Informal Institutions, State Reform, and Political Parties in East Central Europe
Anna Grzymala-Busse
Yale University
Anna.busse@yale.edu
Dept of Political Science
124 Prospect Street
New Haven CT 06520
April 18, 2003
PRELIMINARY DRAFT: Please do not cite.
1
Why have the post-communist states diverged in their performance, despite similarities in
formal reforms? While most work on post-communist reforms (political and economic) has
tended to focus on formal institutions, an important source of variation in political
performance has been ignored: informal institutions. As this paper argues, these informal
rules interact with formal institutions and reforms in distinct and important ways. Whether
they undermine or reinforce formal rules is a function of the competition among the political
actors, and specifically, political parties in parliamentary systems.
Introduction
The formal institutions of post-communist democracy appear to have converged: all the
post-communist states have functioning parliaments, electoral systems, and policymaking
rules. Across the region, democratically-elected political parties have led the creation of new
political institutions, holding in check the powers of presidents, the military, and other
government actors. Parliamentary, proportional representation systems dominate, with mediadriven campaigns, secret and free ballots, and increasingly stable governing coalitions. After
introducing and creating many of the institutions of the market and of democracy, these
parties have recently focused public attention on the question of state reform, not least
because the European Union has reviewed progress in these areas annually for each candidate
country, highlighting administrative and democratic shortcomings. These reviews became a
powerful spur to further reform, and so public administration reform, regional
decentralization, and anti-corruption initiatives have all been introduced across the region
(See Table 1.)
As a result, the “parchment institutions” of the democratic state have been converging.
Yet formal convergence belies differences on the ground: the state has expanded in size, but
2
not in capacity to provide public goods. Rates of employment in public administration have
grown, but government effectiveness and the ability to control corruption have not increased1
(See Tables 2 and 3). By this metric, the Czech and Slovak Republics are among the
surprising culprits, while Poland joins the more obvious success stories of Hungary and
Slovenia. In both the Czech and Slovak republics, reform has been haphazardly implemented,
with delays and scandals contributing to repeated accusations of deliberate sabotage of state
effectiveness and transparency.2
What would account for the variation in state performance despite similar formal reforms?
This paper argues that post-communist informal institutions—specifically, the ways in which
they promote the discretionary and rent-seeking activities of political parties—explain this
variation.
Analyses of informal institutions initially argued that they either formalize as a function of
the power of their beneficiaries, or eventually disappear.3 Informal institutions could thus be
viewed as frequently transitory, marginal, and relatively easily expunged. Scholars of
informal economic institutions, however, countered that informal institutions and practices
not only persist, but coexist with formal institutions.4 Analyses of post-communist property
1
These Transparency International corruption rankings must be taken with a grain of salt, since they are
provided by representatives of international companies who may themselves rely on these rankings in
formulating their opinions. In their defense, the rankings are collated from several sources, and correlate strongly
with other estimates of corruption.
2
See the scandals that broke out in the Czech press in 1996-8, and in Slovakia in 1998-9.
3
Knight, Jack. Institutitions and Social Conflict, Cambridge: CUP, 1992. de Soto, Hernando 1990 argues that
such institutions disappear once formal overregulation is eliminated.
4
Portes, Alejandro, and Sassen-Koob, Saskia. “Making It Underground: Comparative Material on the Informal
Sector in Western Market Economies,” American Journal of Sociology, 93 No. 1 (July 1987): 30-61. Portes,
Alejandro, and Schauffler, Richard. “Competing Perspectives on the Latin American Informal Sector,”
Population and Development Review vol 19, no 1, March 1993: 33-60.
3
relations thus emphasized informal elite networks and “recombinant” property as important
aspects of economic reform and privatization.5
Nonetheless, the analogous role of informal political institutions has not been examined as
thoroughly.6 Insofar as they have examined informal institutions in politics, scholars have
emphasized their negative impact, and their corrosive effect on democracy. 7 The analysis
presented here attempts both to examine the different types of informal institutions prevalent
in politics, and to trace the variety of ways in which informal factors persist and influence the
transformation of the post-communist state in the region.
The paper proceeds as follows: Section 1 discusses informal institutions, and four distinct
types of interaction with formal rules. Political competition determines the extent to which
formal institutions can be undermined by informal rules. Section 2 demonstrates how these
interactions occurred in four cases: Poland, Hungary, the Czech Republic, and Slovakia, and
examines their impact on the state. Section 3 examines other potential explanations for the
observed variation, which focus on broad regime legacies and the exigencies of nationbuilding.
1. The Role of Informal Institutions
Informal institutions are consciously followed rules of political behavior. Much as formal
institutions, they are rules that are widely recognized and taught as such. They are reflexive:
actors need to know what they are. However, unlike formal institutions, they are not
sanctioned or codified via legal recognition, legal enforcement, or official access to power/
5
Bruszt and Stark 1997, Borocz, Borocz and Rona-Tas.
Notable exceptions include Ganev 2001, Cirtautas 1997, Lewis and Gortat 1995.
7
See, for example, O’Donnell, Guillermo. “Another Institutionalization: Latin America and Elsewhere.” Kellogg
Institute Working Paper Series, University of Notre Dame, # 222, March 1996.
6
4
policymaking.8 Examples include personal loyalties and networks, reputations, or
discretionary distribution of resources. This definition has three implications. First, informal
institutions are more than behavioral regularities, traditions, or unintentional byproducts 9 of
formal institutions.10 Second, while they lack a formal enforcement mechanism, such as the
state, they can be nonetheless enforced by informal means such as sanctions, ostracism,
shunning, etc.11 Third, like formal institutions, informal institutions can be either weakly or
strongly influential, and effectively or ineffectively enforced. Their informality does not
presuppose either their extent or their impact.
If formal institutions are viewed as coordination equilibria, norms, or rules,12 informal
institutions are used in similar ways: as a source of information, to cut down on transaction
costs, to redistribute resources, etc. Critically, however, informal institutions do not function
independently of formal institutions. In the modern polity, most areas of political life are
subject to formal rules of some sort, codified and enforced by the power of the state, even if
these formal rules are not necessarily dense or effectively enforced. The nature of their
linkage can vary, as we will see, but informal rules will either affect the functioning of formal
institutions, or formal institutions will constrain the impact of informal ones. Thus, informal
institutions can be very efficacious, but in most situations, theirs is an “impact without
8
This is not to say that the state and other formal actors cannot use informal institutions.
Knight, Jack. Institutions and Social Conflict. Cambridge: Cambridge University Press, 1992, p. 172. This
definition thus also runs counter to the arguments of József Böröcz, who argues that informality consists of
avoiding or circumventing formal institutions. József Böröcz, “Informality Rules,”East European Politics and
Societies, Vol 14, No 2, 2000: 348-380.
10
See also Helmke, Gretchen, and Levitsky, Steven. “Informal Institutions and Comparative Politics: A
Research Agenda,” Manuscript, Harvard University, January 2003, and Lauth, Hans-Joachim. “Special
Relationships: the different impact of informal institutions on different democratic institutions,” Paper presented
at the Conferenc eon Informal Institutions and Politics in the Developing World, WCFIA, Harvard University, 56 April 2002.
