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Оглавление1 PARTIES, UNIONS, AND ECONOMIC REFORMS
As we saw in the Introduction, the ways in which organized labor reacted to changes associated with structural adjustment—and, more important, whether it succeeded in influencing the shape of privatization policies—differed markedly in Poland, Egypt, Mexico, and the Czech Republic. As we have also seen, the extant literature, while providing many important insights into the dynamics of reform experience, does not satisfactorily account for this observed variation. In this chapter, I lay out the theoretical framework that links the historical patterns of interaction between ruling parties and organized labor, the resources that organized labor extracts from the ruling parties over time, and the ability of unions to insert themselves successfully into policy debates once economic restructuring programs are adopted.
Labor Strategies
To tease out how union interest in public sector reform is translated into policy influence, I distinguish between two phases of divestiture programs: design and implementation. Labor organizations can seek to influence one or both phases. During the design phase, labor organizations may attempt to influence the scope and speed of the envisioned program, the privatization methods that will be employed, and the prerogatives that workers will be granted within the program. Although regime type does not explain well whether organized labor succeeds or fails in shaping policy, what strategies labor chooses as it seeks to influence the process of privatization design does depend on the broader political context in which it exists. Hence, these strategies are likely to differ in democracies and authoritarian systems, since strategies that prove most effective in pluralistic context may well be of little value in an authoritarian environment. In democracies, unions are more likely to concentrate their efforts on lobbying government officials and parliamentary deputies, making alliances with political parties that are sympathetic to labor demands and interested in unions’ electoral support, presenting alternative restructuring proposals, and appealing to the broader voting public through the media and protest actions.
Similar tactics are likely to be of less utility in a context of limited political pluralism. Even if parliament and multiple political parties are present, it is unlikely that the incumbents can be voted out of office during the next electoral cycle. Therefore, lobbying parliamentarians and threatening to shift alliances to another political party prior to electoral contests are unlikely to have much influence on how government privatization proposals are formulated. More efficacious strategies entail direct lobbying, often behind the scenes, of regime officials and relying on established clientelistic networks.
Once the program is designed and approved, labor organizations can seek to alter the process of implementation. While the early literature on economic reforms generally assumed that influence at the implementation stage would be manifested primarily in terms of labor organizations attempting to block restructuring and sales of enterprises, labor’s reactions to privatization tend to be more complex. During this phase, labor organizations may seek to modify the privatization methods employed as well as to influence the pace at which sales are realized. At this point, labor is also likely to turn its attention to modifying and shaping other reform measures that generally accompany privatization and are of immediate interest to workers, for example, changes in the labor code.
At both stages of the process, labor organizations can also attempt to influence policies by staging strikes, protests, and demonstrations. Through such actions they can signal to political leaders their preferences. They can also make it more difficult for politicians to ignore their demands by making their dissatisfaction public and making appeals to broader sections of the society. These strategies at both phases of the reform process may or may not be successful.
I evaluate whether organized labor was able to shape the design phase of privatization programs by examining the extent to which initial government proposals were modified to reflect worker demands. I assess the extent of organized labor’s ability to shape the implementation phase by examining the original timetables offered by the government in terms of the pace of divestitures, the methods of privatization the government was interested in pursuing, and the extent to which the pace and methods were modified to reflect labor demands. Additionally, I assess whether organized labor was able to shape pieces of legislation that were directly related to the privatization program, such various labor market regulations.
Clearly, a variety of factors affect the ability of governments to implement privatization programs. The process of company valuation often proves technically difficult and politically challenging; private investors prove less willing to purchase companies offered for sale; and the politically thorny issue of foreign ownership of previously state-owned firms can affect the pace and methods of privatization, as can the global economic climate, to name just a few factors. Nonetheless, drawing on official documents; media accounts; and interviews with policy makers, union leaders, international observers, and local analysts, it is possible to assess the degree to which organized labor’s actions influenced and shaped the dynamics of public sector reform implementation.
While unions in all four cases examined here wanted to see public sector restructuring programs modified, they did not always seek to block reform measures. In fact, initially unions were fairly supportive of aspects of the economic reform programs. In Mexico, for example, unions were concerned about the high rate of inflation and believed that addressing this problem would benefit their rank-and-file members. Polish unions, disillusioned with the centrally planned economy and the inefficiencies of state firms, were initially eager to see them reformed. Among Egyptian labor leaders, despite concerns about threats to job security that public sector restructuring posed, there was a willingness to accept market mechanisms provided that their introduction was accompanied by other changes, for example, the creation of unemployment insurance and job-retraining programs similar to those in existence in Western Europe.
