Zenonas NORKUS
„Kokia demokratija, koks kapitalizmas? Pokomunistinė
transformacija Lietuvoje lyginamosios istorinės sociologijos
požiūriu“. Vilnius : Vilniaus universiteto leidykla, 2008. - 744 p.
- ISBN 978-9955-33-231-2
Which Capitalism, Which Democracy? Postcommunist
Transformation in Lithuania from the Viewpoint of Comparative
Historical Sociology. Vilnius : Vilnius University Press, 2008. 744 p. - ISBN 978-9955-33-231-2 (in Lithuanian)
Contents
Introduction
PART I
FEATURING COMPARATIVE SOCIOLOGY AND ITS BASIC
CONCEPTS
Chapter 1
On Lithuanistic and Non-Lithuanistic Sociology (and More)
1.1. Comparative Research in Natural Science
1.2. Comparative Research in Social Science and Human Studies
1.3. Society, Culture, Civilization, and Empire as Basic Concepts in Social
Comparative Research
1.4. Comparative Research and Ethnocentrism
1.5. The Genealogical Features of the Contemporary Disciplinary Structure of
Social Science
1.6. Evolutionist Comparative Research in the Classical Sociology
Chapter 2
Between Ladder of Evolution and Network of History: The
Development of Comparative Sociology in Outline
2.1. Comparative Historical Sociological Research in Germany, Late 19th-Early 20th
Century
2.2. Area Studies and Modernization Theory in U.S.
2.3. The Europeization of the International Quantitative Comparative Research and
Historical Turn in the American Comparative Sociology
2.4. Comparative Historical Sociological and Capitalist World System Analysis
2. 5. The Postmodern End of “Grand Metanarratives” or the Renaissance of the
Modernization Theory?
2. 6. Great Convergence and the End of Comparative Sociology?
PART II
THE DILEMMAS IN COMPARATIVIST METHODOLOGY
Chapter 3
What is Comparative Method?
3.1. The Paradox of Adamo Przeworski ir Henry Teune
3.2. Arend Lijphart on Comparative Method
3.3. The Classification of the Comparison Forms
3.4 The Canons of John Stuart Mill as the Rules of Comparative Method
3.5. The Comparative Method and the Case Study Method
Chapter 4
The Search for Middle Road in the Contemporary Methodology
of Comparative Research
4.1. Fractal Aspects in the Comparative Methodology
4.2 Two concepts of a case
4.3. Synthetic Strategy in the Comparative Research and the Problem of the
Multiple Conjunctural Causality
4.4. Comparative Qualitative Analysis as Logical Technique in the Synthetic
Strategy of Comparative Research
4. 5. What Does Synthetic Strategy in Comparative Research Synthesize and What
Does Not?
Chapter 5
Comparability, Concept Formation, and Measurement
5.1 The Problem of Comparability
5.2. The Problem of Equivalence
5.3. Taxonomic Constructs
5.4. Typological Constructs: with Adjectives and Without Them
PART III
COMMUNISM AS A PROBLEM OF COMPARATIVE HISTORICAL
SOCIOLOGY
Chapter 6
Marxist Social Theory and Communist Social Order
6.1. Marxism as Social Science and as Utopia
6.2. The Irony and Paradoxes in the History of Marxist Communism
6.3 Was USSR a „Degenerated Workers’ Class State”?
6.4. Was USSR a State Capitalist Country?
6.5. Communism as Anti-Utopia: From Lev Trotsky to George Orwell
Chapter 7
Communism as Totalitarianism
7. 1. Communism and Fascism: Kindred Enemies
7.2. Totalitarianism: Perverse Modernity or a Relapse into “Closed Society”?
7.3. Totalitarianism with Adjectives and Without Them
7.4. The Decline and Renaissance of the Theory of Communism as Totalitarianism
Chapter 8
Was Communism a Way into (Different?) Modernity or into a
Neo-Traditionalist Impasse?
8.1. Modernization Theory and Sovietology
8.2 The Barrington Moore‘s Analysis of the Dilemmas of Communist Power and
Alternatives of Its Development
8.3. „Really Existing Socialism” as Unfinished Modernization: The Convergence
Theory Approach
8.4. Convergence with the … “Third World”? The Communist Neo-Traditionalism
Theory Approach
8.5. What Was Communism Really?
PART IV
EXIT FROM COMMUNISM AS PROBLEM OF
COMPARATIVE HISTORICAL sOCIOLOGY
Chapter 9
Was the Collapse of Soviet Communism a Failure of Social
Science?
9. 1. The Forecasts of the Communism’s Breakdown
9.2. The “Osmanization” or Gradual Transformation of Soviet Communism?
Mikhail Gorbachev’s Perestroika in the Mirror of Sovietology
9.3. Why Nobody Predicted How and When Will the Soviet Communism Collapse?
9. 4. Was the Collapse of Soviet Communism in 1989-1991 Unavoidable?
9.5. The Last Crossroad of Soviet Communism
Chapter 10
The Transformation of Chinese Communism
10.1 The Way-Stations and Achievements in China‘s Exit from Communism?
10.2. Did China Build Socialist Market Economy?
10.3. The Problems and Prospects in the Transformation of China‘s Communism
10.4. Chinese Way Out of Soviet Communism as the Avoided Tragedy of the
Restoration of the Lithuania‘s Independence
Chapter 11
Exit from Soviet and Yugoslav Communism: Orientations, Modes,
Ways, Outcomes
11. 1. Two Paradoxes of the Exit from Communism
11.2. The Conceptual Foundations of the Typology of the Ways of Postcommunist
Transformation
11. 3. Restorative Orientation for the Exit from Communism
11.4 Imitative Orientation for the Exit from Communism and the Program of
„Great Leap“ into Market Economy
Chapter 12
The Political Economical Outcomes and the Macroeconomic
Dynamics in the Exit from Communism
12.1. The Political Economical Outcomes of the Exit Out of Communism
12.2. The Macroeconomic and Welfare Outcomes of the Capitalism Restoration:
12.3. The Problem of the Causes of Transformational Economic Recession
12.4. Types of the Pathways of Postcommunist Transformation
12.5. Pathways and Initial Conditions of Postcommunist Transformation
Part V
LIBERAL WESTERN DEMOCRACY: IDEAS AND
POSTCOMMUNIST REALITIES
Chapter 13
The Idea of Liberal Democracy and its Typologies
13.1. The Problem of Social Cost of Postcommunist Transformation
13.2. Consumer’s Welfare and Citizen’s Wellbeing
13.3. Coercion, State, Democracy
13.4. Democracy as Contested Concept and Its Deductive Typologies
13.5. Liberal Democracy as a Measurement Object
13.6. Arend Lijphart‘s Quantitative Inductive Typology of Liberal Democracy
Chapter 14
New Latin America or New West? The Consolidation Problems of
the Postcommunist Liberal Democracy
14.1. Why All Postcommunist World Did Not Become New Latin America?
14.2. Revolution, Reform, and “Refolution” in Latin America and in the Central
and Eastern Europa
14.3. The Concept of Consolidated Liberal Democracy
14.4. The Problem of the Conditions for Consolidation of Liberal Democracy
Chapter 15
New “Wild West”? The Questions about the Quality of the
Postcommunist Liberal Democracy
15.1. The Concept of the Quality of Democracy
15.2. Which Democracy Type Do Postcommunist Liberal Democracies Represent?
15.3. The Quality Problems of the Postcommunist Liberal Democracies
15.4. Authoritarianism and Democracy with Adjectives: Failures of the
Postcommunist Democratization
PART VI
CAPITALISM: THEORY AND HISTORY
Chapter 16
The Change and Diversity of Capitalism as a Problem in the Classical
Economic Sociology
16.1. Karl Marx: Capitalism as a Mode of Production
16.2. Maxas Weberis: Capitalism as Economic Action and as Economic System
16.3. The “Atom of Property” Splitting: Adolf Berle and Gardiner Means on
Managerial Corporate Capitalism
16.4. Joseph A. Schumpeter: Capitalism as Creative Destruction
16.5 Karl Polanyi and John Maynard Keynes: Free Market Capitalism – Utopia or
Anti-Utopia?