11
Jack Knight 1992 and 2002 argues that the distinction between formal and informal institutions lies in the lack
of third party enforcement of the latter.
12
Crawford, Sue E.S, and Ostrom, Elinor. “A Grammar of Institutions,” American Political Science Review, vol
89, # 3, September 1995: 582-600.
9
5
independence” from formal rules. This is not to argue that informal institutions are merely a
“residual category” that explains politics only at the margins, or to ascribe greater explanatory
power to either set of institutions. Nor should we assume a “parasitic”13 relationship, where
informal institutions necessarily feed off, undermine, and weaken formal institutions.14
However, the interactions between informal and formal are critical for understanding how
informal institutions can determine political outcomes despite the claims to superior authority
and legitimate monopoly over both violence and resource extraction of formal institutions.
There are several ways for informal and formal institutions to interact and coexist. Some
informal institutions are formalized as a function of the distribution of power among those
whom they would benefit (Knight 1990). Incumbents can formalize those unspoken “rules of
the game” that favor them. Thus, many political parties, especially in nascent democracies,
have changed the laws that govern political competition, constraining potential competition
by increasing electoral thresholds and changing the mechanisms that translate votes into seats.
They also passed the laws on their own financing, which allowed governing parties to
strengthen their hand at the cost of the extra-parliamentary opposition, and obviated the need
for financing by membership dues or local fundraising.15 Alternatively, informal rules
substitute for weak formal institutions. Analyses of political economy, the state, and ethnic
identity have shown that informal institutions persist and have a direct impact when formal
institutions are either sparse or unconsolidated.16 Thus, informal institutions can formalize
Lauth, Hans-Joachim. “’Special Relationships: The different impact of informal institutions on various
democratic institutions,” Paper presented at the Conference on Informal Institutions and Politics in the
Developing World, WCFIA, Harvard University, April 5-6, 2002.
14
József Böröcz, “Informality Rules,”East European Politics and Societies, Vol 14, No 2, 2000: 348-380
15
Mair 1995 demonstrated that parties in Western Europe have turned to the state as a survival strategy, and
given its dominance by the parties, the state readily obliges with increased funding, staffing, etc.
16
Bates, Robert. States and Markets in Tropical Africa. Herbst, Jeffrey. States and Power in Africa:
Comparative Lessons in Authority and Control. Princeton: Princeton University Press, 2000. Laitin, David.
Culture and Hegemony.
13
6
into legally codified structures or substitute for them. In both accounts, of formalization and
of substitution, the relationship between formal and informal institutions is zero-sum: one
functions in the absence or weakness of the other.
However, there are other potential interactions between formal and informal institutions,
which do not presuppose a zero-sum relationship or the necessary subsuming of one by the
other. First, political actors can use informal institutions to exploit formal institutions, by
mining legal loopholes and capitalizing on poor specifications of formal institutions. Where
gaps in formal laws exist, informal rules guide decisionmaking in lieu of missing formal
directives. Certain forms of clientelism and patronage that are not technically illegal,
discretionary awarding of jobs and contracts, or discretionary implementing of policy fall into
this category. For example, where no regulations provide the criteria for hiring new
employees, personal loyalties or bias may determine hiring decisions. Similarly, using tax
loopholes, lax incorporation requirements, subcontracting and subletting, earning an income
in contexts unregulated by the state,17 are all forms of informal institutions that exploit the
gaps in formal regulations.18
Second, informal institutions can also be used to subvert some formal rules. In contrast to
exploitation, subversion consists of deliberate violation of formal strictures. It thus relies on
existing formal institutions. Examples include covert party funding, contract re-negotiation or
awarding in contradiction to formal stipulations regarding these. Subversion occurs more
readily when formal regulation or monitoring is weak. With minimal enforcement, formal
rules can be more freely broken. An excess of formal institutions—for example, when the
formal rules are dense and contradictory—can also produce subversion, as informal solutions
Portes, Alejandro, and Schauffler, Richard. “Competing Perspectives on the Latin American Informal Sector,”
Population and Development Review vol 19, no 1, March 1993: 33-60.
18
József Böröcz, “Informality Rules,”East European Politics and Societies, Vol 14, No 2, 2000: 348-380
17
7
necessitate the breaking of formal rules.19 The incredibly dense regulatory body of Italian law,
for example, regularly leads to the subversion of formal rules as the most efficient way to
obtain personal or business goals. It becomes easier to pay a bribe than to continually run
against conflicting regulations and laws.20
Third, informal institutions can be used to facilitate, or to supplement and enable, formal
rules by providing information and expectations for strategic choices in the formal
environment. Unlike either exploitation or subversion, facilitation reinforces formal
institutions, if indirectly, by providing this informational wherewithal for the functioning of
formal institutions. For example, when the creation of formal institutions is rapid and/or
chaotic, extant rules and reputations may then provide the information that allows actors
within formal institutions to make decisions in the absence of clear and readily available new
data. Similarly, the informal rules and expectations—the “folkways”—of the Unites States
Senate served to smooth its formal functioning and policymaking.21 These types of
interactions can thus lower transaction costs engendered by formal institutions.22
Fourth, informal institutions can also reproduce formal institutions by creating popular
expectations and incentives to comply with formal rules. While facilitating interactions
augment formal rules by providing information to the actors, reproducing interactions
reinforce formal rules more directly by changing the actors’ behavior. Informal rules can thus
reinforce formal regulations, via informal sanctioning (truthful gossip), or reporting to formal
authorities.23 Alternatively, informal institutions can inadvertently reify formal rules: for
19
De Soto, Hernando. The Other Path.
Frei, Matt. Getting the Boot: Italy’s Unfinished Revolution. New York: Random House, 1995, p. 12.
21
Matthews, Donald. US Senators and Their World. New York: Vintage Books, 1960.
22
Pejovicz, Svetozar. “The Effects of the Interaction of Formal and Informal Institutions on Social Stability and
Development” Journal of Markets and Morality, 2, #2, (Fall 1999): 164-181.
23
Ellickson, Robert. Order Without Law. Cambridge: Harvard University Press, 1991.
20
8
example, even as informal financing and mobilization techniques are used in electoral
campaigns, they reinforce the notion that elections are the legitimate means of elite
competition.24 As a result, formal rules can gain greater power to structure political behavior
and decisionmaking.
Two dimensions—the extent of the linkage, and whether it weakens or strengthens formal
institutions—help to distinguish analytically between these four informal-formal interactions.
First, interactions can be more or less dependent on dense and consolidated formal
institutions. In subversion and reproduction, the impact of informal institutions is a direct
function of existing formal rules. If there are no formal rules to break, or to reproduce, these
interactions do not take place. Exploitation and facilitation, on the other hand, function even
when the formal institutions are few and inchoate: profiting from loopholes and providing
information do not rely as much on formal institutions for their impact, but on existing
informal networks, experiences, and reputations. We can thus think of formal and informal
interactions as tightly or loosely coupled.
