From Ethnic Conflict to Stillborn Reform: The Former Soviet Union and Yugoslavia

CHAPTER 2. Theory, Statistical Tests, and Literature Review

Theory, Statistical Tests, and Literature Review 27 CHAPTER 2 Theory, Statistical Tests, and Literature Review T his chapter begins with a more detailed statement of the book’s theoretical framework.First,there is a discussion of post-communist market reform and democratization in the absence of war. This focuses on the expected effects of economic development and ideologies emphasizing national renewal (“frustrated national ideals”). Second, the main expected effects of war are discussed in this context of transition. The main factors are distraction,militarization of the state,military defeat,and economic isolation. There is also an extended discussion of factors expected to contribute to military defeat or victory. Next, the main hypotheses are restated and subjected to statistical tests. These tests provide broad confirmation that economic development, frustrated national ideals, and war affect democratization and market reform as predicted—although the estimated effect of economic development is weaker than expected. The chapter then concludes by situating the theoretical framework in the related scholarly literatures on postcommunist market reform and democratization,on the economic and political consequences of war, and on ethnic conflict and national identity. Understanding Post-Communist Market Reform and Democratization To understand the effects of war, it is helpful to begin with post-communist transitions not disrupted by war. Why did some countries adopt more ambitious market reforms and more democratic political systems than others?1 Here 28 introduction it is argued that two factors particularly favored such reforms: economic development and frustrated national ideals. Economic Development and Market Reform. Under the initial conditions of a Soviet-style planned economy or a Yugoslav-style socialized economy,market reforms most directly target subsidies and international trade protection benefiting heavy industry and agriculture. More developed economies had proportionately smaller “losing” economic sectors—particularly agriculture ,nonviable heavy industry,and the regions in which these sectors were concentrated—and hence faced weaker resistance from concentrated interest groups in such sectors.2 Similarly, more developed economies have larger urban service sectors. Middle- and working-class service-sector groups benefit most from market reforms. Resources are no longer diverted from services to the supposedly more socially valuable production of “real”goods, and internationally traded agricultural and manufactured goods become available at competitive prices and quality.Notably,the gains to these more dispersed urban service -sector interest groups come only after painful transitional recessions, and for a long time are not nearly as large as the corresponding losses of the more concentrated interest groups in the “losing” agricultural and heavy industrial sectors. Hence, it may prove difficult to mobilize and sustain support for market reform among its most numerous beneficiaries. Overall, more developed economies should have smaller,weaker interest-group coalitions opposing market reform, and larger, stronger interest-group coalitions supporting it. Frustrated National Ideals and Market Reform. Strong reform nationalist movements were the main drivers of aggressive early economic reforms . The core mass base for such movements has been urban middle- and working-class groups—the more dispersed economic interest groups already employed in, or with greater access to, the more flexible, service-oriented labor markets of the bigger cities.Similarly,the counter-elite leading the reformist nationalist movements has been dominated by the educated middle classes of the big cities—by the academic and professional intelligentsia, excluding communist party (CP) hierarchies and party-associated networks of regulatory bureaucrats and state-enterprise managers.It is not just that, in the postcommunist context, literate counter-elites are highly skilled and employed in the urban service sector, and hence stand to gain most from market reform. It is also well known that they are most likely to place great value on collective goals of national development. Reform nationalist movements view communist regimes as alien impositions that have set back otherwise more progres- Theory, Statistical Tests, and Literature Review 29 sive national potentials—as having “frustrated” achievement of widely held national ideals. These reformist forces typically advanced through a massmobilizing democratic political process. Thus creating and maintaining a democratic political process has been a necessary intervening variable—typically supported by the same reformist forces that support market economic reform. Both variables—economic development and frustrated national ideals— predict that dispersed middle- and working-class groups in the big cities will furnish the crucial mass base for market-reform policies. However, frustrated national ideals add crucial intensity and patience to the reformist preferences of dispersed...