The Political Economy of Post Socialism

The Political Economy of Postsocialism
Author(s): Valerie Bunce

Source: Slavic Review, Vol. 58, No. 4, Special Issue: Ten Years after 1989: What Have We
Learned? (Winter, 1999), pp. 756-793
Published by: The American Association for the Advancement of Slavic Studies
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The Political Economy of Postsocialism
Valerie Bunce
The Argument for Similarities

There were two good reasons to expect that developments after socialism,
whether in the former Soviet Union or in east central Europe, would fol-
low a roughly similar course.' The first was the homogenizing effects of
the socialist experience. In contrast to other regions of the world, such as
Latin America and southern Europe, where dictatorships had also given
way to more liberalized orders, the socialist regimes of eastern Europe and
the Soviet Union were remarkably alike in their form and functioning. In
particular, they shared three defining characteristics: an ideology hostile
to capitalism and democracy and committed to rapid socioeconomic
transformation; a fusion between politics and economics; and a leader-
ship, the Communist Party, that functioned as an economic, political, and
social monopoly. When combined, these three characteristics shaped in
many respects how these systems functioned on a day-to-day basis. These
features also go far toward explaining why these regimes collapsed.2
Two incontrovertible facts are perhaps the best testimony to these
similarities, however. One is that all of these regimes exhibited relatively
similar trends during their final decade. For example, most evidenced de-
teriorating economic performance, ossification of the elite stratum, rising
corruption, and declining central political control over the periphery-
whether that periphery was defined as nonpolitical spheres of human ac-
tivity, such as the economy or the society, or in spatial terms, such as the
lower reaches of the party-state itself, eastern Europe within the Soviet
bloc, and republics within socialist federations. The other irrefutable
observation is that all of these regimes ended at roughly the same time-
if by ending we mean, simply, the sudden and formal deregulation of the
Communist Party's monopoly that occurred in 1989 and 1990.
All of this would seem to suggest that the successors to state social-
ism began the process of transformation from a roughly similar point
of departure. While analysts of transitions to democracy and capitalism
My thanks to RawiAbdelal, M. Steven Fish, Bela Greskovits,Vladimir Popov, Sharon Wern-

ing Rivera, Philip Roeder, and two anonymous reviewers for providing comments on an
earlier draft of this article. I also benefited from comments on a version of this paper pre-
sented at the conference, "Between Past and Future: The Revolutions of 1989 and the
Struggle for Democracy in Eastern and Central Europe," organized by Vladimir Tisman-
eanu and Sorin Antohi and held at Central European University, 26-28 March 1999.
1. Throughout this paper, the units of analysis are those states that, during the Cold
War era, were part of the Soviet Union and eastern Europe. Given state dissolution (and
the absorption of East Germany), this produces twenty-seven cases. Mongolia, therefore,
is ignored in this analysis, as are several other, "semisocialist,"cases-Vietnam and China.
2. See Valerie Bunce, SubversiveInstitutions:TheDesign and theDestructionof Socialism
and theState (Cambridge, Eng., 1999). For a similar argument focusing on the Soviet case
and using an institutionalist framework, see Steven L. Solnick, StealingtheState:Controland
Collapsein SovietInstitutions(Cambridge, Mass., 1998).
Slavic Review 58, no. 4 (Winter 1999)

The Political Economy of Postsocialism 757
(whether occurring recently or long ago) might disagree about both

whether and, if so, how the past shapes the character of new orders, eco-
nomic and political, they would, nonetheless, concur on one point.3 State
socialism presents, arguably, the best case social scientists have for a
powerful past; this political-economic system was internally consistent,
elaborate in structure, unusually invasive in practice, and regionally en-
cased. When combined, these characteristics rendered this system as all-
encompassing as it was distinctive. Moreover, state socialism remained in
place for a long time and was the heir in virtually every instance to a well-
established tradition of authoritarian politics and state-dominated eco-
nomics. Thus, if we give any credence to historical-institutionalism, with
its emphasis on the power of the past in narrowing the range of alternative
futures, then the sheer depth, ambitions, and longevity of state socialism,
along with its nearly simultaneous implosion, should, at the very least,
have severely constrained the range of possible postsocialist pathways.
The second reason to have anticipated little variance in postsocialist
developments is more proximate to regime transition. It is not just that
these regimes ended at roughly the same time; it is also that the larger
world into which the successor regimes entered was remarkably consen-
sual in its ideological messages. By the close of the 1980s, liberalism in pol-
itics and economics had become the hegemonic standard; few incentives
were available to countries to embark on other paths of development; and
the international order, because of unprecedented consensus and the
considerable resources at the disposal of international institutions, had
come to exert powerful, as well as consistent, influences on domestic de-
velopments. With the collapse of the Cold War order in 1989-1990 and,
thus, the decisive defeat of its "other," liberalism came to occupy-for the
first time in its life, either in theory or practice-the position of an ideo-
logical monopoly.4Just as we cannot escape the irony that an ideology
based on competition now enjoys a monopoly, so we cannot understate
the impact of this reigning ideology on the postsocialist world. With its
weak states, shattered economies, and fragile regimes, this scared new
world would seem to be unusually receptive to international guidance.5
Thus, the homogeneity of the socialist past and the homogeneity of
the contemporary international political economy pointed in unison to
the same prediction: postsocialist regimes would resemble one another in
3. For diametrically opposed positions on the influence of the socialist past, contrast,
for example, Ken Jowitt, "The Leninist Legacy,"in Ivo Banac, ed., EasternEuropein Revo-
lution (Ithaca, 1992) versus Adam Przeworski, Democracyand the Market:Political and Eco-
nomicReformsin EasternEuropeand Latin America(Cambridge, Eng., 1991). For a summary
of these arguments and others that propose competing influences on postsocialist devel-
opments, that divide along the axes of optimism and pessimism, and that resemble, re-
markably, earlier debates concerning the historical transition to capitalism, see Bela
Greskovits, "RivalViews of Postcommunist Market Society" (paper presented at Cornell
University, 5 October 1998).
4. On socialism as the "other" of capitalism, see Katherine Verdery, WhatWasSocial-
ism, and WhatComesNext? (Princeton, 1996).
5. Janine Wedel, Collisionand Collusion:TheStrangeCaseof Western Aid toEasternEurope,
1989-1998 (New York, 1998).
758 Slavic Review
form and functioning. The contentof that resemblance was another issue,
however, and depended upon the emphasis placed on the regional past
versus the global present and the extent to which either determinant of
outcomes was read as facilitating or undermining capitalism and democ-
racy.6Thus, there were those whose scenario for postsocialism was gloomy,
with images of disarray,despair, and despots as the "civilizations"of liber-
alism and state socialism clashed with one another. The picture that
emerged in other investigations was a rosy one, however. Here, the argu-
ment was either that certain elements of the socialist past were helpful to
a liberal outcome, or that the socialist past, while illiberal, had been deci-
sively defeated. In either event, the premise, if not the promise, was that
eastern Europe was well positioned to become precisely that: the eastern
half of Europe.7
The Reality of Diversity

It has now been ten years since state socialism began its formal departure
from the European stage. There have been, to be sure, certain common-
alities among the postsocialist states. These include their distinctive so-
cioeconomic profile when compared with other countries at the same
level of economic development (for example, unusually high rates of lit-
eracy, an unusually small agricultural sector, and, even some years into the
transition, an unusually egalitarian distribution of income); a contraction
in the size of these economies that has been considerable, often of ex-
tended duration, and without any historical precedent; 8 continuing polit-
ical as well as economic difficulties associated with the privatization of
large state enterprises; considerable corruption accompanying the estab-
lishment of new forms of property and property relations (even, recently,
in the Czech Republic, a country widely thought to be "deviant"in this re-
spect); rising crime rates; a political environment that is liberalized in
comparison with the state socialist past;9 slow crystallization of party sys-
tems; 10substantial public dissatisfaction with the performance of political
6. See, especially, Greskovits, "RivalViews." Also see Grzegorz Ekiert, "Patterns of
Postcommunist Transitions in Eastern Europe," and Anna Grzymala-Busse, "Political
Legacies and Communist Party Adaptation in East-Central Europe" (both papers pre-
sented at the Council for European Studies conference, Baltimore, 26-28 February 1998).
7. Bela Greskovits argues, however, that in opting for Europe, eastern Europe has
paid a big price: the "Latin-Americanization"these countries were supposed to avoid.
Greskovits, "The Unveiled Periphery: Backwardness under Postcommunism" (unpub-
lished manuscript, Cornell University, 1999).
8. See, for example, Bela Greskovits, ThePoliticalEconomyof Protestand Patience:East
Europeanand Latin AmericanTransformationsCompared(Budapest, 1998); Vladimir Popov,
"Explaining the Magnitude of Transformational Recession" (unpublished manuscript,
1999).
9. For example, only one country in the region-Turkmenistan-has failed to hold
at least one contested election. See Karen Dawisha, "Post-Communism's Troubled Steps
toward Democracy: An Aggregate Analysis of Progress in the 27 New States" (paper, Cen-
ter for the Study of Post-Communist Societies, University of Maryland, 1997).
10. On the Russian case, see, for example, M. Steven Fish, "The Predicament of Rus-
sian Liberalism: Evidence from the December, 1995 PartyElections,"Europe-AsiaStudies49,
leaders and the newly created political and economic institutions; limita-
tions in, if not the absence in many cases of, the rule of law (including a
legal framework for economic activity);"Iand a working class that is weak,
disorganized, and dispirited.'2 These rough similarities aside, however,
the dominant pattern of postsocialism has been one of variation, not uni-
formity. Here, I refer not to the obvious differences among these states in
their physical and social characteristics, all of which were present at the
beginning of the transition.'3 Rather, what is striking is the intraregional
contrast in postsocialist economic and political pathways. For example,
Slovenia's income per capita today is seventeen times that of Azerbaijan;
Poland's gross domestic product (GDP) in 1997 was 11 percent larger
than what it had been in 1989 (which is the strongest performance in the
region), whereas the Georgian and Bosnian GDPs per capita in 1997 were
only slightly more than one-third of their 1989 size; and foreign direct
no. 2 (1997): 199-220; Kathryn Stoner-Weiss, "Democracy in Disarray:Central Governing

Capacity in the Provinces and the Weakness of Russian Political Parties" (unpublished
manuscript, Princeton University, August 1998). But by some measures, which emphasize
stability over time in ideological clustering rather than specific party attachments, Russian
party identification does at least seem to be developing. See Joshua A. Tucker and Ted
Brader, "Congratulations, It's a Party:The Birth of Mass Political Parties in Russia, 1993-
1996" (paper presented at the annual meeting of the American Political Science Associa-
tion, Boston, 3-6 September 1998).
11. See, for example, Kathryn Hendley, "Legal Development in Post-Soviet Russia,"
Post-SovietAffairs13, no. 3 (July-September 1997): 228-51.
12. On the working class under postsocialism, see, for instance, David Ost, "Labor,
Class, and Democracy: Shaping Political Antagonisms in Post-Communist Society,"in Bev-
erly Crawford, ed., Markets,States, and Democracy:The PoliticalEconomyof Post-Communist
Transformations(Boulder, Colo., 1995), 177-203; Stephen Crowley, "Barriersto Collective
Action: Steelworkers and Mutual Dependence in the Former Soviet Union," WorldPolitics
46, no. 4 (July 1994): 589-615; Stephen Crowley, Hot Coal, ColdSteel:Russian and Ukrai-
nian Workers from theEnd of the SovietUnion to thePostcommunistTransformation(Ann Arbor,
1997); Paul T. Christensen, Class/Power/Politics:Labor,Management,and theStateunder Gor-
bachevand Yeltsin(DeKalb, forthcoming, 2000); David Ost and Marc Weinstein, "Unionists
against Unions: Toward Hierarchical Management in Postcommunist Poland," East Euro-
pean Politicsand Societies13, no. 3 (1999): 1-33. On the more general question of civil so-
ciety and the constraints on its development, see Martin Krygier, 'Virtuous Circles: An-
tipodean Reflections on Power, Institutions, and Civil Society," East EuropeanPolitics and
Societies11, no. 3 (1997): 36-88; Ekiert, "Patterns of Postcommunist Transitions"; Grzy-
mala-Busse, "PoliticalLegacies"; Karen Dawisha and Bruce Parrott, eds., Conflict,Cleavage,
and Changein CentralAsia and the Caucasus (Cambridge, Eng., 1997); Karen Dawisha and
Bruce Parrott, eds., The ConsolidationofDemocracyin East-CentralEurope(Cambridge, Eng.,
1997); Karen Dawisha and Bruce Parrott, eds., DemocraticChangesand AuthoritarianReac-
tions in Russia, Ukraine,Belarus,and Moldova (Cambridge, Eng., 1997); Karen Dawisha and
Bruce Parrott, eds., Politics,Power,and the StruggleforDemocracyin South-EastEurope(Cam-
bridge, Eng., 1997); and Dawisha, "Post-Communism's Troubled Steps."
13. For example, to take the regional extremes: the territory of the Russian Federa-
tion is 850 times that of Slovenia (though both countries are a product of recent state dis-
solution); the population of the Russian Federation is 90 times that of Estonia; agriculture
occupies 55 percent of the Albanian labor force and only 5 percent of the Slovene labor
force; and Poland, Slovenia, and Albania are virtually homogeneous in national terms,
while the titular nation of both Bosnia and Kazakhstan is a minority within each of these
states.
760 Slavic Review
investment in Hungary accounts for nearly one-third of all such invest-