Polish unions pursued a wide variety of strategies in their efforts to modify government privatization design proposals. They made alliances with parliamentarians and presented an alternative privatization program for consideration at the same time as the government sent its proposal to the parliament. They also appealed to the public for support. The Czech unions, by contrast, concentrated on lobbying parliamentarians and presenting alternative proposals, while largely eschewing strategies aimed at attracting broader popular support for their cause. Mexican and Egyptian unions, functioning within an authoritarian environment, pursued very different strategies, concentrated primarily on the direct lobbying of government officials as the design of the privatization program was being considered.
During the implementation phase, Polish unions again pursued a variety of strategies. In the first years of reform, most unions and workers’ councils supported sales of their companies, although they substantially modified the types of privatization methods employed. Later, as economic conditions deteriorated, unions moved more firmly to oppose the implementation of sales and fought for additional concessions. Czech unions looked to strikes and demonstrations as a means of putting their demands on the government agenda. Mexican unions, taking another approach, engaged in strategies to modify the program. While the official labor confederation concentrated primarily on lobbying government officials and occasionally staging demonstrations, the independent unions turned to strikes and protest actions. In Egypt, factory-level unions also sought to influence the implementation of the privatization program at particular companies through staging protests and strikes, while the confederation leadership concentrated on lobbying government officials and negotiating legislation whose passage was directly tied to progress in the implementation of the divestiture plan.
Organized labor is, however, not a unitary actor. Union leadership and the rank and file often have different preferences during times of economic transition. This can create profound tensions within labor organizations. Such differences exist both in democratic and authoritarian contexts and can have various consequences. In Poland, for instance, the differences between the leadership of Solidarity and the rank and file resulted in the union’s varying and sometimes contradictory responses to economic restructuring and over time contributed to the decline in its membership.1 Likewise in Egypt the policies pursued by the leadership of the ETUC created much opposition among the rank and file. The lack of internal accountability within the confederation and the inability of the rank and file to elect different representatives pushed them to engage in protest actions that confederation leaders did not sanction and often opposed. These actions, while not supported by the ETUC, nonetheless gave the organization a useful chip in bargaining and negotiating with the regime. Similar tensions between the rank and file and the official unions’ leadership were also evident in Mexico, where the lower levels of the union hierarchy were prepared to be more vocal and active in their opposition to the proposed reform measures than were those in the CTM leadership. Chapters 4, 5, and 6 will explore in greater detail how these internal union dynamics shaped labor response to the privatization program.
It is this initial complexity of labor response to market reforms that was underestimated by early students of restructuring efforts. This divergence of expected and actual response stems from a number of sources. First, as Kingstone points out in his analysis of the role of Brazilian business in the country’s economic restructuring program, “Economic crisis that usually precedes major reform programs can radically alter how business and other interest groups view their stakes in reform. Economic crisis leaves business much more open to policy innovation because they perceive the status quo as untenable.”2 Second, deep crisis can also make people more willing to take risks in anticipation of potential, if not guaranteed, payoffs.3 Third, periods of reform are characterized by deep uncertainty. It is often difficult to anticipate who the winners of the reforms will be.4 The difficulty of identifying winners of reforms means that those who are likely to benefit from the changes cannot mobilize in support of these changes and provide valuable coalition partners to the reforming political elites. However, the identity of losers is less ambiguous, and they are therefore expected to mobilize in order to prevent those reform measures that are likely to cause deterioration in their economic position.5 One of the reasons why labor was expected to block reform efforts was that organized labor was seen as one of the likely losers of the reforms.
Nevertheless, as Chapters 4, 5, and 6 will examine in detail, organized labor, although clearly concerned by many of the restructuring proposals, did not always see itself as just a loser of the reform effort during the first years of restructuring programs. Unions were often keen to address the deep economic crisis, since it negatively affected its rank and file. For example, reform measures aimed at bringing high inflation rates under control met with a positive response from labor. Additionally, unions in state-dominated economies often were well aware that public sector firms were inefficient, corrupt, dysfunctional, and in need of restructuring. A popular Polish saying from the pre-reform period, “We pretend to work, they pretend to pay us,” indicated worker dissatisfaction with the condition of public sector enterprises. They were therefore sometimes willing to consider modifying rather than outright rejecting proposals to reform the public sector.6
The fourth reason that the expected and actual behavior of unions differed is that in cases where unions are engaged in a political struggle to displace an authoritarian state, they may well support privatization of the public sector as part of their oppositional political program. In other words, if an authoritarian state supports retaining control over enterprises, opposition unions may well support selling state firms as a way to undercut the power of the authoritarian political elite.7 The fact that over the long term many of the policies initially supported by organized labor resulted in a deterioration of workers’ standards of living and employment prospects should not lead us to conclude that organized labor was unable to shape reform strategies.
