For more than two decades, the former socialist region has been experiencing a tumultuous integration into the world capitalist market. The integration has generated a complex of interlinked economic, political, and societal changes which have restructured the centrally planed socialism into the newly emerging capitalism in the space of Russia, Eastern Europe, and Central Asia. This form of transition from socialism to capitalism represents hardly a unilinear process. Rather, the transition paths have been conditioned by differing geographies, distinct path-dependencies inherited from socialist, and even pre-socialist, periods and societal struggles in post-socialism. All these factors made sure that the region's integration into the world market would not evolve into just one, but a diversity of post-socialist varieties of capitalism; a diversity whose sustainability would be again tested by the global economic crisis in 2008. Such is a summary of Myant's and Drahokoupil's compelling book. Reprinted in a fine Czech translation1 “Tranzitivní ekonomiky” is a product of both authors' long-term specialization in the political economy of Central and Eastern Europe that is well-argued and simultaneously supported by a critical reading of transition intellectuals, extensive scrutiny of secondary literature, and an exhaustive use of statistical data.

“Tranzitivní ekonomiky” is clustered in six thematic parts which develop gradually its main thesis: Renouncing the role of state in economic development and losing thus national base to generate economic growth, post-socialist economies have become dependent in economic recovery on the forms of their international integration in the world market. Thus, the first part deals with the political economy of state socialism. Apart of analysing the common incapacities of state socialism to compete with advanced market economies, it identifies differences among individual state socialisms that shaped their post-socialist destinies. The second part depicts the early transition recessions in the 1990s and explores how the distinct forms of international integration have reinforced the divergent paths of economic recovery in the post-socialist region up to the global economic crisis in 2008. The third part discusses the Washington Consensus as a transition strategy promoted by international financial institutions (IFIs) such as the International Monetary Fund and World Bank, while it also uncovers how this international strategy became instrumentally adjusted to varying national conditions across the post-socialist region. The fourth part follows to reappraise the role of state in transition. Although marginalized by IFIs as a barrier to transparent transition, robust state−where it was preserved−has proved crucial in securing property rights, fiscal consolidation, and a rational adjustment of welfare systems. The fifth part inspects the microeconomic aspects of transition. As documented, the absence of regulatory institutions, managerial experience, and technological knowledge has led to a hastened privatization of state-owned enterprises on the one hand and failed attempts to develop a national business sector that could rely on lending from a modern banking supported by national savings on the other.

The sixth part brings a particularly important contribution to the transition literature because it turns the main thesis into an innovative typology of post-socialist varieties of capitalism. Myant and Drahokoupil identify five forms of international integration (pp. 455–459). “FDI based (second-rank) market economies” (Visegrád Group and Slovenia) benefit from their close geographical links to Western Europe, integration in the European Union, and strong industrial heritage. They have adjusted their industrial policies to attract foreign direct investment (FDI) in complex-manufacturing industries, but won only a second-rank position in the global value chain. Hence, their economic future depends on the decision-making of multinationals' headquarters in Western Europe. “Peripheral market economies” (Baltic states, Romania and Bulgaria) have developed a weaker economic coordination and legal support for business. They focus on basic manufactured-goods exports and rely mostly on financialized growth (foreign borrowings to support imports and consumption). “Oligarchic or clientelistic capitalism” (majority of the Commonwealth of Independent Nations) is characteristic of authoritarian governments which cohabit in mutually benefiting alliances with national business leaders. Such economies depend on raw materials exports, experience low investment levels, and generate poor environment for new business. On the other hand, “order states” (Belarus, Uzbekistan) are authoritarian regimes whose state apparatuses have remained dominant in economic coordination. Ignoring the advices provided by IFIs, they have undergone the transition surprisingly better than their post-soviet counterparts. Finally, “remittance- and aid-based economies” (bottom low-income economies in Eastern Europe and Central Asia) failed to attract FDI because of their unfavourable geographical location, unsound physical infrastructure, and inadequate business environment.

