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The Political Economy of Dual Transformations

Market Reform and Democratization in Hungary

David L. Bartlett

Publication Year: 1997

In the early 1990s, scholars voiced skepticism about the capacity of Eastern Europe's new democracies to manage simultaneous political and economic reform. They argued that the surge of popular participation following democratization would thwart efforts by successor governments to enact market reforms that imposed high costs on major elements of post-Communist society. David Bartlett challenges the conventional wisdom regarding the hazards of "dual transformations": far from hindering marketization, democratization facilitated it. Bartlett argues that the transition to democracy in East Central Europe lowered the political barriers to market reforms by weakening the ability of actors most vulnerable to marketization to manipulate the existing institutional structure to stop or slow down the process. Although the analysis focuses on Hungary, whose long history of market reforms makes it an ideal vehicle for assessing the impact of institutional change on reform policy, the author shows how his findings call into question the use of "shock therapy" and arguments, based on the experience in East Asia, that economic development and democratization are incompatible. This book will appeal to economists, political scientists, and others interested in transition problems in formerly communist countries, democratic transitions, and the politics of stabilization and adjustment. David L. Bartlett is Assistant Professor of Political Science, Vanderbilt University.

Published by: University of Michigan Press

Contents

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pp. vii-

Acronyms

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pp. ix-

Tables

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pp. xi-

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Acknowledgments

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pp. xiii-

Many individuals and institutions, both in the United States and Hungary, contributed to the research and writing of this book. l owe a special thanks to my friend and colleague Kurt Weyland, who read multiple drafts of the manuscript and responded with his distinctive combination of thoroughness, scholarly insight, and good humor. Kurt's trenchant critiques and ...

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Introduction

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pp. 1-8

Is political liberalization compatible with economic transformation? That question, long a central concern of scholars of Latin America, Southern Europe, and East Asia, has assumed special significance in postcommunist Eastern Europe. The socioeconomic costs of stabilization, adjustment, and reform pose serious challenges to the capitalist South, where market ...

Part 1: An Institutional Approach to Eastern Europe's Transition

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1. Party and State Institutions in Dual Transformations

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pp. 11-52

What are the theoretical grounds for supposing that political liberalization and economic transformation are mutually antagonistic? The main predicament of dual transformations is that the surge of popular participation following democratization clashes with the austerity requisite to stabilization, adjustment, and market...

Part 2: Economic Reform in Communist Hungary, 1979−89

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2. Macroeconomic Stabilization under Reform Communism

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pp. 55-97

In January 1968, Hungary launched NEM. Like other market socialist reforms, NEM was premised on the assumption that devolving decision-making authority to factory-level agents would heighten allocative efficiency. At the same time, maintaining...

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3. Structural Adjustment and Market Socialism

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pp. 99-138

In this chapter, I analyze Hungarian structural adjustment policy in the 1980s, focusing on financial sector reform, industrial restructuring, and foreign trade and exchange. I argue that market reforms undertaken within the institutional setting of reform communism produced contradictory effects that impaired the ruling party's...

Part 3: Economic Reform in Democratic Hungary, 1990−94

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4. Political Institutions and Hungary's Negotiated Transition

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pp. 141-163

In this chapter, I survey the institutional terrain of postcommunist Hungary. I begin by assessing how the institutional legacies of the communist period shaped the strategies of the successor government. I then examine the institutional outcomes of Hungary's negotiated...

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5. Stabilization Policy in the Postcommunist Period

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pp. 165-204

The former communist countries of Eastern Europe pursued a variety of economic stabilization strategies.1 In Germany, unification paved the way for the region's only true "big bang." By assuming the external debt of the GDR and absorbing its fiscal, monetary, and price systems, the Bonn government executed what amounted...

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6. Structural Adjustment in Hungary's New Democracy

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pp. 205-249

As shown in chapter 3, the contradictions of market socialism thwarted the Hungarian Communist Party's structural adjustment program in the 1980s. Market reforms broadened the decision-making power of local agents while inducing those actors to behave in ways contrary to adjustment policy. For instance, the introduction...

Part 4: Conclusions

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7. Implications and Comparative Perspectives

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pp. 253-282

In this final chapter of the book, I use the institutional theory developed in chapter 1 to generalize from the case study. I begin by discussing the implications of Hungary's experience for the relationship between democracy and market in Eastern Europe, arguing...

Appendix

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pp. 283-286

Index

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pp. 287-288


E-ISBN-13: 9780472023301
E-ISBN-10: 0472023306
Print-ISBN-13: 9780472107940
Print-ISBN-10: 0472107941

Page Count: 320
Illustrations: 18 tables
Publication Year: 1997

Research Areas

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Subject Headings

  • Hungary -- Economic policy -- 1989-.
  • Hungary -- Economic conditions -- 1989-.
  • Democratization -- Hungary.
  • Post-communism -- Hungary.
  • Democracy -- Hungary.
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