Evolution of Corporatist Labor Organizations
Unions employ different strategies to translate their interest in public sector reforms into policy influence. Sometimes these strategies prove successful; sometimes they are ineffective. How can we account for this variation in patterns of labor influence? As discussed in the preceding chapter, many accounts of interest groups’ ability to influence policy making in periods of reform and of labor’s reaction to economic restructuring provide useful insights into these complex transition processes. However, a fuller picture of the variation in labor influence on policy making during the design and implementation of economic restructuring programs is possible if the resources available to labor organizations when the reforms are commenced are more centrally incorporated into the analysis. Particularly important are legal prerogatives won by organized labor prior to reform initiation, financial autonomy from the state, and experience of successful past confrontations with the state. Whether these resources are available to organized labor depends on its relationship with the state during the pre-reform period.
Despite numerous differences between the four cases, they share a number of characteristics that makes comparative analysis fruitful. Most important, in the decades preceding the initiation of economic restructuring, all four were states in which the ruling parties looked to labor groups as one of their main pillars of political support. To harness that support and to ensure regime control over politically mobilized labor, these states created corporatist labor institutions.
In this study, I define ruling-party states as authoritarian political systems in which one political party serves as a tool of governance. While other political parties may be present, they tend to be small, repressed, and not allowed to challenge the ruling party’s hegemony. Corporatist labor organizations are defined here as labor associations organized by the state, functioning under state supervision, and financed by the state. Their primary function, unlike that of other types of trade unions, is not the representation and promotion of workers’ interests but rather the political mobilization and control of labor and support of state policies. In exchange for this political submission to the party-state and loss of autonomy and independence, labor received access to material benefits that ensured its privileged position within the domestic economy.
Many studies of corporatism suggest that such arrangements generally result in the subordination of the working class to the state. The centralization and hierarchical structure of labor federations and the tight control that the state exercises over nominations to union leadership positions and trade union finances make organized labor unable to mount effective action in opposition to the party-state.8 The dependence of union leadership on the party-state for finances and career advancement, furthermore, isolates them from the rank and file, thereby redirecting their loyalties away from the workers they nominally represent and toward the party-state.
However, as Stepan points out, maintaining a corporatist system can be difficult.9 Corporatist labor institutions do not always function as originally designed by the ruling elite. In some cases, during the pre-reform period the ruling parties succeeded in constructing and maintaining corporatist labor institutions in a subordinate position to the state. In these circumstances, corporatist institutions continued to perform their original functions and organized labor lacked the ability and resources to act as an autonomous interest group. In other cases, state control over corporatist labor organizations gradually weakened. Over time, organized labor extracted concessions from the state, concessions that gave unions the ability to act independently from the state. Thus, the balance of power between the state and labor groups may shift, thereby fundamentally changing the relationship between the two.
Substantive and Procedural Concessions
In the four cases examined in this study, corporatist labor institutions continued to perform their original functions in Mexico and Czechoslovakia.10 However, in Poland and Egypt, ruling party control over these institutions gradually weakened, and organized labor succeeded in carving out ever greater autonomy from the state. More important, the types of concessions that the ruling parties were forced to make changed over time in the latter two cases. The types of concessions that organized labor extracted from the state can be divided into two categories. The state may offer organized labor substantive concessions, which include assorted material resources. Especially common are wage increases; expanded benefits packages, including health, pension, recreation and education benefits; housing and child care support; and subsidies on consumer goods. The other type of concessions is procedural, granting organized labor rights and privileges that allow it to have a voice in the management of state firms and in national policy debates on decisions affecting labor. Although both types of concessions are extended by the state in response to labor mobilization and protest, the long-term consequences of these concessions are different.
In cases such as Egypt and Poland, where corporatist labor institutions weakened over time, we can discern a particular pattern in the interactions between organized labor and the state. The state first responded to labor demands by extending substantive concessions. Although these had budgetary implications, they did not affect the overall balance of power between organized labor and the state. The higher wages, more attractive benefits packages, or additional consumer subsidies tended to defuse worker mobilization and protest, thus restoring social stability and maintaining labor within the ruling party’s support coalition. However, over time recurring economic crises depleted the regime’s resources. Consequently, the party had fewer material goods to offer organized labor as payment for the latter’s continued political support. These financially strapped regimes had few alternatives but to offer organized labor procedural concessions, which were attractive when material resources were scarce, since they did not have an immediate economic price. Thus, by offering these procedural concessions the ruling party could silence labor opposition without incurring significant costs. In most cases, once the immediate crisis was over, the ruling party attempted to rescind the concessions by offering pay increases or other substantive benefits. This kind of an exchange, however, did not always succeed and many procedural concessions remained in place.
