse before they get better. This presents a classic rime inconsistency dilemma for reformist governments forced to demand severe sacrifices from the public in the short term for the mere promise of future gains. In response, political economy models of the reform process have tended to stress the importance of insulating governments from the pressures of the shortterm losers until a sufficient constituency of winners has been created with a stake in supporting and enhancing the reforms. Based on evidence from the postcommunist transitions, this article suggests that the most serious political obstacles to the process of economic reform have come not from the short-term losers but from the short-term winners. Groups that gain substantial rents from the early distortions of a partially reformed economy have a stake in maintaining a partial reform equilibrium that generates high private gains, but at a considerable social cost. In these countries, the main political challenge has been, not to marginalize the losers, but to restrain the winners. This explains the paradoxical outcome of the postcommunist transitions: that political systems which are more inclusive of the losers have been able to adopt and sustain more comprehensive economic reforms than states insulated from popular pressures.
Although Russia experienced dramatic political breakthroughs in the late 1980s and early 1990s after shedding the shackles of Soviet rule, it subsequently failed to continue progressing toward democracy. M. Steven Fish offers an explanation for the direction of regime change in post-Soviet Russia, relying on cross-national comparative analysis as well as on in-depth field research in Russia. Fish demonstrates that Russia's failure to democratize has three causes: too much economic reliance on oil, too little economic liberalization, and too weak a national legislature.
Do ties between political parties and businesses harm or benefit the development of market institutions? The post-communist transition offers an unparalleled opportunity to explore when and how networks linking the polity and the economy support the development of functional institutions. A quantitative and qualitative analysis covering eleven post-socialist countries combined with detailed case studies of Bulgaria, Poland and Romania documents how the most successful post-communist countries are those in which dense networks link politicians and businesspeople, as long as politicians are constrained by intense political competition. This combination allowed Poland to emerge with stable institutions while Bulgaria demonstrates that in developing economies intense political competition alone is harmful in the absence of dense personal and ownership networks. Indeed, as Romania illustrates, networks are so critical that their weakness is not mitigated even by low political competition. This title is available as Open Access on Cambridge Books Online and via Knowledge Unlatched.
The Origin of Utopian Socialism The Contribution of Saint-Simon The Contribution of Fourier The Contribution of Robert Owen The Limitations of the Utopian Socialists The Decline of Metaphysics and the Emergence of Dialectics “Nature is the Proof of Dialectics” “The Hegelian System” and “German Idealism” The Emergence of “Modern Materialism” “A Decisive Change in the Conception of History” “Socialism Became a Science” “The Materialist Conception of History” “What is, then, the position of Modern Socialism?” “Anarchy Reigns in Socialized Production” The Immanent laws of the “Capitalistic Mode of Production” “The Perfecting of Machinery” “The Socialized Organization of Production” The Withering Away of the State