Chapter 17
The Rise and Decline of Fordist Capitalism
17.1. Fordist Capitalism and Its Welfare Regimes
17.2. Globalization and the End of Managerial Capitalism
17.3. Whose Capitalism is Most Viable and Best?
Chapter 18
The Diversity of Rational Entrepreneurial Capitalism as a Problem of
the Contemporary Comparative Economic Sociology
18.1 Coordinated and Liberal Capitalism
18.2. Conditions for the Stability of the Capitalism Types
18.3. How Many Capitalism Types?
PART VII
POSTCOMMUNIST CAPITALISM: PRESENT AND FUTURE
Chapter 19
What Kind of Capitalism is Emerging in the Baltic and Central Europa?
19.1 From Communism into Peripheric Capitalism and Feudalism? Pessimistic
Diagnoses and Predictions
19.2. From Communism into „Better“ Capitalism? Disappointed Hopes of the
Postcommunist Messianism
19.3. Postcommunist Capitalism in the Mirror of the „Neoclassical Sociology“
19.4. Methodical Difficulties and Discoveries of the Quantitative Inductive Typology
of Postcommunist Capitalism
19.5. Postcommunist Capitalism in Central Europa: a New Stable Type or
Transitional State?
Chapter 20
Why Estonians Did Overtake Us?
20.1. North-South Gap in the Political and Economical Transformation of the Baltic
States as an Explanation Problem
20.2. Economical Explanation of Lithuania’s Backwardness
20.3. Political-Economical Explanation: Does the Blame Lay on Lithuanian ExCommunists?
20.4. Culturalist Explanation: “Weber’s” Thesis for Baltic Countries?
20.5. Difficulties of the Culturalist Explanation of the Estonia’s Success
Chapter 21
Between Estonia and Slovenia: Postcommunist Capitalism in Lithuania
and Its Prospects
21.1. Estonia, Slovenia, Lithuania: Two Antipode Champions of the Postcommunist
Transformation and One Mediocrity
21.2. Why Capitalism in Lithuania is Akin to Estonian, but not to Slovenian
Capitalism?
21.3. Whom to Run after: Estonia or Slovenia?
21.4. Will Eurocapitalism be Neoliberal or Social?
REFERENCES
SUMMARY IN ENGLISH
SUMMARY
Which Democracy, Which Capitalism? Post-communist
Transformation in Lithuania from the Standpoint of
Comparative Historical Sociology
The book is a comparative historical sociological study of the processes of postcommunist economical and political transformation, focusing on its course and outcomes
in the author‘s native country – Lithuania. Its goal is to provide the synthesis of two
bodies of literature: (1) swelling body of native social scientific research work that is
published in Lithuanian and is mostly ethnocentric in its methodological orientation (see
e.g. Adomėnas et al. 2007; Aidukaite 2004; Ališauskienė, Dobryninas and Žilinskienė
2005; Bernotas and Guogis 2003; 2006; Bielinis 2003; Dobryninas 2001; Gaidys 2000;
Gečienė, Juknevičius et al. 2001; Genzelis 1999; 2005; Gylys 2002; Grigas 1995; 1998;
2001; 2004; Gruževskis 2001; Guogis 2000a; 2000b; Grigas ir Ružas 2007; Juknevičius,
Mitrikas et al. 2003; Krupavičius ir Lukošaitis 2004; Kuzmickas 2007; Kuzmickas and
Astra 1996; Laurėnas 2001; Lazutka et al. 2004; Leonavičius 2002; Leonavičius and
Keturakis 2002; Lopata and Matonis 2004; Maniokas 2003; Maniokas ir Vitkus 1997;
Matonytė 2001; Matulionis. 2005a; Matulionis 2005b; Melnikas 2002; Mitrikas 2000;
Novagrockienė 2001; Poviliūnas 2003; Rakauskienė 2006; Ramonaitė 2007; Stankūnienė
et al. 2003; Stankūnienė, Jasilionienė ir Jančaitytė 2005; Socialiniai pokyčiai 2000;
Šabajevaitė 1999; Šaulauskas 1996; 1998a; 1998b; 2000; Vilpišauskas 2001; Vitkus 2006;
Vitkus ir Pugačiauskas 2004; Žiliukaitė, Ramonaitė, Nevinskaitė, Beresnevičiūtė and
Vinogradnaitė 2006), and (2) Western scholarly work from the fields such as comparative
politics and comparative political economy. The book is sociological by bridging the
disciplinary boundaries, historical by covering time span between 1914 and 2004 (year of
Lithuania‘s accession to the EU and NATO), and comparative by discussing the social
change in Lithuania in the comparative frameworks of varying scope, beginning with
intercivilizational comparisons and closing with comparisons according to the most
similar cases design (i.e. with other Baltic countries).
In his use of both bodies of literature, the author follows two questions: (1) how
the achievements of the international comparative research help to illuminate Lithuanian
case? (2) In which respects is Lithuania an interesting and important case for the
comparative research aiming at broader generalizations? These questions are directed to
four research areas: (1) communism; (2) exit from communism; (3) post-communist
democracy; (4) post-communist capitalism. The topics from the first area are discussed in
the third, those from the second – in the fourth, those from the third – in the fifth, and
those from the fourth – in the sixth and the seventh parts of the book. The discussion of
all these topics is guided by the two questions put above, formulated more specifically:
what were specific features of the communist regime in the Lithuania? In which respects
is it of the interest for comparative communism studies? What are the specific features of
the Lithuania‘s exit from communism? How and why is it important for transitological
research? How should post-communist democracy in Lithuania be classified? In which
respects is it important and interesting for the comparative research on post-communist
democracy and on liberal democracy generally? What kind of capitalism exists in
contemporary Lithuania? How the research on contemporary capitalism in Lithuania can
enrich comparative research on capitalism?
The discussion of these questions are instrumental to achieve the main goal of this
book – to provide a macrosociological diagnosis of the present state of Lithuanian society
that is a subject of the ongoing public discussion in this country, displaying a broad range
of opinions from the triumphant optimism to the apocalyptic pessimism, describing
recent transformations in Lithuania as a social catastrophe leading to the extinction of the
Lithuania as a distinct state and nation in the wake of the ongoing globalization and
europeanization. The book was inspired by author‘s conviction that creating an objective
image of the present state of Lithuanian society is not possible to be made without
thorough comparison of processes of economical, political, and social change with other
post-communist countries. This is the only way to find out in which respects Lithuania‘s
development is normal, and in which it is not.
Although the comparative research in Lithuania has old traditions going back to
the works of Lithuanian philosophers of culture Antanas Maceina and Stasys Šalkauskis
in the interwar Lithuania, and it is practised in the contemporary Lithuania (Antanas
Andrijauskas, Vytautas Kavolis, Leonidas Donskis), up to this time it was represented
only by the work in comparative civilization analysis, working with the civilizations as
the biggest possible units of comparison and straggling the line between social science
and speculative philosophy of history. To introduce Lithuanian reader into other, more
down-to-earth styles of comparative research, author reserves two opening parts of the
book for the methodological prolegomena, including discussion of the basic concepts
(categories), techniques, and directions of international comparative social research in its
historical development.
The discussion of the basic concepts of comparative research in the first part of
the book is focused on the concepts of modernity and modernization, and involves also
concepts of society, culture, empire, international system. This discussion identifies two
key metaphors in the comparativist imagination, competing to guide the thinking about
the long-time socio-cultural change. One of them directs to conceive this change as
evolution – ascent or descent along the stages representing evolutionary types of social
systems. Another metaphor suggests thinking about social and cultural change as a
history – growing rhizomatic network where social systems are related by the filiation
and cultural diffusion, considered in the book as unique features of socio-cultural change.
Competition of these key metaphors accounts for differentiation of the comparative social
research into two broad directions – evolutionist and historicist one, and for the
ambiguity in the concepts of modernization and modernity themselves.
