Theorizing Transition

The Political Economy of Post-Communist Transformations

John Pickles, Adrian Smith, John Pickles, Adrian Smith

• Publisher: Routledge
• Year: 2005
• ISBN:
  9781134715640
• Edition: 1
• Topic: Scienze fisiche
• Subtopic: Geografia

Theorizing Transition provides a comprehensive examination of the economic, political, social and cultural transformations in post-Communist countries and an important critique of transition theory and policy. The authors create the basis of a theoretical understanding of transition in terms of a political economy of capitalist development.
The diversity of forms and complexities of transition are examined through a wide range of examples from post-Soviet countries and comparative studies from countries such as Vietnam and China. Theorizing Transition challenges many of the comfortable assumptions unleashed by the euphoria of democratisation and the triumphalism of market capitalism in the early 1990s and shows transition to be much more complex than mainstream theory suggests.

1
INTRODUCTION
Theorising transition and the political economy of transformation

Adrian Smith and John Pickles

1989 and the geopolitics of transitions

In 1996, an OECD report on the transition from a state socialist, centrally planned economy in perhaps the most liberalised and westernised country in Eastern and Central Europe—the Czech Republic—raised the possibility that the ‘transition’ is at an end (OECD 1996). A year later, the western business press was full of reports about the failure of the Czech Republic to establish the conditions for competitive growth, largely as a result of the continued dominance of the economy by large, institutional investors (such as banks) with close ties to the state. Through mimicking the old relations of state socialism in a new guise the past had returned to haunt the postcommunist scene. By contrast, in Bulgaria since 1989 almost annual changes of government, electoral reversals from communists to democrats to reformed communists and back again to democrats have typified the process of political democratisation. Industrial restructuring has been occurring in Bulgaria through loss of Eastern markets, plant closure and mass unemployment. Financial and fiscal instabilities permeate all institutions and had led, by 1996, to hyperinflation, as the value of the currency (the lev) fell precipitously against all other currencies: from around 60 leva to the US $ in June 1996 to around 3,500 leva to the US $ by February 1997. Over the same period, Vietnam, with an economic growth rate of around 9 per cent per year, was witnessing a partially agrarian-based economic restructuring centred around the reconfiguring of the role of the party-state, in complete contrast to the apparent liberalism of the Czech transition.

These diverse experiences of ‘transition’ raise two crucial issues for our understanding of the political economy of change in both Eastern and Central Europe (ECE) and the post-communisms and market-socialisms of the ‘peripheral’ states (Figure 1.1). First, the conventional, neo-liberal view of transition wielded by western multilateral agencies and advisers to governments in ECE, that transition is a relatively unproblematic implementation of a set of policies involving economic liberalisation and marketisation alongside democratisation, enabling the creation of a market economy and a liberal polity, relies on an under-theorised understanding of change in post-communism. Such claims tend to reduce the complexity of political economic change in Eastern and Central Europe and fail to provide us with an adequate basis on which to move beyond policy prescriptions of transition as a set of end-points. The Czech experience, once held as the best practice solution to the problems of transition (low unemployment, rapid westernisation, the quick implementation of large-scale privatisation, etc.), with Prime Minister Vaclav Klaus presented on the international stage as the darling of East European neo-liberalism, suggests that even in Eastern Europe’s most liberal polity ‘best practice’ transitional policies have not been implemented in the most effective way. In the Vietnamese case, however, with its parallels to China (Burawoy 1996; Smart in this volume), the continued role of the party-state has been a mechanism through which reform could occur. Yet in Bulgaria, where the party-state nominally was in control until 1991 (some would even argue until 1997, when the Bulgarian Socialist Party witnessed a resounding electoral defeat), the partial imposition of a market road to capitalism through price liberalisation but stalled privatisation has led to crisis. The challenge then is to negotiate ways in which we can understand the diversity of forms of transition.

Second, the causes of the ‘Czech crisis’, as identified by the western business press, point directly to the central role of the legacies of institutional frameworks and existing social relations derived from state socialism to an understanding of the multiple ways in which transition is playing itself out. Transition is not a oneway process of change from one hegemonic system to another. Rather, transition constitutes a complex reworking of old social relations in the light of processes distinct to one of the boldest projects in contemporary history—the attempt to construct a form of capitalism on and with the ruins of the communist system (Stark 1996; Smith 1997; see also Grabher and Stark in this volume).