ment in the region.'4
On the political side (which is less easy to summarize with numbers),
we can offer the following examples. Only five of the states in the region
existed in their present form during the socialist era (Poland, Hungary,
Romania, Bulgaria, and Albania); another three were states during the in-
terwar period, but not during the Cold War era (Lithuania, Latvia, and Es-
tonia); and the remaining nineteen are new formations (though some of
these, such as Serbia, have historical claims to independent statehood).
Moreover, while some states in the region have secure and uncontested
borders, the majority, one can argue, do not.'5 The virtual state argument,
so central to debates about the crisis of sub-Saharan Africa, would appear
to be relevant to the postsocialist experience as well.'6
Variation is also evident if we shift our attention from issues of the
state-or the spatial contours of political authority-to questions of the
regime-or the organization of political power. Here, the twenty-seven
new regimes in the region represent at this time the full spectrum of po-
litical possibilities. On one axis, we can compare regime form, where the
range extends from fully democratic to partially democratic to largely au-
thoritarian to fully authoritarian orders. On the other axis, we can look at
differences in "regime-ness," or the degree to which there is a single re-
gime in place with full institutional expression, shared identities, and
public and elite compliance with the existing ideological contours of the
polity. Here, the contrast runs from, say, Hungary, where the regime ques-
tion is settled, to, for instance, Bosnia, rump Yugoslavia, and Albania,
where multiple regimes continue to vie for dominance.'7
The postsocialist experience, therefore, exhibits considerable eco-
nomic and political diversity. Indeed, once a cohesive area representing
an alternative world order, this region has become-and very quickly-a
microcosm of the larger world within which it resides. In saying this, how-
ever, we must remember that the former Soviet Union and east central
Europe are not so "micro." This area represents more than one-fifth of
the world's landmass and about one-sixth of its states.
14. These figures are drawn from the World Bank, WorldDevelopmentReport:The State
in a ChangingWorld(Oxford, 1997), 218-21, 230-31, 234-37, 242-47; Martin Raiser and
Peter Sanfrey, "StatisticalReview,"Economicsof Transition6, no. 1 (1998): 258.
15. For an insightful analysis of the Georgian case, where the state and the regime dis-
integrated and where both are now in the process (albeit unevenly and without any guar-
antees) of being reconstituted, see Ghia Nodia, "Putting the State Back Together in Post-
Soviet Georgia" (paper presented at the conference, "Beyond State Crisis: The Quest for
the Efficacious State in Africa and Eurasia,"University of Wisconsin, 11-14 March 1999).
16. Virtual states can also mean virtual economies. See David Woodruff, "Barter of
the Bankrupt: The Politics of Demonetization in Russia's Federal State," in Michael Bura-
woy and Katherine Verdery, eds., UncertainTransition:Ethnographiesof Changein thePostso-
cialist World(Lanham, Md., 1999), 83-124.
17. On the Bosnian case, see, especially, Valere Gagnon, "Bosnian Federalism and the
Institutionalization of Ethnic Division" (paper presented at the Workshop on Nationalism,
Federalism, and Secession, Cornell University, 2 May 1998). For a different perspective, see
Robert M. Hayden, "The State as Legal Fiction," East European ConstitutionalReview 7,
no. 4 (Fall 1998): 45-50.
Investigating Diversity
The purpose of this article is to explore in systematic fashion the varie-
gated landscape of postsocialism. I will do so by documenting economic
and political variations within the region that once comprised the Soviet
Union and eastern Europe and by offering some tentative explanations
for these variations. 18
Three postsocialist pathways emerge from this analysis. The first is one
where democracy and capitalism coexist in relative and, indeed, mutually
supportive harmony, and where political stability and sustained economic
growth (after an initial and sharp downturn) are the result. This is the re-
gional exception. The second, also exceptional, is where authoritarian
politics coexists with semisocialist economics. Again, the result is relatively
stable politics and relatively reasonable economic performance (though
less impressive, for the most part, than the performance of the first
group). The final cluster, which comprises the majority of the states in the
area, represents a middle ground, poised between democracy and dic-
tatorship and between socialist and capitalist economics. Here is where
politics tends to be the most unstable and where economic performance
is the poorest. If Poland best typifies the first tendency and Uzbekistan the
second, Russia represents the third.
What explains whether countries have followed the first, the second,
or the third path? Here, I suggest that the key factor is the socialist past
and whether that past produced a rough consensus about the political
and economic successor regimes to state socialism. Where it did, the re-
sult was, in the terminology of economists, a relatively stable equilibrium.
Where contestation over regime form was the prevailing legacy of state so-
cialism, reflecting diverse preferences and a relatively equal distribution
of economic and political resources among preference "camps," political
instability and unusually poor economic performance are the pronounced
tendencies. Simply put, then, for these cases neither an economic nor a
political equilibrium has materialized.
The Implications of Diversity

In the process of developing this typology of postsocialism, I will neces-
sarily touch on matters of broader theoretical, as well as geographical,
18. The comparisons that follow, however, are limited in three ways. First, and most
obviously, the comparative thrust of this article means that some important details
defining individual cases are glanced over in the search for generalizations. Second, as al-
ready noted, this analysis will not deal with Mongolia, China, or Vietnam. Finally, my focus
is on the domestic and not the international political economy of postsocialism. For in-
sightful comparisons that incorporate more of these cases with respect to economics, see
Popov, "Explaining the Magnitude." For an illuminating study of the consequences of do-
mestic politics, especially nationalism, for the security and foreign economic policies of
the successor states of the former Soviet Union (and eastern Europe after the breakup of
the Habsburg empire), see Rawi Abdelal, "Economic Nationalism after Empire: A Com-
parative Perspective on Nation, Economy and Security of Post-Soviet Eurasia" (Ph.D. diss.,
Cornell University, 1999).
762 Slavic Review
import. One is the typicality of postsocialism when compared with other

regions of the world undergoing what appears to be similar processes of
economic reform and democratization. Here the question is whether
postsocialism, because of its past and because of its remarkable agenda of
transformation, exhibits distinctive characteristics.
Another issue goes to the heart of current (and past) paradigmatic
disputes in the social sciences. Put succinctly: is a given phenomenon best
analyzed as a product of immediate or more distal influences? Just as the
answer to this question divides, say, some game theorists from most his-
torical institutionalists, it also taps into competing understandings of our
specific concerns here-that is, the transition from dictatorship to de-
mocracy and from socialism to capitalism.19
A third issue is how democratization relates to economic reform.
While many have argued that the two are in tension with each other, oth-
ers have suggested either that they are mutually supportive or that they
can be so, given certain political-economic conditions.20
The final issue involves matters of interpretation. Should we use de-
mocratization or revolution as our theoretical touchstone for analyzing
recent developments in the postsocialist world, and, if we opt for the for-
mer (as has been the pronounced tendency), should we rely on those the-
ories that deal with "quick" democratization or on older theories that treat
democratic governance as the product of a long, circuitous, and often ac-
cidental proceSS?21 Should we conceptualize postsocialist countries as
following, if not being locked into, different and increasingly divergent
economic and political trajectories, or as following a roughly similar tra-
jectory, with countries located-perhaps even stuck-at different points
along the way?22 The answers to these questions are notjust matters of in-
tellectual taste; they also affect in significant ways our very reading of the
19. For example, contrast Guillermo O'Donnell, Philippe C. Schmitter, and Lau-
rence Whitehead, eds., Transitionsfrom AuthoritarianRule: ComparativePerspectives,vols.
1-4 (Baltimore, 1986) with Grzegorz Ekiert, The State against Society:Political Crisesand
Their Aftermathin East-CentralEurope (Princeton, 1996), or contrast Jeffrey Sachs and
Michael Lipton, "Creating a Market in Eastern Europe: The Case of Poland," Brookings
Paperson EconomicActivity 20, no. 1 (1990): 75-147, with Kazimierz Poznanski, Poland's
ProtractedTransition:Institutional Change and EconomicGrowth,1970-1994 (Cambridge,
Eng., 1996).
20. See, for example, Juan Linz and Alfred Stepan, Problemsof DemocraticTransition
and Consolidation:SouthernEurope, South America, and Post-CommunistEurope (Baltimore,
1996); Valerie Bunce, "Sequencing Political and Economic Reforms," in John Hardt and
Richard Kaufman, eds., East-CentralEuropeanEconomiesin Transition (Washington, D.C.,
1994); M. Steven Fish, "The Determinants of Economic Reform in the Postcommunist
World,"East EuropeanPoliticsand Societies12, no. 2 (1998): 31-78; Kurt Weyland, "Swallow-
ing the Bitter Pill: Sources of Popular Support for Neoliberal Reform in Latin America,"
ComparativePoliticalStudies31, no. 5 (October 1998): 539- 68.
21. On the question of democratization versus revolution, see Valerie Bunce, "The
First Postsocialist Decade," East EuropeanPoliticsand Societies13, no. 3 (1999).
22. For two quite stimulating discussions of these various interpretations, see Peter
Murrell, "HowFar Has the Transition Progressed?"JournalofEconomicPerspectives10, no. 2
(1996): 25-44; Vesna Pusic, "Mediteranskimodel na zalasku autoritarnih drzava,"Erasmus
29 (January 1997): 2-18.
postsocialist experience-and, for that matter, the socialist and even pre-
socialist experience.23
Economic Reforms and Economic Performance

Let us begin our survey of postsocialism with the economic side of the
equation. In tables 1-3, I have presented some economic data that pro-
vide a comparative overview of postsocialist developments. The picture
that emerges is, of course, one of remarkable diversity-in such areas as
level of development, the size of the agricultural labor force, economic
growth, income distribution, and implementation of economic reforms
(or the size of the private sector in the economy and a combined measure
that includes this, along with liberalization of markets, foreign trade, and
domestic prices).
A closer look at these tables (supplemented by some other data) re-
veals some important patterns. First, there is the disastrous economic per-
formance of postsocialism, particularly in the early years. For example,
the region's economies declined by an average of 7.6 percent from 1990-
1992; the average economic "growth"of the region from 1989-1998 was
-1.0 percent (a figure that would be even lower if we were able to include
the Bosnian and rump Yugoslav economies and, most recently, the re-
gional, as well as domestic impact of the current Russian economic cri-
SiS); 24 it was only in 1997 that the postsocialist region as a whole first reg-
istered any economic growth (a whopping 1.4 percent); and only two
countries in the region-Poland and Slovenia-have managed to regis-
ter an actual growth in real GDP from 1989 to (projected) 1998.25
These trends are all the more striking once we place them in a larger
context. Here, it is useful to note the following. First, the economic
23. For example, in the many debates about Russia's future, one source of disagree-
ment is whether Russia is outside the European experience and thereby likely to carve out
a distinctive niche, or whether Russia, located on the fringes of Europe, but in Europe
nonetheless, will end up slowly, and with detours, but surely as a typically European state.
See, for instance, Martin Malia, Russia under WesternEyes:Fromthe BronzeHorsemanto the
Lenin Mausoleum(Cambridge, Mass., 1999). Similar arguments have also been central to
debates about the Balkans. See Pusic, "Mediteranski model," and Maria Todorova, "The
Balkans: From Discovery to Invention," Slavic Review 53, no. 2 (Summer 1994): 453-82.
24. See "IMFLowers Growth Forecasts for Transition Economies," Transition9, no. 6
(1998): 29. On the Russian crisis, see Vladimir Popov, "Pochemu rukhnul rubl'?" NG-
Politekonomiia23, no. 1 (December 1999): 3; Steven Solnick, "Russiaon the Edge,"East Eu-
ropeanConstitutionalReview7, no. 4 (Fall 1998): 70-72; David Woodruff, "WhyMarket Lib-
eralism and the Ruble's Value Are Sinking Together," EastEuropeanConstitutionalReview7,
no. 4 (Fall 1998): 73-76; Sergei Kiriyenko, "Sergei Kiriyenko on the Russian Economic
Crisis," East European ConstitutionalReview 8, nos. 1/2 (Winter-Spring 1999): 56-60;
Archie Brown, "The Russian Crisis:Beginning of the End or End of the Beginning?" Post-
SovietAffairs15, no. 1 (January-March 1999): 56-73.
25. Just as telling are the disturbing data on poverty. While in Estonia, 8.4 percent of
the population falls below the poverty line, the figures for Russia, Ukraine, the KyrgyzRe-
public, Hungary, and Poland are, respectively, 31 percent, 32 percent, 40 percent, 25 per-
cent, and 23 percent. See the World Bank, KnowledgeforDevelopment,1998-1999 (Oxford,
1999), 190-97.
764 Slavic Review
Table 1
Economic Development and Economic Growth
Percent Annual GDP Proj.

GNP of Labor Rate of Index, Growth GDP,
per Force GDP Growth 1997 in Real 1998
capita, in Agri- (1990- (1989 GDP, (1989
1995 culture 1997) 100) 1998 100)
Albania 670 55 -2.1 79.1 12 89

Armenia 730 17 -8.1 41.1 6 41
Azerbaijan 480 31 -10.1 40.5 7 43
Belarus 2070 20 -4.0 70.8 2 72
Bosnia 765 na na na na na
Bulgaria 1830 14 -5.5 62.8 4.5 66
Croatia 3250 15 -3.4 73.3 5 76
Czech Republic 3870 11 -0.4 95.8 2 99
Estonia 2860 14 -2.8 77.9 5 82
Georgia 440 26 -10.6 34.3 10 38
Hungary 4120 15 -1.1 90.4 4.3 94
Kazakhstan 1330 22 -6.3 58.1 2.5 59
Kyrgyzstan 700 32 -5.8 58.7 5.9 68
Latvia 2270 16 -5.8 56.8 5 58
Lithuania 1900 18 -8.9 42.8 5.5 45
Macedonia 860 22 -6.9 55.3 5 58
Moldova 920 33 -11.4 35.1 1 34
Poland 2790 27 1.6 111.8 5 117
Romania 1480 24 -2.2 82.4 -3 82
Russia 2240 14 -7.7 52.2 1.5 58
Slovakia 2950 12 -0.3 95.6 3 98
Slovenia 8200 5 0 99.3 4 103
Tajikistan 340 na -10.3 40.0 4.4 39
Turkmenistan 920 na -9.8 42.6 13.5 47
Ukraine 1630 20 -11.1 38.3 0 37
Uzbekistan 970 34 -1.7 86.7 2.0 89
Average 2111 21.6 -5.3 64.8 4.45 67.6
Sources:World Bank, WorldDevelopmentReport:TheStatein a ChangingWorld(Oxford, 1997),

214-15, 220-21; Grzegorz Kolodko, "Equity Issues in Policy-Making in Transition
Economies" (paper presented at the conference on economic policy and equity, 8-9June
1998), 40; Martin Raiser and Peter Sanfrey, "StatisticalReview,"Economicsof Transition6,
no. 1 (1998): 248, 251. The figures for Bosnia, Tajikistan, and Turkmenistan are very
rough estimates and may not be comparable to those for the other countries in this table.
decline of the region in the first five years or so of postsocialism has been
greater than that registered by western economies during the Great De-
pression.26 Second, if we take comparable years and comparable measures
(or average annual GDP growth, 1990-1995, as measured by the World
Bank), the economic growth rates for southern Europe (Portugal, Spain,
26. See Greskovits, PoliticalEconomy.

