From the Washington Consensus to the Brussels Consensus: Neoliberalisation by Depoliticisation in Post-Communist Poland
The issue of globalisation and its impact in Eastern Central Europe’s (ECE) post-communist transition has at best been dealt with parsimoniously, and at worst long ignored, in both the International Relations/International Political Economy (IR/IPE) and Area Studies literatures. For over two decades, change in the region has been analysed in both academic and policy debates as primarily national processes leading to a self-evident, natural endpoint: the free market. Globalisation has all too often been formulated as a secondary constraining process rather than as determining. Beyond the rather politically anaemic studies of the influence of the International Monetary Fund (IMF) and World Bank and similar studies on democratisation and conditionality during negotiations to join the European Union (EU), there has been an almost uniform acceptance that the genuine causes of transition are internal and that international factors played, at most, only supportive roles in advancing business-oriented reforms (inter alia Stone 2002; Schimmelfennig & Sedelmeier 2005; Dimitrova & Pridham 2004). When EU membership negotiations created a notable improvement in the business environment for investors in ECE during the late 1990s, many Europeanists assumed that the baton of “reform” had been passed from the institutions of the Washington consensus to those of the EU (O’Dwyer 2004; Vachudova 2005).
The aim of this paper is to offer a corrective to such myopic analyses and to begin consciously interrogating the impact of so-called globalisation in the ECE political economy. We shall explore three waves of post-communist neoliberalisation in ECE, focusing on the paradigmatic transition state, Poland. Poland was the first post-communist state to introduce substantial economic reforms slashing subsidies, abolishing peripheral government ministries, and forcing state enterprises to adapt to the market. We analyze two apparently divergent processes, post-communist transition and EU enlargement, in the context of globalisation, i.e. the transnationalisation of production and finance and the spread of neoliberal economic rationality as the dominant paradigm of social organisation (inter alia Bieler 2000; Cafruny & Ryner 2003; van Apeldoorn 2002).
Far from the latter being the solution to the former, transition and enlargement are both, in fact, part of the same process of the intensified restructuring of (European) social relations of production (Bieler 2002: 576), a process that is designed to engender neoliberalisation through depoliticisation. The intention of these changes is to ensure the naturalisation of capitalism by redefining the market as normal (Pusca 2007). I use the term ‘depoliticisation’ to describe a process whereby important functions of economic management – functions deemed vital to a more interventionist era of state management of the economy – become removed from state control and placed in the remit of supposedly neutral objective institutions, technocrats, or juridical frameworks. As Gill indicates, the move from embedded liberalism to disciplinary neoliberalism ‘seeks to separate economic policies from broad political accountability in order to make governments more responsive to the discipline of market forces, and correspondingly less responsive to popular-democratic forces and processes’, and ‘involves actively remaking state apparatuses and governmental practices and the institutions of civil society’ (Gill 2001: 47, 51). This insulates policymakers from political pressures and locks in key reforms by making the future reversal of reforms unlikely, or often illegal, while it dispels political confrontation from within the ambit of state institutions.
We proceed as follows. First, I take issue with the notion of neoliberalism as merely an end point associated with the withdrawal, or rolling back, of the state. Instead, through a critical engagement with recent Gramscian scholarship in IR/IPE, I argue that there is a diversity of neoliberalisations understood as a number of different processes which might at first appear to be contradictory. There is often a dangerous conflation of process and end-state, with neoliberalism (singular) ignoring the complexity, contingency and contested nature of neoliberalisation, thereby making it appear inevitable and inexorable. Second, we see how a first wave of neoliberalisation (associated with the early stages of transition) was an extension of the Washington Consensus – with its mantra of liberalisation, stabilisation, privatisation and internationalisation – from its previous application in the Third World and Latin America. Third, we examine a second wave of neoliberalisation associated with EU enlargement which followed upon the transition-induced recessions of the early to mid-1990s, and entailed a highly selective application of neoliberal Europeanisation. This second phase, which I term the Brussels consensus, was aimed at completing the transition process and opening up what neoliberal social forces considered to be oligarchic and exclusive institutional frameworks and practices to competition. The fourth section of the paper turns to the most recent wave in the series of strategies employed by neoliberal social forces following upon EU enlargement in 2004: the promotion of a global agenda for neoliberal competitiveness, with the aim of reorienting domestic/national economic and social policy against labour resistance. I conclude by arguing for a re-politicisation of the processes associated with neoliberalisation.
