Globalization and the State in Central and Eastern Europe

Reviews

Europe-Asia Studies, 62 (1), 2010 (by David Lane)

Study of the determinants of transformation has been directed on domestic political and economic interests and the forms and cultures inherited from the state-socialist and earlier national social formations. External political and transnational interests have been recognised but rarely theoretically and empirically integrated into the analysis. Focussing on the four Visegrad countries (V4) and Slovenia, Jan Drahokoupil’s book links domestic and international structures and agents to explain the ways in which transformation has occurred in Central Europe. In doing so, the book provides a richly documented and methodologically rigorous comparative study of the Visegrad states.

Given the hugh increase in the stock of outward foreign direct investment and the rise in power of transnational corporations, the author poses the question of why the Central European countries (CEEs) received such low levels of foreign investment until the later 1990s. While he recognises that domestic politics was ‘transnationally constituted’ (p.3), he contends that national and local forces were a major determinant of the forms of privatisation and types of transformation. Internationalisation occurred dramatically in the late 1990s, and much of the originality of the book, both theoretically and empirically, is the explanation of why and how this occurred when it did. Theoretically, the book is a refreshing counterpoint to much of the literature on transformation which has defined and explained transformation in neo-liberal terms. The author combines state theory, neo-Gramscian international political economy and new institutionalism. The institutional structures create a ‘field of force’ (p.7) which not only limits the politically achievable but also defines the politically possible.

In this context, the author identifies different groups of political actors and social forces in the various countries and provides a coherent explanation of their policies. He argues that domestic politics is transnationally constituted which defines some opportunities but suppresses others. Thus while a neo-liberal framework was installed in the V4 countries, it did not entail identical policies. Domestic actors representing different social forces were decisive and the author provides an empirically substantiated rebuttal of the assertions that international agencies (such as the IMF) and foreigners generally determined the character of privatisation. Initially, these countries attempted to create a form of national capitalism, only after these attempts resulted in failure did a transnational form take root. Explaining the shift between these different policies is a major component of the book.

The work makes a significant contribution to our understanding of the way in which the CEE countries became integrated into (or subordinate to) power blocs composed of multinational investors. It links discussion of developments in the post socialist states to critical analyses of ideology, the state and class interests.

Following writers such as Panitch and Poulantzas, Drahokoupil contends that domestic actors promote internationalisation within the nation state; this process he defines as ‘transnationally constituted domestic politics’ (p.27). In the early 1990s, the national states had been integrated into the transnational state apparatus (in the form of the IMF, WB and others) and the leading politicians had been socialised into accepting an externally oriented path. A decisive role is played by the emergence of a ‘hegemonic comprador service sector’ (p.28). This is a key explanatory variable and the author demonstrates how different groups – business, state, labour – all combined to form shifting alliances in favour of foreign capital, and its instrument, FDI. Drahokoupil shows how domestic economic actors became integrated into the supply chains of international investors. With the failure of the attempt to create national forms of capitalism, the domestic bourgeoisie saw advantages in joining the transnational coalition of forces. Ireland became a working model for the CEE states.
Moreover, institutional constraints (as imposed by the conditionality of European Union membership and the ideology of Europeanization) created an environment for the internationalisation of asset ownership and made the formation of a national corporatist capitalism impossible to implement.

The book poses questions that will no doubt be taken up in further work. There could have been more discussion, for example, of what alternatives the V4 states had in the early period of transformation. While it is true, as Drahokoupil notes (p.75), that even early on some German companies saw possibilities of buying up Czech enterprises and making them into production sites for exports to the East, this was a period of great economic fluctuation, political upheaval and social turmoil creating an environment of uncertainty and high risk. Transnational capital at this time had other less risky options than investment in the post-communist societies. The level of risk and uncertainty changed with the progress of marketisation and privatisation and particularly with the inclusion of these countries into the EU. The author contends that the neo-liberal transition strategies led the V4 countries to their ‘peripheral integration’ into the world system (p.112). This needs further clarification as their political incorporation into the EU and their export profile are quite different from ‘peripheral’ countries of the South. The linkages with the transnational class could also be developed. It is one thing for the reformers to be socialised into thinking like members of the transnational capitalist class, it is quite another thing to be a member of this class.

This is an outstanding book. It is clearly written, has excellent documentation and bibliography and the argument is clearly put, well developed and organised. It is theoretically based and empirically substantiated and will contribute greatly to our understanding of the transformation process.

David Lane
University of Cambridge