Table 2
Economic Reform and Income Distribution
Private Composite Gini
Sector Economic Coefficient,
Share of Reform 1993-1995
GDP, 1995 Score (1987-1989)
Albania 60 6.7 na
Armenia 45 5.2 na
Azerbaijan 15 3.5 na
Belarus 45 3.0 28 (23)
Bulgaria 45 4.9 34 (23)
Croatia 70 6.7 na
Czech Republic 65 8.2 27 (19)
Estonia 65 7.7 35 (23)
Georgia 30 4.4 na
Hungary 60 7.5 23 (21)
Kazakhstan 25 4.1 33 (26)
Kyrgyzstan 40 6.1 55 (26)
Latvia 60 7.0 31 (23)
Lithuania 55 7.1 37 (23)
Macedonia 40 5.9 na
Moldova 30 4.9 36 (24)
Poland 60 7.4 28 (26)
Romania 40 5.5 29 (23)
Russia 55 6.4 48 (24)
Slovakia 60 7.3 19 (20)
Slovenia 45 6.2 25 (22)
Tajikistan 15 2.7 na
Turkmenistan 15 1.9 36 (26)
Ukraine 35 4.7 47 (23)
Uzbekistan 30 4.2 33 (28)
Average 42.6 5.5 33.5
Sources:Kolodko, "EquityIssues in Policy-Making," 18; M. Steven Fish, "The De-

terminants of Economic Reform in the Postcommunist World,"EastEuropeanPol-
itics and Societies12, no. 1 (Winter 1998): 34; Nicholas Stern, "The Transition in
Eastern Europe and the FSU: Some Strategic Lessons from the Experiences of 25
Countries in Six Years" (working paper, European Bank of Reconstruction and
Development, 18 April 1997), 19.
and Greece) and Latin America-two other regions undergoing democ-
ratization and economic reforms-were approximately three times as
high as those registered for the postsocialist countries.27 At the same time,
the variance in postsocialist economic performance -or the contrast be-
tween 2.4 percent for Poland and -26.9 percent for Georgia-is far
27. See the World Bank, WorldDevelopmentReport,234-35. More recent data suggest,
for example, that the Russian economy declined by 5 percent in 1998, whereas the Polish
economy grew by approximately the same amount. See the World Bank, GlobalEconomic
Perspectivesand theDevelopingCountries:BeyondFinancial Crisis (Oxford, 1999), 194.
766 Slavic Review
Table 3
Annual Growth of Real Gross Domestic Product
East Central Former Soviet
Europe and Union (minus
Entire the Baltic the Baltic
Region States States)
1990 -4.9 -6.8 -3.7

1991 -7.7 -10.6 -5.8
1992 -10.4 -4.2 -14.3
1993 -5.5 0.6 -9.3
1994 -7.1 3.4 -13.6
1995 -1.0 5.3 -4.9
1996 -1.2 4.2 -4.6
1997 1.4 3.2 .4
1998 2.3 3.5 1.6
Source:Raiser and Sanfrey, "StatisticalReview,"251.
greater than that for Latin America-or the spread between 6.1 percent
for Chile and -5.4 percent for Nicaragua.28
What I am suggesting, therefore, is that the new regimes in the post-
socialist world are distinctive with respect to both their economic diversity
and the overall severity of their recent economic downturns. This is not
the only way in which postsocialism stands out, however. These countries
are also unusual in three other respects-all of which testify, as do the
costs of economic transformation, to the powerful impact of the socialist
past. One is that the agrarian sector in these countries is very small, given
the norm for all countries at a matching level of economic development.
Another is that income distribution is (still) unusually equal, even when
we control for level of economic development.29 Finally, there is the prob-
lem, unusually pronounced in the postsocialist context, of states that fail
to provide a stable and predictable business environment. On the basis of
a recent survey of local entrepreneurs in sixty-nine countries, the World
Bank concluded that the Commonwealth of Independent States in par-
28. These figures were calculated from the World Bank, WorldDevelopmentReport,
214-15. For a discussion of the difficulties of estimating economic performance in the
postsocialist context, see Kasper Bartholdy, "Old and New Problems in the Estimation of
National Accounts in Transitional Economies," Economicsof Transition5, no. 1 (1997): 131-
46. Also refer to Greskovits, "Unveiled Periphery," for a discussion of the instability of
World Bank estimates of economic performance in the postsocialist world, especially with
respect to what has become an ever-downward estimation of economic performance dur-
ing the last years of socialism.
29. See the World Bank, WorldDevelopmentReport,222-23. For example, while the av-
erage Gini coefficient for all those countries outside the postsocialist region that fall in the
lower middle income category is 45.2, the postsocialist countries that are in that category,
such as Moldova, Bulgaria, Kazakhstan, Lithuania, Belarus, Poland, and Slovakia, register
Gini coefficients of 34.4, 30.8, 32.7, 33.6, 21.6, 27.2, and 19.5, respectively. The contrast is
even more glaring for the upper middle income countries of the Czech Republic, Hun-
gary, and Slovenia. While their Gini coefficients are, respectively, 26.6, 27.0, and 28. 2, the
remaining countries in this category average a Gini coefficient of 55.4.
ticular stood out among the world's regions -of east central Europe, sub-
Saharan Africa, Latin America and the Caribbean, the Middle East and
North Africa, south and southeast Asia, and the countries of the Organi-
zation for Economic Cooperation and Development-in its failure to
provide law and order, security of property rights, and predictability of
both rule application and policy implementation (given, in particular,
corruption, an unreliable judiciary, and unstable governments) .30
Tables 1-3 also illustrate several other characteristics of postsocialist
variation. One is that two distinct "regions"seem to exist. Thus, the eco-
nomic profile of the former Soviet Union contrasts sharply with that of
east central Europe-whether the focus is on adoption of economic re-
forms or on measures of economic performance. The Baltic states are sit-
uated between these two areas, given their relatively high economic re-
form scores, but their poor economic performance. Put simply, then,
political leaders in the Soviet successor regimes have been less likely than
their counterparts in east central Europe to introduce economic reforms,
and the economies in the former Soviet Union have, on the whole, con-
tracted far more sharply than the postsocialist economies to the west.
The other and related consideration is temporal. Although the reces-
sionary effects of the economic transformation were undeniably large in
the early years of postsocialism, these effects seem generally to have been
short-lived.3' Thus, for example, beginning in 1993, the east central Eu-
ropean economies, when taken as a whole, began to grow, and they have
continued to do so in subsequent years. Economic performance in the
former Soviet Union, however, although similar in its overall pattern,
varies in its details. There, the economic downturn appeared later, and it
has lasted a good deal longer. What seems to distinguish east central Eu-
rope (including the Baltic states) from the Soviet successor states, there-
fore, are three related factors: whetherthere was an economic reform, how
long the economic slide lasted, and whenthe economy began to recover.32
30. World Bank, WorldDevelopmentReport,5, 37. More specifically, the Commonwealth

of Independent States led in unpredictability of changes in policies; tied with the Middle
East and sub-Saharan Africa in unstable government; tied with Latin America with respect
to insecurity of property; and led all the other regions in the unreliability of the judiciary
and levels of corruption. One example provided of the "state problem" in the former So-
viet Union is Ukraine, where both decision-making and policy implementation are sabo-
taged by a political structure that is unusually complex and that allows for remarkable
overlap in administrative jurisdictions (see the chart on 85).
31. There has also been a dramatic decline in inflation. In 1992, the average rate of
inflation in east central Europe and the Baltic states was 199.2 percent and it was 13,525
percent in the former Soviet Union (minus the Baltic states); the comparable figures for
1997 are 10 and 13.1, respectively. See Raiser and Sanfrey, "StatisticalReview,"252. To put
these figures in another perspective, however, it should be noted that the average rate of
inflation in Russia from 1991-1997 was 340 percent. See the World Bank, GlobalEconomic
Perspectives,194.
32. For evidence on these points, also see Grzegorz Kolodko, "EquityIssues in Poli-
cymaking in Transition Economies" (paper presented at the conference on "Economic
Policy and Equity,"Washington, D.C., 8-9 June 1998). Also see Giovanni Andrea Cornia
and Vladimir Popov, "Transition and Long-Term Economic Growth: Conventional versus
Non-Conventional Determinants," MOST 1 (1998): 7-32.
768 SlavicReview
Tables 1-3 also allow us to address in a limited way a question that

has received considerable attention: the typicality of the Russian experi-
ence.33 Usually this question has been framed in terms of comparisons
among Russia and, say, the west, the Weimar Republic, or the new democ-
racies of southern Europe and Latin America. However, another way to
think about Russia in comparative terms-and one that allows for more
controlled comparisons-is to view Russia through the lenses of the post-
communist experience. When doing so, the Russian case looks familiar
in certain respects and unusual in others. Thus, for example, the Russian
level of economic development is slightly above the regional average,34 as
is the size of its urban sector; its economic reform score is slightly above
average for the region as a whole, as is the private sector share of the econ-
omy; and its rate of economic growth is somewhat below the regional av-
erage for 1990-1997 (or -7.7 versus -5.3).
On the other hand, Russia does seem to be exceptional-at least by
regional economic standards-in certain ways.35 For example, the distri-
bution of income in Russia, while typical of the region at the beginning of
the transformation, is now unusually unequal (though more typical of "in-
termediate reformers" in the region and of all countries outside the re-
gion at roughly the same level of economic development); 36 social trends
in Russia, such as male life expectancy, exhibit alarming trends;37 and

Russia is a rare example within the region of economic reforms intro-
duced midstream.38
33. For a helpful analysis of the Russian economy that brings in a number of com-
parative cases, see Paul Gregory, "Has Russia's Transition Really Been Such a Failure?"
ProblemsofPostcommunism 44, no. 6 (1998): 58- 64. Also quite helpful in analyzing the Rus-
sian case is a review essay by Richard Ericson, "Economics and the Russian Transition,"
SlavicReview57, no. 3 (Fall 1998): 609-25.
34. Of course, the recent downturn in the Russian economy suggests that some care
is needed when making these generalizations. Several other countries have also shown
significant problems in the past few years-most obviously, Albania and Bulgaria.
35. For instance, it has been argued that the Russian experience is unusual from the
perspective of theories of democratization. See Richard Anderson, Jr., "The Russian
Anomaly and the Theory of Democracy" (paper presented at the annual meeting of the
American Political Science Association, Boston, 3-6 September 1998). For a somewhat
different perspective, see Philip Roeder, "The Triumph of Authoritarianism in Post-Soviet
Regimes" (paper presented at the annual meeting of the American Political Science Asso-
ciation, Boston, 3-6 September 1998).
36. I have taken the phrase "intermediate reformers" from Joel Hellman, "Winners
Take All: The Politics of Partial Reform in Postcommunist Transitions," WorldPolitics 50,
no. 2 (January 1998): 203-34.
37. About one-half of the countries in the postsocialist region have registered a small
decline in male life expectancy, but the Russian decline is, even by that sad standard, un-
usually large. See Murrell, "How Far Has the Transition Progressed?" table 3, p. 38, and
Timothy Heleniak, "Dramatic Population Trends in Countries of the FSU," Transition 6
(1996): 1-5. To place the Russian figures in a comparative perspective, Russian males live
about as long on average as their counterparts in Bolivia-a country having about one-
third the gross domestic product per capita of Russia's. See the World Bank, Knowledgefor
Development, 190.
38. Russia incurred costs, of course, from introducing economic reform later in the
transitional process. In particular, because dominant interests in the socialist era had the
Explaining Economic Policies and Economic Outcomes

We can now move from description to explanation. Here, two obvious is-
sues present themselves. What factors account for variations in economic
reform and for variations in economic performance? We can begin to an-
swer this first question by noting a modest correlation between level of
economic development and economic reform (see table 4). If we expand
the range of explanatory factors and deal with the question more system-
atically, however, we find, as Steven Fish has suggested, that the most
robust explanation appears to be the outcome of the first competitive
election.39 Put simply, economic reform is far more likely when the non-
communist opposition forces triumph and far less likely when the ex-
communists succeed in maintaining political power (albeit in new politi-
cal circumstances). This is a point that will be followed up later in this
article.
The other issue-or the determinants of economic performance in
the postsocialist context- elicits more divided opinion. On the one hand,
there is a widespread assumption, which lies at the core of the World
Bank's and the International Monetary Fund's mission, that policies mat-
ter. Indeed, as table 4 suggested, there is a positive correlation, albeit im-
perfect, between economic reform and economic performance.
This leads in turn to an obvious question: with what kinds of payoffs?
The verdict in fact is not yet in, for instance, with respect to shock ther-
apy- or what has been succinctly characterized as "liberalize as much
as you can, privatize as fast as you can, and be tough in fiscal and mone-
tary matters" -versus more evolutionary approaches to economic re-
gime transition.40 In particular, the actual cases of shock therapy are very
opportunity to recast their economic and political portfolios in anticipation of reform,

their interests shaped the course of the reform while contributing in the process to both
unusually high levels of corruption and an unusually prolonged period of economic re-
cession. Their interests also stalled the reform process. The winners, in the short-term,
therefore, did not sustain the reform. Instead, they used their privileged positions to main-
tain a regime of rent-seeking. See, especially, Hellman, "WinnersTake All."Also see Hilary
Appel, "Voucher Privatisation in Russia: Structural Consequences and Mass Response in
the Second Period of Reform," Europe-AsiaStudies49, no. 8 (1997): 1433-49. For a more
historical account of asymmetric resources and asymmetric gains from the Russian eco-
nomic reform, see Georgi Derlugjian, "Russia'sImperial Bankruptcy: The Process and Its
Medium-term Prospects," forthcoming in Derlugjian and Scott Greer, eds., The Changing
Geopolitics of the WorldSystem (Westport, 1999).
39. Fish, "Determinants of Economic Reform." For a similar observation, absent the
statistical support, see Bunce, "Sequencing Political and Economic Reforms."This conclu-
sion, however, must be read as a matter of tendencies, not laws (which is invariably the case
for social inquiry). Here, one must note, for example, some difficulties in terms of mea-
suring economic reforms (for instance, with respect to institutional development); prob-
lems of coding certain types of opposition parties; and recent instances of backtracking
from economic reforms in conditions of either political instability or de-democratization.
40. The description of shock therapy is taken from "Interview with Grzegorz
Kolodko: Economic Neoliberalism Became Almost Irrelevant," Transition9, no. 3 (1998):
2. This debate has far too many participants, papers, and books to cite. For a sampling, see
Anders Aslund, Peter Boone, and Simon Johnson, "How to Stabilize: Lessons from Post-
Communist Countries," Brookings Papers on Economic Activity 1 (1996): 217-313; andJeffrey
770 SlavicReview
Table 4
Economic Reform and Economic Performance
Considerable to Limited
Moderate to None
Albania Armenia
Croatia Azerbaijan
Czech Republic Belarus
Estonia Bulgaria
Hungary Georgia
Kyrgyzstan Kazakhstan
Latvia Moldova
Lithuania Romania
Macedonia Tajikistan
Poland Turkmenistan
Russia Ukraine
Slovakia Uzbekistan
Slovenia
Average reform score 6.87 3.7