Second, informal institutions can either undermine or reinforce formal institutions: both
exploitation and subversion undermine the rule-setting role of formal institutions, while
reproduction and facilitation do not undermine the functioning of formal institutions, and can
instead make formal rules more effective. This framework differs from fruitful distinctions
based on the strength of formal institutions, and the compatibility between formal and
informal rules.25 However, it may be more appropriate for the analysis of post-communist
state institutions. For example, one reason to rely on the level of interaction, rather than on the
See Kotkin, Stephen, and Sajos, Andras. Political Corruption: A Sceptic’s Handbook Budapest: CEU Press,
2002, for more of these ironies of new democracies.
25
Helmke and Levitsky 2003.
24
9
strength of formal institutions, is that the latter’s strength may be dependent on informal
institutions, especially in a transitional setting.26
Figure 1. Types of interactions between formal and informal institutions
Undermine FI
Greater dependence on
formal institutions
Subversion
Greater autonomy of
formal institutions
Exploitation
Reinforce FI
Reproduction
Facilitation
What are the constraints and opportunities for these interactions? Competition among the
political actors determines the extent to which informal institutions can be used to undermine
formal ones. Specifically, low alternation in power (turnover) and high concentration of
power (fragmentation) in parliament both allowed political actors to build in formal
advantages for themselves, and to subvert and exploit formal institutions with little fear of
sanction or opposition.27 In East Central Europe, these new competitors consisted chiefly of
political parties. Since policy demands were so huge, and the state itself so weak,
parliamentary parties initially assumed much of the administrative work after 1989. The sheer
volume of laws to be drafted, and the unresolved debates about powers and functions led to
“overparliamentization” of policy, as parliaments expanded to fill the vacuum created by
cabinet and state inadequacy.28 Their enormous role as the key lawmakers in constructing the
institutions of market, polity, and administration meant that parliamentary parties could
26
Moreover, it may be unclear what the relevant aspects of formal institutional strength are: influence, density,
or enforcement. Second, compatibility as an outcome may not necessarily indicate the mechanism of interaction
that led to the outcome, whereas “undermine/ reinforce” refers to the processes of interaction. Another
classification is found in Lauth 2002: formal-informal interactions can be a) complementary (coexistence and
mutual reinforcement), substitutive (functionally equivalent), or conflicting (incompatible.)
27
Similarly, Mitchell Orenstein argues that lengthy incumbency delays policy learning, and perpetuates policy
mistakes. See Out of the Red. Ann Arbor, MI: University of Michigan Press, 2000.
28
Barbara Nunberg, ed. The State After Communism. Washington, DC: World Bank, 1999, p. 239-41. See also
Attila Ágh, ed. The First Steps. Budapest: Hungarian Centre of Democracy Studies, 1994.
10
legislate for their own benefit. By creating new institutions, these parties could also build in
statutory and informal privileges, “drawing up and then implementing the laws and proposals
from which they benefit.”29
The greater the number of parties in parliament, and the higher their electoral uncertainty,
the more likely they were monitor and sanction the actions of other parties as a way to gain
electoral advantage for themselves. The greater the party turnover and fragmentation, the
lower the likelihood any one party could build in benefits for itself and continue to exploit or
subvert formal institutions. Well-established incumbents that can expect to be reelected and
stay in office, on the other hand, can subvert and exploit formal rules with little fear of
sanction or even publicity. If they could survive a regime collapse, as the communist parties
did in Bulgaria, Romania, or Albania, they were even less constrained in their subversion or
exploitation efforts.
The converse scenarios are unlikely. A “cartel” of fragmented parties, which would Staff
(and stuff) the public administration and monopolize state funding would require means
(extensive party cooperation), and opportunities (lack of incentives for regulation of other
parties) that rarely exist,30 and are even more scarce in consolidating party systems.
Alternatively, a dominant party could give public access to state resources, reckoning that it
would benefit more than other parties. However, there is little reason for a dominant party to
be so magnanimous—it is more likely to accumulate resources and offices if it excludes
others.31
Mair, Peter. “Political Parties, Popular Legitimacy, and Public Privilege.” West European Politics. July 1995:
40-57” pp. 54-5.
30
Koole 1996.
31
This is not to exclude the possibility that ideology can lead to self-sacrificing moves made by actors
committed to ideals such as power-sharing and redistribution. See Pauline Jones Luong, Institutional Change
and Political Continuity in Post-Soviet Central Asia. Cambridge: CUP, 2002.
29
11
Thus, competition constrains the degree to which informal institutions can undermine
their formal counterparts. Whether we see interactions that are highly dependent on formal
institutions is a function of the pacing of transformation: the faster the development of formal
institutions, the more we would expect reliance on the informal provision of information and
decision rules, since formal institutions have yet to consolidate. However, since the pace of
institutional development is roughly similar across the region, we should not expect to see
much differences in interactions that facilitate the functioning of formal institutions.32
Thus, the differences in the structures of party competition explain why parties differed in
their use of informal institutions, and how these interacted with the formal structures and
reforms of the state. The resulting constraints on the parties’ discretionary and rent-seeking
activities explain the variation in state performance we observe in the region.
2. Party Competition and Institutional Interactions in East Central Europe
Below, I examine how the configurations of party competition led to different formalinformal interactions, and how political parties both transformed and attempted to benefit
from the state. Political parties exploited the formal institutions of the state by using
particularist bases for decisionmaking in the absence of formal ones, subverted them by using
covert channels of funding and financial support in contravention of formal laws, enabled the
workings of formal institutions with informal reputations, and reinforced them with informal
monitoring and sanctioning of each other. In all these cases, informal rules, such as personal
loyalty, historical reputations, and discretionary decisionmaking, interacted with the formal
institutions of the state and the economy.
Party Competition
32
The real difference is with Western Europe, where the slower formal institutional development did not rely on
informal facilitation, and was more able to constrain informal exploitation of formal rules.
12
In Slovakia and in the Czech Republic, the parliaments were dominated by the Movement
for Democratic Slovakia (HZDS) and the Civic Democratic Party (ODS), respectively. These
two parties ruled for most of the post-1989 period (until 1998 in both cases), with minimal
opposition. As a result, these parties were relatively certain of their electoral performance, and
expected that if they built in advantages, they would continue to benefit from them. Nor did
other parties have the ability to monitor or publicize their transgressions, since these two
parties limited access to both authority and information by the other parties.
Power was initially far more dispersed in the highly fragmented Polish parliament, and in
Hungary, where turnover rates and super-majority requirements offset any seat majorities.
There, the fragmentation and turnover led to uncertainty regarding each of the parties’
electoral future. If one set of parties built in formal advantages, it could not be certain it would
benefit from these advantages in the next electoral period. Moreover, no party had the
wherewithal or the desire to allow any other to benefit exclusively. Given this electoral
uncertainty, there was also a considerable incentive to publicize any transgressions by other
parties, and use these to electoral advantage.33
Exploitation
By exploiting formal loopholes, parties could informally extract resources from the state.