Mainstream transition theory has, then, largely been written in terms of the discourses and practices of liberalisation. Theorising Transition attempts to move the ground away from such perspectives by directly engaging the criticisms identified above. Liberalisation can thus be thought of in terms of what Michel Foucault has called the ‘technologics of the social body’: as a series of techniques of transformation involving marketisation of economic relations, privatisation of property, and the democratisation of political life. Each seeks to de-monopolise the power of the state and separate the state from the economy and civil society. Marketisation seeks to free-up the economy. Privatisation aims to break up economic monopolies in the spheres of production, purchasing and distribution. Democratisation and de-communisation aim to break the hold of the Communist Party in political life and to enable a rejuvenated civil society to emerge. Each technique has, in turn, its own specific instruments: for example, the creation of markets and price reform for marketisation; restitution, voucher schemes and share ownership, and the selling off of state property for privatisation; multi-partyism and parliamentary democracy for democratisation.

Each technique of transformation, along with its specific instruments and policies, is bringing about a fundamental reorientation in the position of post-communist states in the global economy. The dismantling of the Council for Mutual Economic Assistance (CMEA) and the Warsaw Pact, and the rejection of links with former members by individual states, opened post-communist economies to international capital and institutions (Gowan 1995). The result was a fundamental reorganisation of material life within ECE and the former USSR, a transformation of geopolitical relations on a global scale, and a major ideological/discursive shift in the ways in which ‘possibilities’ and ‘policies’ were to be framed and acted upon in future years.

Figure 1.1 Central and Eastern Europe

Early attempts by anti-Stalinist democratic socialists and social democrats within the democracy movements of Eastern and Central Europe to frame a transition ‘with a human face’ failed in the euphoria of 1989. Even as ‘the Wall’ fell, the Left was either swept away, or swept up into the machine of transition or western think-tanks, banks, and para-statal agencies who provided ‘guidance’. For those who remained to articulate alternatives to ‘shock therapy’ and the ‘three zatsias’ (privatizatsia, demokratizatsia, liberalizatsia), anti-communist sentiment left little room for articulating alternative paths for transformation (a situation that applied equally to the reformed communists as well). There simply was no ‘third way’ available—a closure produced in part by the growing public imaginary of a West offering wealth, freedom and opportunity (Altvater 1993; see also Marshall Berman (1982) on the experience of the modern) and in part by the direct and indirect effects of western propaganda throughout the 1980s.

The possibility of a third way was also foreclosed by the immense power of the dominant discourse through which interpretations of transformation in ECE were projected: a reworked modernisation theory which recasts Sovietology and its Cold War ideology into what Michael Burawoy (1992) has called ‘transitology’. In this view of transition, it was argued, socialist societies will undergo modernisation to market capitalism and democracy once the appropriate policies, institutions and mechanisms are in place. As central planning systems are dismantled, the bureaucratic economy will be replaced (through privatisation, new firm development and the emergence of an entrepreneurial class) with thriving examples of market economies and the emergence of social groups capable of cementing the market, liberal democratic practices and a re-emergent civil society.

In the past seven-eight years these techniques of transformation have contributed to the massive political and economic transformations and social dislocations attendant upon the collapse of Soviet power. The fall of the Berlin Wall in 1989 led to an immediate outpouring of optimism about the future possibilities opened to peoples of Eastern and Central Europe by the democracy movement and the overthrow of state socialist institutions and leadership groups. The subsequent turn to formally marketised and democratic systems has resulted in a deep and thoroughgoing modernisation of the structures and institutions of government, economy and social life. And, with the ‘guidance’ and pressure of western multilateral organisations (such as the IMF and World Bank), national and international assistance agencies, and NGOs and policy groups of one kind or another, the fabric of life has been reconfigured so as to construct capitalism and create the formal structures on which liberal democracy can be built. These changes have in turn brought with them a reworking of the geographies of the region in the forms of metropolitan growth, the economic collapse of peripheral regions, the polarisation of urban spaces as inequalities deepen, and the reworking of the territorial structure and democratic spaces of the state and civil society.

