Transcript european institutional history part 3

Transition
2 major characteristics:
- mainly non violent
(except
for
Romania
and
posttranstion nation-building wars in exYugoslavia);
- non revolutions
(no
major
social
conflict,
no
institutionalized political opposition
except
Polish
Solidarnosc,
no
theory, no project)
Civil society
Incapability to structure a net of
social associations due to mortifying
communicative conditions, causing:
- “cognitive confusion”,
- self-doubt,
- apathy about collective aspirations, “semi-loyalty”,
-escape from politics (mistrust to any
formal political project).
Systemic and political
revolution
A
hypothesis offered by Zygmunt
Bauman,
in
A
post-modern
Revolution, 1993:
- political revolution adjust a regime
to its social-economic system that
cannot find an institutionalized
channel;
actors
launching
a
systemic
revolution have not only to dismantle
the political regime, but also to build
new social forces
Systemic brand of CEE
No old CEE regime generated social
forces capable to guide new
institutions (Hungarian small
entrepreneurs and Polish
Solidarnosc being no real forces).
Consequently, those who brought the
old regime down, are not the one
which will build the new regime
(they represent only the
dissatisfaction with the old one).
Dealing with the past
Absence of a clear counter-legitimacy
of the new forces implies a major
role of social and cultural traditions:
- distrust to political elites,
- low attention to the rule of law,
- skepticism toward innovations,
- expression of formal loyalty as
counterpart for political patronage,
- hostilities between ethnic groups.
Past as focal point
In search for new economic and
political institutions, the past
provide a sense of direction:
recent socialist past or distant presocialist past can be seen as
different “golden ages” representing
different sets of values.
Search for patterns
3 divergent patterns deriving from
different sets of values:
1) “modern” West – individualistic
values, pluralistic view to society;
2) distant local past – traditional
communitary values;
3) recent local past – reformed
socialist values.
1) Western model
- Priority to individualistic values –
strong constitutional guarantees to
rights and liberties of the person
(classical english theory expressed
by John Locke in 1690: life, liberty,
property).
Means for individual
emancipation
-
Representative democracy and
market economy with the help of the
West (European Union, NATO) in
order to “be a normal country” .
- re-invention of pre-socialist liberal
traditions.
Rational efficiency
- Western model “pluralism” against
the past authoritarian monism –
competition in economical, as in
political sphere,
As the only rational way to reach
“prosperity”: Western living standard
by economic and administrative
efficiency.
2) distant local past
- National culture and history prior to
communist takeover as the only
legitimate source of institutional
models
(to be reactivated, or better,
reinvented).
- aiming for the reinforcement of
traditional values based on
hierarchic power structure.
Ethno-national identity
Opposition to:
- recent past communist regime and
Western modernity seen as contrary
to traditional social values
(patriarchal family, unequal gender
relations), religion, ethnic
exclusiveness;
- both models are seen as “foreign
domination” or cosmopolitan
contamination.
3) recent local past
Reform wing of former communists,
promoters of attempts to merge the
major efficiency of economic
marketization and the social justice
achieved by state socialism.
Ideal reference to local history of
reforms (Prague spring, “socialism
with human face”).
Successes and failures
Political claim toward new regime to
govern at least as well as in the last
phase of socialist government, in
terms of GDP, income distribution
and employment.
Blames toward old regime for
“mistakes”, “deformations”, personal
responsibilities of single leaders,
but not for its principles.
Cleavages within society
3 types of cleavages:
socio-economic:
about
the
distribution of income and the
control over productive forces (as
employees/employers);
- political-ideological: those loyal to
the old regime and its opponents or
victims;
cultural:
based
upon
ethnic,
linguistic or religious identity
1) Socio-economic cleavage
- considered as more easily processed
by liberal democratic institutions, as
a quantitative compromise can be
obtained through bargaining.
Due to the fact that it concerns
interests, not principles, parties
agree more easily to meet halfway,
and realize that they depend upon
each other within mutually
recognized rules.
Class conflict in CEE
Socio-economic cleavages have still
an “amorphous” nature due to state
socialism atomization of the civil
society:
– no independent collective actors (as
trade unions, interest associations
etc.)
- no free forums (mass media debates,
parliamentary discussions).
Revival of civil society
-until post 1989' reforms:
fairly uniform living conditions for the
population (except for the
nomenklatura).
Since 1989: large parts of population
must first learn “who are our friends,
sharing similar interests?”
First institutionalized economical
cleavage: agrarian parties.
2) Political-ideological
cleavage
Less easily settled because parties do
not see themselves as depending on
each other –
- instead, they consider it better if the
opponents were non existent and
accept at most to suspend the
conflict between ideologies
– that is, values affecting several
spheres of the public life of the
community.