State resources had the advantage of both stability and largesse, hard to find in a political
environment lacking committed party members, private donors, or international support.
Exploiting loopholes in formal regulations further meant that state enterprises funded
governing political parties, and party loyalty would become a key criterion for employment in
public administration.
33
For a detailed account of the process by which party competition configuration translated into formal
constraints on rent-seeking, see Grzymala-Busse, Anna. “State Politicization and Party Competition in East
Central Europe,” Comparative Political Studies. March 2003: forthcoming.
13
However, the extent to which parties were able to privilege themselves is a function of
party competition: specifically, the informal mechanisms of mutual monitoring and
constraint that occurred in the more fragmented parliaments. Where numerous parties faced
electoral uncertainty, and each party could benefit from pointing out the errors and
transgressions of the others, mutual suspicions and accusations (often publicized in the print
media) served as a form of informal monitoring. Thus, in Poland and in Hungary, where
government turnover was higher and no incumbent was re-elected, parties could exploit
formal institutions far less than in the Czech Republic or Slovakia, where one party
dominated politics for most of the transition period. (See Table 4) Turnover and
fragmentation meant that each party faced considerable uncertainty about its electoral future,
and thus all parties had incentives both to monitor each other’s performance, and to close
loopholes that would unduly benefit ruling parties with state resources. Moreover, these
parties repeatedly made public and sanctioned each other’s transgressions, in the newspapers,
television interview programs, and in parliament itself—and where party votes were highly
fragmented and fluid, gaining even a few voters via such appeals could mean the differences
between governance, entering parliament or failing to clear the threshold.
As a result, Polish and Hungarian electoral laws quickly eliminated financing by local
government, by government-subsidized institutions, and by state enterprises.34 In contrast,
the Czech and Slovak laws left considerable loopholes in this area. As a result, state firms
and enterprises often funded national party activity, as did local government coffers. As early
as January 1990, the rather vague Czechoslovak law on parties did little to address party
finances, other than to stipulate that the Civic Forum, the Communist Party and its four
satellites, and the Slovak counterpart of the Forum (Public Against Violence), could use their
34
See Grzymala-Busse 2003.
14
own funds.35 As Vacláv Klaus’s ODS arose from the Civic Forum, it “reluctantly allowed”
state funding, but refused to expand the regulatory framework. Finally, when the opposition
Social Democrats began to govern in 1998, state organs were no longer permitted to fund
parties. However, since parties could be a joint owner of businesses, and local governments
often owned these, funds could be easily funneled from local state offices to political parties,
via informal networks of party members and allies. Since these gifts could remain
anonymous until the 100,000 Kč ($30,000) threshold, parties could benefit greatly from these
lax funding regulations.36 In mid-2000, parliament even voted to abolish the taxation of party
donations. Gifts were limited, but loans were not, and parties did not need to provide
information regarding the loans or their payment.37 As the scandals piled up,38 parties were
now to name all donors, employees, wages paid, etc, but no enforcement mechanisms were
put in to control this informal party financing.39 In Slovakia, as we will see below, even weak
regulations were regularly broken, so that subversion rather than exploitation dominated.
Employment in the state administration was similarly subject to informal exploitation of
formal strictures. Given the delay in civil service laws, parties gained state resources by
employing party loyalists in the state administration and then giving them discretion to further
hire. Much as legal loopholes were exploited in the financing of political parties, so was the
absence of formal regulations regarding the civil service or public administration
employment. And, since the absence of regulations favored political appointments, civil
35
Since this allowed the communists to use their considerable assets, the newly democratic legislature did away
with this privilege after the June 1990 elections, and forced the communist party to give up 95% of its assets to
the state. Petroff, p. 8.
36
Vládní program boje proti korupci v Česke Republice. “Zpráva o korupci v České republic a možnostech
účinného postupu proti tomut negativnímu společenskému jevu.” 17 February 1998.
37
“Rozhovor s Vojtĕchem Šimíčkem o financování politických stran,” Parlamentní Zpravodaj, 2000, #5.
38
See Appel, Hilary. “Corruption and the Collapse of the Czech Transition Miracle,” East European Politics and
Society Fall 2001: 528-553.
39
Jednotka boji proti korupci, Ministry of Interior, Zpráva o korupci v ČR a o plnění harmonogramu opatření
vládního programu boje proti korupci v ČR., 2001.
15
service laws were often delayed. As a result, state employment grew considerably after the
fall of communism, far more than the architects of neo-liberal reforms and the concomitant
slimming down of the state regulatory structures had expected.
The differences, however, again lie in the constraints of party competition. With its steady
rates of turnover, Hungary was relatively immune from the exploitation of formal structures
by informal practices. From the start, the nascent political parties concerned themselves with
ensuring that their relatively weak and uncertain positions would not be further imperiled. As
a result, a civil service law, in place since 1 April 1992, effectively established the
independence of the public administration system from political parties. It was followed up by
a conflict of interest law in 1996, which forbade national government representatives from
serving on the boards of directors and supervisory councils of companies with more than 10%
of state stake.40 These heavily enforced laws eliminated potential loophole exploitation, and
so very few political appointments were made in the executive structure.41
In Poland, the extreme fragmentation of the parliament also impeded the unhindered
expansion of the public administration. The rapid turnover rates limited any accumulation of
offices. Polish party coalitions were highly unstable, and the considerable conflict within the
coalitions mean that even coalition partners tried to limit each others’ efforts. In Poland, after
1993, 10 new central offices were created, as were several funds and agencies.42 Polish parties
also assigned their members to the supervisory boards (rady nadzorcze) of state
corporations,43 but estimates of actual numbers placed by the parties in the public
40
Freedom House, Nations In Transit 2001. Washington DC: Freedom House, 2002, p. 204.
Nunberg, Barbara. Ready for Europe: Public Administration Reform and European Union Accession in
Central and Eastern Europe. World Bank Technical Paper No. 466. Washington, DC: World Bank, 2000, p.
274.
42
Wprost, 31 January 1999.
43
19 April 1997, Polityka.
41
16
administration fall below 20,000, or less than a tenth of the total public administration
employment.44 Any transgressions were immediately publicized by other Polish parties (and
subsequently stopped), and they did not lead to the accumulation of resources by parties over
time. For example, after the 1997 elections, the ruling AWS openly spoke of exchanging
4,000 positions,45 but was immediately criticized for trying to establish a new “party
nomenklatura.”46 Rather than continuing to allow exploitation, moreover, parties moved to
close loopholes, by passing civil service laws in 1996 and in 2001. 47 The two laws illustrate
the importance of party competition: the 1996 law built in a formal advantage for its
communist successor authors: it specified that civil servants with more than 7 years of service
were exempt from passing tests, and were to be favored in advancements. Needless to say, the
only civil servants with this tenure were from the communist era. As a result, when the
opposing AWS coalition entered office in 1997, it immediately announced it would change
the law. The communist successor SLD then announced it would carefully monitor the
creation of the new civil service legislation, repeatedly criticizing the novelization but keeping
its meritocratic proposals when it re-entered office in 2001.48
In both the Czech Republic and in Slovakia, limited competition created limited incentives
for closing formal loopholes. Two causal mechanisms underlie this correlation: first, the
access of other parties to both authority and information was limited, all the more so as the
governing parties entrenched themselves further in the bureaucracy. This was especially the
case for opposition denounced by the governing parties as “illegitimate,” such as the
44
Polityka.
