Liberalism in a Corporatist Context: The Revolutions of 1989

Liberalism in a Corporatist Context: The Revolutions of 1989
May 19, 2004
Staff-prepared summary of the EES informal discussion with Ilya Prizel, Professor of Political Science, Center for Russian and East European Studies, University of Pittsburgh

More than a decade has passed since the end of the Cold War, and there has been much debate over what kind of revolutions occurred in 1989. Some analysts contend that they were liberal-democratic revolutions, in which democracy and market capitalism triumphed over communism. Ilya Prizel, however, argues that the revolution was not ideologically driven, but structural, in which the elite in power decided to realign power structures in the pursuit of the personal goals of lengthening their tenures in power and increasing their personal wealth. He calls this a "Burkian Revolution," in which the elite embraced constitutionalism and neoliberalism in order to justify privatization.

The outcome has been the repositioning of the old elite: those that lost political power have now become owners of privatized state companies. In some countries, the former communists regained power through free and fair elections throughout the region, most notably in Lithuania and Poland, but also in Bulgaria and with Vladimir Putin, in Russia. As a result, the postcommunist world has free societies, but they are far from democratic, since there is no transparency, no accountability and low public participation, and politics is determined by elite power struggles over the heads of the people.

What can explain this outcome? Prizel contends that the so-called "Washington Consensus" (which touts neoliberal policies for political and economic transition) is partially to blame, since it placed the speed of reform above other priorities. The old elite got what it wanted by 1993, at the same time that the EU began its enlargement rhetoric. This development shifted the attention to the enlargement process, which values compliance over democracy.

The result of the revolutions in East Europe is a strongly corporatist system, which meshes well with the EU. This should not be surprising, since liberalism is largely an alien ideology on the continent. Its demise began after World War II, when liberalism was blamed for the rise of fascism. The EU has largely removed people from the decision making process and replaced them with a cartel of executives who decide on industrialist policies, rather than wait for the free market to direct capital flows. In exchange for a political voice, Europeans receive state welfare benefits, and are therefore less inclined to protest the current regime.

Will EU enlargement to Central and East Europe enhance the liberal experiment or increase the corporatist slant? There is no doubt that the EU has contributed greatly to maintaining peace on the continent and is credited for spurring on the economic development of countries such as Spain, Greece and Ireland. But will this be repeated in CEE in the new economy, which rewards innovation? Perhaps not, since the EU's long list of standards has placed restrictions on CEE's economic and fiscal policies and bureaucrats are unlikely to be able to keep up with market innovations. Moreover, CEE remains an inhospitable environment for venture capital, which is driving the new economy. It remains to be seen if the EU will be able to reinvent itself to counter the corporatist model.