Socio-economic transformations in post-communist countries: Central and Eastern Europe and Russia compared.

• Author: Cerami, Alfio
• Position: Report

Introduction

This article investigates the most recent socio-economic transformations occurring in post-communist countries taken as ex ample the cases of Central and Eastern Europe (2) (CEE) and of the Russian Federation. It also provides a sufficient overview of the new social risks emerging in these transition economies. The investigation is structured around three crucial questions. Section One aims to respond to the question of what kind of systemic problems (from now onwards strukturprobleme (3)) characterize post-communist capitalism(s). Section Two addresses the issue of what kind of social structure is developing, while Section Three deals with the question of what kind of new social risks are emerging.

The reason why finding an adequate response to these questions is crucial depends on three principal factors. Firstly, systemic deficiencies present in the economic environment can greatly influence the social structure of a country. Secondly, these deficiencies contribute, at the same time, to the emergence of specific new social risks. Thirdly, they also determine the subsequent welfare state responses. As it is well known, the transition from communism to capitalism has implied huge social costs in both CEE and in the Russian Federation. GDP dropped severely, many state-owned enterprises collapsed, several million workers lost their jobs, the paternalistic system of social protection was, to a large extent, dismantled, and, as a result, poverty rates and income inequality dramatically increased with a large proportion of the population now living below the poverty threshold (Cerami 2006a, 2006b, 2009; Cook 2007; Manning and Tikhonova 2009).

An enormous transformation, however, occurred not only in the economic sphere, but also in the relationship between the state, the market and the society. In the immediate aftermath of 1989, new ideas, interests and institutions had to be quickly introduced (4). A new social contract, no longer based on one-party rule and full-employment, had to be established with the citizens, whereas, in order to put the new social contract in action, new feasible institutions and interests had to be developed. This implied a process of functional, distributive, normative and institutional recalibration (5) in which the functional prerogatives, distributive objectives, normative foundations and institutional structures of these communist systems had to be adjusted to the post-communist environment. As highlighted by several authors, communist ruins represented, in this context, the main institutional material in which the new societies could be built (Offe 1996; Crawford and Lijphardt 1997; Stark and Bruszt 1998; Ekiert 2003). In other words, a recombinant transformation of ideas, interests and institutions took place (Cerami forthcoming).

This study is based on the assumption that the strutkturprobleme of contemporary capitalism(s), changes in social structure and emergence of new social risks are not unrelated issues, but elements strictly linked together. The main hypothesis, which will then be tested in the following sections, is that due to more drastic systemic structural changes occurring in post-communist societies, more intense and more diversified strukturprobleme are taking place in transition economies than those present in the West. These are resulting in faster changes in social structure as well as the emergence of broader new social risks types and groups. If this is the case, then post-communist welfare states are in front of a double burden of responsibilities. On the one hand, they will be called to ensure citizens both against old and new social risks, as Western welfare states are also required to do, while, on the other hand, they will also be forced to intensify their efforts in order to deal with the more severe problems stemming from the transition.

What kind of Strukturprobleme Characterize Post-Communist Capitalism(s)?

This section aims to improve understanding of the main strukturprobleme of post-communist capitalism(s). On the basis of Claus Offe's reflections (Offe 1973, 2006), the strukturprobleme of modern capitalism(s) may involve three distinct dimensions: political, economic, and societal (6). In the political dimension, the main strukturprobleme of contemporary capitalism(s) concern the system-stabilizing capacity of political institutions, in the economic dimension, they concern the economic capacity and performance of firms and markets, while, in the societal dimension, they concern the social integration capacity of political, economic and societal institutions. For the sake of brevity, only the key elements for each distinct dimension will be highlighted. What is important here to note is that even though no country is immune to systemic problems, in the specific case of transition economies, due to the still uncompleted process of consolidation of democratic institutions, these strukturprobleme are likely to have more serious destabilizing consequences. In this context, a crucial question concerns not simply the link that exists between short-term economic achievements of a nation and stability of its democratic institutions, as the supporters of modernization theory would emphasize (see Lipset 1959; Zapf 1960, 1994, 2002), but also the longterm political legitimacy of the system, as well as the preservation of mass loyalty to the newly-established institutions. This will depend, on the one hand, on the political capacity to manage societal conflicts, while, on the other, to find a response to the new social risks.