18 December 1999, Polityka.
46
22 January 2000, Polityka.
47
The extreme fragmentation, however, could also delay the implementation of formal constraints. Thus, while a
civil service law was ready in 1992-3 in Poland, the fall of three different governments prevented its passing.
48
See Gazeta Wyborcza (cites from SLD file here)
45
17
Communists or the Republicans in the Czech Republic, and the Hungarian minority parties or
the Christian Democrats in Slovakia. Second, given the electoral dominance of the ODS and
HZDS, there were fewer marginal voters to capture via such public reports of their
misdoings—and the governing parties were certain enough of future victories to continue to
build in advantages for themselves without fear of subsequent electoral loss. As a result, the
opposition had neither the access nor the incentives to close down the loopholes in formal
regulations that favored the dominant parties.
Thus, in neither country, no civil service laws were passed until 2002. In the Czech
Republic, for example, the government approved a basic outline of the public administration
code, and then shelved it.49 Even then, several political parties were vehemently opposed to
civil service regulations, as “expensive and unnecessary.”50 Not surprisingly, in the absence of
effective public employment regulations, an enormous amount of informal discretion was left:
in one blatant example, in the 1996 Slovak regional reform, the HZDS instituted the “action
fives,” groups of five political appointees whose job was to appoint or reappoint personnel to
non-elected positions at district level. These boards “conducted a general, government-led
purge of the ranks of district state administration based on explicit political criteria.”51
Similarly, when regional reform was considered, the HZDS government nominated eight
regional plenipotentiaries in the fall of 1993, before the parliament approved any laws, or
even the number of future regions. In other words, the HZDS knew all along that it wanted
eight regions, and committed the government to this variant before laws were passed. 52 On
49
OECD, Issues and Developments in Public Management: Czech Republic-2000, p. 10.
Both the ODS and the HZDS announced they would scrap the passed laws if elected into office in the 2002
elections in the two countries.
51
Krivý, Vladimír. “Slovakia’s Regions and the Struggle for Power,” in Szomolányi, Soňa and John Gould, eds.
Slovakia: Problems of Democratic Consolidation. Bratislava: Friedrich Ebert Foundation, 1997, p. 116.
52
23 March 1994, Sme.
50
18
the night of 3-4 November, 1994, the HZDS also instituted what subsequently became known
as the “night of long knives,” when almost all heads of oversight, monitoring, and
administrative bodies were summarily exchanged for HZDS loyalists.
Where parties could staff the administration with their own, both state employment and
state structures expanded. In the Czech Republic, public employment more than tripled during
1989-2001, even despite the elimination of the regional governments in 1990. Slovakia also
saw a similar increase, with the public employment more than tripling. Public employment
did not multiply as much, “only” doubling since 1989. Part of the problem was that each
ministry could hire its own employees, rather than relying on a pool of civil servants: and as a
result, ministerial hiring became a favored way for political parties to reward its loyalists. The
situation had become dire enough in the Czech Republic for the EU to conclude that “the
occupying of positions in the state machinery according to party membership or on the basis
of personal acquaintances is in contradiction with the requirements of the rule of law and with
the interests of the public.”53 Moreover, in both the Czech and Slovak cases, top party leaders
were direct members of supervisory boards of profitable enterprises,54 and “state agencies
retained the ability to control the field by providing subsidies from state funds to select
groups.”55 The HZDS moved to centralize power, and “rewarded its members and supporters
in the organs of the state administration, especially on the regional and local level.” 56 Not
PHARE and NVF, “An Analysis of Public Administration of the Czech Republic,” Summary Report, Prague,
September 1998.
54
Mesežnikov, Grigorij. “The Open-Ended Formation of Slovakia’s Political Party System,” in Szomolányi,
Soňa and John Gould, eds. Slovakia: Problems of Democratic Consolidation. Bratislava: Friedrich Ebert
Foundation, 1997, p. 45.
55
Malová, Darina. “The Development of Interest Representation in Slovakia after 1989” in Szomolányi, Soňa
and John Gould, eds. Slovakia: Problems of Democratic Consolidation. Bratislava: Friedrich Ebert Foundation,
1997, p. 100.
56
Mesežnikov 1997, p. 45.
53
19
surprisingly, a subsequent audit emphasized the need to eliminate many medium-level
organizations, sections, committees, and divisions.57
This informal exploitation of loopholes in formal regulations had two effects: first, it
made it possible for political parties to gain resources directly from the state. Thus, it enabled
considerable rent-seeking, as state resources were awarded on a discretionary, rather than
meritocratic or competitive basis. Second, it generated a feedback effect: parties that were
powerful enough at the outset to privilege themselves, such as the HZDS and ODS, gained the
material resources and clientelistic ties to gain an advantage in subsequent elections and could
build in further loopholes for themselves, making it more difficult for other parties to compete
and reverse this spiral. Since these parties created the laws that would then constrain their
behavior, they could build in opportunities for further exploitation. For example, the Slovak
Law on Political Parties and Movements formally allowed political formations to conduct
business activity only in clearly defined areas. But in 1996, Slovak media revealed that the
HZDS (which wrote the law) had founded businesses that deliberately participated in
privatization projects in spheres not covered by the law.
Subversion
When political parties do not comply with formal reporting requirements, review or skew
privatization decisions, award contracts in contravention of bidding rules, and so on, they
subvert formal rules. Political parties did not stop at exploiting formal institutions: they also
deliberately broke laws and operating procedures, and relied on faulty monitoring and
enforcement mechanisms to escape punishment. Thus, favorable privatization privileges and
deals drained resources out of the state treasury, rather than funding public goods. These deals
“Audit súladu činností a financovania ústredných orgánov štátnej správy,” Slovak Government Information
Service, August 2000, also available at http://www.vlada.gov.sk/INFOSERVIs/
DOKUment_UOSS_2000/audit_UOSS_2000_august.shtml
57
20
were concluded on the basis of individual and political networks, rather than on the basis of
highest bids in the formal tenders, as in Slovakia during 1992-8. Subversion of formal rules
also included the funneling of funds to party coffers from sources that were legally forbidden,
such as anonymous donors.
