The Political Dynamics of Economic Reforms: Przeworski's Theory and the Case of Poland and Hungary

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I. DEMOCRACY AND THE MARKET: THE DOUBLE TRANSITION IN CENTRAL AND EASTERN EUROPE

The literature on transition has pervasively pointed out that post-communist transition in Central and Eastern Europe (CEE) constitutes in many ways a historically unique phenomenon, inter alia because it involves a double transition towards (and a consolidation of) first, a liberal democracy and second, a market economy.(2) Ralf Dahrendorf has pointed to the "incompatible time-scale of political and economic reform."(3) While political change can be effected in a period of a few months, economic recovery takes several years. In the intervening period, society must pass through a "valley of tears," during which the "losers" from transition might use the new democratic institutions to derail the economic reform process.

One very influential approach for analysing the political dynamics of economic transition, is the theoretical model developed by Adam Przeworski, in Chapter 4 of his book Democracy and the Market (1991, henceforth referred to as DM).(4) In this ambitious book, Przeworski rejects the traditional macro-comparative studies of transition which correlate background institutions in individual countries with outcomes of the democratisation process, as having rather little merit: "I find surprisingly little evidence that the features of the "new republic" do in fact correspond either to traits of the ancien regime or to modalities of transition"(DM: 98). For instance, these traditional "preconditions" approaches(5) have proved incapable of explaining the timing of regime change.(6)

Against this preconditions approach, Przeworski adopts a strategic choice approach, focusing on the choices made by the following three groups of actors: politicians in office, technocrats and the population. In his model, Przeworski unambiguously assumes that these actors shape outcomes through their choices in a way that is not especially influenced by historical legacy: they are assumed to make forward-looking choices outside of any context (such as the different economic and political legacies from the pre-transition period). The framework which Przeworski provides in Democracy and the Market for analysing the linkages between political and economic liberalisation has arguably been quite influential in the field of transition theory. Indeed, one reviewer dubs the book as:

   One of the most important volumes produced in comparative politics in
   recent years. This is because it not only provides us with a means by which
   to explain patterns of political and economic reform in recent years in two
   parts of the world. But it also sets a theoretical agenda for the field of
   comparative politics. In so doing, Democracy and the Market reminds us that
   our greatest intellectual challenge lies not in describing and cataloguing
   the experiences of countries but in developing and defending explanations
   for why these experiences are, in certain respects, similar and different"
   (Freeman, 1993: 285, my italics).

Przeworski's approach towards analysing transition is indeed very original, in that it provides a marked break with, and seems to claim greater explanatory power than, the prevailing theories on the subject. At the same time, however, Przeworski remains very theoretical and abstract throughout the book, referring only occasionally to empirical data, and when so only selectively, in order to support his theoretical arguments. In fact, Przeworski's book presents a new approach towards theorising about post-socialist transition, full of empirically testable hypotheses. My aim is to select some(7) of Przeworski's proposals and critically check them against the empirical evidence ex post from Poland and Hungary. This will allow me to assess the explanatory value of Przeworski's early theory of transition, while at the same time going beyond the theory by looking at the actual experience of transition in these two countries. …