The "triumph of neoliberalism" reconsidered: Critical remarks on ideas-centered analyses of political and economic change in post-communism

East European Politics and Societies

Volumn 19, Issue 3, 2005, Pages 343-378

  Ganev, Venelin I ^a  

^a NONE

Author keywords

Economic reforms; International financial institutions; Neoliberalism; Post communist politics

Indexed keywords

EID: 23944474611     PISSN: 08883254     EISSN: None     Source Type: Journal    
DOI: 10.1177/0888325405277924     Document Type: Review

References (74)

1. Adam Przeworski, "The Neoliberal Fallacy," Journal of Democracy 3 (July 1992): 45-59.
2. See, for example, Peter Reddaway and Dmitri Glinski, The Tragedy of Russia's Reforms: Market Bolshevism against Society (Washington, DC: U.S. Institute of Peace Press, 2001);
3. Maurice Glasman, Unnecessary Suffering: Managing Market Utopia (London: Verso, 1996);
4. and Stephen F. Cohen, Failed Crusade. America and the Tragedy of post-communist Russia (New York: W. W. Norton, 2000).
5. The list of economists who endorsed neoliberal reforms should include the names of Jeffrey Sachs, Anders Aslund, Andrei Shleifer, and Robert Vishny. It is important to remember, though, that the list of economists who opposed neoliberal blueprints is much longer and includes the names of scholars who are much more influential, for example, Nobel Prize laureates Douglas North and Joseph Stieglitz.
6. To the extent that such dissent exists, it comes mainly from two quarters. First, there are authors who have undertaken cross-country studies encompassing more or less the entire set of post-communist countries and have found that, contrary to the claims of antineoliberal orthodoxy, more thorough and comprehensive reforms are positively correlated with outcomes such as democratic consolidation, economic growth, and lower Gini coefficients. See, for example, M. Steven Fish, "The Determinants of Economic Reform in the Postcommunist World," East European Politics and Societies 12 (Winter 1998): 31-78;
7. and Valery Bunce, "Regional Differences in Democratization: The East versus the South," Post-Soviet Affairs 14 (Spring 1998): 187-211.
8. Second, the argument that neoliberalism has triumphed is sometimes questioned by single-country experts who find it too superficial and empirically unsubstantiated. "Numerous critics blamed the supposedly dogmatic monetarist reforms, which were derided as 'Thatcherism' and 'market Bolshevism.' But these critics neglected to demonstrate that Russia underwent ruthless neo-liberal reforms. It did not." Stephen Kotkin, Armageddon Averted: The Soviet Collapse, 1970-2000 (New York: Oxford University Press, 2001), 116.
9. See Michael Burawoy, "Transition without Transformation: Russia's Involutionary Road to Capitalism," East European Politics and Societies 15 (Spring 2001): 269-90, at 269. Despite his avowed ambition to offer orthodox Marxist analysis of post-communism as a process of structural change subservient to the global logic of capitalist production, Burawoy's numerous writings of Russian politics inevitably and obsessively focus on "the programmatic destruction" of the Russian economy, a destruction carried out by "Russia's neo-liberal reformers and their Western advisors." In other words, the "ideological blueprint" allegedly embraced by Russian politicians and Western economic elites is accorded much greater analytical priority than the impact of "structural factors" associated with globalization.
10. The contention that the "structural logic of the transition" is to be found in "the documents of the World Bank," is defended by Michael D. Kennedy, Cultural Formations of Postcommunism (Minneapolis: University of Minnesota Press, 2002), 7.
11. It bears emphasizing that none of the so-called "radical reformers" can be accused of unconstitutional usurpations of power, violations of the basic principles of the Rule of Law, or disregard for fundamental democratic norms. There is simply no evidence that these reformers were inclined to disregard the legal and constitutional constraints they had to face to promote the "higher" neoliberal values of which they were allegedly so enamored.
12. For an illuminating and generally friendly discussion of these defects, see Robert C. Lieberman, "Ideas, Institutions and Political Order: Explaining Political Change," American Political Science Review 96 (December 2002) 697-712, especially p. 698.
13. Sheri Berman, The Social Democratic Moment: Ideas and Politics in the Making of Interwar Europe (Cambridge, Mass.: Harvard University Press, 1998), 14-15.
