The Political Economy of Crisis Adjustment in Central and Eastern Europe

The fall of communism in 1989 across Central-Eastern Europe (CEE) has ushered in a decade of transitologists. Epitomized in EBRD’s annual Transition Reports, international institutions, global academic community and observers at large have sought to analyse, theorize and advise governments on the building of capitalist democracies from the ruins of socialist command economies (see de Batt, 1990; de Melo et al., 1996; Åslund, 2002; Dylon & Wykoff, 2002). By the 2000s, transitology gave way to comparative analysis, as scholars of various theoretical backgrounds argued for the formation of substantively different varieties of capitalism in the post-communist region (Cernat, 2006; Lane & Myant, 2007; Bohle & Greskovits, 2007; Drahokoupil, 2009; Drahokoupil & Myant, 2011). The 2008/9 financial crisis has opened up new avenues for research, particularly how the different political economies in CEE adjust to external economic shocks. Building on the existing literature, this article begins by proposing a theoretical framework for an analysis of the process of crisis adjustment in CEE with a view to exploring two of its dimensions. The first is economic: has there been an economic recovery and if so, what were its drivers and beneficiaries? The second is concerned with the social costs: how was the burden of fiscal adjustment that accompanied the crisis distributed? Ultimately, the article seeks to identify the implications of this episode for the East European variants of capitalism.