Average GDP per capita $2,542 $1,189
Average growth -3.4 -7.6
Sources: See tables 1 and 2.
few;41 some strong economic performers feature at most therapy, but little
shock; and some of the shock therapy cases, in the face of political tur-
moil, evidence recent and serious economic difficulties. Moreover, the
strongest economic performance in the region is registered by countries
with either considerable or minimal economic reform, with Poland ex-
emplifying the former and Belarus and Uzbekistan the latter. Such coun-
tries as Russia, Ukraine, Bulgaria, and Moldova fall in between and exhibit
the poorest economic performance (leaving out those cases, such as
Georgia and Bosnia, that are war-ravaged economies).42 At the same time,
Sachs, Poland'sJumpto a MarketEconomy(Cambridge, Mass., 1993). For those who question

shock therapy, see Gerard Roland, "The Role of Political Constraints in Transition
Economies," Economicsof Transition2 (1994): 27- 42; Grzegorz Kolodko and D. Mario Nuti,
"The Polish Alternative: Old Myths, Hard Facts, and New Strategies in the Successful
Transformation of the Political Economy" (paper, UNU/ WIDER project/ UNU World In-
stitute for Development Economics, Helsinki, 1997); Poznanski, Poland's ProtractedTransi-
tion;Peter Murrell, "ConservativePolitical Philosophy and the Strategy of Economic Tran-
sition," East European Politics and Societies 6, no. 1 (1992): 3-16.
41. This point is obscured in many measures of economic reform, because such mea-
sures are snapshots of outcomes and, as a result, fail to recognize such important consid-
erations as: 1) gain scores (Hungary, for instance, began postsocialism with substantial
reforms already in place), and 2) the many policy roads to an outcome of strong reform
scores.
42. See, especially, Hellman, "WinnersTake All."Also seeJoel Hellman, "Competitive
Advantage: Political Competition and Economic Reform in Postcommunist Transitions"
(unpublished manuscript, 1997).
with respect to Poland, the regional leader in economic performance and

the exemplar of shock therapy, one can argue that what was crucial for
Polish economic growth was that the shock-which, it has been sug-
gested, was more costly than it had to be and which would have been dis-
astrous if continued-was followed by therapy, with the latter understood
as a matter of both correcting the faults of Leszek Balcerowicz's reforms
and building sound economic institutions sensitive to certain aspects of
the socialist past.43
To all these complications can be added several more. One is that the
best predictor of economic performance in the postsocialist world may
very well be the growth of the "denovo" private sector-a development
that seems to be encouraged by a variety of economic policy levers.44 The
other is that quick privatization through vouchers (as was carried out in
Russia and the Czech Republic) may not be as desirable as sometimes pre-
sumed. As Giovanni Cornia and Vladimir Popov have suggested: "quick
privatization is generally inferior to a more cautious approach, both in
terms of raising economic efficiency and of containing the surge in in-
equality and poverty. Fast give-away privatization is now perceived as less
efficient as it provides little revenue and can create negative incentives
and governance problems, which can be very costly over the long-term."45
The most thought-provoking position in the debate over the determi-
nants of economic performance in the postsocialist world, however, has
been staked out by Vladimir Popov.46 Rather than proceeding from the fa-
miliar and rarely questioned premise that policies matter (with the debate
then centering on more and less desirable policy options), Popov has
posed a more fundamental question. What happens when we try to ex-
plain economic performance by assessing the effects of assets and liabili-
ties available at the beginning of the transformation? What he discovers in
a regression analysis that incorporates the entire postsocialist region, plus
China and Vietnam, is that two variables are crucial: 1) initial conditions
(or distortions in industrial structure and trade patterns), and 2) the col-
lapse of institutions during the transition (or, for example, a sharp decline
in the revenue base of the government). It is significant that these two fac-
tors account for a substantial proportion of the variance, and economic
reform adds little in the way of explanatory power.
43. This, at least, is the argument of Grzegorz Kolodko (who succeeded Leszek Bal-
cerowicz as Finance Minister) and D. Mario Nuti. See their "The Polish Alternative."
44. See "Interview with Grzegorz Kolodko"; Cornia and Popov, "Transition and
Long-Term Growth."
45. Cornia and Popov, "Transition and Long-Term Growth," 28. Also see Appel,
"Voucher Privatisation";Nevenka Cuckovic, "Nesluzbeno gosodarstvo i proces privati-
zacije,"Financijskapraksa21, nos. 1-2 (1997): 259-76; and Michael McFaul, "When Capi-
talism and Democracy Collide in Transition: Russia's Weak State as an Impediment to
Democratic Consolidation," Working Paper Series, no. 1 (paper presented at Davis Center
for Russian Studies, Program on New Approaches to Russian Security, Harvard University,
1998).
46. Popov, "Explaining the Magnitude." Also see Popov, "Krakhiugo-vostochnoi Azii
po-svoemu unikalen," NG-Politekonornziia 2 (December 1998); Popov, "Pochemu rukhnul
rubl"';and Cornia and Popov, "Transition and Long-Term Growth."
772 SlavicReview
Simply stated, then, the socialist past, not proximate policy choices,
emerges as critical (though inflation rates, and, hence, macroeconomic
stabilization policies, are helpful). This is an argument that leaves us with
a seeming puzzle. While economic reform seems to be shaped by proxi-
mate politics, economic performance seems to be heavily influenced by
distal economics. As I will argue below, however, this seeming tension be-
tween the legacies of the socialist past and contingent circumstances is
more apparent than real.47
Political Diversity
Measuring the political variations among postsocialist regimes is far more
difficult than providing measures of economic reform and performance.
This is not just because power-the metric of politics-lacks the quanti-
tative simplicity of money (though money is not, as already noted, without
some serious estimation problems). Other complications also play a role.
One problem is the lack of consensus regarding the meaning or mea-
surement of the three most important aspects of politics that speak di-
rectly to the nature and quality of governance in the postsocialist world:
political stability,state strength, and regime type (or the continuum rang-
ing from democracy to dictatorship). Another is that each of these politi-
cal indicators is multidimensional; these dimensions do not necessarily
correlate; and neither, for that matter, do the three indicators. For in-
stance, Kazakhstan is stable, but not very democratic; Bulgaria is unstable,
but far more democratic; Estonia looks quite democratic with respect to
the provision of political liberties and civil rights, but its exclusionary poli-
cies regarding voting rights for minority populations make it less demo-
cratic; and Russia has a fully inclusive electorate and free and fair elec-
tions, although the weakness of its state and the continuing war of laws
between the center and the regions mean that elected officials there, par-
ticularly at the center, lack the capacity to translate public preferences
into public policy and, therefore, to meet the democratic standard of gen-
uine accountability. In addition, however country "scores"are measured,
there is some flux over time in these indicators. Thus, if we were to focus
on the first years of the transformation, Albania, Armenia, and the Kyrgyz
Republic might emerge with an impressive democratic profile. Subse-
quent developments in these three countries, however, suggest that such
a conclusion would have been premature -or at least, timebound.
Perhaps the best way to begin our political assessment is to define
some terms. Political stability, in my view, is the capacity of the regime (or
the organization of political power) and the state (or a political entity de-
fined by space and granted a monopoly in the exercise of coercion) to
provide political order. It implies such characteristics as relatively con-
stant rules of the political game that are recognized by all and inform the
behavior of all; the existence of a hegemonic regime (as opposed to com-
47. One study that recognizes the duality of the socialist past in this respect is Crow-
ley, Hot Coal, ColdSteel.
petitive regimes); governments that function effectively; and physical

boundaries that are clearly defined and uncontested. Instability, there-
fore, is indicated by high levels of social disorder; secessionist pressures;
contestation over the form of the regime; high rates of governmental
turnover; and governments that cannot decide, or, if deciding, cannot im-
plement. Put simply, then, instability testifies to the failure of a regime or
a state to be hegemonic-or without ideological or spatial competitors-
and to function effectively.
The other aspect of politics that is of interest is regime type, or the
contrast between democracy and dictatorship and the many variations sit-
uated between these two poles. There are, of course, any number of
definitions of democracy.48Some focus on substance and others on pro-
cedures; some are detailed and others parsimonious; and some set a high
standard that relatively few countries can meet, whereas others are less
discriminating. For our purposes, we can follow the lead of Adam Prze-
worski by defining democracy as that system of governance that combines
freedom, uncertain results, and certain procedures (a definition which,
by the way, works for capitalism as well).49 This implies three clusters of
conditions. One is freedom, or whether members of the political com-
munity have the full array of civil liberties and political rights.50The sec-
ond is whether political results are in fact uncertain; that is, whether
publics are fully enfranchised, whether politics is competitive and com-
petition institutionalized through parties that offer ideological choice,
whether elections are regularly held and are free and fair, whether gov-
erning mandates are provisional, and, as a result of all these factors,
whether politicians are fully accountable to the electorate. The final cate-
gory, procedural certainty, refers to rule of law, the control of elected
officials over the bureaucracy, and a legal and administrative order that is
hegemonic and transparent, commands compliance, and is relatively con-
sistent in its operation across time, circumstances, and space.5'
Beneath these three aspects of democracy, therefore, are complex
clusters of preconditions. Moreover, implied in this elaboration is a hier-
archy of traits that distinguish among dictatorships (where none of the
three conditions are met); incomplete democracies (or those countries
that meet, say, the first condition, but that fall short on the remaining
two); and political orders that are full-scale democracies, or what has been
termed, variously, sustainable or consolidated democratic orders (where
all three sets of conditions are present).
48. For a sampling, see Robert Dahl, Polyarchy:Participation and Opposition (New Haven,
1971); Przeworski, Democracyand the Market;Philippe C. Schmitter and Terry Lynn Karl,
"WhatDemocracy Is.. . . and Is Not,"Journal of Democracy2, no. 3 (Summer 1991): 75-88.
49. See Przeworski, Democracy and the Market; Dahl, Polyarchy; and Valerie Bunce, "De-
mocracy, Stalinism, and the Management of Uncertainty," in Gyorgy Szoboszlai, ed., The
Transition to Democracy in Hungary (Budapest, 1991).
50. As defined in detail by Freedom House. See "The Comparative Survey of Free-
dom," FreedomReview28, no. 1 (1997).
51. On the importance of a capable state for the functioning of democracy, see
Stephen Holmes, "WhenLess State Means Less Freedom," Transition5, no. 1 (1996): 5-15.
774 SlavicReview
Evaluating the Politics of Postsocialism

We can now apply these definitions of stability and democracy to the post-
socialist world. With respect to stability, we can assign these countries
(with a great deal of trepidation, I must admit) to three groups: 1) highly
stable countries, where both the regime and the state are consolidated
and where government is reasonably effective (Poland, Hungary, the
Czech Republic, Slovenia, Lithuania, Estonia, Latvia, and, arguably, Ka-
zakhstan, Turkmenistan, and Belarus); 2) less stable countries, where
regimes are not fully consolidated (often combining democratic and au-
thoritarian elements), where state boundaries are in some dispute, or
where governments lack the political (including constitutional) support,
the ideological consensus, and the legal-administrative capacity to govern
effectively (Bulgaria, Romania, Slovakia, Croatia, Macedonia, rump Yu-
goslavia, the KyrgyzRepublic, Russia, Ukraine, Moldova, and Azerbaijan);
and 3) unstable countries, where the regime or the state are -or at least
have been-in serious question (Albania, Bosnia, Armenia, Georgia, and
Tajikistan). We can certainly debate whether some of these country as-
signments are correct-for example, whether Russia, rump Yugoslavia, or
Azerbaijan should be downgraded, and whether Georgia should, on the
basis of recent developments, be upgraded.
Whatever our different readings of these cases, however, one point of
consensus would nonetheless emerge. The great majority of the regimes
and states in the postsocialist region are not stable. This is hardly a sur-
prising situation, given that, at most, only ten years have passed since the
end of Communist Party hegemony and given, as well, the revolutionary
character of postsocialism. By the latter, I refer to the fact that all the
building blocks of politics, economics, and society- or, put bluntly, state,
nation, class, economic regime, political regime, and the relationship be-
tween the state and the international system-are being reformulated.
What is more, this process is happening simultaneously. This is hardly a
climate that would seem to be conducive to stable politics.
If we assess democratization in the region, we are on somewhat (but
only somewhat) firmer ground. In table 5, I have summarized recent
rankings by Freedom House with respect to the provision of civil liberties
and political rights. What these data suggest is that the postsocialist coun-
tries vary from liberal to decidedly illiberal, but that one-third of the re-
gion (or Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithu-
ania, Poland, Romania, and Slovenia) comes reasonably close to the
standards of well-established democratic orders. What the Freedom House
measures also suggest is that the Latin American countries (including
Central Anmericaand the Caribbean) are freer than the countries of the
postsocialist world (the average score in Latin America is 2.5 compared to
3.7 in the postsocialist countries). This is not terribly surprising, since
many of the Latin American countries have had a democratic past to re-
cycle, authoritarianism in those contexts was less invasive and ambitious
than was the case for state socialism, and their return to democracy has
taken longer and been more carefully prepared. Finally, the economic
costs accompanying the breakdown of authoritarian rule have been lower.
Table 5
Freedom Rating
Free Partly Free Not Free
Bulgaria* Albania* Azerbaijan

