Studies of the transformation of formerly communist societies often treat the changes as products of technique and faithful emulation of Western policy models. Hilary Appel's provocative and empirically rich book shows that ideas matter in the postcommunist transitions and that, in combination with other factors, they can make the difference between success and failure.
After the collapse of communism in the Soviet Union and eastern Europe, more than a dozen countries undertook aggressive privatization programs. Proponents of economic reform championed such large-scale efforts as the fastest, most reliable way to make the transition from a state-run to a capitalist economy.
The idea was widely embraced, and in the span of a few years, policymakers across the region repeatedly chose an approach that distributed vast amounts of state property to the private sector essentially for free-despite the absence of any historical precedent for such a radical concept. But privatization was not a panacea. It has, instead, become increasingly synonymous with collusion, corruption, and material deprivation.
Why was privatization so popular in the first place, and what went wrong? In answering this question, Hillary Appel breaks with mainstream empirical studies of postcommunist privatization.
By analyzing the design and development of programs in Russia, the Czech Republic, and across eastern Europe, Appel demonstrates how the transformation of property rights in these countries was first and foremost an ideologically driven process. Looking beyond simple economic calculations or pressure from the international community, she argues that privatization was part and parcel of the foundation of the postcommunist state.
A New Capitalist Order reveals that privatization was designed and implemented by pro-market reformers not only to distribute gains and losses to powerful supporters, but also to advance a decidedly Western, liberal vision of the new postcommunist state. Moreover, specific ideologies-such as anticommunism, liberalism, or nationalism, to name but a few-profoundly influenced the legitimacy, the power, and even the material preferences of key economic actors and groups within the privatization process.
Takes us back to the heady days of the early 1990s when the leaders of socialist-bloc countries set about the transition to capitalism. By bringing ideology and the politics of identity back into the equation, Appel explains why such radical economic programs were so quickly adopted, despite grave misgivings about their economic viability, and why they succeeded in the case of the Czech Republic and failed in the case of Russia.
A valuable analysis. Surprising and innovating. Appel's study of the role of ideology in mass privatization provides a crucial launching point for future debate.