3) Cultural cleavage
- identity based parties are even less
suitable for compromises or
suspension of conflicts,
because parties consider each other
as mutually threatening – in extreme
case, they can only live if the other
is expelled from a territory.
- A compromise is possible if an
“identity” conflict is in fact a
“dressed up” interest conflict.
Historical heritages
Cultural conflicts:
- have a sense of “eternity”, from a
imagined past to a indefinite future;
- contain prescriptions for the totality
of social and personal life - “our way
of
life”
economic,
political,
esthetic, religious etc;
usually are burdened with the
memory of past hostilities and
humiliations (that are expected to
repeat in the future)
Menace to pluralism
- the most easily accommodated type
of conflict (socio-economic interest)
is the least pronounced and least
structured;
- the least easily accommodated type
(cultural identity) is the most
dominating,
rendering more difficult to agree on
common rules in public life and to
protect the independence of private
life.
Political options
3 patterns tend to shape 3 types of
political parties:
Liberal, national-conservative and
social-democratic party,
capable of merging into 3 types of
coalitions:
1) social-democratic/liberal (1990' in
Hungary);
2) socialist/national-conservative
(1990' in Slovakia, Serbia);
3) liberal/national-conservative (2000'
in Czech republic, Hungary)
Party systems
An entirely open electoral market
raises party instability because of:
- no pre-existing party infrastructure
(except ex-communists),
- no pre-existing electoral identities
and preferences (only nationalistic
parties can count on strong partisan
loyalties as a means of reinforcing
ethnic identity).
Transitional parties
Parties did not cause the transition,
but were created as by-products of
the transition, without any
- coherent program,
- strong organizational basis,
- clear connection to a particular
social group (except in ethnic
terms).
Anti-party tradition
Dissenters to the communist oneparty governments developed during
the old regime an anti-party
approach – “antipolitics”.
Newly developed parties inherited
their prejudice against strong state
institutions, and prefer the idea of
“spontaneous” civil society,
“autonomous” from the state
expressing deputies loosely related
or independent from the parties.
Parties/society
The characterization of new parties
depend less on programs, issues and
connections with distinctive social
groups,
More on political culture, style,
imagery or leading personalities
(even on personal antagonisms
between single members of new
political elite).
Internal instability
Ideological conflicts which divide
parties exist also within each party,
leading to
Strong internal fractions (having each
party their own liberals, socialdemocrats, nationalists,
conservatives...)
which could influence the party line in
any direction at any time.
Parties/classes
New parties have only “theoretical
interest” on workers/owners
conflicts, thus,
- no stable channels through which
economical conflicts could find a
politically negotiated solution.
Correspondingly, voters' preferences
do not depend on their social/class
status, but mainly on cultural
factors.
“Overparliamentarization”
Party leaders are not interested in
building a social base as much as in
achieving governmental positions,
causing
over concentration of organizational
and personal capacities of the
parties in Parliament, leading to
extremely weak party influence
within society.
Parties/Civic associations
As legislators, socially weak parties
prefer laws on party financing based
on state funds. Thus, they tend to:
- be less cooperative with other civic
associations (trade unions, NGO's
...);
- disregard local level partisanship
(extremely low number of party
members);
- concentrate their propaganda on
national mass-media.
Political agenda
Process of transformation implies:
1)shaping of a new constitution – that
will grant rights to citizens, rules for
the conduct of politics and a
constitutional court reenforcing both
rights and rules;
2) institutional reorganization of
economical life – privatization,
marketization, stabilization;
3) consolidation of national borders.
Individual rights
New constitutions symbolize the
1989' political victory of human
rights groups,
thus constitutions contain extensive
catalogues of rights with both:
- high political significance,
- stronger legal force due to
constitutional courts as defenders
of citizens' rights.
The concept of democracy
As reaction to past privileges of the
communist party, new constitutions
declare expressly that
“no part of the people shall usurp the
expression of popular sovereignty
and no state-party or state-ideology
shall be allowed”.
All constitutions explicit the principle
of political pluralism and
competition.
Executive government
1) Cabinet government – reflects the
composition of the parliament and is
responsible to it (Czech Republic,
Hungary, Poland, Slovakia, Slovenia);
2) Presidential government – elected
directly by the people, appoints the
key members of the administration,
controls public expenditure, makes
laws by decree (Serbia, Romania in
1990').
Institutional stability
Governmental stability facing
unstable parliamentary majorities –
generally considered as a value and
secured by:
- constructive vote of no confidence in
parliamentary systems (as Hungary);
- stronger role of the president of the
republic (semi-presidential systems,
as Croatia and Serbia in 1990',
Romania, Poland).