Although they were less costly in the short run, the procedural concessions won through confrontations with the state provided organized labor with important legal prerogatives that in the long term significantly augmented its power vis-à-vis the state. In Poland, for instance, concessions granted to labor during the 1980s gave workers’ councils extensive powers in controlling the management of public sector enterprises. Once economic reforms began following the 1989 transition, the councils were able to make a compelling case that they had ownership rights within state firms, thus significantly altering the government’s privatization plans. In Egypt, during the 1970s the ETUC extracted important concessions from the regime that gave them the legal right to participate in policy making affecting its membership base. The ETUC made use of this legal prerogative during debates about public sector restructuring and divestiture during the 1990s.
Resources
As a consequence of contentious encounters between organized labor and the state, corporatist institutions can weaken over time and labor begins to acquire important resources. Crucially, such encounters often go beyond demands for improving workers’ standard of living that can be satisfied, at least in good economic times, through substantive concessions. Frequently these contentious encounters revolve around issues of control over decision making within the labor organizations themselves as well as at the national level. The procedural concessions that the party is forced to grant both because it lacks material resources to extend substantive concessions and because of the nature of the demands go to the very heart of the corporatist arrangements designed to ensure labor’s subordination to the regime. The price of maintaining labor’s political support during periods of crisis is often the long-term reduction of the regime’s ability to control labor organizations. By gradually expanding the autonomous space that labor institutions enjoy, labor’s political loyalty to the ruling party becomes that much more difficult to enforce. This in turn increases the likelihood that during the next moment of crisis the unions will be that much more willing and able to demand and extract further concessions. In other words, changes in laws and regulations governing labor relations are valuable resources that organized labor acquires during contentious encounters with the state. Over time these legal prerogatives significantly reshape organized labor’s ability to influence policy decisions it cares about.
These legal prerogatives are often accompanied by the acquisition of other resources. When the prerogatives are acquired through a bargaining process with an often reluctant state, labor organizations also gain a more intangible resource of experience. Thus labor organizations that had successfully extracted concessions from the state are more confident in their ability to challenge the state in the future and know how to do so. They had confronted the state previously and had witnessed the state backing down. Consequently, what once may have been perceived as a regime with large reservoirs of repressive tactics and a willingness to use them now comes to be seen more as an opponent that can be brought to the negotiating table. By the same token, during subsequent encounters the ruling party is aware that the once submissive labor organization has gained additional experiential resources that it can draw upon and knows how politically threatening labor unrest can be.11
Finally, the acquisition of legal prerogatives by labor organizations is also often accompanied by the expansion of fiscal autonomy from the state, through, for instance, greater control over the collection and expenditure of union dues and through the control of profit-generating ventures and economic initiatives that bypass the state, such as vacation resorts; housing; or, as was the case in Egypt, a bank. In other cases, as in Poland, organized labor can tap into foreign sources of funding that are outside state control. With greater financial autonomy, the ability of organized labor to effectively confront the state grows, since unions are now less concerned that in retaliation for insubordination the ruling party will be able to cut off all its financing. Furthermore, once acquired, these resources proved difficult to rescind and highly resilient even in the face of profound and far-reaching sociopolitical and economic transformation. Because the resources were acquired through contentious encounters with the state, workers were willing to defend them and resist attempts by the state to take them away. Chapters 2 and 3 will examine the evolution of corporatist labor institutions in the four cases. They will focus on how in two of them, Poland and Egypt, in the decades prior to reform initiation in 1989 in the former and 1991 in the latter, the contentious encounters between the state and organized labor resulted in unions’ acquiring legal prerogatives, significant financial autonomy, and experience of successfully confronting the regime. These resources allowed them to insert themselves into policy making and shape privatization strategies that were adopted when governments initiated structural adjustment reforms. These chapters will also examine how organized labor in Czechoslovakia and Mexico traveled along a very different trajectory. Here, corporatist labor institutions remained effective and unions did not acquire the resources that would allow them to influence privatization policies during the first decade of reforms.
Dynamics Within Ruling Parties
Why are corporatist labor institutions able to extract these recourses in some cases but not in others? After all, economic crises that triggered labor mobilization in Poland and Egypt also occurred in the other two cases, but with very different consequences for party-labor relationships. Why were ruling parties in two cases able to either prevent labor mobilization from happening in the first place even during periods of economic downturn or, when they did occur, to withstand the pressure to grant additional procedural concessions or accede to changes that resulted in greater union financial autonomy? Or put differently, why was the creation of effective mechanisms for elite conflict resolution so central to the Mexican and Czechoslovak regimes’ ability to maintain control of corporatist labor institutions?