Czech Republic Armenia* Belarus*
Estonia** Bosnia** Serbia-Montenegro
Hungary Croatia* Tajikistan
Latvia Georgia** Turkmenistan
Lithuania Kazakhstan Uzbekistan**
Poland Kyrgyzstan
Romania** Macedonia
Slovenia Moldova**
Russia
Slovakia*
Ukraine
Note:A single asterisk indicates a recent decline in the score for civil liberties and political
rights or both, and a double asterisk shows a recent improvement.
Source:"The Comparative Survey of Freedom," FreedomReview 28, no. 1 (1997): 21-22.
Attention to the second standard of democratization, however, lowers

the number of robust democracies in the postsocialist world. As Philip
Roeder has recently argued, on the question of electoral inclusion at least,
the postsocialist states divide into three groups: those states that have fully
inclusive electorates and thereby meet a necessary precondition for de-
mocracy (which describes most of the region, albeit at varying times dur-
ing postsocialism); those states that exclude 10 to 25 percent of the po-
tential electorate (at various points, Georgia, Kazakhstan, Moldova,
Kyrgyzstan,Tajikistan, and Albania); and those that consistently exclude
one-quarter or more of the potential electorate (Estonia and Latvia).52
When placed beside the Freedom House measures, these indicators of
electoral inclusion suggest only a modest overlap. This leads to two ob-
servations. One is that democratization in the postsocialist context is a
highly uneven process-not just across countries, but also over time and
across dimensions. Within rump Yugoslavia, as within the Russian Feder-
ation and Bosnia, moreover, one can also speak of substantial regionaldif-
ferences in democratization-for example, the sharply contrasting poli-
tics of, say, Serbia versus Montenegro (since January 1998).5 The other
observation is that very few of the postsocialist regimes could be termed
full-scale democracies-that is, fully inclusive and fully free. In particular,
52. See Roeder, "The Triumph of Authoritarianism," 7. Also see Andrejs Plakans,
"Democratization and Political Participation in Postcommunist Societies: The Case of
Latvia,"and Toivo U. Raun, "Democratization and Political Development in Estonia," both
in Dawisha and Parrott, eds., Consolidationof Democracy,245-89, 334-74. Recent policy
changes in Latvia, however, will move this country toward a more inclusive definition of
citizenship.
53. On the Russian case, see, for instance, Matthew Evangelista, "Russia'sFragile
Union," Bulletinof theAtomicScientists55, no. 5 (1999): 50 -55; Kathryn Stoner-Weiss, Local
Heroes: The Political Economyof Russian Regional Governance(Princeton, 1997); Solnick,
"Russiaon the Edge."
776 SlavicReview
only Poland, Hungary, the Czech Republic, Slovenia, Lithuania, and, per-
haps, Latvia- or less than one-quarter of the region-meet this very high
standard.
The Procedural Side of Democracy

The third dimension of democracy, procedural certainty, is harder to
measure. The secondary literature suggests that there are three reasons
why this is a problem (albeit in varying degrees) for all the postsocialist
countries. The first is that political institutions in the region are new and
represent, in theory at least, a marked departure-in design and prac-
tice-from the past. One could hardly expect, therefore, that the proce-
dures governing politics would be easily, quickly, or thoroughly regular-
ized, let alone rendered transparent or fully capable of producing
widespread compliance. This generalization would seem to be particu-
larly apt under certain conditions prevalent in the postsocialist world:
where states, along with regimes, are new; 54where there is no democratic
or at least parliamentary past; where there is a significant gap between the
premises underlying constitutional design and actual practice; and where
constitutions have only recently been enacted and, thus, reflect the tense
and asymmetric distribution of power between, say, the communists and
the opposition, or the center and the regions.55
Another constraint on procedural certainty is the socialist past. As
many analysts have observed, state socialism was long on institutions and
short on administrative regularities.56 To use communist parlance for a
moment, this was not accidental. Just as political leaders in these systems
maximized their power through coercion and through the construction
of a dense web of institutions, so did they create a climate of uncertainty
for those within this institutional web with respect to roles, rules, respon-
sibilities, rights, and resources. This had several consequences, in addi-
tion to inefficiency and atomization. One was to render decision making
highly capricious. If the ideology enshrined the importance of change
from above, the design of the system ensured that leaders would matter.
The other consequence worked in the opposite direction. Power at the
top was maximized only to be severely compromised, because leaders
lacked the capacity to implement.
This contains a dual lesson. In the state socialist case at least, large and
intrusive states were not necessarily capable or strong ones. At the same
54. Brand new state institutions might be preferable to institutions recycled from the
socialist era, however. This point is made by Alexander Motyl in "StructuralConstraints
and Starting Points: The Logic of Systemic Change in Ukraine and Russia," Comparative
Politics29, no. 4 (July 1997): 433-47.
55. On these problems, see, for example, Robert Sharlet, "LegalTransplants and Po-
litical Mutations: The Reception of Constitutional Law in Russia and the Newly-Indepen-
dent States," East European Constitutional Review 7, no. 4 (Fall 1998): 59-68; Przeworski, De-
mocracy and the Market.
56. A weak tradition in rule of law is also a problem in much of Latin America. See
Guillermo O'Donnell, "Notes on Democratic Theory and Comparative Politics" (paper
presented at the Mellon-Sawyer Seminar on Democratization, Cornell University, 12 April
1999).
ThePoliticalEconomyof Postsocialism 777
time, the institutional density of state socialism did not indicate institu-
tionalization. Indeed, precisely because their power was not institutional-
ized, political leaders in the Second World kept inventing new institutions
and reinventing old ones in order to narrow the yawning gap between
their reach and their grasp.57
The legacy of state socialism, then, was a weak state and a capricious
leadership. This led, in turn, to a particular dynamic, wherein political
leaders responded to their constraints by, first, giving up power in order
to stay in power, and, second, by intervening in politics in unpredictable
ways. For followers of the contemporary Russian scene, of course, this
sounds familiar. Lilia Shevtsova's characterization of Boris El'tsin's Russia
is one that describes Leonid Brezhnev's Soviet Union as well-and, in
some respects, Alexander II's Russian empire: "One of the many para-
doxes on the current Russian political scene is that keeping afloat a 'ver-
tical Presidential' structure of government is possible only by turning over
more power to the regions and various interest groups and thus weaken-
ing it as well as the state system as a whole."58
Why has procedural uncertainty and its co-conspirator, rogue leader-
ship, survived the transition to postsocialism? Part of the answer lies, of
course, in the very nature of the postsocialist project, with its extraordi-
nary fluidity in roles, rules, and resources.59 But the other part of the an-
swer is constitutional design. As Peter Murrell has recently observed:
"Russia has only half-succeeded in following Napoleon's dictum that the
best constitutions are short and confused."60 This is a generalization that
applies equally well to the recently enacted constitution of Ukraine.
57. These observations about state socialism are drawn from several sources. See
Elemer Hankiss, East European Alternatives (Oxford, 1990); Maria Csanadi, Party-States and
Their Legacies in Post- Communist Transformation (Cheltenham, Eng., 1997); Valerie Bunce,
"Stalinismand the Management of Uncertainty," in Szobaszlai, ed., TransitiontoDemocracy
in Hungary.
58. Lilia Shevtsova, "Russia:Retreat of Democracy?" and Michael McFaul, "The Hu-
man Factor in State Dissolution: Economic Reform, Political Change, and State Effective-
ness in the Soviet Union and Russia," (both papers presented at the conference, "Beyond
State Crisis?The Quest for the Efficacious State in Africa and Eurasia,"University of Wis-
consin, 11-14 March 1999). Also see Timothy Colton, "Super Presidentialism and Russia's
Backward State,"Post-SovietAffairs11, no. 2 (April-June 1995): 144-48. For historical and
comparative perspectives on this question, see Valerie Bunce, "The Political Economy of
the Brezhnev Era: The Rise and Fall of Corporatism," BritishJournal of PoliticalScience13,
no. 1 (January 1983): 129-58; Bunce, "Domestic Reform and International Change: Gor-
bachev in Historical Perspective," InternationalOrganization47, no. 3 (1993): 107-38; Bela
Greskovits, "Brothers-in-Armsor Rivals in Politics? Top Politicians and Top Policy-Makers
in the Hungarian Transformation" (discussion paper, Collegium Budapest, Novem-
ber 1998).
59. See Valerie Bunce and Maria Csanadi, "Uncertainty in the Transition: Post-
Communism in Hungary," EastEuropean Politics and Societies 7, no. 2 (1993): 240-75.
60. Murrell, "How Far Has the Transition Progressed?" 33. For a more charitable in-
terpretation of Russian political institutions, see George Breslauer, "Political Succession
and the Nature of Political Competition in Russia,"Problemsof Post-Communism44, no. 5
(1997): 32-37. For further insights into the impact of institutional design, see Joel Hell-
man, "Competitive Advantage: Political Competition and Economic Reform in Postcom-
munist Transitions" (paper presented at the annual meeting of the American Political Sci-
ence Association, San Francisco, 3-6 September 1996).
778 SlavicReview
But the problem goes deeper and has a larger geographical scope.
Most of the postsocialist countries have opted for presidential, not parlia-
mentary, government.61 As specialists in democratization have argued in
virtual unison, presidentialism encourages conflict among institutions,
immobilizes policy-making, undermines the development of effective po-
litical parties, exacerbates polarization of the public, and tempts presi-
dents to respond to all of this by ignoring, circumventing, or suspending
the constitution. This is a summary, of course, of Latin American political
history and the interwar politics of Germany and Poland.62 At the same
time, in the postsocialist context, the decision to introduce presidential-
ism reflects a particular balance of forces, wherein the power of the com-
munists was either equal to or superior to that of the liberal opposition.63
All of this leads to a straightforward conclusion. Presidentialism is a
problem for democracy in general, because it undermines political rou-
tines, encourages willful politicians, and, in the extreme, tolerates, if not
encourages democratic breakdown. At the same time, it is a problem for
the postsocialist democracies in particular, because presidentialism aug-
ments the power of the communists (by helping ensure their continuation
in political office) while reinforcing the procedural irregularities and the
leadership interventions so characteristic of the past.
With these considerations in mind, let us now draw some distinctions
among the postsocialist regimes with respect to their provision of certain
political procedures. In fact a considerable gulf seems to separate those
few countries where procedures have managed to become relatively rou-
tinized and transparent-Poland, Hungary, the Czech Republic, Slove-
nia, and, perhaps, the Baltic states (despite the contrasting timing in
constitutional adoption)-from the rest of the region, where the admin-
61. See, for example, Gerald Easter, "Preference for Presidentialism: Postcommunist
Regime Change in Russia and the NIS," WorldPolitics49, no. 2 (January 1997): 184-211;
Timothy Frye, 'A Politics of Institutional Choice: Postcommunist Presidencies," Compara-
tive PoliticalStudies30, no. 5 (October 1997): 523 -52; Valerie Bunce, "Presidents and the
Transition in Eastern Europe," in Kurt von Mettenheim, ed., PresidentialInstitutions and
DemocraticPolitics:ComparingRegionaland National Contexts(Baltimore, 1997), 161-76.
62. See, for example, Linz and Stepan, ProblemsofDemocraticTransition;Alfred Stepan
and Cindy Skach, "Constitutional Frameworks and Democratic Consolidation: Parliamen-
tarianism versus Presidentialism," WorldPolitics46, no. 1 (October 1993): 1-22; M. Steven
Fish, "Reversaland Erosion of Democracy in the Postcommunist World" (paper presented
at the annual meeting of the American Political Science Association, Boston, 3-6 Sep-
tember 1998); Michael Bernhard, "Institutional Choice and the Failure of Democracy:
The Case of Interwar Poland," East EuropeanPoliticsand Societies13, no. 1 (1999): 34-70.
63. The Polish case, with its mixed presidential-parliamentary system, might seem to
provide an exception. What we must remember here, however, is that Poland was the first
country in the region to begin a transition from dictatorship to democracy. While public
support of Solidarity (which included in its ranks many members of the Polish United
Workers Party [PUWP]) certainly outstripped the support of the PUWP (as theJune 1989
elections revealed), this could not, given the highly uncertain political climate surround-
ing Polish developments at the time, translate into an adoption of parliamentary govern-
ment. Put simply, being the first worked in favor of exaggerating the capacity of the com-
munists to protect their interests through the adoption of presidential government.
Indeed, recognition of this fact is a major reason why Solidarity was so crucial to the se-
lection of WojciechJaruzelski as the first "quasi-communist" president.
ThePoliticalEconomyof Postsocialism 779
istrative environment is confused, capricious, chaotic, and, therefore,

highly unpredictable.64 Indeed, this is precisely the picture that emerges
for the Commonwealth of Independent States in particular in the already
noted 1996 World Bank survey of entrepreneurs in sixty-nine countries.
The uncertainty of the commercial environment, in brief, correlates
highly with the uncertainty of the political environment. The culprit is a
weak state-as much a problem for democracy and political stability as it
is for capitalism and economic growth.
Explaining Political Patterns