But the significance of the ‘end of communism’ runs far deeper than even these massive transformations. The geopolitical consequences of the end of a ‘two-world’ order and the consolidation of what George Bush called ‘the New World Order’ have become increasingly clear in recent years. Superpower singularity supervises the emergence of regional power blocs and, once again, narrows the options open to individual state planners in all countries (see Ould-Mey in this volume). But precisely because of this geopolitical hegemony, we need to be aware of the multiple and differentiated strategies for transformation that are at work. From the boycott of Cuba and the blockading of Iraq to the ‘openness’ towards Vietnam and China, a variety of strategies are being deployed to sustain transitions with the goal of building post-communism, open markets, and stable relations for the flow of goods and capital.

Political economy, restructuring and theorising transition

At the end of the twentieth century there is a need, then, for an alternative set of conceptual frameworks on transition to challenge the neo-liberal hegemony and account for the variety of strategies, techniques and effects that constitute transition-in-process—actually existing transition. Unlike liberal transition theorists, however, we do not want to articulate a single, hegemonic perspective. Indeed, as we have seen from the cases of the Czech Republic, Vietnam and Bulgaria, the variety of actually existing transitions does not allow this. What we do need is a critical engagement with the real transformations in post-communism and some way of thinking through what our theorisations of transition should look like. And what we do have, even after the collapse of the one main legitimation for capitalism, state socialism, is a variety of starting points to enable us to begin to rebuild a critical political economy of transition. This book aims to make a modest contribution to this project—to begin to map, both empirically and conceptually, our understandings of post-communism; to produce alternatives to what Derrida in Specters of Marx (1994:51–2) has described in the following terms:

No one, it seems to me, can contest the fact that a dogmatics is attempting to install its worldwide hegemony in paradoxical and suspect conditions. There is today in the world a dominant discourse, or rather one that is on the way to becoming dominant, on the subject of Marx’s work and thought, on the subject of Marxism (which is perhaps not the same thing), on the subject of the socialist International and the universal revolution, on the subject of the more or less slow destruction of the revolutionary model in its Marxist inspiration, on the subject of the rapid, precipitous, recent collapse of societies that attempted to put into effect at least what we will call for the moment, citing once again from the Manifesto, ‘old Europe’, and so forth. This dominating discourse often has the manic, jubilatory, and incantatory form that Freud assigned to the so-called triumphant phase of mourning work. The incantation repeats and ritualizes itself, it holds forth and holds to formulas, like any animistic magic. To the rhythm of a cadenced march, it proclaims: Marx is dead, communism is dead, very dead, and along with its hopes, its discourse, its theories, and its practices. It says: long live capitalism, long live the market, here’s to the survival of economic and political liberalism!

Derrida’s project is one of deconstruction, in which ‘[i]n order to analyze [the]… wars and the logic of [the]…antagonisms [of the post-Cold War world], a problematics coming from the Marxian tradition will be indispensable for a long time yet. For a long time and why not forever?’ (Derrida 1994:63–4). For Derrida (p. 75), deconstruction ‘has never been Marxist, no more than it has ever been non-Marxist’. What is important is to act and work in the ‘spirit of Marxism’, although these spirits are many and heterogeneous.

This book remains open to this ‘specter’, in part because of the analytical purchase it gives to some of the authors, in part because of the symbolic function ‘Marx’ and ‘Marxism’ have played and continue to play in the geopolitics of communist and post-communist societies, and in part because of the fundamental challenges to hegemonic theories of transition and the destabilising role Marxian analyses of capitalism continues to perform. In this sense, the aim of this book is to explore some of the many ways in which a ‘radical political economy’ (see Sayer 1995) of post-communism can be constructed. This is not to argue that interrogating and ‘deconstructing’ the discourses that are wielded in thinking through and interpreting postcommunism are unimportant. On the contrary, such a project should have a central place in our analyses. But the key is to think through how these discursive formations of post-communism relate to an understanding of transition in which the social and material worlds are transformed in conjunction with our ideas about them. In this introduction, we want to begin to identify starting points for such an alternative conceptual map. As editors, we argue that there is much to be learnt from an engagement between political economy and recent shifts in critical and cultural theory. Indeed, we have attempted to frame this introduction in terms of where our understandings of transition can be located in this engagement. However, we are also cognisant of the fact that our contributors may want to position themselves differently, some preferring to engage more closely with variants of political economy, others with a concern for pushing the boundaries of cultural theory. What we hope to achieve in Theorising Transition is an opening of our conceptual maps of transition to counter the closure of dominant discourses and the power of these ideas in shaping the policy agendas of transition in ECE and beyond.