The single or ruling party, which Duverger has called one of the great inventions of the twentieth century, shares some features with other types of political parties.12 It does, however, exhibit a number of unique characteristics that place it in a distinct category. The single or ruling party has historically emerged primarily either in states that have undergone revolutions or in those that were engaged in nationalist, anticolonial struggles. This particular context has influenced how the party defined its functions and goals and how it related to the bureaucratic apparatus of the state. Single parties that emerged from either revolutionary or nationalist struggles came into power with promises of a complete reorganization of both the political and socioeconomic order. In cases of nationalist struggle, the single party achieved a dominant position by virtue of being the most viable political organization in the new nation. In the revolutionary context, the single party engaged in displacing any other political actors who may have posed a challenge to its authority and to its program of fundamental restructuring of socioeconomic relations.13
The single party’s tasks were enormous, both because of ambitious socioeconomic-transformation projects and because of the need to politically consolidate what often were newly created nations. Given this environment, the party engaged in activities that in more consolidated states are performed by other institutions, such as the mass media, the courts, or social service delivery organizations.14 In addition, to promote and implement its goals of socioeconomic transformation and working either in the absence of a well-developed bureaucracy or in a bureaucracy whose loyalty to the party’s project was suspect, the party became engaged in mobilizing, controlling, and coordinating administrative tasks; served as the main conduit for the dissemination of information and development targets from the center to the peripheries; and became the main source of training and educating the population to prepare it for implementation of the sought-after changes. At the same time, the single party began extending direct control over such social organizations as labor unions and women’s and youth leagues to make them unavailable to any other potential political entrepreneurs. This meant that while the ruling party and the government remained nominally independent of each other, in reality the two became fused.15
Ruling-party regimes, according to some studies, because of their extensive presence within societies and their dominance of the political space, may have a unique ability to initiate difficult policy decisions thanks to their control of the political arena and the means to mobilize public support.16 However, if they are to have these capabilities, they must first build an effective party organization that allows them to mobilize and control the population, establish effective lines of communication between the leadership and the population, and ensure that the directives coming from the party leadership are implemented by the lower levels of the party machine. The primary goal of any party, however, is its self-preservation. Unless a party can marshal the necessary resources, create effective internal organization, and institutionalize mass support, it will not be able to perform any other functions and, in fact, may not survive at all.17
An effective party must therefore create mechanisms that allow internal party disputes to be resolved within the party itself and, once a consensus is reached within the party, to enforce that consensus.18 Conflict within a political party is inevitable. What matters is how that conflict is managed by the party and, most significant, whether conflicts can be managed within the organization without spilling out into the public arena. A party can respond to internal disputes by moving toward greater internal centralization and authoritarianism; conversely, it can begin to fragment and become unable to effectively perpetuate itself as an organization or, if in control of the government, to govern effectively.19
A ruling party that fails to create an effective internal organization is prone to challenges in maintaining political control for a number of reasons. The jockeying for position within a party torn by internal disputes pushes the various factions to build up personal fiefdoms within the state bureaucracy. These factions are also likely to look for allies outside the regime as a means of bolstering their position: the dynamics of single ruling parties that have not created an effective internal organization come to resemble those in a fragmented or polarized multiparty system, with each faction seeking to acquire allies and build independent bases of power. Although conflicts may often appear as little more than personality clashes, those in the inner circle of the regime who preside over vast bureaucratic or military organizations have resources that can be drawn on to mount effective opposition to other factions.20
The existence of competition within the ruling elite creates a window of opportunity for interest groups to extract more concessions by allying themselves, whether formally or tacitly, with one of the competing regime factions. Conversely, when a party builds into the system incentives that promote loyalty and punish disloyalty among the elite, such a favorable opportunity structure does not exist.21 In this context, it makes little sense for those within the party elite to look to social groups as a means of building alliances for promoting their careers. If anything, such attempts can undermine their ability to move up in the power hierarchy.
The internal management of the ruling party’s disputes therefore is of key importance for the evolution of the corporatist labor institutions’ relationship to the party-state. In cases where party elite conflict is not contained within the party, labor organizations are able to more successfully make demands on the state, since factions within the party are interested in ensuring labor support. Over time, as labor gradually extracts more concessions, corporatist control over organized labor weakens and unions develop the means to act independently of the state. Conversely, when the elite manages to contain disputes, corporatist institutions continue to perform their original functions and labor lacks the ability and resources to act as an autonomous interest group.