Unlike exploitation, subversion involves the explicit breaking and transgressing of formal
regulations, rather than making use of its shortcomings. Like exploitation, however, it is more
prevalent where dominant parties have gained access to state resources. Thus, the Czech
Republic saw repeated scandals over party financing, and the tendency of the governing
parties to break the few rules on the books: the main ruling party, the ODS, could not explain
why a dead Hungarian and a resident of Mauritius were its main donors during 1995-6, why it
concealed over 170 million Kč in Switzerland,58 or why it received 7.5 million Kč from
Moravia Steel after the latter was allowed to lower its bid for Trinecke Železarne by 300
million Kč.59 Another coalition partner, the ODA received over 6 million, ostensibly from the
TMC Company in the Virgin Islands, which turned out to be Philip Morris, the First
Privatization Fund, and the Vitkovice steel mill. Both the ODA and the ODS received loans of
25 and 50 million, respectively, from Antonin Moravec, head of the Credit and Industry Bank,
which they then repaid via favorable privatization deals.60 Parties thus deliberately broke
formal privatization and financing regulations.
In Slovakia, the dominant HZDS did not stop at exploiting legal loopholes, but went on a
binge of unconstrained subversion as well. The second wave of voucher privatization,
scheduled for 1993, never took place, but privatization nonetheless accelerated at beginning
58
Respekt, 1 December 1997.
The ODS also claimed it had received over 2 million Kč from the American Committee for the Support of
ODS, despite the latter’s denial it had ever paid the money.
60
Respekt, 16 February 1997.
59
21
of 1994, via direct sales in favor of the HZDS and its coalition partners.61 Moreover, HZDS
often informed would-be participants in the privatization process that partnership with HZDStied companies was a “necessary precondition of the successful realization of their
privatization projects.”62 The HZDS also used formalization to subvert earlier laws: a 1995
law gave tax breaks to the allies of the HZDS government who bought enterprises via direct
privatization.63 Another law gave the state power over 74 key companies, and transferred
power to administer privatization from the Ministry of Privatization to the National
Privatization Fund, so that the state no longer had formal control over privatization
decisions.64
Yet informal monitoring and checking among parties could curtail these practices.
Initially, monitoring and reporting requirements were routinely ignored by Polish parties.
Political parties and parliamentarians were to submit yearly statements regarding their
economic activity and large donors, but these were not checked for either submission or
accuracy. As a result, only two parties turned in declarations in the first year of the law.65 Yet
the constant suspicions among the numerous and squabbling political parties and mutual
accusations meant that informal practices would limit this subversion, and create incentives
for the formalization of this monitoring. Thus, by 2001, a new Polish election law mandated
Mikloš, Ivan. “Economic Transition and the Emergence of Clientelist Structures in Slovakia,” in Szomolányi,
Soňa and John Gould, eds. Slovakia: Problems of Democratic Consolidation. Bratislava: Friedrich Ebert
Foundation, 1997, p. 61.
62
Mesežnikov, Grigorij. “The Open-Ended Formation of Slovakia’s Political Party System,” in Szomolányi,
Soňa and John Gould, eds. Slovakia: Problems of Democratic Consolidation. Bratislava: Friedrich Ebert
Foundation, 1997, p. 38.
63
Mikloš, Ivan. “Economic Transition and the Emergence of Clientelist Structures in Slovakia,” in Szomolányi,
Soňa and John Gould, eds. Slovakia: Problems of Democratic Consolidation. Bratislava: Friedrich Ebert
Foundation, 1997, p. 77.
64
The NPF, a quasi-private joint stock company created to administer the privatization decisions of government
and administer state properties, was fully under the personal discretion of the HZDS. Szomolányi, Soňa.
“Identifying Slovakia’s Emerging Regime,” in Szomolányi, Soňa and John Gould, eds. Slovakia: Problems of
Democratic Consolidation. Bratislava: Friedrich Ebert Foundation, 1997, p. 17.
65
22 January 2000, Polityka. These were the UW and ZChN.
61
22
full reporting and effective sanctions,66 since “all agree that to limit corruption it is necessary
to publicize the sources of party financing.”67 As a result, the new law eliminated public
fundraising, capped contributions, and stipulated that all campaign spending has to come from
a public electoral fund set up by each party and monitored by an independent commission.
The opportunities for such subversion were even more limited in Hungary, where the
initial fragmentation and uncertainty prior to the communist exit made all the parties wary of
any one benefiting disproportionately. Formal party funding was both generous and strictly
regulated. According to the October 1989 law, parties receiving more than 1% of the vote
were eligible for state funding. At the same time, the majority of the new law on parties was
concerned with the methods of funding distribution, use, accounting, and limits on potential
donations.68 Party funding reports were made public, and an independent monitoring agency,
the Government Control Commission, was set up. Subsequently, in May 1991 professional
accounting standards for parties were introduced, and repeatedly upheld.69 Similarly,
privatization was far less subverted than in the former Czechoslovakia. As a result, despite the
rise of foundations closely allied with the parties, and the ties of business with parties, party
finances were more public, more stringently controlled, and allowed less rent-seeking, since
“strong limits have developed upon party penetration into state and social life.”70
Both the mechanisms and constraints of subversion and exploitation were themselves
informal. Where the political competition was limited, and both turnover and fragmentation
rates were relatively low, parties were returned to office again and again, as in the Czech
Parties not submitting a report, or those that did not pass the forensic accountants’ scrutiny, would not receive
state funds for that electoral period.
67
19 May 2000, Rzeczpospolita.
68
As a result, some parties, like the MSZP, received only 24% of their funds from the state. The MDF received
60%, the FKGP 73%, while the others (Fidesz, KDNP, and SzDSz) received over 80% from the state.
69
Petroff, Wlodzimierz. “Finansowanie partii politycznych w postkomunistycznej Europie,” Kancelaria Sejmu,
Biuro Studiów i Ekspertyz, June 1996, #95, p. 14.
70
Körösényi, p. 168.
66
23
Republic and Slovakia, such dominant parties could more readily build in advantages for
themselves, confident they would be the beneficiaries. Thus, the powerful beneficiaries of
informal institutions can formalize these practices, but in so doing, they may also undermine
formal institutions and their development.
Facilitation
Informal practices facilitated formal institutions by decisionmaking rules for actors within
formal institutions where the latter generated few formal guidelines. Unlike exploitation or
subversion, facilitation is not a function of the configuration of party competition, but of the
greater availability of information from existing informal rules at a time when formal
institutions are being rapidly constructed, but have not yet become familiar or powerful
enough to generate strong incentives.
First, informal rules cut down on the costs of obtaining information—for example, before
parties developed ideological reputations and practical experience, an informal “regime
divide” structured the potential for formal coalitions and cooperation between parties with
origins in the former opposition on the one hand, and the successors to the communist parties
and their various satellites on the other.71 The more profound this divide (the result of
communist party-society interactions and conflict), the less likely coalitions across these two
camps, even when ideological proximity and other affinities would have dictated them. For
example, the Polish communist successor party could only form coalitions with its former
satellite. Its policy and ideology were far closer to the centrist Freedom Union, as both parties
admitted, but its provenance made such a coalition impossible. In contrast, the Hungarian
communist successor could govern with a former opposition party, chiefly because the regime
Kitschelt, Herbert, Mansfeldová, Zdenka, Markowski, Radosław, and Tóka, Gábor. Post-Communist Party
Systems. Cambridge: Cambridge University Press, 1999., Grzymala-Busse 2002.