Strong presidencies
due to:
- the need of fast and strong decision
making under conditions of deep
political
and
socio-economic
changes;
- fragmented and volatile party
systems and governments;
- popularly elected presidents seemed
able to provide a sense of national
unity for new nation-states.
3) Mixed government
Mixed presidential-parliamentary
system as a compromise between
democracy and efficiency.
Positive aspects: competition
between presidential advisers and
cabinet ministers.
Negative aspects: possibility of intraexecutive conflicts over
administrative control.
Types of government
Parliamentary
Mixed government Presidential
government
government
Albania
Bulgaria
Belarus
Czech Republic
Croatia (since
Ukraine
2000)
Hungary
Poland
Macedonia
Romania
Bosnia and
Serbia (since
Herzegovina
2000)
Slovakia
Constitutional incoherence
New CEE constitutions can contain
internal contradictions, as:
- Bulgarian system sets a directly
elected president of the republic
(strong legitimation), but with no
real political power;
- Hungarian system sets a president
of
the
republic
elected
by
parliament (weak legitimation), with
too large powers.
Example: Hungary
In 1989 2 new parties, created by 2
small group of intellectuals,
challenged the Socialist party:
- Hungarian Democratic Forum:
representing traditional values of
rural communities;
- Alliance of Free Democrats:
representing universal rights of urban
emancipated individuals.
New authoritarianism
1998: due to 1994 disappointing
electoral results, the party of young
liberals Fidesz turns into a
conservative populist party headed
by a 1989 hero Victor Orban.
In 2010 elections Fidesz won 52.7% of
the votes and a two thirds majority
(supermajority) of parliamentary
seats, enough to change the
constitution.
New constitution
adopted by the Parliament on April
2011, into effect on January 1, 2012.
Although Hungary remains a republic,
the preamble refers to Holy Crown,
as well as to Christianity in
“preserving
the
nation”,
and
traditional family values.
It extends citizenship rights to ethnic
Hungarians
living
beyond
the
country’s borders, thus creating
conflicts with Slovak and Romanian
government.
- The preamble claims the period
between March 19, 1944 (Nazi
occupation of Hungary and May 2,
1990 (first free election since 1945)
legally nonexistent.
- According to Amnesty International
the
constitution
"violates
international and European human
rights standards", in cases of:
fetal protection,
marriage,
life imprisonment,
sexual orientation.
New constitution imposes:
- a constructive vote of no confidence
(as before);
- 2/3 majority for family and tax
issues;
- limitations to the Constitutional
Court and to National Bank on budget
and tax matters;
- limitations to the independence of
the judiciary and removal of the right
of
citizens
to
turn
to
the
Constitutional Court with individual
appeals.
New Law on Freedom of
Information in Hungary
adopted in June 2011:
- Doesn't assure that information can
be classified only when necessary,
and doesn't prevent abuse;
- Doesn't provide an effective legal
remedy in court;
- The independent Data Protection
and
Freedom
of
Information
Commissioner is substituted by an
administrative authority dependent
on the Prime Minister.
Building capitalism
1) redefining the relationship between
state administration and economy:
- limiting the state's role in economy;
- replacing the modalities of state
interference (more indirect).
2) furnishing the market:
- adopting appropriate legal
framework;
- providing financial, informational and
organizational support
Inherited malfunctions
1) highly distorted sectoral structures
demand reallocation of capital and
labor from the secondary sector
(industry) to the service sector
(particularly in Czechoslovakia and
East Germany, less in Hungary);
2) individuals' “incongruent” attitudes
as high risk aversion, “grab and run”
behavior, are obstacles to proper
functioning of new institutions;
3) industrial giants
Communist governments promoted
the formation of large enterprises in
order to rationalize the planning of:
- capital allocation,
- row material supply and
- distribution of products
(in
Czechoslovakia
the
average
number of workers in each firm was
3000, against 300 in the West).
Small number of big enterprises make
single failures more dangerous.
4) “bad debt”
Under planned economy, credits were
allocated to enterprises without
regard to their capacity to pay back.
Once the banks started to operate on
market, they had high percentage of
unrecoverable claims in their
portfolios,
thus making vulnerable both
enterprises and banks and creating
difficulties by privatization.
5) inflation and foreign debt
- due to price controls and endemic
shortage of capitals in communist
years, the liberalization of prices
conducted to the rise of hidden or
repressed inflation
(much stronger and longer
consequences on population than
expected by IMF economists).
- servicing high foreign debts
rendered more difficult the adoption
of anti-inflationary measures.
Radicals/Gradualists
Paradox: destatization can only be
accomplished by strong state
intervention, in order to end all state
intervention!
But, if the state retreats too early
(Radical proposal), it can endanger
the proper development of new
institutions.
If the state do not retreat immediately
(Gradualist), the reforms would lose
credibility.