The differences in the ability of unions to become influential players in the first years of reform in the four cases I examine can be traced back to the very different elite dynamics that existed in the four countries in the years prior to the initiation of reforms. These different dynamics affected the resources available to labor organizations as reforms were being considered. While the Czechoslovak and Mexican elites succeeded at constructing mechanisms for ensuring elite cohesion, neither the Polish nor the Egyptian elites were able to devise such mechanisms. In Mexico and Czechoslovakia, the elites constructed political parties that both served to ensure that elite conflicts could be managed constructively and established channels of communication with the public. In Poland and Egypt, by contrast, political parties did little to dampen elite conflict.
In Mexico and Czechoslovakia, while the mechanisms that were devised were quite different, what they did have in common was the incentive structure that rewarded loyalty and punished disloyalty among the elite. Given this incentive structure, those seeking to advance their political careers saw few benefits in making alliances with social groups, while the advantages of being faithful to the party line were unambiguous. In the Mexican case, the task of maintaining elite cohesion was facilitated by a number of factors. One of the most significant of these was the principle of no reelection to the presidency or to most other contested offices. This rule had two main consequences. In the first place, it gave assurance to the various factions within the Institutional Revolutionary Party (PRI) that they could reasonably anticipate having their turn at the helm, thereby encouraging them to work within the system. Second, the possibility of someday returning to an elective office made breaking with the party unattractive because promotion of one’s political career did not depend on the control of a particular district or constituency but rather on the establishment of relationships with higher-ranked party members who controlled the promotion process. In most cases, these incentives were sufficient to ensure loyalty to the PRI. When, however, individuals attempted to break ranks, the reaction from the elite was swift and included expulsion from party ranks.22
In the Czechoslovak case, the costs of insubordination to the KSČ were even higher, entailing not just removal from the party but also the loss of professional opportunities. It made little sense for those within the ruling elite in Czechoslovakia to look to social groups as means of building alliances for promoting their careers. If anything, such attempts would undermine their ability to move up in the power hierarchy. The pressure to conform to the party line was reinforced by targeting family members as punishment for insubordination.23
In Poland and Egypt, such incentives remained underdeveloped and were not applied with any consistency. The punishments for disloyalty not only were less onerous but also were applied sporadically and selectively. In both cases, there were good reasons for politically ambitious individuals to believe that the path to promotion could lead through a variety of channels. In both countries, building up one’s own power network and cultivating clients among various constituencies remained a viable path to political advancement. In Egypt, the very establishment of a political party proved problematic because of the deep distrust between various regime factions.24 Here, rather than serving as a means for bringing about elite cohesion, the party and the state were frequently at loggerheads. Furthermore, unlike in the other three cases, the military was never fully subordinated to civilian control and became yet another player in elite power struggles. In fact, by the 1980s in Egypt it seemed that one of the best strategies for moving ahead was to openly break with the ruling National Democratic Party, since successful opposition candidates were regularly offered plum positions within the party and state administration as a way of enticing them back into the fold.25
Historical Legacies and Change
The relationship between the ruling parties and organized labor in the decades prior to reform initiation in Poland, Egypt, Mexico, and the Czech Republic influenced the ability of trade unions to shape debates about the restructuring measures that were of particular concern to these groups. The resources that organized labor acquired in Poland and Egypt before debates about privatization policies began allowed them to have an important voice during the phases of design and implementation. The lack of similar resources in the case of Mexican and Czech trade unions meant that they were unable to shape public sector policies. Therefore, even in cases where organized labor seems to be losing political power, for instance, where membership rolls have been dwindling, they may still retain important resources that allow them to continue playing a significant role in policy debates. In other words, once established, institutions often tend to persist even in the face of profound change.26 Changing and restructuring institutions is, of course, possible. How easy a task that will be, however, will depend on how the existing institutional arrangements have distributed power among the relevant actors and on the willingness of promoters of change to incur the political costs of pushing reforms. That is, the most significant effect of historical legacies is not that they predetermine future choices but rather that they constrain them.27 They do so through their effects on the distribution of resources among the state and social actors. They therefore affect the balance of power between them and influence the outcome of policy conflicts over the direction of economic reforms.
The evidence presented in this book thus suggests that the “punctured equilibrium” or “critical junctures” model of institutional change, which argues that change is most likely as a consequence of dramatic breaks with the past, overestimates the power of a political or economic crisis to precipitate a fundamental restructuring of the institutional environment.28 Similarly, it suggests that the incremental and gradual process model, which argues that modifications to existing institutions take place slowly and primarily at the margins, underestimates the potential influence of a crisis on processes of change.29
What crises do produce are windows of opportunity for change. However, while potential for change increases during these “critical junctures,” whether this opportunity will be seized or not will depend on the existing institutional environment. Many of the potential transformations are likely to directly affect various groups that had a stake in the previously established institutions and hence will be seen by these groups as directly threatening their interests. But whether these groups can successfully resist change will depend on the resources they can bring to the negotiations over the form of new institutional arrangements. Those resources in turn will depend on how institutions developed in the past. In cases in which institutional evolution had redistributed resources away from a group threatened by change, it will have difficulty in challenging such transformations, and institutional restructuring can be rapid. Where historical developments have allowed these groups to amass resources, however, there will be no dramatic breaks with the past but rather a gradual change even in the face of a crisis.