In the evolutionist framework, modernity is a stage-like evolutionary type of
social systems. The emergence of the first social systems of this type in the Western
Europe at some specific (modern) time (i.e. in the 16-17th centuries) is considered as
historically accidental for the very essence or identity of being modern, with sinic or
arabic modernities as possible alternative cases of modern societies and cultures. In the
historicist framework, modernity is defined by its origin in one specific – Western –
civilization, with its identity shaped by the unique genealogy of this civilization,
worldview and values. In the historicist framework, modernization of non-Western
societies and cultures basically means their westernization, leading to the long-time
convergence of presently existing civilizations and the extinction of the present diversity
of cultures and forms of political and economical organization. Meanwhile, the
evolutionist framework is also compatible with an idea of multiple modernities, allowing
for the emergence of the new lines of the cultural and social diversification despite (or
due to) the economic forces of globalization.
The subject-matter of the second part of the book is sources of diversity in the
comparative research itself deriving from the differences in the design of the research and
in the strategies of comparison. This strategy can be variable-oriented and quantitative,
applying methods of statistical analysis to large populations of cases (states, cultures) to
detect co-variations, interpreting them as confirmations or falsifications of general causal
hypotheses. However, the comparison can also be qualitative, guided by John Stuart
Mill‘s canons of eliminative induction, and involving only few cases that are known in
depth. This is what comparative method means according to its influential description
provided by Arend Lijphart.
The author prefers the broader conception of comparative method by Charles
Ragin. According to this conception, the distinguishing feature of comparative social
research is the presence of macrosocial variables in the causal hypotheses that are
articulated or tested, and the use of the populations of cases displaying the variation of
such variables across at least two big (macrosocial) cases. In Ch. Ragin‘s description of
comparative method, the dichotomy of quantitative (variable-oriented) and qualitative
(case-oriented) strategies is replaced by the trichotomy of quantitative, qualitative, and
„synthetic“ (diversity-oriented) strategy, with algorithms of Boolean qualitative
comparative analysis designed to serve as logical technique of synthetic strategy.
The methodological half of the book closes (in the chap. 5) with the discussion of
the methods of concept formation applied in the empirical half (chaps. 6-21) of the book.
The bulk of the research surveyed and discussed in this half is typological. Its foremost
goal is to classify communist regimes, ways and outcomes of exit from communism, to
identify emerging types of post-communist political regimes and post-communist
capitalism, and to detect the causes of this diversity. Two strategies of typological
concept construction are distinguished and applied: a deductive (from above) and an
inductive (from below) one.
Applying deductive strategy, typological concepts are articulated in the context of
a theory that identifies conceptual dimensions in the phenomenon under consideration.
These dimensions define logical space of the possible diversity of this phenomenon.
After the comparison of this space with the empirically available diversity, the space of
the logical possibilities is reduced to several types. Of special interest for the goals of
comparative analysis are „ideal types“ made famous by Max Weber. They are defined by
combinations of the values of variables that are located at the limits of the logical space
delineated by theory and represented (if at all) by its „pure“ cases, that may be not
present in the empirical reality.
To apply inductive quantitative strategy, a researcher should have at her disposal
a data-set that is appropriate for application of the statistical techniques of factor and
cluster analysis. Factor analysis helps to discover implicit conceptual dimensions (factors)
in the set of available variables, and the cluster analysis helps to group the cases into the
clusters according to the degree of their mutual similarity. By act of interpretation, these
clusters can then be related to the theoretically constructed types.
The empirical half of the book starts with third part, encompassing chapters 6-8
and dealing with communism as a social system. According to working definition,
communism means a really existing social system that emerged as an outcome of an
attempt to materialize Karl Marx‘s utopia of classless society. However, such definition
still says nothing about the intrinsic character of this outcome, except that communist
countries were ruled by communists. As a matter of common knowledge, the communists
themselves did not consider that the societies under their rule already are communist,
postponing the realization of the communist idea for the more or less distant future.
More informative description and explanation of communism as a really existing
social system is the task of the social scientific analysis, with its conclusions dependent
on the theoretical and comparative perspectives applied for its conceptualization. The
author draws a distinction between etic and emic accounts of communism (in the sense of
Goodenough 1970: 104-119; Harris 1980: 29-45)). Emic are the accounts of communism
from the standpoint of Marxism as the social theory that has produced communism.
These accounts are divided into apologetic and critical ones. Apologetic accounts are
represented by the official ideological doctrines of the former communist countries that
have described communism as “socialism” – first phase of the communism as the highest
and last stage of social evolution. Critical accounts are alternative marxist conceptions of
really existing communist regimes as state capitalism, bureaucratic collectivism and so on.
Emic accounts of communism are discussed in the chapter 6. Next chapters 7-8
deal with etic (i.e. non-marxist) theories of communism. Three types of etic theories of
communism are distinguished: (1) communism as totalitarianism; (2) communism as a
way into modernity; (3) communism as neotraditionalism and neopatrimonialism. This
typology is grounded by the idea that the character of the etic theories of communism is
determined foremostly by the perspective of comparison used for its conceptualization
and explanation. Theory of communism as totalitarianism assumes that the key to
understand communism is provided by its comparison with nazist Germany (and vice
versa). In one version of this theory (Hannah Arendt, Zbigniew Brzezinski, Carl J.
Friedrich) communism and nazism are considered as pathological phenomena peculiar to
modern societies, a form of rule without precedents in the former history. Proponents of
another version (Karl Popper, Karl A. Wittfogel) discover totalitarianism in the
premodern societies, considering nazist and communist totalitarianism as recurrence of
deeply archaic forms of social organization characteristic for closed tribal societies or
Oriental despotism.
Theories of communism as a way into modernity, alternative or incomplete
(arrested) modernity assume that the key to understand and explain the realities of the
(already extinct) communist countries can be provided by their comparison with
advanced liberal democratic Western countries. Assumption of their basic similarity was
implicit in the numerous attempts of the sovietologists to explain social phenomena in the
communist countries by applying theories of interest groups, corporatism, bureaucratic
politics and many others ones that were developed targeting social reality of advanced
Western countries as their intended scope of application. In the theories of communism as
neotraditionalism and neopatrimonialism, the social reality of premodern and
underdeveloped (third world) countries is used as communism‘s mirror.
The author advances proposal to solve the controversy between different theories
of communism by taking into account internal differentiation in the communist world that
was increasing from the very establishment of communist regimes and was greatest at the
eve of communism‘s collapse. The countries that fell under communist rule differed
greatly with respect to their civilizational identity and the level of the social-economic
development achieved on the threshold of communism. These initial conditions decided
both the role of communism in the history of the particular countries, and the shape that
the communist regimes took in the late phases. Although theory of communism as
totalitarianism provided a sharp phenomenological picture of communist regimes in their
early phases, it was no more adequate for late communism. At least three pure types of
late communism can be distinguished (see Kitschelt, Mansfeldova et al. 1999).
In the countries that were economically, socially, culturally and even politically
modern before communism (the Czech Republic, East Germany, Latvia, Estonia),
communist totalitarianism has transformed itself into the bureaucratic authoritarian
communism. In these countries, communism brought just the displacement of the normal
modernity with its pathological version. In the countries where the processes of
modernization were advanced but unfinished before communism, economic, social, and
cultural modernization continued under communist regime that took the shape of national
communism in its late phase.
In the countries where modernization was in very beginning, the coming of
communism initiated a singular way of modernization that can be described as
turbomodernization (Marius Povilas Šaulauskas). After the totalitarian phase of
communism, its transformation into the patrimonial communism followed, whose
distinguishing feature is the paramount role of particularistic patron-client networks in its
social organization. This form of late communism prevailed in almost all republics of the
former Soviet Union and in the Balkan countries.
None of the etic theories of communism were able to predict exact timing and
circumstances under which Soviet communism will collapse, because time and shape of
communism‘s collapse were determined by the contingent conditions and subjective
factors that cannot be derived from general causes that are subject matter of social
science. However, etic theories have correctly identified structural weak spots of the
communist system that made it unable to win economic competition with advanced
liberal democratic capitalist states and to demonstrate to be a superior social system.