14. Peter Rutland, "The Antinomies of Privatization in Eastern Europe," in Gernot Grabher and David Stark, eds., Restructuring Networks in Post-socialism: Legacies, Linkages and Localities (New York: Oxford University Press, 1997), 265.
15. Bob Deacon, "Social Change, Social Problems and Social Policy, " in Stephen White, Judy Butt, and Paul G. Lewis, eds., Developments in East European Politics (Durham, NC: Duke University Press, 1993), 238.
16. Alec Nove, "Economics of Transition: Some Gaps and Illusions," in Beverly Crawford, ed., Markets, States and Democracy: The Political Economy of Post-Communist Transformation (Boulder, Colo.: Westview Press, 1995), 229.
17. Alice Amsden, Jacek Kochanowicz, and Lance Taylor, The Market Meets Its Match (Cambridge, Mass.: Harvard University Press, 1994), vii-ix.
18. See Frank Bönker, Klaus Muller, and Andreas Pickel, "Cross-Disciplinary Approaches to Postcommunist Transformation: Context and Agenda," in Frank Bonker, Klaus Muller, and Andreas Pickel, eds., post-communist Transformation and the Social Sciences (Lanham, Md.: Rowman & Littlefield, 2002), 4.
19. Johanna Bockman and Gil Eyal, "Eastern Europe as a Laboratory for Economic Knowledge: The Transnational Roots of Neo-liberalism" American Journal of Sociology 108 (September 2002): 310-52, at 310-11. One should probably note the interesting tension between the expression "at various speeds" that appears in the first part of the sentence and the term "rapidly" to be found in the second. Behind the former expression, there lurks the understanding that there might have been differences between various countries, but if there were such differences, it is not obvious why all transformations would still be labeled "rapid." It is clearly the intent of the authors to convey the idea that, whatever the differences between, say, Albania and Poland, still the proposition that neoliberalism has become hegemonic holds across the entire region.
20. Berman, Social Democratic Moment, 15.
21. On how difficult and important it is to construct analytically such a distinction, see Karl Dietrich Bracher, The Age of Ideologies (New York: St. Martin's, 1982), 4.
22. Kazimierz Poznanski, "The Morals of Transition: Decline of Public Interest and Runaway Reforms in Eastern Europe," in Sorin Antohi and Vladimir Tismaneanu, eds., Between Past and Future: The Revolutions of 1989 and Their Aftermath (Budapest, Hungary: Central European University Press, 2000), 232.
23. Peter Murrell, "What Is Shock Therapy? What Did It Do in Poland and Russia?" Post-Soviet Affairs 9 (April-June 1993): 111-40.
24. The definition of "shock therapy" endorsed by Murrell resembles closely the one offered by Robert Skidelsky: "Shock therapy is a three-part cure. First, prices are liberalized, the exchange rate is lowered, and the economy is opened up to competition. Secondly, credits and subsidies to loss-making industries are cancelled. . . . Finally, the main source of money-supply growth - the bloated public sector - is shut down or sold off for whatever price it will fetch." Robert Skidelsky, The Road from Serfdom: The Economic and Political Consequences of the End of Communism (London: Penguin Books, 1996), 142. This definition might not resolve all questions surrounding the hypothesis that shock therapy was administered in a particular country, but it makes the exploration of such a hypothesis easier and enables researchers to "measure" the impact of neoliberal ideas in a more structured and rigorous fashion.
25. A good collection of essays on the subject is Jiri Musil, ed., The End of Czechoslovakia (Budapest, Hungary: Central European University Press, 1995).
26. Kazimierz P. Poznanski, "The Crisis of Transition as a State Crisis," in Bönker et al., eds. post-communist Transformation, 55-76.
27. See in particular Table 3-1 in Poznanski, "Crisis of Transition," 66. The author also adds that in both countries, "radical reforms" were eventually abandoned "in a disorganized manner." But he never gives a clue as to what the distinction between "organized" and "disorganized" abandonment might mean. Such indecipherable caveats notwithstanding, Poznanski never qualifies the major claim on which his argument rests, namely, that both Bulgaria and Romania launched radical reforms in the 1990s and that is the reason why they suffered so much during the first post-communist decade.
28. Berman, Social Democratic Moment, 19.