1. A recent study argues that the anger caused by the hardships associated with economic reforms and the rank-and-file workers’ perception of abandonment by both the political elites as well as their own union leadership has had a profound influence on the course of democratic consolidation in Poland. David Ost, The Defeat of Solidarity: Anger and Politics in Postcommunist Europe (Ithaca: Cornell University Press), 2005.
2. Peter Kingstone, Crafting Coalitions for Reform: Business Preferences, Political Institutions, and Neoliberal Reform in Brazil (University Park: Pennsylvania State University Press, 1999), 17.
3. See, for example, Kurt Wayland, The Politics of Market Reform in Fragile Democracies: Argentina, Brazil, Peru, and Venezuela (Princeton: Princeton University Press, 2002), 37–70.
4. See, for example, Robert H. Bates and Anne O. Krueger, “Generalizations Arising from the Country Studies,” in Political and Economic Interactions in Economic Policy Reform: Evidence from Eight Countries, ed. Robert H. Bates and Anne O. Krueger (Cambridge, U.K.: Blackwell, 1993), 444–72; Joan M. Nelson, Fragile Coalitions: The Politics of Economic Adjustment (New Brunswick, N.J.: Transaction Books, 1994), 8–9.
5. Hellman, however, argues that it is partial winners of reforms rather than losers who are the main groups blocking implementation of full reform packages. Joel S. Hellman, “Winners Take All: The Politics of Partial Reform in Post-Communist Transitions,” World Politics 50, no. 2 (1998): 204–5.
6. A number of studies of Western European unions have shown that given credible assurances of future wage prospects and, more important, a role in investment decisions, unions have often been willing to set aside demands for short-term benefits. Thus, under certain conditions, rather than being adversaries during periods of reform, unions can become important government allies and policy supporters. See, for example, Peter Lange, “Unions, Workers, and Wage Regulation: The Rational Basis for Consent,” in Order and Conflict in Contemporary Capitalism, ed. John H. Goldthorpe (Oxford: Clarendon Press, 1984), 56–73; R. Michael Alvarez, Geoffrey Garrett, and Peter Lange, “Government Partisanship, Labor Organization, and Macroeconomic Performance,” American Political Science Review 85, no. 2 (1991): 539–56.
7. This was clearly the case in Poland but is has also been evident in, for example, Zimbabwe.
8. See, for example, Kenneth S. Mericle, “Corporatist Control of the Working Class: Authoritarian Brazil Since 1964,” in Authoritarianism and Corporatism in Latin America, ed. James M. Malloy (Pittsburgh: University of Pittsburgh Press, 1977), 303–38; Youssef Cohen, “The Benevolent Leviathan: Political Consciousness Among Urban Workers Under State Corporatism,” American Political Science Review 76, no. 1 (1982): 46–47; David Collier and Ruth Berins Collier, Shaping the Political Arena: Critical Junctures, the Labor Movement, and Regime Dynamics in Latin America (Princeton: Princeton University Press, 1991), 51–55; David Collier, “Trajectory of a Concept: ‘Corporatism’ in the Study of Latin American Politics,” in Latin America in Comparative Perspective: New Approaches to Methods and Analysis, ed. Peter H. Smith (Boulder, Colo.: Westview Press, 1995), 139–42.
9. Alfred Stepan, The State and Society: Peru in Comparative Perspective (Princeton: Princeton University Press, 1978), 301–16.
10. In this book I am focusing only on the Czech Republic and not including the Slovak Republic, since during the first decade following the political transition in Czechoslovakia very few economic reforms were attempted in the Slovak Republic.
11. For example, the specter of the January 1977 riots that erupted in Egypt following President Anwar al-Sadat’s removal of consumer subsidies continues to haunt Egyptian policy makers. Author interview with World Bank official, Cairo, August 25, 1998.
12. Maurice Duverger, Political Parties: Their Organization and Activity in the Modern State (London: Methuen, 1969), 256.
13. For a discussion of the characteristics of dominant party states, see Samuel P. Huntington and Clement H. Moore, eds., Authoritarian Politics in Modern Societies: The Dynamics of Established One-Party Systems (New York: Basic Books, 1970).