Losing this competition, communist system suffered from the dwindling
legitimacy even in the eyes of the members of communist party. This loss of legitimacy
was most important long-term or structural cause why communism had collapsed. Best
explanation of the short-term dynamics of this collapse is provided by the theory of
preference falsification that discloses the causes why political regimes suppressing or
restricting freedom of speech are more fragile or less stable in comparison with liberal
democracies.
In the chapter 11, the analysis of the conceptual foundations for classification of
the pathways out of communism is provided. In this analysis, five conceptual dimensions
are distinguished: (1) orientation of the transformation (according to Šaulauskas 2000) –
innovative, imitative, continuative, restorative); (2) mode of political transformation
(reform, revolution, „refolution“); (3) mode of economic transformation (shock therapy,
gradual transformation); (4) political outcomes (liberal democracy; illiberal democracy or
one of the forms of authoritarianism); (5) economic outcomes (rational entrepreneurial
capitalism (REC)), political oligarchic capitalism, state monopoly capitalism, state
capitalism).
The combinations of the values of the variables describing these dimensions
define many different kinds of the transition pathways. Some of these combinations are
logically impossible (inconsistent); others may be consistent, but did not materialize
empirically. Focusing on those ways out of communism that were observable empirically,
the conceptual classification is reduced to empirical typology discussed in detail in the
chapter 12. This discussion is introduced by the criticism of the mainstream in the post-
communist transformation research (so-called transitology) that singles out one particular
outcome out of the whole range of possible outcomes (REC + liberal democracy),
classifying the diversity of the transformation pathways into successful and unsuccessful
ones.
To make the criticism of the transitological teleology constructive, the author
provides elaborated classification of the transformation outcomes (including distinction
between different versions of REC and liberal democracy themselves), and tries to take
into account whole range of variation of the outcomes. He singles out six empirical types
of the exit ways from communism:(1) innovatively oriented gradual way leading to
combination of REC and liberal democracy (Slovenia) or authoritarianism (China); (2)
restoratively and imitatively oriented gradual reformist way to REC and liberal
democracy (e.g. Hungary); (3) restoratively and imitatively oriented shock therapy
revolutionary way to REC and liberal democracy (e.g. Czech Republic, Estonia, Latvia);
(4) imitatively oriented shock therapy revolutionary way to semi-authoritarianism and
state monopoly capitalism (e.g. Russia); (5) continuatively oriented gradual reformist
way to political oligarchic capitalism and illiberal democracy (e.g. Ukraine); (6)
continuatively oriented gradual reformist way to state capitalism and authoritarianism
(e.g. Belarus, Uzbekistan).
Instead of just asking about what causal conditions were crucial for the success of
transition (e.g. arrival to station REC+liberal democracy), author focuses on those
conditions that were crucial for entering different exit ways from communism. According
to his view, different legacies of the late communism together with civilizational
differences (legacies of the long duration history) explain why different countries entered
exit ways from communism of specific types and arrived at specific outcomes.
In the countries of bureaucratic authoritarian communism, the restorative
orientation of post-communist social change was prevailing. Countries with the legacy of
national communism displayed most clearly the imitative orientation. In those with
patrimonial communism as exit point, the continuative orientation dominated. China and
Slovenia were the only former communist countries with pronounced innovative
orientation. In Slovenian case, innovative orientation of the exit from communism can be
related to the traditions of the Yugoslav communism that was the most liberal and bent
for revisionist piecemeal social experimentation. In China‘s case, where communism was
marked by leftist egalitarianism, innovative orientation may be related to the
civilizational traditions from older times.
In both cases, post-communist transformation was realized by means of piecemeal
social engineering as the process of incremental change. Imitative and restorative
transformation was enacted in two modes: by gradual reforms, and by shock therapy
marked by revolutionary and holistic features. Success of shock therapy in number of
post-communist countries refutes Karl Raimund Popper‘s theorem that successful holistic
social engineering is impossible. The imitational and restorative orientations of exit from
communism prevailed in most countries that were admitted in the 2004 to the EU and
NATO. Accession of some post-communist countries to these organizations is interpreted
as the certification of the successful (in the transitological sense) conclusion of the postcommunist transformation: the consolidation of rational entrepreneurial capitalism (REC)
and liberal democracy.
However, in many post-communist countries failures of shock therapy or gradual
reforms led them to oligarchic or state monopolistic capitalism and to semi-democratic or
semi-authoritarian regimes, whose nature can be described in the more accurate way by
concepts of delegative democracy, hegemonic electoral authoritarianism, competitive
electoral authoritarianism. In some post-communist countries where continuative
orientation prevailed, the outcome of post-communist transformation was state capitalism
and closed authoritarian or sultanistic political regime.
These outcomes of post-communist transformation are focus of the ongoing
heated discussions: is the post-communist transformation in the authoritarian and halfauthoritarian states of political oligarchic capitalism simply arrested, remaining for some
time behind the achievers of the post-communist transformation (newly accepted
members of the EU and NATO)? Or are configurations of political and economic
institutions in these countries relatively stable and will survive in the present shape for
the foreseeable future? In author‘s opinion, the second viewpoint seems to be more
compelling, because it seems to be more sensitive for the restrictions that were put on the
course and outcomes of post-communist transformation not only by the legacies of the
antecedent type of communist regime, but also by the civilizational differences that are
legacies of the long duration history.
These differences are important also for the evaluation of the prospects of the
further processes of the social change in China (and Vietnam). The communist
nomenclature that has initiated in China the economic reforms from above, could use the
cultural resources of the social and economic ethic inherited from the millennial
Confucian tradition, and to usurp the status and social functions of the mandarin estate
peculiar to the Chinese civilizational tradition. Because of the Chinese civilizational
legacies, outlooks for liberal democracy in China may be much dimmer than those for
REC that is already a reality in this country. The prospects of democratization are not null
and void in China, but the shape of democracy in China may differ from its Western
patterns much more than the Chinese and other Asian varieties of REC deviate from their
Western relatives.
Do civilizational differences also matter in answering two further questions that
are intensively discussed in the transitological literature: could the Soviet Union leave the
communism in the „Chinese way“ of gradual reforms? Why neoliberal shock therapy
reforms had not brought expected results in Russia and some other post-soviet countries?
The author argues that the attempt to apply the Chinese strategy in the Soviet
Union most probably was doomed to fail because of two crucial differences between late
communist China and the Soviet Union. Firstly, the Soviet Union was an empire in crisis,
while imperial features of the communist Chinese state are not sharp enough to become a
source of structural weakness. Secondly, differently from agrarian and rural China, the
Soviet Union was industrialized (and even over-industrialized), and had no resources for
extensive growth that enabled China‘s grand leap just after the legalization of private
enterprise (first of all, in the agriculture). Therefore, even if Chinese-style economic
reforms had been implemented under conditions of authoritarian regime (say, in the
alternative counterfactual history after the successful coup in the August 1991), they
would not have resolved economic crisis and would only have prolonged the agony of the
Soviet empire. In this case, the disintegration of the Soviet empire would most probably
have gone in the violent “Yugoslavian” way, enormously increasing social costs of the
exit from communism.
Most important causes of the failure of the neoliberal shock therapy in Russia
were some mistakes of the Russian reformers and their advisers from the international
financial institutions. The key mistake was the delay in the liquidation of the rouble zone,
that was the cause why the policy of macroeconomic stabilization failed in 1992-1993.
Another important cause of the failure was procrastination of the governments of Western
countries to provide Russia with a financial assistance at the precise time when it could
have made difference (in 1992). Most probably, this procrastination was determined by
the perception of Russia as a civilizational Other bound to remain a geopolitical rival of
the West no matter what type of political regime and economic system it has.
The parts 5-7 continue in the depth the analysis of the diversity of the ways and
outcomes of post-communist transformation that was started in the fourth part. This is
done, firstly, by the narrowing the focus of the analysis. In the third and the fourth parts,
it encompasses the whole communist and post-communist world. From the fifth part on,
only while discussing some specific problems (to achieve the variation in the dependent
variable), the set of cases compared is expanded to include also those states that do not
belong to the elite club of the achievers of the post-communist transformation (countries
joined to EU and NATO). Secondly, general constructs of the modernization theory that
served as theoretical lenses for comparison in previous parts, are replaced by the more
specific conceptual constructs from the middle range theories designed and tested in the
comparative political economy and comparative economic sociology.