29. Berman herself argued that it was the impact of differing ideas about the true essence of social democracy that accounts for the choice of diverging political strategies by social democratic parties in Germany and Sweden in the aftermath of World War I, and in her study, she discusses at length the role of politicians and activists such as Hjalmar Branting, Ernst Wigforss, Nils Karleby, and Karl Kautsky. Likewise, G. John Ikenberry argued that "a set of policy ideas inspired by Keynesianism and embraced by a group of well-placed government specialists and economists was crucial" for the emergence of a new configuration of international financial institutions during the Bretton Woods negotiations in 1944. To substantiate this claim, he identifies "the group of government specialists" (e.g., Harry Dexter White, Jacob Viner, Alvin Hansen, and, of course, Keynes himself) and shows that they were, indeed, "well placed" (e.g., that they held positions in the Treasury Department or had direct access to policy making through institutions such as The Economic and Financial Group). See G. John Ikenberry, "Creating Yesterday's New World Order: Keynesian 'New Thinking' and the Anglo-American Postwar Settlement," in Judith Goldstein and Robert O. Keohane, eds., Ideas and Foreign Policy (Ithaca, NY: Cornell University Press, 1993), 57-86.
30. Finally, analysts of Latin American politics who advance a claim rather similar to the neoliberal hegemony thesis - namely, that "neoliberal ideas" gained prominence through-out the entire continent and decisively changed the course of political processes - devote long passages to the education of pro-laissez-faire "technopols," to the composition of "reform teams," to the political developments that paved their ascent to power, and to the institutional dynamics whereby specific ideas were turned into policies. See Jorge I. Domingues, ed., Technopols: Ideas and Leaders in Freeing Politics and Markets in Latin America in the 1990s (University Park: Pennsylvania State University Press, 1997).
31. Bockman and Eyal, "Eastern Europe," 338.
32. See Lilia Shevtsova, Yeltsin's Russia: Myths and Reality (Washington, DC: Carnegie Endowment for International Peace, 1999), especially chaps. 2 and 3.
33. See, in particular, David Stark and Laszlo Bruszt, Postsocialist Pathways (Cambridge: Cambridge University Press, 1998);
34. and Hilary Appel, "Corruption and the Collapse of the Czech Transition Miracle," East European Politics and Societies 15 (Fall 2001): 528-53.
35. Stark and Bruszt praise Klaus for his commitment to democratic politics, that is, for forgoing ideologically driven agendas in favor of carefully crafted policies intended to mobilize political support for his initiatives among large social constituencies. Appel is much more critical of Klaus and accuses him of using proreform rhetoric to mask massively corrupt practices. In hindsight, of course, Appel's sobering analysis seems much more persuasive than Stark and Bruszt's somewhat unrestrained praise of "Klaus the grass-roots activist." The important point to grasp, though, is that Stark, Bruszt, and Appel share the view that to gain true knowledge about who got what when and how during Klaus's rule in the 1990s, one needs to look beyond the tantalizing neo-Hayekian catch phrases with which he entertained Western academic audiences. On Klaus's pragmatism, see also Steven Saxonberg, "Vaclav Klaus: The Rise, Fall and Re-emergence of a Charismatic Leader," East European Politics and Societies 13 (Spring 1999): 319-418.
36. "I am an independent researcher and an independent teacher. This means I have not been an adviser to this government or to the last. Nor am I an adviser to any political party, and so in this sense I did not take part in preparing the government programme. I consider my main way of contributing to be my writing." See "A Steep Road: An Interview by Laszlo Zsolt Szabo on the Stabilization Programme," in Janos Kornai, Struggle and Hope (Cheltenham, UK: Edward Elgar, 1997), 88.
37. Janos Kornai, The Road to a Free Economy (New York: W. W. Norton, 1990), 18.
38. "The specific feature of the development in Hungary has been that the narrowing down of shortages and subsequent elimination of the shortage economy have taken place gradually, over a very protracted period"; "Hungary has undergone a gradual liberalization of imports in several stages"; "Hungary has undergone a gradual hardening of the budget constraint." See Kornai, "Eliminating the Shortage Economy: A General Analysis and Examination of Developments in Hungary," in Struggle and Hope, 9, 11, 13, emphasis added.
39. "The expression 'gradualism of privatization, Hungarian style,' contains a modicum of national pride, and at least as much self-mockery. But it certainly seems that the strategy works and will result, in the foreseeable future, in the privatization of the enterprises that are viable and that it is not expedient to retain in state ownership." Kornai, "Paying the Bill for Goulash Communism," in Struggle and Hope, 160.