State's retreat
1) liberalization of market entry – first
step, generally guaranteed in new
constitutions as the right to free
enterprise;
as opening to foreign trade, some
states followed more liberal regimes
(Czech republic shock therapy),
other more protectionist (Hungary).
2) liberalization of prices
Price decontrol and cutting state
expenditures
were
essential
elements of stabilization programs
imposed by IMF;
accepted by governments in order to:
- get rid of the responsibility for
citizens' living standard;
- eliminate inefficient enterprises
covered by distorted low prices;
- eliminate speculations caused by
shortages of every-day products.
Inflation rate shock
1989
1990
1991
1992
Hungary
17%
29%
35%
23%
Czechoslovakia
2,3%
10,8%
-
-
Czech republic
-
-
56,7%
11,1%
Slovakia
-
-
61,2%
10,1%
Bulgaria
6,4%
26,3%
333,5%
82%
Real monthly wages
(1989=100)
1990
1991
1993
1994
Hungary
96,3
89,6
84,8
90,7
Czech
94,3
71,2
81
86,2
Slovakia
94,1
70,5
73,8
73
Bulgaria
105,3
64,2
62
47,2
Republic
GDP change (1989=100)
1990
1991
1992
1993
Hungary
96,5
85
82,5
81,7
Czech
Republic
99,6
85,5
79,4
79,3
Slovakia
99,6
85,2
79,2
76
Bulgaria
90,9
80,3
74,4
72,6
3) Capital markets
Transforming socialist model of
central planing allocation of capitals
into
Capitalist model in 3 steps:
1) creating a plurality of state owned
commercial banks;
2) liberalizing banking activities and
entering into stock markets;
3) privatizing commercial banks
Governing monetary
politics
The drafters of new central bank laws
(new governing parties) could
choose if to create bank governors:
- independent from the government,
thus more credible to investors
(as in Poland);
- appointed by ruling parties
thus more willing to coordinate
monetary politics with the
government (as in Hungary).
4) Privatization
One of most intransparent processes:
- more than half of all enterprises
targeted as “privatized” are in fact
recombinations of state properties;
- complex cross-ownership (private
enterprises
owned
by
statecontrolled banks);
- governmental investors credits often
implied
occult
preferential
treatments;
- non-economical asset stripping (as
in Slovakia under Mečiar).
Legal framework
- first wave of reforms (1989-1991):
introducing
property,
contract,
company and competition law in
new constitutions and civil codes;
- second wave (1992-1994):
new bankrupcy laws and Competition
Offices able to sanction effectively
the abuses of
market power;
specific laws as banking and stock
exchange law.
Legal uncertainty
- many new laws were rudimentary
and hasty;
- highly unstable political situation
and
cross
references
between
different laws implied frequent
revisions and amendments;
adoption
of
many
“western”
provisions have not led to desired
results;
- frequent changes have favored
political manipulation with law and a
sense of impunity.
Pursuing German model
Large majority of CEE governments
and public opinions show strong
preferences for German (-Japanese)
model of capitalism, due to:
- legal and cultural connections in precommunist past;
- Germany's dominant role as investor
and trading partner;
- its “social” market economy based
on a corporatist system of interest
representation (works councils).
“Uncivil economy”
-
pervasive tax evasion: the old
“second economy” (communist era
black market traders) have not
transformed into regular business
but remained in “shadow” (20-30% of
GDP in 1990');
- trader “tourism”: spot transactions,
grab-and-run, short term investment
and engagements;
- illegal markets: organized crime.
Plundering of public sector
Private sector had to be built upon
foreign investments;
Actually, it has been built mostly upon
assets transferred from the state
sector
(by illegal means or at artificially low
prices) by former public managers
using their “social capital” (long
term ties with creditors and
suppliers).
Old vs. new economical
structure
Preconditions for economical
consolidations:
- governmental stability,
- proper legal framework,
- continuity in economic policy.
Negative influences:
- filling management positions with
political favorites (patronage),
- selling enterprises undervalue to
political friends.
New social elite
Transition from a society based on
rank order (nomenklatura – top
administrators vs. subordinated
common citizens)
to a society based on class order
(owners vs. non owners of means of
production).
Rank order – based on “social”
capital;
Class order – based on financial
capital.
Cultural capital
Key factor of the transformation
process: possession of knowledge
and ability to learn (cultural capital):
- in the first years of transition the
members of the new elite had too
small financial capital;
- the old social capital wasn't useful
any more because it depended on
political privileges of the former
communist party members.
Technocratic ideology
The importance of ability to learn is
developing a managerial view to
questions of government,
Thus creating a
new political and economical elite of
technocrats, feeling superior (and
alien) to the rest of society,
incapable of adopting new rules of
behavior (as self-help instead of
government assistance).