The subject matter of the part 5 is the processes of democratization and their
outcomes in the post-communist countries. The analysis of these outcomes is of
paramount importance for the evaluation of the comparative social costs of different ways
of post-communist transformation. Taking into consideration only economic costs and
benefits, one should consider the Chinese exit way from communism as superior, because
it satisfies the criterion of optimality according to Pareto: income of all Chinese has
increased, but to different extent, with increasing social-economic inequality as overall
outcome. In Central Europe, Baltic countries, and former Soviet Union, similar or even
greater inequality has emerged as outcome of the redistribution of wealth under
conditions of economic recession.
While economic situation of the minority of the population markedly improved
from the very start of transformation, it has worsened for the large majority. Only part of
this losing majority was compensated by the fruits of the resumed economic growth.
Many losers did not live long enough to survive the recession or even died because of the
worsened living conditions, because even after 15 years from the collapse of the
communism the economy of many post-communist countries has not reached its precommunist level. Significant part of the surviving losers has remained excluded from the
benefits of the economic recovery, and they are absolute losers or victims of the postcommunist transformation.
Therefore, the author starts the fifth part of the book with an argument, that while
assessing the achievements and losses of the post-communist transformation one should
take into account not only consumer‘s welfare. In those countries, where processes of the
post-communist transformation came to the end with the consolidation of the liberal
democratic regime, the losses in the consumer‘s welfare were compensated by the newly
acquired civil and political rights (that could be also used by the absolute economic
losers). However, not every kind of democracy provides such compensation. Democracy
as such is a political regime where top government officials are elected in the free
competitive election. Only under conditions of liberal democracy, civil and political
rights of the citizens are protected from their own elected government. This protection is
achieved institutionally by the division of power between branches of government and
their mutual control (horizontal accountability), by the developed network of
nongovernmental organizations and free media.
Applying discourse analysis, one can distinguish two varieties of liberal
democracy: libertarian liberal democracy and social liberal democracy. In the first variety,
citizens have only civil and political rights. Under social liberal democracy, citizens have
also social rights. Paramount importance of this cleavage is also confirmed by the means
of the inductive statistical typological analysis in the work of A. Lijphart. This work
discloses two dimensions of differentiation between existing liberal democracies: joint
responsibility/power and divided responsibility/power. Next, it detects two clusters
(inductive types), called majoritarian democracy and consensus democracy. These two
inductive types of liberal democracy approximately correspond to libertarian liberal and
social liberal democracy as two deductive types of liberal democracy.
Existing attempts (Fortin 2005; Roberts 2006) to gauge typological identity of the
post-communist liberal democracies by A. Lijphart‘s means do not allow to draw
unambiguous conclusions. In some respects (strong judicial power, independent central
banks) post-communist liberal democracies resemble consensual democracies. However,
in other respects (pluralist system of interest groups, high disproportionality of elections,
weak local municipalities) they are more similar to majoritarian democracies. Cocktail
character of the post-communist democracies can be partly explained by the imported
character of its institutions – in many countries, they were imported following fashions in
constitutional law that have dominated among Western experts in the late 1980s, when
independent central banks and strong judiciary were „a must“. Therefore, many formal
institutions of the post-communist liberal democracies are consensual, while political
process inside these institutions is strongly adverse: political parties fight do-or-die for
survival, and the membership in the set of the politically effective parties is rapidly
changing. So although formal institutions of post-communist democracy favor
development of the consensual social liberal democracy, libertarian and majoritarian
features strongly mark its present real content.
Because post communist liberal democracies lack stable systems of political
parties, some political scientists doubt whether they can already be qualified as
consolidated. To resolve these doubts, the author proposes to draw clear distinction
between two questions: (1) what is the difference between consolidated liberal
democracy and unconsolidated liberal democracy? And (2) what is the difference
between consolidated liberal democracy of low quality and that of high quality?
In author’s opinion, there are no reasons to doubt the fact that post-communist
liberal democracy is consolidated. In those countries that were admitted to NATO and the
EU as its new members, liberal democracy is the „only game in town“ (Juan Linz)
beyond all reasonable doubt. In all of them, free, fair, and competitive elections have
taken place many times, with loosing government parties transferring power in orderly
fashion to victorious opposition. There are no strong (and sometimes any)
„antisystemic“ political forces that would aspire to come to power and keep it by
nonconstitutional ways. At the same time, the quality of democracy is low in almost all
dimensions that have been distinguished in the recent work on the quality of democracy.
In this respect, the state of the young Lithuanian liberal democracy does not differ much
from the situation in other post-communist liberal democracies.
In the procedural dimension (including rule of law, competitiveness, vertical and
horizontal accountability) there are no significant problems only with respect to
competitiveness and horizontal accountability. High corruption and frequent violations of
civil rights are symptomatic for weak rule of law. Due to the instability of the system of
political parties, vertical accountability is low: after losing trust of voters, politicians
manage to avoid punishment by changing political party membership. Elected
officeholders are not successful in their attempts to bring public administration under
their control, where the influence of the unelected and unaccountable
„statesmen“ manipulating elected officials remains widespread.
Low quality of the post-communist democracies is also indicated by low voter
satisfaction with the activities of the politicians that they have elected and low policy
responsiveness: governments rule without taking the public opinion into consideration.
Low level of quality in post-communist democracies is manifested most sharply by the
fact that the outcomes of the elections did not influence government policies: frequently,
the policy of new government did not differ from that of their predecessors.
However, these weaknesses of the post-communistic democracy should not be
absolutized in an alarming way. Firstly, some of the problems in the liberal democracies
(first of all, decreasing responsiveness) are also characteristic for the old liberal
democracies. Decreasing responsiveness is one of the negative collateral effects of the
deepening European integration. The problem, how to cope with it, remains unsolved not
only in practice, but even in the theory.
Secondly, it is impossible to improve the quality of democracy in all dimensions
at once. For example, horizontal accountability can be increased by giving more power to
judiciary and nonmajoritarian agencies. However, this can lead to the decrease of vertical
accountability. On the other hand, there can be a hypertrophy of responsiveness,
contradicting rule of law and even leading to degeneration of the liberal democracy into
the populist democracy.
The author makes two conclusions from this analysis. Firstly, the same level of
democratic quality can be achieved in alternative ways. Secondly, the methods that work
best to increase quality of democracy in the short-term perspective, are not necessary the
best ones to achieve this goal in the long-term perspective (and vice versa). Political class
that disregards present preferences of voters may succeed in the long-term perspective to
educate the electorate with preferences that suit its present policies. Therefore, (and
thirdly), the greatest impediment for high quality of democracy in the post-communist
countries are their low quality citizens (inherited from the communist times), especially
their lack of republican virtues (participatory civic culture).
However, there is no sufficient reason to assume that such high quality citizens
with republican virtues are needed also for the consolidation of the liberal democracy.
One of the two important lessons of the post-communist democratization that contradict
influential views in the comparative politics, may be described in the following way:
under favourable external conditions, liberal democracy (even if of rather low quality)
can also consolidate in countries that lack those structural conditions that were considered
as necessary for democratic consolidation in the former research. They include broad
middle class (bourgeoisie), stable political party system and participatory civic culture.
Another lesson of the post-communist transformation says that dual transition –
both parallel democratization and marketization – can succeed. Some designers of the
neoliberal shock therapy were not sure about such success. Their advice was to
implement all market reforms with maximal speed simultaneously to the destruction of
centrally planed-administrative economic system in order to make left populists and
neocomunists unable to re-erect it in the case of their comeback. Fearing that dual
transition may fail, they preferred presidential democracy, considering as its advantage
the possibility to enact at maximal speed (by presidential decrees) those economic
reforms that a team of technocrat experts consider as best, without moving legislation
proposals through parliamentary procedures subject to procrastination and spoiling
through pork-barreling.
