Volume 9 Numbers 1/2

Winter/Spring 2000

 

Symposium on Postsocialist Pathways: Transforming Politics and Property in East Central Europe
By David Stark and Laszlo Bruszt
(Cambridge University Press, 1998)

Confounding Strategies and Tactics of Transformation
Jozef M. van Brabant

This is a book about the interplay between economics and politics during the transforma-tion of the former socialist societies written by an American sociologist, David Stark, and a Hungarian political scientist, Laszlo Bruszt. Its prin-cipal focus is on privatization as the divestment of state assets, and, more particularly, on how this process evolved early in the wholesale restructuring of Czechoslovakia, later the Czech Republic; in the German Democratic Republic (GDR), though within the context of a united Germany; and in Hungary, which receives the brunt of the authors' attention. Their focus is on "intangible assets" inherited from state socialism that, in their view, could and should have been mobilized to forge a better-broader and longer-lasting-sociopolitical consensus for weath-ering the protracted pains of transformation. The book is organized into three sections, although it actually falls into two basic parts. The first part centers on the different national paths to political disengagement from state socialism, with the main focus being on Hungary; on the broad contours of the priva-tization debate, with the bulk of the emphasis on, and the most factual references to, Hungarian experiences; and on path dependency in the transformation, espe-cially as it relates to the various privatization strategies pursued. The second part deals with different aspects of "deliberative associations," and especially their desirable role in the context of the market-versus-plan debates during the early phases of the transformation. Hungary's experiences are again the principal backdrop. The authors advocate a "third way" toward streamlining the transformation, where the burden of the tasks involved is or would be carried by "deliberative and associative networks," as distinct from statism or neoliberalism. They assert that these networks were already present at the end of state socialism, and, given a chance (by being left alone?), they will transform them-selves and many more features of the remnants of state socialism, in line with the desired movement toward pluralistic democracy and a market-based resource allo-cation. They see these ostensibly tightly coupled networks-at the firm level, in Hungary, and at the mesolevel, in the Czech Republic-as having played a critical role in the transformation since 1989, despite the overt stances of the transformation managers. The asso-ciative networks in the GDR, usually concentrated in the Kombinate, were, by contrast, simply ignored, at least during the first phase. It is notable that the authors see the Czech networks as having been critical for "renego-tiating the recombination of assets" (p. 165), the properties of which are depicted as positive features of the Czech transformation. The authors emphasize that deliberative associa-tions, as enabling constraints for transformation, can provide the institutional sources of policy coherence. They can also ensure critical accountability throughout the transformation process. The Czech Republic is seen as having possessed "institutional structures [that] placed the strongest constraints on executive authority," thus yielding more coherent policies (p. 187). This is sharply contrasted with Hungary, where the prime minister held nearly chancellor-like power via "regula-tion through crisis" (p. 167), and with the former GDR, where, after initial misadventures, a corporatist-like approach to transformation was foisted upon, in the first instance, the Treuhandanstalt. Finally, the authors devote much attention to "extended accountability." This is the secret of managing an orderly transformation, and one that can be borne by society at large despite the burdens it entails. To explain the ineffectiveness of an uncon-strained executive, as in the GDR and, less so, in Hungary, the authors contend, paradoxically, that executive capacity can be increased by imposing limi-tations on its unilateral prerogatives. This is presumably the lesson they draw from the Czech case. While instructive, this book is at best an unfin-ished study. Editorial blemishes are legion: irritating inconsistencies in spelling, needless repetition, typos, absent or mangled diacritical marks, erroneous facts, hyperbole ("extraordinarily smooth functioning democracy," p. 45) of dubious value, and so on, all of which a proofreader or editor should have removed. The book is afflicted with verbiage ("reconstructive surgery that gives new anatomies to the old nomen-klatura," p. 82), numerous foreign-language concepts that the authors willfully redefine ("bricolage," p. 103) to suit their purpose, and too-elegant expressions ("presentist history," on p. 83), including catchy allit-erations (the "responsive responsible," p. 113), whose purpose for the issues at hand is unclear. As for the substance of the authors' overall approach to examining the transformation from state socialism, most disappointing is perhaps the contrast between the title of the book and the way the authors develop their arguments. Instead of illuminating the sequential reactions that a living organism, such as a transitional society, undergoes, the authors too frequently describe the dynamics of the pathway in dialectical terms. They reject statism and market liber-alism, preferring a middle road anchored to deliberative and associative networks. The latter are assumed to exist during a postsocialist transformation or to emerge quickly even without some role for the "market" under construction or the "state" under de-or reconstruction. This is an issue they touch on only on page 200 but do not resolve. The basic problem is that the book does not provide a fully developed conclusion about the implications of the interstices of political structures and reform politics, or, more specifically, public accountability and the authority to carry out reform projects. The discussion of how market and plan come into the orbit of those deliber-ative associations remains unsatisfactory. After all, whatever its weakness in these societies, the state has had to play, for better or worse, a constitutional role, as in maintaining industry and ensuring orderly priva-tization. Could the legal framework for market operations have been revamped without the state? Indeed, could a coherent role have been allocated to the targeted associations without state action? The authors' contention that "[n]ot by issuing directives or by setting substantive targets, but by shaping the envi-ronment of procedural rights, the state can facilitate the deliberations that lengthen time horizons" (p. 200) is unsatisfactory. Moreover, nowhere is there mention of the fact that among the associative networks inher-ited