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Understanding Post-Communist Political Economy II

- December 16, 2011

As promised, here is the second part of Professor Andrew Barnes‘ overview of how the field of the political-economy of post-communism has evolved over the past 20 years.

In the last several years, analysts have begun to explain how post-communist political economies work in practice.  A central theme of many of these writings is the importance of informal networks and practices for getting things done in post-communist countries.[1] Interestingly, while the authors do not always phrase it this way, the key players in these networks are often the first-round winners discussed in the previous post.  This helps explain how those winners block the development or more systematically marketized economies: they establish informal ways of getting things done (with or without nefarious intent), and it becomes even harder to displace those patterns of behavior than it would have been to set up formal rules in the first place.

Perhaps more important, a focus on informal networks and practices allows us to ask how those systems might continue to evolve.  That is, it helps us see that they are not, in fact, stagnant systems that are caught in partial-reform equilibria in which winners take all.  Instead, we can ask what happens to the first-round winners who run these networks, under what circumstances it can happen, and what the consequences might be.  In order to investigate those questions, there are four issues we need to consider:

  1. Who are the first-round winners? A number of studies focus on political leaders and ask when they are removed from office.  This is clearly important, but in keeping with the conception of post-communist political economies discussed in the previous post, it may also be useful to track the economic elites who first emerged after the fall of the old regimes.
  2. What can happen to them? The most common expectation in the late 1990s was that they would be able to capture the state in order to maintain their positions, but this need not always be the case.  In some instances, states may escape their initial capture and come to dominate the first-round winners.  (This might be particularly likely when a new government comes to power.)  In other cases, economic and political elites may simply move to a more equal footing, engaging more in an exchange of resources than in a relationship of dominance by one side or the other.

Less emphasized in most analyses is the fact that first-round winners in some countries might be dislodged by other economic actors.  These are not the masses, but rather those near-elites who believe they did not get a big enough slice of the pie the first time around.  More importantly, they did acquire enough assets and develop enough of their own networks to be an important threat to those at the top of the system.

  1. When might these changes occur? One possibility is a shock to the system.  Elections, for example, produce uncertainty, jockeying for position, and hedging of bets by economic elites, even if the incumbents have massive advantages in the actual voting.  Economic shocks may also be destabilizing, as they bring down major banks or industries that were the first-round winners’ sources of wealth.

Another possibility is that first-round winners might be undermined (and their rivals strengthened) through a longer-term process.  Post-communist property redistribution has been much more complex and long-lasting than the formal privatization programs of the early 1990s, which means first-round losers may continually peck away at the empires of the first-round winners.  The second-tier elites might slowly replace the old oligarchs by taking their property one piece at a time.

  1. What happens next? It is possible that the subordination, weakening, or displacement of first-round winners may clear the way for further democratization, economic development, or both.  This is typically the hope when an old elite is toppled.  Often, however, the second-round winners behave much like their first-round counterparts, and their ascension simply means a transformation of authoritarianism and continued stagnation.

There is, then, still a great deal of room for exploration and explanation.  It is only by changing our approach, though—moving from the study of the political requisites of marketization to the study of how resources are deployed in post-communist political economies—that we have laid the groundwork for understanding these developments.


[1] For examples, see John Gould, The Politics of Privatization (2011); Henry Hale, “Explaining Machine Politics in Russia’s Regions,” Post-Soviet Affairs (2003), Why Not Parties in Russia? (2006), and “Formal Constitutions in Informal Politics,” World Politics (2011); Vadim Kononenko and Arkady Moshes, Russia as a Network State (2011); Alena Ledeneva, How Russia Really Works (2006); Scott Radnitz, Weapons of the Wealthy (2010); Gulnaz Sharafutdinova, Political Consequences of Crony Capitalism inside Russia (2010).

For earlier works that are compatible, see Andrew Barnes, Owning Russia (2006); Juliet Johnson, A Fistful of Rubles (2000); Vadim Volkov, Violent Entrepreneurs: (2002); David Woodruff, Money Unmade (1999).