As a matter of fact, in many post-communist countries simultaneous
democratization and marketization displayed a synergetic effect that was strongest under
conditions of parliamentary democracy. Frequent change of governments was the
obstacle for the groups of early winners, interested in delaying reforms to appropriate
rents created by partial reforms, to capture the state and to direct the restoration of
capitalism towards political oligarchic capitalism that occured in Russia, Ukraina,
Bulgaria, Romania and in number of other postcommunist states.
With exception for ambivalent Slovenian case, where market reforms were started
in tandem by post-communist president and anticommunist government, market reforms
were most consequential and successful in those countries where first free election was
won by anticommunist political forces. These were countries of former bureaucratic
authoritarian and national communism. In most countries of the former patrimonial
communism, liberal democracy remains unconsolidated (e.g., Ukraine) or broken down
(Belarus and most probably, Russia). In some cases, communist regime was continued
after dropping communist ideology (countries of Central Asia) without any democratic
intermezzo.
The diversity of the economic systems that have emerged in the sphere of the
former Soviet and Yugoslav communism is even greater, representing a new challenge
for comparative economic sociology. Differently from the vulgarized basics of
neoclassical economics, preached by influential nongovernmental public education
institutions in Lithuania, ideas of classical and contemporary economic sociology are
comparatively less known for Lithuanian reader. Therefore, the entire sixth part of the
book is reserved for introduction into classical (K. Marx, M. Weber, Joseph A.
Schumpeter, Adolf Berle, Gardiner Means, John M. Keynes, Karl Polanyi) approaches in
the economical sociological and political economical sociology.
The author uses the work both of M. Weber and of J. A. Schumpeter to construct
the ideal type of rational entrepreneurial capitalism (REC) that provides the reference
point for analysis of the diversity of post-communist capitalism. To M. Weber‘s work on
capitalism, this concept owes the idea that capitalist economic action can be oriented
either productively (towards wealth-creation), or unproductively (towards rent-seeking
and redistribution), rational capitalism displaying the first, and the political capitalism the
second orientation.
Along with entrepreneurial and managerial activities directed to the organization
of production employing free labour, M. Weber includes into the scope of the rational
capitalism the speculation on the financial markets, considering them as necessary parts
of rational capitalism as economic system consisting of markets for consumer‘s goods,
labour, land, capital and risk. The activities of financial speculators help to institute risk
markets, enabling entrepreneurs engaged in the real economy to act in the relatively
stable and predictable (parametric) environment. For M. Weber, rationality of rational
capitalism connotes not only the orientation to the profit-maximization at the micro level,
but also tendency to optimal allocation of resources at the macro level due to the
workings of the „invisible hand“ of the markets.
However, this Weberian (and neoclassical) rationality of the rational
entrepreneurial capitalism (REC) stands in tension with the role of private
entrepreneurship that is pointed to by the second adjective (entrepreneurial). This role
was central topic in J. A. Schumpeter‘s work. To entrepreneurs as managers (bearers of
the function of optimising calculation), capitalist economy owes its trend to equilibrium
and quantitative growth. Entrepreneurs as agents of organizational and technological
innovation are driving force for the change of capitalist economy as qualitative
development.
They bring capitalist economy out of equilibrium and make out of its working the
process of creative destruction, proceeding by leaps and bounds. However, because of
this feature, rational entrepreneurial capitalist system is also a source of new life risks.
Under conditions of the total dependence of a worker on the market, surges in
unemployment during the recession phases of the short and long cycles of economic
activity expose broad segments of population to dangers of social degradation. These
aspects of capitalist economic dynamics are in focus of the work by K. Marx, K. Polanyi,
and J. M. Keynes.
Theorizing capitalism as a process of development – a process of qualitative
change with different regimes of regulation and accumulation – is considered in the book
as the unique contribution of the comparative economical sociological analysis,
complementing the mode of its analysis practiced in the neoclassical economy, that
abstracts from the changes and variations in the institutional framework of economic
activity or assumes the existence of the single best institutional framework. Although
some institutional frameworks (for example, political oligarchic capitalism, state
capitalism, state monopolist capitalism) may be defective in the sense of providing
incentives for unproductive, rent-seeking activities, suppressing technological innovation,
leading to misallocation and waste of resources, two or more institutional frameworks
can be „equally good“ as different versions of REC. They all display the same basic
features of economic rationality – microeconomic calculation, orientation of private
entrepreneurship to the productive, wealth-creating activities, efficient (in the sense of
Pareto optimality) allocation of resources. At the same time, they can strongly differ in
their distributive and social consequences (welfare regimes).
This is the basic insight in recent work on the varieties of capitalism in the
historical institutionalist sociology (Peter A. Hall, David Soskice), that draws upon the
former work about Fordist capitalism in the neomarxist French regulation school, upon
the research on neocorporatist capitalism in the international political economy, and upon
the work on the national versions of capitalism in the institutionalist economy itself. This
work has been focused on the causes of the variations of the macroeconomic performance
and international competitiveness among the advanced REC countries.
In the varieties of capitalism approach by P. A. Hall and D. Soskice, two ideal
types of REC – liberal market economy (LME) and coordinated market economy (CME)
– are distinguished. This typology is grounded by the analysis how main economic agents
(firms) in the capitalist economies coordinate their activities. In the LME, this
coordination is realized by classical relations of market competition, while in CME
various methods of non-market strategic coordination (conditional on the high levels of
trust) are used. Detailed analysis of the differences between two types of capitalism
includes comparative analysis of their financial systems, industrial relations, relations of
firms with their employees, systems of education and professional training.
While ownership rights of the LME firms are widely dispersed among
stockholders and frequently change their owners, CME firms have main owners or are
related by the relations of cross-ownership, building clusters usually centered around a
house bank, providing them a patient capital. In LME, trade unions are weak and divided,
both employment and unemployment protection is weak, and wages are settled by the
individual agreements between employers and employees. For industrial relations in
CME, collective agreements on wages and work conditions at the level of firm, industrial
group, branch or even at national level are the norm. Both employment and
unemployment protection is strong. Work force builds a community loyal to employing
firm. For LME rapid turnover of work force and purely instrumental orientation in the
relations between employer and employees are main characteristics. Therefore, firms in
LME avoid investing into the professional training of their workers, while this is the case
in CME economies, where the public education system, focused on the cultivation of
general competences, is supplemented by the professional training run by firms or their
associations, and focused on the acquisition of special skills.
Basic conclusions of the analysis by P. A. Hall and D. Soskice are confirmed by
the findings of the inductive statistical analysis by Bruno Amable who used as inputs the
data of the OECD states social and economic statistics. However, B. Amable finds not
two, but five types of capitalism: (1) Anglo-Saxon market-based capitalism, (2)
Scandinavian social-democratic capitalism, (3) Continental European capitalism, (4)
Asian capitalism, (5) Mediterranean capitalism. Because LME and CME are ideal types,
it stands for discussion which countries approximate them most closely. While
contemporary U.S. capitalism is the most unambiguous case of LME, one can recognize
characteristic features of CME in the institutional organization of German, Japan, and
Scandinavian capitalism. Some types of capitalism can be qualified as transitory or mixed.
Important conclusion made by P. A. Hall and D.Soskice says that both pure CME
and pure LME are stable types of capitalism. This contradicts the view of the neoliberal
economists who maintain, that only LME, most closely approximated by U.S. capitalism,
is stable, and who predict the convergence of the present national and regional diversity
of capitalism towards LME under relentless pressure of the forces of globalization.
Besides the well-known idea of path-dependence, P. A. Hall‘s and D. Soskice‘s
arguments for stability of CME are grounded in the theories of (1) institutional
complementarity and (2) comparative institutional advantages.