40. See Serguey Braguinsky and Grigory Yavlinsky, Incentives and Institutions: The Transition to a Market Economy in Russia (Princeton, NJ: Princeton University Press, 2000).
41. See Michael McFaul, Russia's Unfinished Revolution (Ithaca, NY: Cornell University Press, 2001), 142.
42. Balcerowicz was ousted from his position toward the end of 1991. See Mitchell A. Orenstein, Out of the Red: Building Capitalism in post-communist Europe (Ann Arbor: University of Michigan Press, 2001), 41.
43. Gaidar was pushed out of the Russian government in late 1992 and briefly regained power in October to December 1993. His second ouster coincided with the end of what the powerful new Prime Minister Viktor Chernomyrdin contemptuously described as "the age of market romanticism." See McFaul, Russia's Unfinished Revolution, 223, 236.
44. Interestingly, much of the "evidence" about the putative all-pervasiveness of shock therapy is derived from the experience of post-communist Poland. One cannot help but notice that there exists an intriguing continuity in the way in which the peculiarity of Polish politics was integrated in the official communist discourse on the Soviet block before 1989 and in the dominant academic discourse on post-communist Eastern Europe after 1989. Both "before" and "after" Poland is depicted as the place where dangerous ideas intended to hurt "the people" originated (e.g., independent trade unionism and "shock therapy"), as the harbinger of political practices that diffuse through borders and subvert "the normal life" of other nations (e.g., the Solidarity movement and "neoliberalism"), as the homeland of lunatic radicals who threaten to destabilize neighboring regimes (e.g., the activists of KOR and Balcerowicz). Both "before" and "after," it is largely assumed that the Polish ways of doing things reverberate throughout Eastern Europe. Hence, the peculiar proneness to use the Polish case to generate explanations and analyses that purport to reveal developments that might reshape - and the dangers that threaten to engulf - the entire region.
45. Geoffrey Garrett and Barry R. Weingast, "Ideas, Interests and Institutions: Constructing the European Community's Internal Market," in Goldstein and Keohane, eds., Ideas and Foreign Policy, 203.
46. Peter A. Hall, "Introduction," in Peter A. Hall, ed., The Political Power of Economic Ideas: Keynesianism across Nations (Princeton, NJ: Princeton University Press, 1989), 4.
47. Judith Goldstein and Robert O. Keohane, "Ideas and Foreign Policy: An Analytical Framework," in Goldstein and Keohane, eds., Ideas and Foreign Policy, 11.
48. See Peter A. Gourevitch, "Keynesian Politics: The Acceptance of Keynesianism in Britain and the United States," in Hall, ed., Political Power, 87.
49. For example, Hall considers and evaluates various hypotheses that explain why Keynes's ideas became influential; Goldstein and Keohane demonstrate how ideas may serve as "road maps," "focal point and glue," and "institutionalized practices"; Gourevich examines how social coalitions become a vital force propelling the New Deal in the United States and the policies of the Popular Front in France.
50. For specific examples of how "the imposition thesis" is formulated and defended, see Przeworski, "Neoliberal Fallacy," 45.
51. and Peter Murrell, "The Transition according to Cambridge, MA, " Journal of Economic Literature 33 (March 1995): 164-78.
52. See also Amsden, Kochanowicz, and Taylor, Market Meets Its Match, viii, according to whom Eastern Europeans were forced to follow "the prevailing opinion in Washington, D.C., where the Republican administrations then in power - for reasons of ideology and foreign competition rather than theory or empirical data - espoused a mythological version of eighteenth century laissez-faire." Interestingly, the three coauthors also assert that "the persistent reliance on shock therapy in Eastern Europe has also been voluntary. Its use is a reflection of the opinions of the local intelligentsia." Not surprisingly, however, they fail to produce a single piece of evidence in support of the contention that there is a "persistent reliance on shock therapy in Eastern Europe," and the only representative of the "local intelligentsia" they mention is, predictably, Balcerowicz.
53. Michel Crozier, The Bureaucratic Phenomenon (Chicago: University of Chicago Press, 1964), 194.