Another contribution is the extensive use of statistical data to argue that much of the economic urgency claimed by IFIs and national proponents of the so-called shock-therapy to support fastest economic reforms was actually political. Moreover, as Myant and Drahokoupil demonstrate, although the basic aim of Washington Consensus to establish modern market economies can be hardly disputed, the means of fast privatization, liberalization, and fiscal stabilization had proved to be counter-productive to such an end. This is well described by some of the case studies on the Czech Republic: The Czech voucher privatization, based on a false conviction that state-owned enterprises disregard profit incentives, ended up in allocating property to the hands of people who were neither managerially capable, nor interested in using it to overtake a productive leadership in national industries (pp. 356–370). Meanwhile, fast liberalization of the banking sector was undertaken without any parallel establishment of modern banking regulation and used deliberately to support the voucher privatization with unrestricted lending policies (pp. 398–402). These led to banking crisis which would be resolved only by the state-financed transfer of national banking sector into foreign ownership. On the other hand, the Czech Republic belongs to those transition economies whose governments have retained bigger bureaucracies and stronger intervention rather than placing them outright on the altar of austerity and laissez-faire. In effect, it ranks comparatively better in restraining corruption, collecting taxes, protecting rule of law, arranging proper business environment, and attracting FDI in the end (pp. 175–226, 250–284).

As “Tranzitivní ekonomiky” documents, neoliberalism, which underpinned the Washington Consensus, is not a universal, but historically specific mode of regulation that "powerfully shapes, but does not determine, the selection of policy strategies and technologies of governance".2 The post-socialist transition was indeed symptomatic of "an evolution of thinking, differing between countries, in which pressures for speed jostled with arguments for more caution" (p. 144). This explains why, although happening in the heyday of neoliberal economic order, the transition outcomes took distinct shapes in different historical-geographical contexts. Even the IFIs admitted at some point that they had misguidedly preached plain marketization instead of assisting in the establishment of robust institutional regulations and legal frameworks which would have bolstered a stable development of the emerging market economies (p. 180). However, such an acknowledgment came ex post at the beginning of 2000s after the overarching marketization had already brought dire transition recessions. It marked only a pragmatic turn, as Polanyi would suggest, because "if the needs of a self-regulating market proved incompatible with the demands of laissez-faire, the economic liberal turned against laissez-faire and preferred […] the so-called collectivist methods of regulation and restriction".3

Myant and Drahokoupil conclude that "transition economies missed a chance, or at best, only some of them took some advantage of the possibilities that the world offered at the time" (p. 490). Much of the missed chance derives from the animosity to state activism in tasks such as improving physical infrastructure or supporting research and development, even though similar state intervention is considered vital in advanced and rapidly developing market economies. However, this begs a question whether any form of developmental state could have been established in post-socialist economies with regard to the economic order which encouraged the classical cases of coordinated market economies to undergo liberalization-cum-disorganization and forced the emblematic developmental states to dire restructuring.4 Indeed, even the most developed transition economies were constrained to choose among few alternatives once these were to be justified internationally.5 Moreover, such conclusion tends to depict the post-socialist transition as an already finished process which has locked the new capitalist varieties in permanent external dependency after almost all chances to reach economic prosperity had been wasted due to the international agendas of post-socialist elites. This is a welcome antidote to self-praise of the very same elites for the transition finishing in complete success, but it denies the transition as a possibly open-ended historical process and abandons consequently a search for new development opportunities at the same time. Preoccupied a priori with instability, Myant and Drahokoupil neglect the focus on stability. For example, it seems improbable that German economy would retain its export competitiveness without having relocated a substantial part of its production capacities to neighbouring Visegrád states. Following Myant's and Drahokoupil's argumentation, one would have to explain this as a Visegrád's one-sided dependency rather than an institutionalized interdependency, albeit uneven one.

None of this sympathetic criticism can nevertheless change the fact that “Tranzitivní ekonomiky” is a well-researched volume which brings an original reappraisal of the economic development in post-socialist times. It will definitely contribute to the ongoing discussions on both the history of post-socialist transition as well as the contemporary formation of capitalism in Russia, Eastern Europe, and Central Asia.

Notes:
1 Martin Myant / Jan Drahokoupil, Transition Economies. Political Economy in Russia, Eastern Europe, and Central Asia, New York 2010.
2 Jamie Peck / Nik Theodore, Variegated Capitalism, in: Progress in Human Geography 31/6 (2007), pp. 731–772, here p. 765.
3 Karl Polanyi, Great Transformation. Political and Economic Origins of our Time, Boston 2001 (first published 1944), p. 155.
4 Wolfgang Streeck, Re-Forming Capitalism. Institutional Change in the German Political Economy, Oxford 2009; Ha-Joon Chang / Shin Jang-Sup, Restructuring 'Korea Inc.'. Financial Crisis, Corporate Reform, and Institutional Transition, London 2003.
5 Dorothee Bohle / Béla Greskovits, Neoliberalism, Embedded Neoliberalism and Neocorporatism. Towards Transnational Capitalism in Central-Eastern Europe, in: West European Politics 30/3 (2007), pp. 443–466, here p. 464.