Political regime types and varieties of post-socialist capitalism in the era of globalization

For the former state socialist countries 1989 was the year of the starting of the simultaneous transformation of their political regimes and economic systems. This entailed attempts at remaking simultaneously the political and economic institutions of these countries under the conditions of opening up their economies and entering the “era of globalization.” These countries have ended a developmental model that was built upon the combination of authoritarian political regime, state control of the economy combined with limited links to the global markets. In 1989 they started their pathways toward some uncertain other, away from autocracy, command economy and autarchy. The goal of this chapter is to provide a description of and an explanation for the diverging pathways of the post-socialist countries that have combined different political regime types with specific varieties of capitalism and have ended up with dramatically different patterns of insertion into the global markets. The questions discussed in the introduction to this volume about the various causal links between VoC, ToD and globalization were raised in the postsocialist countries in the very basic form as questions about the relationship between political regime type, type of capitalism and pattern of insertion in the global economy. The first question in this setting was whether a democratic or a non-democratic political regime was more conducive to successful economic transformation? The answer to this question primarily depended on the way one answered the second question of how one could conceptualize variation in postsocialist capitalism. The central question about the right policies during economic transformations was about the role of the state, whether the key task was to liberate the economy from the state, or to transform its role in the economy. While some in that debate expected the coming variety of capitalism to be based primarily on the level of freedoms from the state, others have expected variation based on the differences in the outcomes of efforts to create the capacity of postsocialist states to set and enforce public rules for the private economy. Finally, the third question was how would the interplay between economic and political change affect the insertion of these evolving market economies into the global markets? The first question was about the relationship between the simultaneous extension of property rights and political rights: is the building of “any kind of democracy” (AKD) compatible with, or is it inimical to, building a functioning capitalism in these countries? Which of the former communist countries will have a functioning market economy? Those that will have governments constrained by democratic politics or those countries where governments will not be bothered by democratic rights and procedures? From the start, the question about the link between political regime type and economic system was answered based on differences in the understanding of what a “functioning market economy” was, how one could meaningfully conceptualize variation among differently functioning capitalist economies in evolving market economies. Depending on the answer to this question, researchers of post-socialism arrived at diametrically opposing results on the link between AKD and variation in the outcomes of capitalist transformation. According to the dominating neo-liberal view in the 1990s, the levels of freedom from the state defined functioning market economies. Variation in capitalism from this perspective meant variation in the level of liberalization of prices, trade and privatization. For the neo-liberals AKD, at least in the short term, was a liability from the perspective of the necessary reforms that were supposed to lead to a functioning market economy. The right sequencing of reforms for them was the following: market reforms should come first; democracy and state building should come later.