54. An exception to this rule are Brockman and Eyal, who argue that the worldview rose to prominence as a result of ongoing exchanges between East European economists and their laissez-fairian counterparts in the 1960s and 1970s. While their interpretation might be critiqued from a variety of analytical and empirical angles, it should be mentioned that they have set for themselves - and tried to accomplish with admirable analytical skill and solid empirical research - a task that other "ideational theorists" routinely neglect, namely, to explain why and how "the Washington consensus" all of a sudden "triumphed" in a peripheral region of the world situated thousands of miles away from Washington.
55. David Stark, "Networks of Assets, Chains of Debt," in Roman Frydman, Cheryl W. Gray, and Andrzej Rapaczynski, eds., Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Hungary: Central European University Press, 1996), 116.
56. David Ost, "Illusory Corporatism in Eastern Europe: Neoliberal Tripartism and post-communist Class Identities," Politics and Society 28 (December 2000): 503-30. Notably, it is workers reluctant to embrace labor union militancy, not just reformist elites, that Ost seeks to stigmatize as ignoramuses.
57. The thinly veiled accusation that East European reformers - many of them former dissidents repeatedly harassed, persecuted, and imprisoned because they opposed Marxist dogma - lack "spiritual power, courage and vision" is voiced by Zhiyuan Cui, "Privatization and the Consolidation of Democratic Regimes: An Analysis and an Alternative," Journal of International Affairs 50 (Winter 1997): 691-92.
58. Stefan Hedlund, Russia's Market Economy: A Bad Case of Predatory Capitalism (London: University College of London Press, 1999), 122. In this remarkable book, Hedlund also narrates how a wholly new International Monetary Fund (IMF) policy, "Systematic Transformation Facility," was invented with the sole purpose of "facilitating lending to post-communist countries on more lenient terms" and how after Russia failed to meet even these "more lenient terms," a series of tranches were released after "a little hunting expedition undertaken by managing IMF director Michel Camdessus and Russian Prime Minister Viktor Chernomyrdin" (pp. 165-66).
59. See Svetlana Vasojevic and Igor Mekina, "Privatization: 'No' to Foreigners?" Alternative Information Network, 18 October 2000, http://www.aimpress.ch/dyn/trae/archive/data/200010/01018-005-trae-lju.htm.
60. See also Svetlana Vasovic, "The Power of Selfish Interests: Interview with Joze Mencinger," Vreme News Digest Agency, No. 24, 9 March 1992, http://www.scc.rutgers.edu/serbian_digest/24/t24-8.htm.
61. Both the default and the events of 1995-96 are discussed in detail in Krassen Stanchev, ed., Anatomia naprehoda: stopanskata politika na Bulgaria 1989-2004 ["Anatomy of the Transition: Economic Policy in Bulgaria 1989-2004"] (Sofia: SIEMA, 2004).
62. "Russians with clout serenely consigned the law-making process to foreign consultants, while keeping the buying and selling of de facto exemptions to themselves." Stephen Holmes, "Lineages of the Rule of Law," in Adam Przeworski and Jose Maria Maravall, eds., Democracy and the Rule of Law (Cambridge: Cambridge University Press, 2003), 45.
63. Janine R. Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe, 1989-1998 (New York: St. Martin's, 1998), 3.
64. Gabor Hunya, "Romania 1990-2002: Stop-Go Transformation," Communist Economies and Economic Transformation 10 (June 1998): 241-58, at 245. Hunya discusses numerous other occurrences that fit the same pattern.
65. Wally Bacon, "Economic Reform," in Henry Carey, ed., Romania since 1989: Politics, Economics and Society (Lanham, Md.: Lexington Books, 2004), 380.
66. Janine Wedel's findings about "collusion" between Russian economic policy makers and Harvard-based American consultants are particularly interesting in that respect. See Collision and Collusion, chap. 4.
67. Goldstein and Keohane, Ideas and Foreign Policy, 11.
68. Cf. Emile Durkheim, The Rules of Sociological Method and Selected Texts on Sociology and Its Methods (New York: Free Press, 1982).
69. An excellent essay on the subject is Steven Lukes's introduction to Durkheim's book Rules of Sociological Method.
70. Durkheim, Rules of Sociological Method, 86.
71. Karl Mannheim, Ideology and Utopia (New York: Harvest Books, 1936), 58-59.
72. Hannah Arendt, On Revolution (London: Penguin, 1977), 52.
73. Michael Bernhard, "Institutional Choice after Communism: A Critique of Theory-Building in an Empirical Wasteland," East European Politics and Societies 14 (March 2000): 316-47.
74. Cf. Venelin I. Ganev, "Postcommunism as a Historical Episode of State-Building: A Reversed Tillyan Perspective" (The Helen Kellogg Institute for International Studies, University of Notre Dame, Working Paper 289, November 2001).