We can now step back from this discussion and these various measures of
political stability and democratization and draw a straightforward con-
clusion. A majority of regimes and states in the region are unstable and,
at best, partially democratic. Therefore, the Czech Republic, Hungary,
Slovenia, and Poland are not the regional norm. Instead, it is Russia, with
its fuzzy state, its fuzzy democracy, and, to echo an earlier observation, its
fuzzy property.
How can we explain these patterns? There are a variety of factors that,
while logical and suggestive, do not seem to produce a robust explana-
tion. For example, while all the stable and fully democratic cases are, by
regional comparative standards, both rich and homogeneous, some rela-
tively rich states score low on both democratization and political stability
(Slovakia, Croatia, and Ukraine) and some homogeneous states do the
same (Albania and Armenia).65 Moreover, state age is not all that helpful
a factor, given, for instance, the inclusion of Slovenia and the Czech Re-
public in the group of stable and fully democratic orders. Finally, such fac-
tors as religion, imperial lineage (or inclusion in the Habsburg versus the
64. This contrast reflects, most obviously, the degree to which the revolution that
ended Communist Party hegemony was both liberal and full-scale. Another historical fac-
tor, however, considerably predates even socialism: whether these areas were influenced
by Roman law. Where they were, the legal-administrative tradition accepts the possibility
of a law-based state. See, for example, Jeno Szucs, "The Three Historical Regions of Eu-
rope: An Outline," Acta Historica:Revue de l'academiedes Sciencesde Hongrie 29, nos. 2-4
(1983): 131-84. Also see Perry Anderson, Lineagesof the AbsolutistState (London, 1974).
65. Here I am referring to those arguments regarding the impact of economic de-
velopment on democratization and the greater difficulties that heterogeneous national
settings-or settings where the national and the state questions have yet to be resolved-
have in creating stable and durable democratic orders. See, for instance, Dankwart Rus-
tow, "Transitions to Democracy: Toward a Dynamic Model," ComparativePolitics 2, no. 3
(April 1970): 337-63; Arend Lijphart, "Unequal Participation: Democracy's Unresolved
Dilemma," AmericanPoliticalScienceReview91, no. 1 (March 1997): 1-14; Adam Przeworski
and Fernando Limongi, "Modernization: Theories and Facts,"WorldPolitics49, no. 2 (Jan-
uary 1997): 155- 83; Tim Snyder and Milada Vachudova, "AreTransitions Transitory?Two
Types of Political Change in Eastern Europe since 1989,"East EuropeanPoliticsand Societies
11 (Winter 1997): 1-35. Although the three "quick"but poor democracies in the region
have, recently, become decidedly less democratic (Albania, Armenia, and Kyrgyzstan),
some of the richest democracies in the region have also backtracked in recent years (Slo-
vakia and Croatia). Thus, there is some question concerning whether economic devel-
opment has as much impact on democratic sustainability as Przeworski and Limongi have
argued.
780 Slavic Review
Russian or Ottoman empires), and institutional design (or parliamentary

government versus forms of presidentialism) do not seem to account all
that well for these differences.66
One factor does seem to correlate with democratization, however:
economic reform.67 Put simply, all of the robust democracies score high
on economic reform (with an average score of 7.3); all of the postsocial-
ist dictatorships score quite low (with an average of 3.2); and the remain-
ing countries, or incomplete democracies, fall in between these two ex-
tremes with respect to economic reform. This introduces a question that
allows us to combine this discussion of politics with the earlier discussion
of economics, and that moves us toward an explanation that accounts for
the political-economic patterns of postsocialism. Why does democratiza-
tion correlate with economic reform?
Democratization and Economic Reform

There are two reasons to have expected that democratization and eco-
nomic reform would go together in the postsocialist region. First, all
democracies have had capitalist economies. Second, democracy and cap-
italism are based on precisely the same principles, albeit applied to dif-
ferent arenas of human activity: uncertain results combined with certain
procedures. Just as democracy is based on the notion of competition
within well-specified rules of the game, so capitalism is premised on com-
petition in a context of secure property rights. In both realms, moreover,
the state bears primary responsibility for ensuring the desired mix of com-
petition and constraint.
However, alongside these arguments must be placed a series of others
that tilt the balance in the direction of presuming tension, not compati-
bility, between democratization and the transition to capitalism. First, cap-
italist economies, we must remember, have often coexisted-and quite
happily-with dictatorial politics. Moreover, just as it would not be in the
interests of accountable politicians to introduce painful economic poli-
cies (especially when they are courting fickle constituencies lacking strong
party identification), so such economic policies in a context characterized
by a combination of freedom and resentment could very well encourage
66. See, for example, Fish, "Determinants of Economic Reform"; Stepan and Skach,
"Constitutional Frameworks and Democratic Consolidation," 1-22; Colton, "Super Presi-
dentialism and Russia'sBackward State," 144 - 48; Easter, "Preference for Presidentialism,"
184-211; Valerie Bunce, "Presidents and the Transition in Eastern Europe," in von Met-
tenheim, ed., PresidentialInstitutionsand DemocraticPolitics, 161-76. As both Gerald Easter
and I have argued, however, institutional design may not be the culprit as much as the pol-
itics- or the relative strength of the ex-communists versus the opposition forces-behind
the adoption of parliamentary versus presidential government. Moreover, as Steve Fish has
argued, what may really matter is presidential interpretation of presidential power in new
democracies. See his "Reversaland Erosion."
67. See M. Steven Fish, "Democratization'sPrerequisites," Post-SovietAffairs 14, no. 3
(July-September 1998): 212-47; Valerie Bunce, "Sequencing of Political and Economic
Reforms."
massive popular protests.68 In the first instance economic reform would

be avoided or blocked, but in the second instance the result would be po-
litical instability and, perhaps, democratic breakdown.
Indeed, democratic breakdown would appear to be likely in cases
where, as in much of the postsocialist world, political institutions are new
and weak; where the elite's commitment to democracy, although present
and more pronounced than such commitments among mass publics, is
nonetheless far from habitual; 69 where publics in some instances have just
learned that collective action pays off; and, to echo an earlier observation,
where semipresidentialism offers the possibility, especially if publics are
restive and polarized, of a sequence wherein deadlock is followed by the
concentration of power in the executive's hands, which is followed in turn
by suspension of civil liberties and political rights. This is a scenario that
describes, of course, Weimar Germany in the first half of the 1930s-
an observation not lost on some analysts of the contemporary Russian
scene. 70
Third, in the postsocialist context, vested interests in capitalism are, by
definition and tradition, minimal, and public support of capitalism is
more qualified than public support of democracy.7' Finally, even if we
68. See John Walton and David Sweddon, FreeMarketsand Food Riots: The Politics of
GlobalAdjustment(Oxford, 1994).
69. A number of studies of the elite's commitment to democracy in the postsocialist
world have been written. For the Russian case, see, for example, William Zimmerman, "Mar-
kets, Democracy, and Russian Foreign Policy,"Post-SovietAffairs 10, no.2 (April-June 1994):
103-26; Stoner-Weiss, Local Heroes;Arthur Miller, Vicki L. Hesli, and William Reisinger,
"Conceptions of Democracy among Mass and Elite in Post-Soviet Societies," BritishJournal
of PoliticalScience27, no. 3 (July 1997): 157-90; Sharon Werning Rivera, "Explaining Elite
Commitments to Democracy in Postcommunist Russia" (paper presented at the Mellon-
Sawyer Seminar on Democratization, Cornell University, 3 May 1999); Sharon Werning
Rivera, "Communistsas Democrats: Elite Political Culture in Postcommunist Russia"(Ph.D.
diss., University of Michigan, 1998). Rivera's research has several notable characteristics
that need to be highlighted. First, she has interviewed both central and regional elites. Sec-
ond, she has interviewed both bureaucratic and elected political officials (with the latter
emerging as more supportive of democracy than the former). Finally, among her many
findings is a challenge to the assumption, so central to the literature on democratization,
that political leaders are self-interested in their preferences and, thus, their behavior. This
assumption serves as the basis for much theorizing about the games political leaders play
during democratization, and it has often been used as the point of departure for solving the
puzzle of why authoritarian elites adhere to the new democratic rules of the game.
70. See Stephen E. Hanson and Jeffrey S. Kopstein, "The Weimar/Russia Compari-
son," Post-SovietAffairs 13, no. 3 (July-September 1997): 252-83; Stephen D. Shenfield,
"The Weimar/Russia Comparison: Reflections on Hanson and Kopstein," Post-SovietAf-
fairs 14, no. 4 (October-December 1998): 355-68; Jeffrey S. Kopstein and Stephen E.
Hanson, "Path to Uncivil Societies and Anti-Liberal States: A Reply to Shenfield," Post-
SovietAffairs14, no. 4 (October-December 1998): 369-75. For a highly insightful, if de-
pressing, analysis of the contemporary Russian scene that speaks to the debilitating inter-
action between economic reform and democratization, see Brown, "The Russian Crisis."
71. This is particularly the case-in Russia at least-for those publics who have been
the losers in the transition to capitalism. See Judith Kullberg and William Zimmerman,
"LiberalElites, Socialist Masses, and Problems in Russian Democratization," WorldPolitics
51, no. 3 (April 1999): 323-58.
782 Slavic Review
were to doubt these arguments, we would still come face-to-face with

trends in other parts of the world. In Latin America, southern Europe,
and Africa, there have been serious tensions between democratization
and economic reform.72 This is precisely why specialists in these areas
have argued in favor of sequencing, whereby economic reforms are de-
layed (often with the help of international actors) until democracy is
consolidated.
Why, then, do we see this robust and unexpected relationship in the
postsocialist world, and what does that suggest, in turn, about contrasting
political-economic trajectories? We can begin to answer this question by
noting that, just as the best predictor of democratization is economic re-
form, so the best predictor of economic reform (to return to an earlier
point) is the outcome of the first competitive election. When combined,
these two explanations suggest three causal stories of political-economic
developments in the postsocialist world. The first story deals with those
founding elections that produced a clear victory of the opposition forces,
sometimes alone (as in the Czech Republic, Estonia, and Latvia) and
sometimes augmented, formally or informally, by an alliance with reform
communists, who, during the last years of socialism, had defected to the
opposition and embraced its vision for the future (as in Slovenia, Hun-
gary, Poland, and Lithuania). This vision was fully anticommunist and, be-
cause of that, fully liberal. As a result, it "bundled" two projects: democra-
tization and economic reform. Because public support for these projects
was considerable and had produced a sizable political mandate, more-
over, ideological "bundling" could translate quickly and thoroughly into
policy "bundling."
The transition to capitalism, therefore, could proceed apace along-
side democratic consolidation. While all democracies, new and old, are
more likely to produce policy innovations when electoral mandates are
large and leaders are new to office,73 in these nascent democracies in-
72. See, for example, Thomas M. Callaghy, "Political Passions and Economic Inter-
ests," in Thomas M. Callaghy andJohn Ravenhill, eds., HemmedIn: ResponsestoAfrica' Eco-
nomicDecline (New York, 1993), 463 -519; Henry Bienen and Jeffrey Herbst, "The Rela-
tionship between Political and Economic Reform in Africa," ComparativePolitics29, no. 1
(October 1996): 23-42; Robert Kaufman, "Liberalization and Democratization in South
America: Perspectives from the 1970s," in O'Donnell, Schmitter, and Whitehead, eds.,
Transitionsfrom AuthoritarianRule, 2:85-107; Jose Maria Maravall, "Politics and Policy:
Economic Reforms in Southern Europe," in Luiz Carlos Bresser Pereira, Jose Maria Mar-
avall, and Adam Przeworski, eds., EconomicReformsin New Democracies:A SocialDemocratic
Approach(Cambridge, Eng., 1993), 77-131; Stephan Haggard and Robert Kaufman, The
Political Economyof DemocraticTransitions (Princeton, 1995); Guillermo O'Donnell and
Phillipe C. Schmitter, "Tentative Conclusions about Uncertain Democracies," in O'Don-
nell, Schmitter, and Whitehead, eds., Transitionsfrom AuthoritarianRule, 2:39; Stephan
Haggard and Robert R. Kaufman, "The Political Economy of Democratic Transitions,"
Comparative Politics29, no. 3 (April 1997): 263-83.
73. Valerie Bunce, Do New LeadersMakea Difference?ExecutiveSuccessionand PublicPol-
icy under Capitalismand Socialism(Princeton, 1981). Also see John Keeler, "Opening the
Window for Reform: Mandates, Crises, and Extraordinary Policy-Making,"Comparative Po-
liticalStudies25, no. 4 (September 1993): 433-86, and Leszek Balcerowicz, Socialism,Cap-
italism, Transformation(Budapest, 1995).
novation became something more: a radical turn in both politics and

economics.
At the same time, the costs of economic reform could be tolerated by
these societies, not just because many assumed that capitalism, as the op-
posite of state socialism, was "right," prosperity-producing, and a one-way
ticket to the "west," but also because consensus over values and, it must be
said, identities (with interests held in abeyance) produced in this context,
as in others like it, relatively long-term political horizons.74 What part-
nered democratization and economic reform in theory and practice,
then, was a remarkable convergence of circumstances: nationalism, a
widely embraced liberal agenda, and a large and thereby enabling elec-
toral mandate.75 In this way, democratization, economic reform, political
stability, and relatively strong economic performance could all coalesce to
form a virtuous circle.76
Such circumstances were, however, the regional exception. This leads
us to a second electoral dynamic: where the opposition forces were weak
and divided and where the ex-communists won, as a result, a decisive vic-
tory (as in, for example, Serbia, Uzbekistan, Kazakhstan, Belarus, and
Azerbaijan). Here, "bundling" also took place, but in this instance involved
the rejection of both significant democratization and economic reform. In
these cases, the electoral mandate, plus the absence of a societal consen-
sus around a liberal project, produced continuity with the past. While this
led to authoritarianism in politics, this also produced-again, by regional
standards -relatively reasonable economic performance (with Serbia the
exception, given the impact of war). In both instances, however, the root
cause was the same: the advantages of institutional continuity.
The third path, describing Russia, Ukraine, Bulgaria, Romania, Slo-
vakia, and Croatia, fell between these two extremes. In these countries,
the first competitive election produced neither a clear win by the ex-
communists nor a decisive triumph by the opposition. Instead, the ex-
communists registered a bare win (usually by using the countryside to de-
feat the large cities); the ex-communists won in one set of political
institutions and not in another; or a party came to power that claimed to
be nationalist and that included within its ranks, if not leadership, a num-
ber of ex-communists. Put simply, neither the ex-communists nor the
74. On the issue of identities, see Denise V. Powers and James H. Cox, "Echoes from
the Past: The Relationship between Satisfaction with Economic Reforms and Voting Be-
havior in Poland," AmericanPolitical ScienceReview 91, no. 3 (September 1997): 617-33.
Contrast this, for example, with Timothy Colton, "Economics and Voting in Russia,"Post-
SovietAffairs12, no. 4 (October-December 1996). On the impact of nationalism on polit-
ical horizons, see Abdelal, "Economic Nationalism after Empire."
75. The one exception to this generalization is Hungary, where the opposition forces
in the first election were divided among three parties and where the results of the
May 1990 election, as a result, failed to produce a decisive victory for one political party.
But this is an exception that seems to support the generalization. What followed that elec-
tion was an economic reform process that proceeded more slowly than in, say, Poland. In-
deed, it was only when the ex-communists returned to power with a decisive victory in the
1994 elections that needed austerity measures were introduced and implemented.
76. I have borrowed the term from Martin Krygier. See his 'Virtuous Circles."
784 Slavic Review
opposition forces enjoyed a clear mandate. This "unbundled" democrati-

zation and economic reform, with some countries preferring the former
over the latter, others the latter over the former, and still others compro-
mising both. Thin mandates and the public divisions that underscored
them, therefore, either decoupled or diluted democratization and eco-
nomic reform. Not surprisingly, the result was significant political insta-
bility and unusually poor economic performance. The "middle ground,"
so extolled in established democracies, proved to be the worst ground to
occupy in postsocialism.
Founding Elections and Finding Causes