Institutional complementarity means mutual fit of institutional practices from
different spheres. Institutionally complementary practices increase each other‘s returns. If
these spheres function according to contradictory institutional logics, these returns
decrease, leading to the loss of international competitiveness and pressure for change in
the direction of the more coherent architecture of institutions. Institutional
complementarity is an obstacle for construction of perfect capitalism by borrowing best
practices from different types capitalism (e.g., social protection from Sweden, venture
capital markets from U.S., and professional training system from Germany). Since firms
in LME have no patient capital, they are forced to be “cruel” with their workforce,
shedding it when demand slumps. The flexibility of employment has as its collateral
consequence lack of loyalty to their firms. By employing disloyal employees, firms avoid
investing in their training. Therefore, they do not have at the shop floor level work force
with local, largely tacit, knowledge necessary to meet challenges of the high quality
diversified production.
Another condition of the stability of the type of capitalism as a set of institutional
practices is a capacity of these practices to generate institutional advantages in the
competition in the world market. These advantages are institutional, because their source
are constraints and incentives that institutions provide for entrepreneurial energy and
initiative. Because of the crucial role of the sustained innovation for long-term success in
the international competition, types of capitalism can be defined as social systems of
production and innovation (B. Amable). Institutional architecture characteristic for LME
enables a country with such architecture to be successful in the industries and services
where radical innovation is a key to success, while CME countries are stronger where
incremental innovation leads to success (e.g. diversified quality production of producer‘s
and consumer‘s goods).
Unlike the mainstream neoliberal views on the consequences of globalization,
varieties of capitalism approach predicts not one-, but two-pole convergence, with some
of the really existing national capitalisms moving toward purer LME, and another part
having a prospect of moving towards CME. Radical innovations bring into life new
branches of industry and services. However, as an example of post-war Japan shows, a
country that has started to produce products using foreign patents, can outdo inventor
countries thanks to the ability to display more flexibility and responsiveness to
costumer‘s needs. To put the impact of globalization on the diversity of capitalism in
correct perspective, one needs to de-mystify this concept by drawing distinctions between
cultural, political, and economic dimensions of globalization.
As huge parts of the world (e.g. worlds of Islamic, Indian, Chinese civilization)
remain immune for the spells of Hollywood pop culture production, there is no sufficient
reason for the diagnosis of cultural globalization. The description of political
globalization as decline of national state and rise of the power of international
organizations is contradicted by the recent choice of most powerful state in the world
(U.S.) to pursue its interests by unilateral actions. Of course, one can define political
globalization as the rise of U.S. to global domination. However, this state of affairs can
be temporary and transitional thanks to the rise of new powers – first of all, of the socalled BRIC (Brazil, Russia, India, China) states. As for economic globalization, its real
content seems to boil down to the emergence of the global financial market, while
ongoing processes of the integration in the real economy (trade and international division
of labour) seem to be described in the more precise way by the concept of regionalization.
While internationalization of capital markets makes capital more mobile, giving
capital the edge in relations with labour, this is not enough to obliterate national and
regional differences between the types of capitalism. It is not the case that the cost of
labour is only one or the most important factor deciding where capital moves. Instead,
transnational corporations use existing differences between capitalist economies for
institutional arbitrage, locating their different divisions in countries with institutional
environments most fitting for activities and products of these divisions.
The author argues that long-time fluctuations in the economic activities known as
Kondratieff waves should be taken into consideration when discussing long-term
prospects of the convergence versus survival or even increase of the diversity of
capitalism. These fluctuations are caused by revolutionary changes in the production
technologies (production functions). Most credible explanation of recent success of U.S.
capitalism refers to the ability of LME to provide best institutional framework for radical
technological innovations. Neoliberal economic reforms in the early 1980s that have
destroyed managerial capitalism in U.S., replacing it with stockholder capitalism,
provided the capital market of this country with supply of venture capital surpassing that
in other countries.
This enabled U.S. to be first in realizing opportunities for radical innovation that
were opened by the advances of the information and telecommunication technologies,
and to reap pioneer‘s advantages. However, present Kondratieff wave is the only one of
five waves that can be distinguished since the 18th century. The history of the former
waves teaches the lesson that after pioneer‘s advantages (characteristic for the first
(ascending) phase of a wave) are exhausted, later developers have good chances to catchup with them, using non-market methods of coordination of economic activities to
accelerate the reception of the leader‘s know-how.
An example of such state-led spurt was the rise of East-Asian “tigers” in the
seventies and nineties that took place during the descending phase of the former (the
fourth) Kondratieff wave. While LME provides best institutional environment for radical
innovation, countries featuring CME institutions are best performers during the phase
when potential for radical innovation in the framework of new technological paradigm
becomes exhausted and competitive success becomes conditional on the capabilities of
incremental innovation. Hence, one can expect the emergence of new successful national
versions of CME during the coming downward phase of the world economy.
The discussion of the state and prospects of global capitalism provides the horizon
for 7th part of the book that is focused on the question what kind of capitalism is
emerging in the post-communist countries, with special attention being paid for the
peculiarities of Lithuanian capitalism. This discussion starts with the survey of the body
of available literature. In the work on post-communist capitalism during the first postcommunist decade, one can discern two approaches. Skeptics and pessimists (e.g.
Michael Burawoy and Katherine Verdery) have focused on destructive effects of postcommunist transformation, conceiving post-communist realities as economic involution
that means the rise of primitive forms of capitalism (trade, comprador, peripheric
capitalism) and even processes of (re)feudalization. Optimists (David Stark, Laszlo
Bruszt) asserted that in some post-communist countries new form of capitalism is in
making that may be superior to the really existing capitalism in the old West.
During the second decade, another cleavage has emerged. Some researchers
maintain that differences between post-communist capitalism(s) on the one side and
rational entrepreneurial capitalism(s) in advanced countries on another are still deeper
than similarities between them. Others argue that in the diversity of post-communist
capitalism one can detect the same lines of differentiation that were disclosed between
the cases of mature or advanced rational entrepreneurial capitalism by P. A. Hall,
D. Soskice and other historical institutionalists. This second line of thinking about postcommunist capitalism is represented by the work of David Lane, Mark Knell, Martin
Srholec, Clemens Buchen, Vlad Mychnenko, Magnus Feldmann and others. First
approach is developed most consistently by neoclassical sociology – a group of
researchers led by Ivan Szelenyi, and including Lawrence P. King, Gil Eyal, and others.
Second approach is represented also by Bela Greskovits, Dorothee Bohle and other
researchers who theorize post-communist capitalism through the viewpoint of the
Immanuel Wallerstein‘s theory of the capitalist world systems and classify postcommunist capitalism as peripheric (in Eastern Europe and Balkans) or semi-peripheric
(in Baltic and Central Europe),
Neoclassical sociologists discern in the diversity of the post-communist
capitalism(s) three forms of capitalism. The first one is represented by capitalism from
without. This form resembles most closely REC in the old West. However, capitalism
from without is different from the old Western REC in as much as it is capitalism without
capitalists. Because of the very active participation of foreign capital in the privatization,
no strong national economic bourgeoisie (class of the capital owners) has emerged in
these countries. Instead, cultural bourgeoisie is socially dominant in these countries. It
was recruited from the former (in the communist time) technical and humanist
intelligentsia. Coming to power after the collapse of communism, intellectuals thwarted
national communist nomenclature to privatize public property. Instead, they sold it
cheaply to foreign capital and took the positions of its local agents and trustees.
In those countries where nomenclature privatization was not blocked, second
form of capitalism has emerged that is described by I. Szelenyi as top-down capitalism,
or alternatively (because of the role that client-patron networks play in its social
organization) as political patrimonial capitalism. Thus, this form includes cases that are
classified in the 12th chapter of this book in the more differentiating way as political
oligarchic, state monopolist, and state capitalism. Third way for post-communist
capitalism to emerge is to grow from below. It grows out of private sector, functioning
along with state sector and gradually overshadowing and outdoing it. In this way,
capitalism is emerging in China and Vietnam. Because of the important role that state
sector still plays in the economies of these countries, I. Szelenyi also calls this third form
of post-communist capitalism hybrid capitalism.
In this book, following view is defended with respect to the question of the
comparability between post-communist and old Western capitalism: although there are
essential differences between the oligarchic, state monopolist, and state capitalism in
most former republics of Soviet Union on the one side, and REC on the another,
typological methods and concepts from the historical institutionalist work on the varieties
of capitalism in the advanced Western countries are already fruitfully applicable to the
Baltic and Central European countries that have joined the EU and NATO in 2004.
