AFTER TWENTY YEARS OF TRANSFORMATION: ON THE TYPOLOGICAL DIFFERENTIATION OF POSTCOMMUNIST CAPITALISM(S) Norkus Zenonas

In the contemporary world there are no alternatives to capitalism, but there are alternatives within capitalism. Theorizing capitalism as a process of development - a process of qualitative change with different social systems of production and innovation is 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.

In the varieties of capitalism approach by P. A. Hall, D. Soskice (5) and B. Amable (1), two ideal types of rational entrepreneurial capitalism (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. 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.

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. 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. 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.

For post-communist countries, some researchers maintain that differences between postcommunist 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 post-communist capitalism is represented by the work of David Lane, Mark Knell, Martin Srholec, Clemens Buchen, Vlad Mychnenko (6), Magnus Feldmann (4).

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 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. 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 alternatively names this third form of post-communist capitalism hybrid capitalism.

From the viewpoint of the author (see 7; 8) 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.

As for postcommunist countries classified by neoclassical sociologists as those of political patrimonial capitalism, a more nuanced approach is needed, distinguishing between political oligarchic (e.g. Ukraine and Russia before Putin), state monopolist (Russia under Putin), and state capitalism (Belarus and Uzbekistan). State capitalism seems to be the form of political capitalism that can be most easily transformed into “Slovenian” type of CME.

References

1. Amable, Bruno. The Diversity of Modern Capitalism. Oxford, Oxford UP, 2003.
2. Bohle, Dorothee; Greskovits, Bela. 2007b. „The State, Internationalization, and Capitalist Diversity in Eastern Europe“, Competition and Change, 2007, Vol. 11 (2), pp. 89-115.
3. Eyal, Gil; Szelenyi, Ivan; Townsley, Eleanor. 1998. Making Capitalism Without Capitalists. Class Formation and Elite Struggles in Post-Communist Central Europe. London: Verso.
4. Feldmann, Magnus. „Emerging Varieties of Capitalism in Transition Countries. Industrial Relations and Wage Bargaining in Estonia and Slovenia“, Comparative Political Studies, 2006, Vol. 39 (7), pp. 829-854.
5. Hall, Peter A.; Soskice, David.“An Introduction to Varieties of Capitalism”, in Hall, Peter A.; Soskice, David (Eds) Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford UP, 2001, pp. 1-68.
6. Lane, David.; Myant, Martin (Eds). Varieties of Capitalism in Post-Communist Countries. Houndmills: Palgrave, 2007.
7. Norkus, Zenonas. “Why did Estonia Perform Best? The North-South Gap in the Post-Socialist Economic Transition in the Baltic Countries”, Journal of Baltic Studies, 2007, Vol. 38, Issue 1 pp. 21-42.
8. Norkus, Zenonas. Kokia demokratija, koks kapitalizmas? Pokomunistine transformacija Lietuvoje lyginamosios istorines sociologijos poziuriu [Which Democracy, Which Capitalism? Post-communist Transformation in Lithuania from the Viewpoint of Comparative Historical Sociology]. Vilnius: VU leidykla, 2008.