71
24
divide was less stark. Coalitions thus formed not on the basis of ideological or numerical
considerations, but of past conflict or cooperation.72
When it came to the state and its structures, governing coalitions in all four countries
named representatives enterprise boards on the basis of informal power-sharing: if the head of
a board was from one governing party, the vice chair was from the other. Positions were filled
according to the political preferences of the governing coalition, and these in turn relied on
extant personal alliances.73 With time, rather than a mid-way step to privatization, the
supervisory boards became an end unto themselves, a lucrative and stable employment that
was both a reward to party loyalists and a source of income to the party.74 Similarly, when
governing parties were to appoint regional leaders in Poland, senior governing coalition
partners named the voivode, and the juniors, the vice-voivode. These rules thus provided
informational shortcuts for, and thus enabled the functioning of, formal institutions.
Coalition-affinity and power-sharing rules thus facilitated formal institutions by making
decisions within formal structures considerably more streamlined. Similarly, informal
agreements facilitated formal arrangements when the question of staffing discretionary offices
came up.75 Informal rules could thus provide information that was both useful to political
parties on its own—and which greased the gears of the formal state machinery.
Grzymala-Busse, Anna. “Coalition Formation and the Regime Divide,” Comparative Politics, October 2001.
Wprost, 5 March 2000.
74
Parties could use these positions in two ways: use the moneys directly for various sponsoring and advertising,
and to get foreign investors and others to contribute to the party in exchange for a permit to buy company shares.
75
Since these were intended to be named by political parties, this is not exploitation of the sort we see with
personalistic hiring in the civil service in the absence of a civil service law.
72
73
25
Reproduction
Informal institutions could also reproduce their formal counterparts, by monitoring and
punishing the subversion and exploitation of formal institutions, and by reifying formal
institutions.
First, informal monitoring and sanctioning among the political parties could also
reproduce formal institutions by limiting the amount of subversion and exploitation possible.
Competition was thus not only a constraint on subversion and exploitation, but was also a
mechanism of institutional reproduction. Where several parties competed for power, with no
party getting re-elected, the greater electoral uncertainty meant that parties constantly watched
each other’s hands, reporting any misdoings since that could be an electoral advantage, as
argued above. The electoral uncertainty also meant that no party had either the incentive or
the capacity to propose “winner-take-all” formal institutions, such as single member districts,
funding based exclusively on number of seats, and so on, since it was unclear who would
benefit. Parties also publicized each other’s shortcomings, thus informally sanctioning parties
that sought rents from the state. Such constant monitoring limited the amount of subversion
and exploitation of formal institutions. In contrast, where the informal monitoring and
sanctioning were feeble, political parties could poorly specify the legislation on party
financing so that local governments and state firms could contribute financially to the
governing political parties. They could also exploit the lack of meritocratic laws regarding
public hiring and staff the public administration with their loyalists, and break laws with less
fear of adverse publicity or electoral punishment.
Second, informal institutions reproduced formal institutions by expanding the latter’s
sphere: several informal arrangements were formalized by political parties and leaders, only
26
to make them subject to formal oversight organizations, expanding the formal regulatory role
of the state. For example, the creation of quasi-public agencies in Poland and in Hungary to
take on privatization and other state roles allowed informal personal networks to carve out a
sphere of activity that was formally codified and legitimated.76 At the same time, however,
these were subject to the rulings of the Constitutional and other courts, reinforcing the latter’s
regulatory role.
Such patterns also show the acquiescence of local and national authorities to the
proliferation and functioning of informal institutions: not only because they may be a way to
gain discretionary benefits, but also because they offer shortcuts and strategic templates that
allow formal institutions to function and to perform their codifying roles. Informal institutions
may even reproduce formal institutions, both by limiting the undermining of formal rules, and
by relying on the formal legitimation of informal gains.77
3. Alternative Explanations
Two other alternative explanations seek to account for the role of informal institutions,
and the peculiar divergence between Poland and Hungary on the one hand, and the Czech
Republic and Slovakia on the other. The first one focuses on the existing supply of informal
institutions in the legacies of the past, and the second emphasizes the potential demand for
informal institutions in the processes of national and constitutional construction.
Thus, relevant legacies of the past range from the kind of state that arose from the collapse
of the communist-party state78 to the impact of tourism, which became a significant source of
76
These institutions first gained these funds in the 1980s, and were resurrected in the 1994-5, when branch
ministries heavily pressured the center to create more extra-budgetary institutions.. Interview with Zyta
Gilowska, by Elzbieta Misiak. 3 September 2001, available at http://www.platforma.org/new/wywiady/10.shtml.
77
See also Portes and Sassen-Koob, and Darden, Keith. “Graft and Governance: Corruption as an Informal
Mechanism of State Control,” Manuscript, Yale University, August 2002.
78
Kitschelt et al 1999
27
unregulated, untaxed, and unregistered income in the 1980s.79 The more informal institutions
were used in the past, the argument goes, the greater their impact after the collapse of
communism. The communist parties’ response to the shortcomings and inefficiencies of their
regime took the form of “accommodating” society through a degree of liberalization—the
Polish and Hungarian states gained some independence from the party by the 1980s—or of
increased authoritarianism, as in Czechoslovakia. This communist response, whether
“patrimonial,” “accommodative,” or “authoritarian,”i could account for the observed variance.
The more patrimonial or accommodative the communist regime, the looser the controls on the
informal despoliation of the state, while the more constrained and authoritarian the communist
state, the fewer such opportunities.
However, the predictions of this explanation run counter to the empirical findings: the
authoritarian regime in Czechoslovakia did not constrain the subsequent use of informal
institutions—indeed, the informal undermining of formal institutions was considerably worse
in the two successor republics. Moreover, the mechanisms that would sustain and adapt these
informal institutions from one regime setting to another remain unclear. It is not clear from
these accounts either which legacies would be deployed, or the mechanisms by which they
were transmitted. As a result, this account does not specify clearly which informal solutions
we would expect to see, or how they would continue to influence politics.
Another set of scholars argues that informal institutions will be sustained only as long as
there is external demand for them.80 Thus, where new nation-states are constructed, as in the
case of the Czech Republic and Slovakia, we would expect greater demand for informal
79
Borocz 2000, p. 362.
Pistor, Katharina. “The Evolution of Legal Institutions and Economic Regime Change,” Paper Prepared for the
annual Bank Conference on Development Economic in Europe, Paris, France, 21-23 June, 1999. See also
Barbara Geddes, The Politician’s Dilemma. Berkeley, CA: University of California Press, 1994.
80
28
facilitation and greater opportunity for informal exploitation, since the formal institutions had
not consolidated enough for interactions dependent on formal institutions to take place. Yet
subversion was the dominant interaction in these two countries, as existing formal rules were
inherited, and new ones were constituted, only to be broken. This demand-driven approach
tends to ignore both the persistence of informal institutions and their “stickiness,” as well as
the possibility that informal institutions can so undermine formal institutions as to create their
own demand.
