Debate: What theories do we need to explain and explore capitalism in Central and Eastern Europe?

Contributions by Otto Holman, Elena Iankova, Lawrence King, Raj Kollmorgen, Klaus Müller

 

Dorothee Bohle

Countries in distress: transformation, transnationalization, and crisis in Hungary and Latvia

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Abstract

Abstract

With the outbreak of the global financial crisis, the vulnerability of democratic capitalism in East-Central Europe has come once again to the fore. Almost all new EU member states have accumulated major economic imbalances, and have been experiencing steep recessions. The crisis in the region is not only economic. Surging protests and the increasing appeal of political illiberalism attest to the end of the “political economy of patience” (Claus Offe) which characterized the first decade of post-socialism. The paper seeks to understand what has made the region’s democratic capitalist project so vulnerable. It takes its cue from an early body of literature which has pointed to the problems involved in simultaneously introducing capitalism and democracy. Contrary to the “breakdown thesis” which was a part and parcel of this literature, the paper argues that repeatedly, temporary solutions to the dilemma of simultaneity were found. Based on the Hungarian and Latvian examples, the paper shows how at first domestic resources – generous welfare policies in Hungary and appeals to sentiments of national solidarity in Latvia - allowed to reconcile democracy with market reforms. From the second half of the 1990s onwards, EU-accession and deeper transnational integration helped to secure the democratic capitalist project. By the late 2000s the full exposure to the risks of an increasingly instable global order has however become a major source of trouble for the two countries.

 

Monika Gonser

How hard a blow for the collective representation of labour interests? – The Baltic industrial relations and the financial crisis

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Abstract

Abstract

The article discusses effects of the financial crisis on the bargaining position of labour in the Baltic States based on the power resources approach. It analyses in how far distinctly Baltic characteristics of industrial relations have intensified the crisis impact as compared to other Central and Eastern European Countries. The findings stress two interrelated effects. Firstly, they do reveal a sharp drop in structural power due to the particularly high unemployment rate. Secondly, this trend is accompanied by a loss of associational and institutional power that is likely to have a weakening impact on the bargaining position of labour due to three developments: specific forms of membership losses, the widespread failure of renegotiating collective agreements and the non-compliance of anti-crisis social dialogue results. The author argues that in the outcome the crisis could distinctly intensify the individualised nature of the respective industrial relations systems. This is due to the extremely high costs it would cause labour to reverse the three mentioned developments.

 

Mihai Varga

Political involvement in industrial conflict in Ukraine during the world economic crisis, 2008-2010

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Abstract

Abstract

To what extent is the current world economic crisis leading to industrial conflict in Ukraine and through which mechanisms? This article shows with ethnographic data that the crisis did indeed spur some industrial conflict in Ukraine. Furthermore, the crisis has combined with the increase in political liberalization witnessed by Ukraine ever since 2004 to create incentives for political forces to take the workers’ side in plant-level industrial conflicts. I study three instances of plant-based industrial conflict in 2008-2010, and map how political forces contain or use worker militancy against political opponents. However, cases of industrial conflict are rather limited. With the help of statistical analysis I discuss a possible explanation why industrial conflict is largely absent from Ukraine’s most crisis-hit sector, machine-building.

 

Zdenek Kudrna

Financial crisis: testing the relationship between foreign banks and the new EU members

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Abstract

Abstract

This paper discusses the impact of the recent financial crisis on the relationship between the domestic authorities of new member states and the foreign banks that dominate their financial sectors. Foreign banks played an adverse role during the unsustainable pre-crisis credit booms that rendered certain EU10 economies very vulnerable to crisis. However, they also supported the most affected EU10 economies through the acute phase of the crisis, when new capital and liquidity was essential for the success of domestic and international stabilization programs. It thus seems that the crisis test had proven the viability of the EU10 model of financial integration. However, there are also signs of heightened political risks that tend to be disregarded by economic analysis. This paper provides early evidence from Hungary and Latvia demonstrating that these risks are not entirely covered by EU membership. Domestic tax and regulatory policy changes may have a substantial impact on foreign subsidiaries in EU10 countries and thus strain mutual relationships more than expected. Therefore, it is yet to be seen whether the foreign-dominated banking model is resistant to the politics of hard times.

 

emecon No 1/2010