Such a critical political economy is necessary now more than ever. In the face of the ‘neo-evangelistic rhetoric’ (Derrida 1994) of neo-liberalism, Eastern and Central Europe and other post-communist societies are being fundamentally transformed by globalised systems of capital accumulation. The experience of ‘transition’ after seven or eight years has been, in part, one of economic collapse, an onslaught on labour, and social and political disorientation (collapsing birthrates and increasing death-rates suggesting a deep-seated social and psychological crisis), while at the same time enabling some to prosper while others fall into abject poverty. The result has been a profound increase in poverty and inequality. Milanovic (1994), for example, argues that poverty now affects some 58 million people in ECE, or 18 per cent of the regions population. Similarly, real wages have dropped dramatically and wage differentiation increased. Alongside increased inequality, homelessness has risen, health levels have declined and other social problems associated with polarisation have emerged.

Increasing poverty and inequality have proved to be fertile ground for two forms of coping strategies—and it is vital that any theory of transition understands the complex dialectical relationships between these: the first is the increased use of household survival strategies such as the exchange of household production including food and other basic items between friends and in networks established in the workplace and community which have led to a burgeoning of the informal economy. The second is the rise of illegal and semi-legal activities associated with, but not wholly confined to, the ‘mafia’ (Burawoy 1996). Both of these ‘coping strategies’—and there are many more—can be read as ways in which individuals with differential power are able to mobilise existing social, political and economic resources to find a pathway through the maelstrom of transition. What is doubly interesting about these experiences is that they suggest that we have a great deal still to learn from the experiences of earlier (and uneven) transitions to capitalism.

Earlier transitions and the political economy of uneven development

Lenin, writing of Russia at the end of the last century, suggested that

merchant’s and userer’s capital, on the one hand, and industrial capital…on the other, represent a single type of economic phenomenon, which is covered by the general formula: the buying of commodities in order to sell at a profit…. Merchant’s and userer’s capital always historically precedes the formation of industrial capital and is logically the necessary premise of its formation…but in themselves neither merchant’s capital nor userer’s capital represent a sufficient premise for the rise of industrial capital (i.e., capitalist production); they do not always break up the old mode of production and replace it by the capitalist mode of production…. The independent development of merchant’s capital is inversely proportional to the degree of development of capitalist production…the greater the development of merchant’s and userer’s capital, the smaller the development of industrial capital…and vice versa…. Consequently, as applied to Russia, the question to be answered is: Is merchant’s and userer’s capital being linked up with industrial capital? Are commerce and usury…leading to its [the old mode of production’s] replacement by the capitalist mode of production, or by some other system?

(Lenin 1967:186–7; emphasis in original)

What is interesting about these debates a century ago is that they were embroiled in a working through and specification of a Marxist analysis of capitalism. Indeed, Lenin’s project was one of demonstrating (contra the Narodniks) that capitalist production and social relations were transforming Russian society, yet they were doing so on the basis of a complex articulation of capitalist relations with mediating social formations such as merchant capital. What we have been in danger of losing in the face of the neo-liberal onslaught and the ‘triumphalism’ and ‘neo-evangelism’, as Derrida puts it, of the likes of Francis Fukuyama’s thesis on the end of history, is a space for critical engagement with the transformative practices of capitalist modernities and the state socialist project. While many have decried the collapse of state socialism as the end of Marxism, we—as editors—would prefer to argue that the collapse has opened a space to rework a critical political economy, in part because the main justification for capitalism (the ...