State, Labor, and the Transition to a Market Economy

State, Labor, and the Transition to a Market Economy
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In response to mounting debt crises and macroeconomic instability in the 1980s, many countries in the developing world adopted neoliberal policies promoting the unfettered play of market forces and deregulation of the economy and attempted large-scale structural adjustment, including the privatization of public-sector industries. How much influence did various societal groups have on this transition to a market economy, and what explains the variances in interest-group influence across countries? In this book, Agnieszka Paczyńska explores these questions by studying the role of organized labor in the transition process in four countries in different regions—the Czech Republic and Poland in eastern Europe, Egypt in the Middle East, and Mexico in Latin America. In Egypt and Poland, she shows, labor had substantial influence on the process, whereas in the Czech Republic and Mexico it did not. Her explanation highlights the complex relationship between institutional structures and the “critical junctures” provided by economic crises, revealing that the ability of groups like organized labor to wield influence on reform efforts depends to a great extent on not only their current resources (such as financial autonomy and legal prerogatives) but also the historical legacies of their past ties to the state. This new edition features an epilogue that analyzes the role of organized labor uprisings in 2011, the protests in Egypt, the overthrow of Mubarak, and the post-Mubarak regime.

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Agnieszka Paczyńska. State, Labor, and the Transition to a Market Economy

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State, Labor, and the Transition to a Market Economy

Transition to a Market Economy

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Other studies suggest that it is the internal characteristics of a state rather than political regime type that accounts for the differences in the ability of governments to push through reforms without interest group influence. In this view, the cohesion and autonomy of the state are crucial variables affecting restructuring processes and the role that social actors come to play.15 Especially significant, and signaling autonomous state decision making, is the existence of change teams, insulated from popular pressures and with the bureaucratic capacity to push through the measures that shape the process of economic reform implementation.16 Such change teams are seen as indispensable to reform promotion, since they are composed of people who possess technical knowledge about the restructuring process and are not beholden to or dependent on old political patronage networks.17 Advocates of the so-called shock therapy approach to economic restructuring, in particular, have emphasized the importance of technocratic teams, fully committed to reforms. As Sachs has pointedly noted, “In times of crisis there simply is no consensus to build upon, only confusion, anxiety, and a cacophony of conflicting opinions. . . . The reform team must make its reforms an accomplished fact.”18 Similarly, Balcerowicz, both a theoretician and a practitioner of this approach, has argued that change teams, working far away from the political limelight, must make use of the period of extraordinary politics that frequently exists at the beginning of the reform process and, swiftly, without engaging in much political debate, initiate reforms.19 Moments of political transition when a new political elite comes to power may thus be a particularly auspicious time for pushing through reforms without interest group interference.

From this perspective, the existence of change teams not only makes interest group influence on policy making less likely, but such lack of influence is unambiguously seen as essential to successful reform process. Although change teams may indeed facilitate state autonomy from interest group pressures in some instances, the cases examined in this book suggest that such teams are at best a necessary but not sufficient condition for blocking interest group influence on policy making. The Polish case in particular suggests that the existence of a technocratic change team in itself does not block interest groups from being able to shape the reform process.

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