Founding elections and the details surrounding them, therefore, emerge
as a key factor accounting for variations in postsocialist economic and po-
litical trajectories-and the relationship between the two. Before we leave
this observation and draw some conclusions, however, we need to con-
front an obvious question: what accounts for these contrasting electoral
outcomes? Other proximate factors, such as the mode of transition, are
not helpful. For example, if we just look at those cases where the opposi-
tion forces won handily and where democratization and economic reform
proceeded apace, we find, for example, the elite-negotiated transition of
Hungary, the mass mobilization combined with elite-negotiated transi-
tions of Slovenia and Poland, and the largely mass-mobilized transitions
of the Czech Republic, Latvia, and Estonia. How the socialist chapter
came to a close, therefore, did not predict electoral outcomes- or what
followed.
Another plausible factor is whether the last decade or so of socialism
featured a liberalized political order. The presumption here is that liber-
alized socialism would provide a bridge between authoritarianism and de-
mocracy, expand the power and numbers of the reform communist con-
tingent, and provide space for opposition forces to organize themselves.
This factor is tempting, given the successful story of democratization and
economic reform in Poland, Hungary, and Slovenia. It is less helpful,
however, for the Czech Republic or the Baltic states.
This leaves us with a third explanation,77 and one that also takes us
back to the socialist past: patterns of political dissent during socialism.
Where there was significant protest (sometimes repeatedly, sometimes
not, and sometimes early and sometimes late during the socialist era),
where this protest was at once anticommunist, nationalist, and liberal, and
where opposition leaders were in place, the collapse of Communist Party
77. Space limitations prevent me from discussing some other possible explanations
that also fail to account for electoral outcomes, or, for that matter, what follows. In partic-
ular, neither nationalism (that is, whether and to what extent communist elites used na-
tionalism to solidify their position in a rapidly changing political environment, or the ex-
tent to which protests in the last years of socialism were primarily concerned with
nationalist issues) nor economic performance during the last years of socialism (with poor
performance linked in theory at least to the rejection of socialism) helps us differentiate
among our elections or among the political-economic trajectories of these countries.
hegemony and the subsequent holding of free elections allowed mass

publics to reveal their true preferences, the opposition to take power, and
democratization and economic reform to be implemented. Where the
socialist past failed to produce such protests, however, or, where in pro-
ducing such protests, nationalism was severed from liberalism, anti-
communism, or both, the founding elections duly reflected that fact. The
consensus was not there, and leaders, old and new, had to choose-in
varying combinations -among nationalism, anticommunism, and the
economic and political sides of liberalism. While founding elections were
a proximate cause of what followed in politics and economics, then, they
were in fact summary measures of a more distal set of causes: the patterns
and content of public protests during the socialist period.
One is tempted, of course, to continue this line of argumentation by
seeking the causes of the cause. Suffice it to note here that a number of
scholars have analyzed why publics in some socialist regimes were more
restive than in others. The key factors that seem to be critical include,
for example, the distinction between the core and the periphery of the
Soviet bloc (with publics in the periphery often operating in a less con-
strained political-economic environment); the extent to which leadership
squabbles in Moscow were played out in the capitals of eastern Europe
and, thereby, divided these parties, while creating room for both reform
and protest; the national homogeneity of the population; economic per-
formance over the course of socialism; and the depth of Stalinization. Put
more succinctly, different political, economic, and social circumstances
produced differential incentives and capacities for publics to rebel and
for political leaders to liberalize politics or economics.78
But all these details should not detract from the more general point.
Just as state socialism destroyed itself, so it created varying foundations for
the political and economic orders that followed. In this way, state social-
ism was both a homogenizing force, as noted in the introduction, and, as
emphasized here, a differentiating force as well.
Conclusions
This article has been written with three purposes in mind: to survey the
economic and political landscape of postsocialism, to develop an expla-
nation of postsocialist pathways, and to use these observations to address
some larger issues in the study of regime transition. Because I have already
addressed the first two concerns in some detail, I will merely highlight
here some major conclusions and move quickly on to the question of the-
oretical implications.
A reasonable description of postsocialist regimes would have to begin
by recognizing the extraordinary diversity of this region. This is the case,
whether we focus on economics-on such questions as whether, and, if
78. For a review of these factors and the research that identified their importance and
for an analysis of their impact on the collapse of state socialism, the Soviet bloc, and the
socialist federations, see Bunce, SubversiveInstitutions. Also refer to Ekiert, State against
Society.
786 Slavic Review
so, how capitalism has been constructed and at what cost- or on poli-
tics- on such issues as regime form and whether the regime and the state
are legitimate, settled, and capable political entities.
Perhaps the most helpful way to convey the importance of diversity is
to make several related observations. One is to keep in mind that few
longtime specialists in the region have been surprised by how these coun-
tries have fared in comparison with each other in the race to democracy
and capitalism.79 Thus, for example, most expected that Poland and Hun-
gary would, after ten years, be "ahead" of, say, Russia and Ukraine, and
that Russia and Ukraine would in turn be "ahead" of Kazakhstan and
Uzbekistan. If the regional rank order has not been all that surprising,
however, the distance between the occupants of the top and the bottom
ranks has been decidedly so. To take one example of the former: who
would have imagined that, in a mere ten years, we would have been able
to speak with confidence about the democratic and capitalist future of
one-fourth of the states in the region?
This in turn leads to a second observation that helps us place diversity
in some perspective. The postsocialist region is far more varied in its pol-
itics and economics than it was ten years ago. To give one brief but telling
example: while the ratio of the richest to the poorest state in 1989 was
about 3 to 1, the current ratio (given the effects of state dissolution, war,
and differential growth rates) is about 17 to 1.Just as the postsocialist ex-
perience has expanded domestic inequalities in income and wealth, so
have interstate inequalities increased.
Another defining characteristic of this region, aside from substantial
and growing diversity, is a curvilinear relationship between regime type
and political stability, and between economic reform and economic per-
formance. Thus, just as the most stable regimes in the region are either
fully democratic or fully authoritarian, so those countries with the strongest
economic performance feature either substantial and sustained economic
reforms or a failure to introduce, let alone implement, such reforms. The
most unstable countries and the ones with the weakest economic perfor-
mance, therefore, are hybrid regimes-in the first instance political and
in the second instance economic. These are the regimes that are perched
precariously between democracy and authoritarianism and between state
socialist and capitalist economics.
This would seem to point to one obvious implication. The most suc-
cessful postsocialist pathways (with success defined narrowly here as stable
polities and growing economies) are those involving either a sharp break
with the past in terms of economic and political regime form, or those
that feature significant continuity with the past. Between these two ex-
tremes (and the extremes are, again, extreme) lies "ambivalent" postso-
cialism-a hybrid form of politics and economics that appears to produce
the highest costs and the fewest benefits.
This leads to a final feature of the postsocialist experience: a high (but
imperfect) positive correlation between democratization and economic
79. My thanks to Gail Lapidus and Sharon Wolchik for a recent discussion develop-
ing this point.
reform. This relationship is easiest to see if we look at the extremes and at

one indicator of economic reform-the contribution of the private sec-
tor to the overall production of goods and services. While all of the well-
established democracies feature what is, by regional standards, a large pri-
vate sector, all of the well-established authoritarian regimes exhibit, again
by comparative standards, a much smaller private sector. What falls in be-
tween are those countries, such as Russia, Ukraine, and Bulgaria, that lack
some characteristics of a well-functioning democratic order and some as-
pects as well of a well-functioning capitalist economy. The relationship be-
tween democratization and economic reform can also be seen from an-
other vantage point. While some countries in the region feature limited
democracy and substantial economic reform (as with, say, Croatia), none
features substantial democracy without substantial economic reforms.
The postsocialist world, therefore, exhibits considerable, but, none-
theless, patterned diversity. The question then becomes: how do we ac-
count for these patterns? The key factor that emerged in this study was the
balance of power between the liberal opposition and the communists-a
balance that determined the outcome of the first competitive election
and that shaped in turn the political struggles, institutional innovations,
and public policies that followed. In particular, three causal scenarios
emerge. In the first scenario, the liberal opposition, sometimes alone and
sometimes in coalition with the reform communists, had widespread pop-
ular support and, in the first competitive elections, converted that sup-
port into a decisive electoral victory. In these cases, democratization and
economic reform proceeded together and were mutually supportive and
mutually sustaining. This in turn produced political stability and, despite
diverse approaches to economic reform, economies that were increas-
ingly capitalist in form and, after a brief and dramatic downturn, capable
of generating sustained growth. Examples of these dynamics include
Poland, Slovenia, and the Czech Republic.
In the second scenario, the communists were strong and the liberal
opposition weak, and the former, as a result, registered a clear victory in
the first competitive election. This was followed by continuity in authori-
tarian politics (often with some "de-liberalization")and socialist econom-
ics and by relative political stability and, by the low standards of the re-
gion, reasonable (but not the strongest) economic performance. This
describes, for example, Belarus and Uzbekistan.
In the final trajectory-which is the regional norm (whether mea-
sured in terms of population or number of states) -neither the liberal op-
position forces nor the communists were able to win a decisive victory. Not
surprisingly, this generated considerable political conflict, which cen-
tered not just on the "hows"of the transition, but also on the more fun-
damental question, "whether."This also produced either a decoupling of
economic reform and democratization, with the former invariably pre-
ferred over the latter (as in Croatia and Slovakia),80 or the dilution of both
80. The recent parliamentary election might change all this. See Martin Butora and
Zora Butorova, "Slovakia'sDemocratic Awakening,"Journal of Democracy10, no. 1 (Janu-
ary 1999): 80-95. As of this writing, however, the presidential election has yet to be decided.
788 Slavic Review
(as in Ukraine, Russia, and Bulgaria). While economic performance

varies in these cases, all of the worst performers are in this "neither here
nor there" group.
Implications
With this brief summary in mind, we can now confront some issues
central to current debates about regime transition. One such issue is
whether the postsocialist experience is singular or typical.8' As I have ar-
gued throughout this paper, the political-economic point of departure
from socialism was quite unusual, as was the agenda of transformation.
More important is the fact that these distinctive characteristics translated
into both distinct patterns of democratization and economic reform, and,
as that might suggest, different payoffs attached to the various strategies
of transformation. Thus, just as the postsocialist world, by the standards
of Latin America and southern Europe, is more urban and still more eco-
nomically egalitarian and features fewer democracies and higher eco-
nomic costs attached to reform, so the postsocialist world demonstrates
a positive affinity, not a tension, between democratization and economic
reform.
When combined with other data, we can conclude that the logic of re-
form seems to be different in the east than in the south. In the east, the
approach that seems to have the highest payoff-the one that best pro-
motes democratization, political stability, economic reform, and eco-
nomic growth-is where there was a decisive political break with the past.
In particular, what seems to have been important is the rapid introduction
of democratic institutions and democratic procedures, the sound defeat
of the ex-communists in the first competitive elections, the thorough-
going stabilization of the economy, and the introduction of new and cap-
italist economic institutions (but without, it must be noted, destroying
state capacity in the process). By contrast, specialists analyzing the south-
ern transitions seem to have a preference for bridging, rather than break-
age. Thus, they caution against electoral victories that marginalize and
thereby threaten the authoritarian forces, and they advocate putting off
economic reforms until democracy has been consolidated.82
81. See, for example, Philippe C. Schmitter and Terry Lynn Karl, "The Conceptual
Travels of Transitologists and Consolidologists: How Far to the East Should They Attempt
to Go?"SlavicReview53, no. 1 (Spring 1994): 173-85; Valerie Bunce, "Should Transitolo-
gists Be Grounded?" Slavic Review 54, no. 1 (Spring 1995): 111-27; Valerie Bunce, "Re-
gional Differences in Democratization: The East versus the South," Post-SovietAffairs 14,
no. 3 (July-September 1998): 187-211.
82. See, especially, Haggard and Kaufman, Political Economy of Democratic Transitions;
Linz and Stepan, Problems of Democratic Transition;Jose Maria Maravall, "Politics and Policy:
Economic Reforms in Southern Europe," in Pereira, Maravall, and Przeworski, eds., Eco-
nomicReformsin New Democracies,77-131; Kaufman, "Liberalization and Democratization
in South America," 85-107; Terry Lynn Karl, "Dilemmas of Democratization in Latin
America," ComparativePolitics 23, no. 1 (October 1990): 1-21. A different line of argument,
however, has recently been suggested by Kurt Weyland, "Swallowingthe Bitter Pill." Spe-
cialists in Africa also seem to concur that democratization and economic reform are in
What I am suggesting is that successful transformations in the postso-