Political Dimension

In the political dimension, the main strukturprobleme of post-communist capitalism(s) concern the system-stabilizing capacity of political institutions. This primarily involves the organization and conflict capacity of political institutions to: (i) address internal challenges; (ii) stabilize unstable economies; (iii) manage societal conflicts while finding a response to the emerging new social risks; (iv) ensure mass loyalty and political legitimacy to the system; (v) permit effective interest representation (trade unions' and civic society's organization and conflict capacity); and (vi) deal with the exogenous forces of European Integration and globalization.

Addressing internal challenges in an effective way has probably been the most difficult task that post-communist governments have been called to face. Disintegrative processes initiated with the fall of the Berlin Wall have clearly not disappeared overnight, but have produced long-lasting consequences to the stability of the political systems recently introduced. In fact, even though recent studies (Vanhuyusse 2006) have shown how violent protests have almost been absent in CEE (but not in Russia) during the entire period of transition, the presence and, depending on the periods of crisis, the increasing support for extreme-right or ultranationalist political formations (see Shenfield 2001; Mudde 2005) clearly represents a serious threat to these modern democracies. The 2005 and 2006 annual reports of the European Monitoring Centre on Racism and Xenophobia (EUMC 2005, 2006) highlighted, for instance, not only a worrying lack of systematic data collection concerned with racist crimes in the region, but also, in some cases, that even a general upward trend was taking place. In the Russian Federation, although no accurate information is available, the newspapers continuously report aggressions against minorities or vulnerable groups. In 2005, these corresponded to at least 28 people killed and 366 assaulted (BBC News 2006).

Stabilizing unstable economies would, probably, be the best way to avoid undemocratic drifts. According to the well-known argument of Lipset (1959: 56) "the more well-to-do a nation, the greater the chances it will sustain democracy". Other more recent versions of modernization theory have called attention to the redistributive impact of the nations' economic achievements (see Zapf 1960, 1994, 2002; Vanhanen 1997; Przeworski et al. 2000; Przeworski 2005). For Przeworski (2005), the probability that a democracy survives rises steeply not in terms of GDP growth, as previously emphasized, but rather in terms of per capita income. Despite the possible criticisms concerned with modernization theory (7) in CEE and in the Russian Federation economic instability has been associated with political instability, with left- and right-wing coalitions that have rarely survived the duration of one legislature (Cerami 2006a, 2009) and, even when it happened, such as in the case of Putin's Russia, questions about the democratic quality of the system have been raised (Shevtsova 2003; Politkovskaya 2004; Eicher and Beichelt 2006).

Managing societal conflicts while finding a response to new emerging social risks becomes, in fact, a much more difficult political exercise when governments are facing a moment of severe economic instability. Which were, in this context, the main political and policy strategies put in place by governments in order to deal with the new challenges? In a path-breaking but also highly contestable work, Vanhuyusse (2006) argues, for instance, that some governments in these regions (notably in Hungary and Poland) pursued a divide and pacify strategy. According to the author, the hidden aim of politicians and policy-makers was that of dividing workers by sending them out of the labour market while simultaneously pacifying them by granting access to early-retirement policies and generous unemployment benefits. Unquestionably, while a "pacify strategy" certainly took place in Eastern Europe (but not in Russia where the workers' requests have systematically remained unheard), then it has still to be clarified whether the part concerning the "divide strategy" was an intended, or rather an unintended, outcome of policies that simply aimed at preventing the return to an authoritarian system.

Ensuring mass loyalty and...