from state socialism some can play a constructive transformation role while others are anathema to democratization and marketization. Another substantive problem concerns Stark and Bruszt's treatment of the "developmental state" and its relationship to associative networks. They formulate their views by invoking Peter Evans's Embedded Autonomy and then criticize that elaboration in a straw-man fashion, as if there were no other antecedents for that concept. At least the voluminous writings by Chalmers Johnson and Robert Wade on the context of the newly industrializing, developing states in Asia, deserved some mention. Likewise, the literature on the role of organizations that are neither part of the state nor operate for profit but have a determining effect on soci-etal outcomes should have been considered. Whereas the authors have much to say about the failures of both neoliberalism and state-directed industrial policy, in the sense of picking the winners, they remain next to mum about two features of trans-formation in Eastern Europe. In addition to abundant preaching of neoliberalism by the reform leadership, there has also been much statist activity in many tran-sition economies. How could it have been otherwise? But much of that activity has been too often and too extensively improvised. Those shortcomings could have been mitigated if societal actors-including the state-had taken a more coherent view of how best to manage the transformations. Also, the authors' "synthesis" recommendation on associative networks presumes that such networks can be readily identified, from the remnants of state socialism, precisely because the state-socialist leadership, toward the end of the 1980s in particular, had lost its autonomy to lower levels of associative networks. The authors mention, in this regard, networks at the shop-floor level-the second economy-and at the managerial level. To the extent that many of these networks thrived on exploiting the state, and indeed society, is it not too simplistic to presume that all will now act construc-tively to orchestrate the transformation or that the "negative" ones will simply disappear and the "posi-tive" ones shape the transformation path? The political disengagements from state socialism in Eastern Europe are shown to vary according to each country's circumstances rather than resulting uniformly from the implosion of party politics. That seems a sensible approach. But the authors then focus over-whelmingly on Hungary and see the struggle of postsocialism essentially as pitting a nascent but weak opposition, with growing but erratic popular support, against a divided Communist Party. I would have given the latter's reform factions more credit, not only for bringing about the negotiated decision to opt for free and fair elections but also for having exploited the weak opposition groups to force through their own agendas. It is ironic that, despite their initial caviling early on about the arrogance and ideology of Vaclav Klaus, the authors deem the Czech experience with transfor-mation under Klaus-by contrast to the GDR's and Hungary's own recent histories-to have produced "coherent policies that could be adjusted rather than abandoned" (p. 187). Furthermore, this particular configuration of policies is portrayed as a positive feature of pluralistic democracy in the Czech Republic as well as of Klaus's pragmatism in guiding the Czech ship toward a feasible market-based allocation of scarce resources. Perhaps these pages were written before the calamity of the Czech transformation became all too evident, from about 1995 on. But the book was published in 1998. Much of the book wobbles between fact and theory, making it hard to sift what the authors consider ideal or desirable and what they take to have actually fallen into place in their three case studies. Extended accountability, for example, would certainly be a valuable aid in forging a sociopolitical consensus, sustaining it throughout the difficult transformation phase(s), and broadening its basis to areas on which the population at large may converge. In this we need to recall that a meaningful counter-factual is simply not available. Even if it were, could associative networks have accomplished such a consensus? Methodologically, the authors tend to mold the evidence from their three case studies to support their theoretical views; it is doubtful they are doing them-selves and the reader a service. To propose, for example, that Klaus was the champion of voucher privatization from the outset is distorting facts and his neoliberalism. Similarly misleading is the argument that Czech voucher privatization was a market simulation (p. 93) rather than a highly technocratic and centralized approach to divestment, regardless of its contribution to clarifying property rights and bolstering economic effi-ciency, restructuring, and growth. Finally, the authors expend great efforts on privatization as if this were the heart of the transfor-mation, yet they reject the premise that state-owned assets must necessarily be devolved to private owners. There is ambivalence here, which is perhaps nowhere more apparent than in their treatment of the proper price of a state-owned asset (or any asset for that matter). Reams of commentary and billions of dollars have been wasted on this issue. The price of an asset is essentially what a potential user is willing to pay for it, which, in turn, depends on discounting to present value the gains he deems prospectively to derive from his preferred use of these resources. There is no "just price," and the price a potential purchaser is willing to pay is by definition path dependent. Much of the material assembled here is recycled from previously published work, particularly by David Stark. The authors acknowledge in the endnotes having derived the first three chapters (about half of the book) from articles published from 1990 to 1992. Naturally, this material is heavily dated, and the way in which it is presented, here, confounds rather than illuminates. To cite two exam-ples, the authors discuss, in 1998, the future of the Treuhandanstalt beyond 1990-91 as if the institution still existed (it was abolished five years ago) as well as the problems of privatization in the former GDR which still needed to be tackled (pp. 88-91). The book is also unsystematic and unbalanced, though promising in some spots (as in its typology of trans-formation, on pp. 80-84) were it presented in a brief journal article. As a book, it is unsatisfactory.

Jozef M. van Brabant is the chief of the Economic Assessment and Outlook Branch at the UN Secretariat and has been an economist with the UN since 1975. His latest book is Political Economy of Transition: Opportunities and Limits of Transformation (Routledge, 1998). He recently edited Remaking Europe: The European Union and the Transition Economies (Rowman & Littlefield, 1999).

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