Thus, to complement these existing approaches to the study of informal institutions and
their impact, a focus on the interaction of informal with formal institutions, and the results of
these interactions, may be more helpful both in providing a mechanism for institutional
retention, and for accounting for the persistence and change in these institutions.
Conclusion
If we examine the variation in state performance across East Central Europe, the
imposition of formal institutions and constraints on state politicization does not coincide or
precede the variation in the growth of state administration, political discretion in hiring or
resource extraction, the control of corruption, or government effectiveness. Rather, the
underlying patterns of party competition allowed and constrained a set of informal institutions
to determine the shape of the state, and the ways in which it differed across the cases
examined here.
In short, in the post-communist context, formal institutions underwent a form of
superficial isomorphism, resembling each other across countries and converging over time.
Informal institutions, however, diverged in their function and importance. Parties used
informal rules both to survive and to shape the state. These rules, derived from personal
29
networks, legal loopholes, and past patterns of conflict allowed the inchoate political parties
to choose strategies and to consolidate their earlier gains. Yet informal institutions also
limited how much parties could extract from the state, via informal monitoring and
enforcement of formal rules. Thus informal institutions had two contradictory effects, both
undermining and reinforcing the formal democratic structures.
By subverting, exploiting, facilitating, and reproducing formal institutions, political
parties have informally shaped the democratic development of the state, both reinforcing and
undermining formal institutions. As a result, informal mechanisms do not simply hinder
democratic accountability or the functioning of formal institutions,81 but function in
considerably more nuanced ways, and can even enrich formal institutions considerably.
Moreover, if the emergence of informal institutions can be seen as a function of conflict
among actors competing for the benefits that flow from institutions,82 so is the moderation of
the effects of informal institutions. Where fragmentation and turnover were high, parties faced
considerable electoral uncertainty—and as a result, they both had incentives not to build in
excessive advantages for incumbents (since it was unlikely they could benefit from them for
long), and to monitor, report on, and sanction each other’s behavior (since they stood to gain a
marginal electoral advantage this way.) These interactions between formal and informal
institutions, and the informal mechanisms of their emergence and reproduction moderated
each other’s impact.83 The result was the change over time we observe between the two
groups of countries considered here.
O’Donnell 1996.
Knight 1992.
83
As Kathleen Thelen argues with respect to formal institutions, one important source of institutional change lies
with the interaction of different institutional orders within society. Thelen, Kathleen. “Historical Institutionalism
in Comparative Politics,” Annual Review of Political Science, 1999: 369-404.
81
82
30
Outside of this sample, there are cases that might call into question the analysis presented
above. Slovenia, for example, has had the same party in power for most of its post-1991
independent existence, yet its rates of state politicization are the lowest in the region.
However, the Slovene LDS’s hold on power was more tenuous than its time in office would
suggest.84 Unlike the Slovak and Czech cases, coalitions were both unstable and differed from
one term to next, with the 1996 election resulting in a deadlock.85 Subsequently, its coalition
partner (SLS) extracted numerous power-sharing concessions from the LDS, and the
government fell when the SLS went over into the opposition in April 2000. As a result, the
LDS was constantly and consistently constrained in ways that neither the Czech ODS nor the
Slovak HZDS were.
The potential importance of informal institutions suggests two further venues for research.
First, a comparison with the slower, more gradual institutional development in Western
Europe may help us to isolate further the effects of pacing, and test the hypotheses provided
here. Secondly, scholars and analysts examining the post-communist state (including
international agents such as the European Union) would gain a more accurate image of state
development, and the potential ways of addressing its shortcomings, by including informal
institutions, as opposed to focusing chiefly on formal laws and regulations on the books.
The party came under constant criticism, most notably from Janez Janša, leader of the SDS, the Social
Democratic Party.
85
Coalition crises repeatedly occurred in 1993, 1994, 1996, and in 2000. In the 1996 election, the LDS got 25
seats, while the SLS+SKD post-electoral coalition got 29.
84
31
Table 1. Introduction of State Reforms
Hungary
Poland
Slovenia
Czech Rep
Bulgaria
Romania
Slovakia
Regional
1990
1998
~
2001
~
199687
1996/ 2002
Civil Service
1992
1996
1993
2002
1999
1999
2001
Anti-Corruption86
2001
1997
2001
1999
2001
1997 (unenforced)
2000
Table 2. Expansion of State Employment88
1989-2000 Change in
1989-2000 Change in
State Employment
State Employment as %
of Total Employment
-24.9%
1989: 7.5%
Hungary
397,900 to 299,000
2000: 7.8%
201%
1989: 1.5%
Poland
260,700 to 526,000
2000: 3.5%
210%
1989: 3.0%
Slovenia
22, 895 to 48,000
2000: 5.3%
258%
1989: 1.5%
Czech Rep
74,047 to 191,000
2000: 4.0%
300%
1989: 1.5%
Slovakia
32,833 to 98,600
2000: 4.7%
Table 3. Government Effectiveness and Control of Corruption
Gov’t Effectiveness
Control of
Corruption Rankings
89
(-2.5 to 2.5 scale)
Corruption
(1-10 scale)91
90
1997/8
2000/1
(-2.5 to 2.5 scale)
199292
2002
.61
.60
.65
5.2
4.9
Hungary
.67
.27
.43
5.2
4.8
Poland
.57
.70
1.09
N/a
6.0
Slovenia
.58
.31
5.2
3.7
Czech Rep .59
.57
.70
.23
5.2
3.7
Slovakia
86
Source: Monitoring the EU Accession Process: Coruption and Anti-corruption Policy. Budapest: Open
Society Institute, 2002.
87
http://ro-gateway.ro/node/200156/editorial
88
Data unavailable for Bulgaria and Romania
89
Source: Kauffman, Kraay, and Zoido (2002): Governance Matters II Data Set, available from the World Bank.
90
Source: Kauffman, Kraay, and Zoido (2002): Governance Matters II Data Set, available from the World Bank
91
Source: Transparency International, and the Internet Center for Corruption Research, at
http://www.gwdg.de/~uwvw/
92
Estimate.
32
Table 4. Dispersion of Power in Parliament
Hungary
Poland
Czech
Republic
Slovakia
i
Longest tenure
of governing
party in office, in
months
48
48
89
Fragmentation
1st
parliamentary
term93
.71
.90
.55
Fragmentation
2nd
parliamentary
term
.65
.75
.79
Fragmentation
in 3rd
parliamentary
term
.74
.67
.76/ .73
9094
.60
.69
.77
See Kitschelt, H., Mansfeldová, Z., Markowski, R., & Tóka. G. (1999) Post-Communist Party
Systems Cambridge: Cambridge University Press.
As measured by 1-  Si 2, where Si is the seat share. The index measures the concentration of competitive
strength among parties. A party system dominated by one party alone would have a fractioning index of 0, a twoparty system with an even split of seats an index of .5, and so on. See Rae, Douglas. The Political Consequences
of Electoral Laws, New Haven: Yale University Press, 1971, and esp. p. 98.
94
The HZDS-led coalition was in office three times, for 9, 33, and 48 months, respectively.
93