cialist context (or cases that are, by regional standards, unusually demo-
cratic, unusually capitalist, and unusually robust in economic terms) are
precisely those where authoritarian elites were the most threatened-in
the first instance by the end of Communist Party hegemony, in the second
by their decisive loss in the first competitive elections, in the third by the
institutionalization of democratic practices, and in the fourth by eco-
nomic reforms, including new economic institutions, that were intro-
duced quickly and that cut sharply into the economic privileges of the
communist elite. Where authoritarians were less threatened, however, be-
cause they managed to maintain political power in postsocialism, they
managed to hold on to many of their economic and political assets. As a
result, they were in a position to either compromise or block both de-
mocratization and economic reform. In the process, corruption became
rampant. Moreover, in those cases where both economic reforms and
democratization were compromised, the result has been a vicious circle:
political turmoil, an economic downturn that has been both sizable and
prolonged, and the optimal conditions, as a result, for a continuation of
the same.
Thus, just as postsocialism itself and the strategies of transformation
in this part of the world have been distinctive, so have the costs and
benefits deriving from those strategies. A different point of departure, in
short, produced different patterns and different payoffs. We can, of
course, discuss whether the postsocialist region is different. But the real
question is whether that difference makes a difference. This study sug-
gests that it does. Region matters, not because of geography or because of
the peculiarities of state socialism, but, rather, because the legacies of
state socialism and the agenda of transformation produced distinctive
patterns of democratization and economic reform and distinctive payoffs
attached to the varied strategies of transformation.83
This observation leads us, necessarily, to a related debate: the role of
long-term versus short-term influences on democratization. The domi-
nant tendency in analyzing recent democratization (in direct contrast to
studies of older democracies) has been to emphasize the impact of prox-
imate factors, such as bargaining between authoritarian elites and oppo-
sition forces and the costs and benefits of opting for one type of political
institution over another. It is widely assumed, in short, that new democra-
cies can be crafted.84 A similar argument has been made by economists.
For them the socialist past is less important than getting the economy
serious tension with one another, and that various forms of bridging are preferable to the
more radical option of simultaneous transformation. See, for instance, Callaghy, "Political
Passions and Economic Interests," 463-519; Bienen and Herbst, "Relationship between
Political and Economic Reform in Africa," 23-42.
83. This argument is further elaborated in Bunce, "Regional Differences in Democ-
ratization."
84. The phrase is taken from Giuseppe Di Palma, To Craft Democracies: An Essay on
Democratic Transitions (Berkeley, 1990).
790 Slavic Review
"right." To draw upon Adam Przeworski's observation: where these eco-

nomic systems are going is more important than where they have been.85
The question for economists, therefore, is precisely the same as for many
political scientists: which policies are most likely to produce the desired
results?
At first glance, this analysis would seem to support the idea that con-
tingent circumstances are more important than the legacies of the past.
After all, just as the best predictor of economic reform was the outcome
of the first competitive election, so the best predictor of democratization
is economic reform. To further reinforce the point, there is also, not sur-
prisingly, given these other relationships, a correlation between democra-
tization and economic reform.
Upon some reflection, however, a different line of argumentation
emerges that privileges the past over contingent circumstances. In partic-
ular, it was the socialist past that shaped, for example, societal perspectives
on socialism, liberalism, and the nation; the size, internal cohesion, and
ideological focus of the opposition; and the representation and influence
of reformers within Communist Party ranks. Put simply, the socialist ex-
perience in some countries produced a liberal counterregime-in-waiting
(and, in the federal states, counterstates as well), while the socialist expe-
rience in other countries produced either a small liberal opposition, or
one that was large, but illiberal. Once Communist Party hegemony ended
and the real distribution of preferences and resources could be, as a re-
sult, expressed, these legacies of the socialist past were free to shape post-
socialist dynamics. This they did, first, through the founding elections,
where the balance of power between the opposition forces and the com-
munists was duly registered, and, second, through subsequent political
and economic trajectories that produced, variously, liberal economic and
political regimes; continuity with the socialist past; or hybrid regimes that
straddled the two in relatively destructive fashion. Historical factors,
therefore, produced different electoral outcomes, which in turn pro-
duced contrasting postsocialist pathways.
Put simply, then, distal causes-in the postsocialist experience at
least-have masqueraded as contingent causes. This interpretation is fur-
ther reinforced by the patterns we discovered in economic performance.
As already noted, the best performing economies in the region are those
that feature either significant or minimal reforms. What seems to account
for variation in performance, therefore, is not economic reform-
though stabilization of the economy is certainly helpful. Instead, the key
factor, according to recent work by Vladimir Popov, appears to be the so-
cialist past (or what has been termed initial conditions); that is, state ca-
pacity and distortions in trade and industrial structure.
This leads, in turn, to two observations. One is to be clear about the
earlier distinction between bridging versus breakage. A break with the
past is crucial for democratization, economic reform, political stability,
and economic growth in the postsocialist context. In saying that, however,
85. Przeworski,Democracyand theMarket.

we must remember that: 1) what is most important is the political break,

or the rise to power of the liberal opposition and the construction of new
political institutions; 2) neither democracy, nor economic reform, nor
political stability, nor economic growth is well served by a sharp decline in
state capacity. Breakage, in short, should be understood as political, and
it should not be equated with economic breakdown.
The other observation returns us to the introduction to this article,
where the homogenizing effects of state socialism were noted. It is true, of
course, that state socialism did produce a region that, today, shares cer-
tain commonalities and that is, from a global perspective, distinctive in
certain ways. What is also evident, however, is that the socialist experience
was different in different places, and that these differences influenced the
character and the performance of the economic and political regimes
that succeeded state socialism. In some instances, for example, the social-
ist experience enabled the subsequent construction of democracy and
capitalism-by, for example, building a viable and liberal counterregime
that, when taking formal power, could implement its liberal vision. More-
over, where the past produced fewer economic distortions and left in
place a capable state, the economy was poised for eventual growth. In
other cases, however, the socialist past was costly. This was when a counter-
regime was weak or illiberal and, thus, deprived of the commitment to lib-
eral politics and economics, or, if committed, the required capacity to
translate liberal theory into liberal practice. What then followed was ei-
ther continuity with the leadership and the political economy of the past,
which was less injurious to economic performance, or hybrid regimes that
combined in effect the worst of democracy and dictatorship, capitalism
and socialism.
This leads to a final issue, which is rarely posed, but very important.
How should we interpretdifference? Here, we can ask whether democrati-
zation is the lens through which we should be analyzing postsocialism. As
implied in many of the arguments presented in this paper (for example,
the notion of bridging versus breakage), if democracy can serve as one
standard by which we can compare postsocialist regimes, then another
would seem to be revolution.86 Thus, while these countries can be arrayed
on a continuum ranging from democratic to authoritarian, they can also
be arrayed on a continuum ranging from completed revolutions-where
the regime is new and fully liberal and where the state is settled-to rev-
olutions in process-where regimes or states are matters of continuing
contestation-to nonrevolutionary situations-where the regime and
the state, representing some continuity with the past, are stable and fa-
miliar formations.
What makes the frame of revolution so helpful, in my view, is that it in-
corporates the issues of state, polity, and economy; it captures the radical
86. Others have made the same point. See, for example, Michael McFaul, "State
Power, Institutional Change, and the Politics of Privatization in Russia," WorldPolitics47,
no. 2 (January 1995): 210-43; Alexander Motyl, "Empire or Stability:The Case for Soviet
Dissolution," WorldPolicyJournal8, no. 3 (1991): 499-524.
792 Slavic Review
agenda of postsocialism; and it reminds us that political conflict in this

region takes spatial and ideological, interregime and intraregime, forms.
Because the end of the Communist Party's monopoly was, for the most
part, relatively peaceful, and because that process took place in a time of
peaceful transitions to democracy in many parts of the world, it was nat-
ural to view postsocialism from the perspective of recent democratization
and the body of work dealing with that process. It was harder, at the same
time, to buck the theoretical and global trend by focusing on revolution
and the literature that addresses those questions.
Once we think in terms of revolution, we are reminded of several use-
ful points. One is that revolutions in the past were understood as neces-
sary (but not sufficient) conditions for democracy. Another is that revo-
lutions usually take a great deal of time to settle on a political result.
Although this was not the case with the Bolshevik revolution, for example,
it does apply to the Chinese, Vietnamese, and French revolutions. The
Third Republic, after all, was founded almost one hundred years after the
French Revolution.
Finally, it may be that, if we do maintain our preference for democra-
tization as the key standard, then we might want to recognize that there
have been several contrasting routes to democracy in history, and that
each of these paths has different theoretical interpretations. One is quick
democratization, the preserve of transitologists (who mainly analyze re-
democratization), and another is long-term democratization. In the latter
instance, democracy is a fully new order, albeit one, we must remind our-
selves, that grew out of an enabling past. It could be that the work on re-
cent democratization, with its emphasis on contingent conditions, can
help us understand, for instance, Poland, Hungary, the Czech Republic,
and the Baltic states. All of these countries, we must remember, differ
from each other in certain ways, and, just as important, they experienced
democratic interludes in the past and, echoing the earlier discussion, ex-
perienced socialism in ways that made the revolutionary leap to liberalism
not so revolutionary.
It may be that the second body of theorizing about the origins and sus-
tainability of the older democracies may be more helpful for, say, Russia,
Ukraine, and the like. Indeed, from this perspective, I am struck by how
much Russia today resembles Europe in the early Middle Ages, where the
breakdown of economic integration and political authority produced is-
lands of autonomy that eventually provided the basis, in combination with
some other factors, for the rise of liberal orders.87
This leads us to another issue of interpretation. Do the varying politi-
cal and economic "scores" of the twenty-seven postsocialist countries sug-
87. Szucs, "Three Historical Regions." Also see Lilia Shevtsova, Yel'tsin'sRussia: Myths
and Reality (Washington, D.C., 1999). As Shevtsova argues, the breakdown of political au-
thority and the fragmentation of the Russian economy might be, from a longer-term per-
spective on democratization, a helpful set of developments. The problem is that the Me-
dieval world within which Europe was situated was both patient and distant. Neither of
these conditions hold today, and Russian travails are likely, as a result, to have powerful
and unpleasant consequences for the larger global system.
gest different trajectories, or do they suggest different positions along

what is the same overall trajectory? Put another way: are we looking at re-
sults that are locked into place for the foreseeable future, or are we merely
looking at fast and relatively trouble-free transformations to democracy
and capitalism versus slower, more troubled, and more detour-prone
transformations that will, nonetheless, end up -some years down the line
-in the same spot? Ten years (at most) into this process is not enough
time to answer this question. But I would suggest that, in our desire to
make sense of the region by generating categories and drawing conclu-
sions based on comparative analysis, we not forget that such a question ex-
ists. Winning and losing in the race to liberalism, as in the experiences of
capitalism and democracy itself, can be, after all, temporary outcomes
with winners in a better position, of course, to continue their successes.
This is especially the case, since the differences between the front-runners
and the laggards in the postsocialist world may reflect different historical
endowments, different sequencing with respect to regime termination
and the formation of ideological alternatives, or, as suggested above, dif-
ferent processes by which democracy and capitalism succeed in becoming
hegemonic projects.
In this sense, the Russian route to democracy might be best under-
stood first, by waiting and, second, by considering the ways in which the
well-established democracies of the west made their long transitions from
dictatorship to democracy. However, we should not fall prey to a teleo-
logical bias-as was the case for so long, for example, with modernization
theory. What I am suggesting is rather that we be open to changing out-
comes (as Georgia, Armenia, and Albania should remind us); that we rec-
ognize the temporal constraints of our comparative vistas; and that we
view the laggards in the race to democratization and capitalism in the
postsocialist world as countries that, primarily because of their socialist
pasts, might be either moving in different directions (and, therefore, un-
deserving of the term laggards) or, alternatively, following a longer and
more circuitous route to democracy and capitalism. The final observation
flows from all this: we need to approach this region with theoretical flex-
ibility. Just as no one approach, concept, or body of theory should domi-
nate our investigations, so the diversity of postsocialism should be cause
for the generation, as well as the testing, of theory.

The Political Economy of Post Socialism

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The Political Economy of Postsocialism

Author(s): Valerie Bunce

The Argument for Similarities

My thanks to RawiAbdelal, M. Steven Fish, Bela Greskovits,Vladimir Popov, Sharon Wern-

Slavic Review 58, no. 4 (Winter 1999)

(whether occurring recently or long ago) might disagree about both

The Reality of Diversity

no. 2 (1997): 199-220; Kathryn Stoner-Weiss, "Democracy in Disarray:Central Governing

investment in Hungary accounts for nearly one-third of all such invest-

The Implications of Diversity

import. One is the typicality of postsocialism when compared with other

Economic Reforms and Economic Performance

Percent Annual GDP Proj.

Albania 670 55 -2.1 79.1 12 89

Sources:World Bank, WorldDevelopmentReport:TheStatein a ChangingWorld(Oxford, 1997),

26. See Greskovits, PoliticalEconomy.

Sources:Kolodko, "EquityIssues in Policy-Making," 18; M. Steven Fish, "The De-

1990 -4.9 -6.8 -3.7

Source:Raiser and Sanfrey, "StatisticalReview,"251.

30. World Bank, WorldDevelopmentReport,5, 37. More specifically, the Commonwealth

Tables 1-3 also allow us to address in a limited way a question that

in Russia, such as male life expectancy, exhibit alarming trends;37 and

Explaining Economic Policies and Economic Outcomes

opportunity to recast their economic and political portfolios in anticipation of reform,

Average reform score 6.87 3.7

Sources: See tables 1 and 2.

Sachs, Poland'sJumpto a MarketEconomy(Cambridge, Mass., 1993). For those who question

with respect to Poland, the regional leader in economic performance and

petitive regimes); governments that function effectively; and physical

Evaluating the Politics of Postsocialism

Bulgaria* Albania* Azerbaijan

Attention to the second standard of democratization, however, lowers

The Procedural Side of Democracy

istrative environment is confused, capricious, chaotic, and, therefore,

Explaining Political Patterns

Russian or Ottoman empires), and institutional design (or parliamentary

Democratization and Economic Reform

massive popular protests.68 In the first instance economic reform would

were to doubt these arguments, we would still come face-to-face with

novation became something more: a radical turn in both politics and

opposition forces enjoyed a clear mandate. This "unbundled" democrati-

Founding Elections and Finding Causes

hegemony and the subsequent holding of free elections allowed mass

reform. This relationship is easiest to see if we look at the extremes and at

(as in Ukraine, Russia, and Bulgaria). While economic performance

What I am suggesting is that successful transformations in the postso-

"right." To draw upon Adam Przeworski's observation: where these eco-

85. Przeworski,Democracyand theMarket.

we must remember that: 1) what is most important is the political break,

agenda of postsocialism; and it reminds us that political conflict in this

gest different trajectories, or do they suggest different positions along

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