Findings of the typological quantitative statistical research (Berrou and Carrincazeaux
2005; McMenamin 2004) are presented that provide the evidence that on the eve of
joining the EU, the institutional architecture of three Central European (Vyshegrad)
countries – the Czech Republic, Poland and Hungary – displayed most similarity with the
Mediterranean capitalism countries.
Among post-communist countries, one can find only one case with the marked
features of CME. This country is Slovenia that was most consistent and successful in
leaving communism by the way of innovationally oriented incremental gradualist reforms,
and has arrived at social or corporate capitalism. At the opposite pole, one finds as
Slovenia‘s antipode – the neoliberal Estonia. Although exit ways from communism and
present architectures of economic institutions are very different in these countries, both of
them are reputed achievers of post-communist transformation. Therefore, one can use
them as corroborating instances for the thesis of P. A. Hall and D. Soskice claiming that
different institutional architectures of capitalist institutions can display similar levels of
macroeconomic performance.
Concluding two chapters of the book are focused on the topic of the typological
identity of Lithuanian capitalism. Seeking to find out which type of capitalism is forming
in Lithuania, the author compares this country with two antipode cases of the postcommunist communism – neocorporate Slovenia and neoliberal Estonia. In the 20th
chapter, author argues that capitalism in Lithuania represents the same (neoliberal)
variety of capitalism that capitalism in Estonia exemplifies, and discusses the question
why Lithuania‘s macroeconomic performance after neoliberal reforms was weaker than
in Estonia‘s case.
The author criticizes explanation of Lithuania‘s weaker performance by economic
policies of Lithuania‘s excommunists who came to power in 1992, when market reforms
in Lithuania were at the very height. He draws attention to the facts that main, nominally
right, political opponent of excommunists – Lithuanian conservatives – promoted
political initiatives that were Leftist populist in terms of Western political discourse both
while in opposition and during their comeback to power (in 1996-1999). He advances a
culturalist (Weberian) hypothesis that attributes relative success of Estonia‘s neoliberal
choice to peculiarities of the Estonia‘s cultural legacy that was decisively influenced
during the 18th-first half of 19th century by the current of ascetic Protestantism known as
Herrnhuter movement. Due to this legacy, Estonians were quicker in their adaptation to
new conditions of the economic action than Lithuanians, whose culture was marked by
the traditions of the rural way of life and by the mentality shaped in times of baroque
Catholicism.
At the first sight, the thesis that the post-communist capitalism in Lithuania is of
LME type, is contradicted by the facts that many institutional spheres in Lithuania have
features characteristic for other types. For example, present system of social protection in
Lithuania is most similar not to the residual Anglo-Saxon welfare state, but to clientelist
corporate model characteristic for countries of Southern Europe (Bernotas and Guogis
2006: 161). Even in that champion of post-communist neoliberalism – Estonia – one does
not find active and liquid stock market that is crucially important attribute of LME.
However, what matters most for the detection of the typological identity of Lithuanian
capitalism, are trends of the change in the institutional architecture that are governed by
the logic of the complementarity between different institutional spheres.
Even those post-communist countries that had chose the most radical shock
therapy, were not able to reform all institutional spheres of the social life at once. The
reform of the systems of education, health care, social protection (first of all, pension
system) was postponed for later time. At the very start of the exit from communism, only
minimal changes in the order inherited from the communist time were made. For this
reason, institutional architecture of most post-communist countries still remains an
unstable conglomerate of institutional spheres working according to contradictory logics
with dysfunctional consequences. These contradictions mount the pressure to continue
reforms. However, these contradictions may be solved either by reforms leading in the
direction of the more consequent neoliberal, or that of social capitalism.
Observation of the ongoing reform process in Lithuania during the last decades
discloses unambiguous trend leading in the direction of the more consequent LME
system. Importantly, in most cases the direction and contents of these reforms are better
explained not by arguments that are publicly advanced in their favour, but by functional
needs and interests associated with the construction of the more consequent LME.
Arguments in favour of privatization of pension system, refering to unsustainability of
the present pay-as-you go system, are flawed (Lazutka 2006). However, they will help to
construct active and liquid stock market.
The reform of higher education in making has as its key element the switch from
the public to private (by students‘ fees) financing of higher education, and is legitimated
by the argument that it will promote the quality of higher education by pressing
universities to be more responsive to the turns and twists of the market demand. It is
difficult to believe that this will be real consequence of coming reforms, because total
funds at the disposition of the Lithuanian universities will not increase, and desired
outcomes cannot be achieved simply by the better use of available resources. However,
among the consequences of the reform, there will be the development of the market
culture of the self-responsible living. Credit markets will expand, creating new business
opportunities for banking sector in Lithuania, and labour market will be refilled by new
fungible entrants starting their working lives under the burden of higher education loan.
Is (was) there no alternative to the neoliberal capitalism in Lithuania? To answer
this question, the comparison of Lithuania and Estonia is supplemented by the
comparison of both countries with Slovenia. Slovenia‘s case is important, firstly, as a
demonstration that catholic cultural legacy was no fatal impediment for
macroeconomically successful exit from communism. Secondly, Slovenia‘s case
demonstrates that indeed there was an alternative both to the neoliberal mode of exit from
communism (via shock therapy), and to its overall neoliberal imitative orientation,
leading to the present path of post-communist transformation where Lithuania is
presently moving in the steps of Estonia. Could Lithuania make its exit from communism
in Slovenian mode and way, transforming itself not in the direction of the Anglo-Saxon
neoliberal but that of the Scandinavian social-democratic or neocorporatist continental
European capitalism?
The author answers this question in a negative way, substantiating his answer by
the comparison of the initial conditions of post-communist transformation in Lithuania,
Estonia, and Slovenia. The three most important obstacles for Lithuania‘s exit from
communism in Slovenian mode and way are considered (1) lack of the basic market
institutions and skills how to govern enterprises under market condition that Slovenia has
inherited from Yugoslav market socialism; (2) nearly complete absence of the Lithuanian
products at the Western markets before communism‘s collapse, while nearly quarter of
Slovenian export was directed to these markets on the eve of the exit from communism;
(3) adversary character of the Lithuanian politics during the early phase of postcommunist transformation, leading to the ideologization of the technical questions of the
market reforms. Early establishment of consensus democracy in Slovenia was facilitated
by preservation of the intellectual hegemony of the Left in Slovenia, where its reputation
was not tainted by the record of antinational policies in the service of the foreign (Soviet)
imperialism, as this was the case in Lithuania.
Can present pathway of the institutional change in Lithuania change its direction,
leading towards social or neocorporate capitalism? The author argues that since Lithuania
joined the EU, the single most important factor deciding the future of Lithuanian
capitalism is the course that the processes of European integration and europeanization
will take during the next decades. Important part of the legitimating ideology driving
these processes is so-called European social model that can be considered as a
programme for convergence of the European national political economies towards the
CME. However, external pressure to harmonize national legal systems with acquis
communitaire (body of common European law), led to the continuation and deepening of
the neoliberal reforms rather than to the change of their overall direction towards social
capitalism or CME.
Up to the present time, processes of European integration have corresponded to
the greater degree to the neoliberal than to the social-democratic ideals. This was the case
because these processes involved mainly negative integration – the removal of the
obstacles for free movement of the goods, services, capital, and labour. Social policies of
the EU were oriented towards the minimal standards. Therefore, they did not work as a
stimulus to reform post-communist countries following patterns of Scandinavian or
continental social capitalism.
Rather than direct the transformation processes in the post-communist countries
towards CME, Eastern enlargement of the EU can be the turning point directing
institutional change in the EU towards LME, with accession countries acting as Trojan
horses for the forces of the neoliberal Anglo-Saxon capitalism. However, it remains
beyond the reasonable doubt that in the time horizon closing with the convergence of the
Lithuania‘s level of social-economic development with that of older members of the EU,
stronger (in comparison with the U.S.) social orientation of eurocapitalism will remain its
distinguishing feature.