14. See, for example, Zolberg, Creating Political Order; Leonard Binder, “Political Recruitment and Participation in Egypt,” in Political Parties and Political Development, ed. Joseph LaPalombara and Myron Weiner (Princeton: Princeton University Press, 1966), 217–40.
15. See, for example, Henry Bienen, Tanzania: Party Transformation and Economic Development (Princeton: Princeton University Press, 1967); Gerald A. Heeger, “Bureaucracy, Political Parties, and Political Development,” World Politics 25, no. 4 (1973): 600–607; Leonard B. Schapiro, The Communist Party of the Soviet Union (New York: Random House, 1960).
16. Stephan Haggard and Robert R. Kaufman, The Political Economy of Democratic Transitions (Princeton: Princeton University Press, 1995), 267–306.
17. See Samuel P. Huntington, Political Order in Changing Societies (New Haven: Yale University Press, 1968), especially 401–12.
18. As Haggard and Kaufman point out, “Divisions send mixed signals when policy decisions are taken and provide the opportunity for lower echelons to appeal or even challenge commands.” Political Economy of Democratic Transitions, 271.
19. See, for example, Robert Michels, Political Parties: A Sociological Study of the Oligarchic Tendencies of Modern Democracy (New York: Dover, 1959), 333–41.
20. See, for example, Robert Holt and Terry Roe, “The Political Economy of Reform: Egypt in the 1980s,” in Political and Economic Interactions in Economic Policy Reform: Evidence from Eight Countries, ed. Robert H. Bates and Anne O. Krueger (Cambridge, U.K.: Blackwell, 1993), 179–224.
21. Doug McAdam, “Conceptual Origins, Current Problems, Future Directions,” in Comparative Perspectives on Social Movements: Political Opportunities, Mobilizing Structures, and Cultural Framings, ed. Doug McAdam, John D. McCarthy, and Mayer N. Zald (New York: Cambridge University Press, 1996), 23–40.
22. See, for example, Bo Anderson and James D. Cockcroft, “Control and Cooptation in Mexican Politics,” in Latin American Radicalism: A Documentary Report on Left and Nationalist Movements, ed. Irving Louis Horowitz, Josue de Castro, and John Gerassi (New York: Random House, 1969), 366–89; Rogelio Hernandez Rodriguez, “The Partido Revolucionario Institutional,” in Governing Mexico: Political Parties and Elections, ed. Monica Serrano (London: Institute of Latin American Studies, 1998), 71–94; Jorge G. Castaneda, Perpetuating Power: How Mexican Presidents Are Chosen (New York: New Press, 2000), xix.
23. See Edward Taborsky, Communism in Czechoslovakia, 1948–1960 (Princeton: Princeton University Press, 1961), 68–96; Vlad Sobell, “Czechoslovakia: The Legacy of Normalization,” East European Politics and Society 2, no. 1 (1987): 35–68.
24. See two studies by Kirk J. Beattie: Egypt During the Nasser Years: Ideology, Politics, and Civil Society (Boulder, Colo.: Westview Press, 1994), 58–74; Egypt During the Sadat Years (New York: Palgrave, 2000), 189–98.
25. See Robert Springborg, Mubarak’s Egypt: Fragmentation of Political Order (Boulder, Colo.: Westview Press, 1989), 89–105.
26. See, for example, Geoffrey Garrett and Peter Lange, “Internationalization, Institutions, and Political Change,” International Organization 49, no. 4 (1995): 627–55.
27. David Stark and Laszlo Burszt, Postsocialist Pathways: Transforming Politics and Property Rights in East Central Europe (New York: Cambridge University Press, 1998), 80–105.
28. For a discussion of the “critical junctures” or “punctured equilibrium” model, see, for example, Stephen D. Krasner, “Approaches to the State: Alternative Conceptions and Historical Dynamics,” Comparative Politics 16, no. 2 (1984): 240–46; Collier and Berins Collier, Shaping the Political Arena, 27–39.
29. For a discussion of the incremental change model, see, for example, Avner Grief, Paul Milgrom, and Barry Weinpast, “Coordination, Commitment, and Enforcement: The Case of the Merchant Guild,” in Explaining Social Institutions, ed. Jack Knight and Itai Sened (Ann Arbor: University of Michigan Press, 1995), 27–56; Douglass C. North, Institutions, Institutional Change, and Economic Performance (New York: Cambridge University Press, 1990), 73–106. Kathleen Thelen argues that over the long term such incremental changes can profoundly reshape the institutional landscape. Kathleen Thelen, How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States, and Japan (New York: Cambridge University Press, 2004), 31–36.