A Gramscian perpective on post-communist transition
Recent historical materialist approaches to post-communist transition and the integration of ECE into the EU (Bohle 2006; Holman 1998; Shields 2006) provide a starting point for understanding the influence of neoliberalism on the development of political economy in ECE (van der Pijl 2006). What these studies indicate is that many characterisations of post-communist transition ignore the successful mobilisation of neoliberal social forces since the 1970s. The attainment of neoliberal hegemony has been augmented by changing structures of capital, states and international relations. Instead of being solely a nation-state driven process, these changes constitute an important break with the immediate past and signal the subordination of national social forces to the requirements of globally mobile capital (Cox 1981). It is this subordination that has configured the variegated forms of neoliberalisation. The ideas associated with this are transmitted through a range of formal and informal national, international, regional and global agencies. This emerging form of predominantly economic constitutionalism is more than just a set of rules (Jayasuriya 2005: 24; Gill & Bakker 2003).
On the whole, analysis of the integration of ECE into the European mainstream has been unable to theorize the enlargement process. Some notion of the inherently neoliberal nature of enlargement is needed. In contrast to the burgeoning ‘Europeanisation’ literature (e.g. Schimmelfennig & Sedelmeier 2005; Epstein 2006), the perspective adopted here is that any attempt at understanding the social transformations occurring in the East must account not only for their form, but also for their social purpose. Through the formalisation of neoliberal hegemony, for example, by the conditionalities and policy transfer from the EU accession membership criteria (the acquis communautaire) , the policy range available to the accession countries has been considerably limited (Jacoby 2001), and with ‘the massive benefits of EU membership being within close reach, the fulfilment of’ EU conditionalities ‘became the highest priority in [ECE] policy-making, crowding out alternative pathways and domestic obstacles’ (Schimmelfennig & Sedelmeier 2004: 671).
For Gramsci, hegemony was not just about the role of ideas; it had the ‘same energy as a material force’, a complex dynamic process of incorporating other classes through a combination of coercion and consent (Gramsci 1971: 57-8). Subordinate classes are co-opted into suppressing their interest through the operation of hegemonic ideologies and the granting of material concessions (Gramsci 1971: 377; Rupert 1995: 80-1). The evolution of variegated forms of neoliberalisation offers a potent illustration of how certain ideas concerning post-communist transition emerge as “common sense”. Such a hegemonic discourse attempts to assimilate and co-opt state managers and government elites into what Gramsci would have termed a historic bloc, a ‘complex, contradictory and discordant ensemble … the reflection of the ensemble of the social relations of production’ (Gramsci 1971: 366) or as Cox asserts, a ‘particular configuration of social classes and ideology’ (Cox 1987: 409).
A central preoccupation of recent Gramscian scholarship in IR/IPE has been to reflect on ruling-class dominance being based not simply on material coercion but also on the provision of cultural and moral leadership. Hegemony is not just imposed on subordinate classes but is a negotiated process in which ruling-class fractions must negotiate with subordinate classes. This is mediated through an extensive range of social institutions and organisations. Where these forces are successful, an historic bloc1 will develop. In this context, post-communist transition can be understood as seeking to bring into being a new global order in which states individually and collectively maintain conditions for capital to remain hegemonic over labour.
The success of neoliberalisation has been evident in building a new hegemony around orthodox economic policy and the containment of socio-political domestic demands, and organising, sanctioning and legitimising class domination within capitalism. The shifting sands of neoliberalisation, with far-reaching implications both up-scale and down, have occurred around a coalition of advanced (and advancing) capitalist states as neoliberals have built on aspects of the ‘internationalisation of the state’ as detailed by Cox to construct new and enhanced methods of surveillance and policy transfer, principally through the increasingly co-ordinated activity of old and new international organisations (compare Cox 1987 with Cammack 2004). In addition, they have sought, with some success, ‘to neutralise the effect of [the] marginalisation of perhaps one third of the world's population so as to prevent its poverty from fuelling revolt’ (Cox 1996: 149), by devising and implementing means of containing social conflict in the 'core' and the 'periphery', through the introduction of new techniques of neoliberal discipline everywhere, and the promotion of transitions to democracy (Gill 1995; Shields 2008). In the next section of the paper I begin to explore how these techniques of neoliberal discipline have been installed in the first wave of post-communist transition in Poland and explore how the changes invoked during ECE transition are also part of a wider series of worldwide neoliberal reforms. The reform programmes throughout ECE mimic the structural adjustment programmes of the developing world, a point clearly illustrated in comparisons of Latin America and ECE (Greskovits 1999; Bartlett & Hunter 1997).
Constructing the post-communist market economy: A first wave of neoliberalisation
In Poland prior to the collapse of the Communist Party, Solidarity’s leadership had instigated a number of alliances with responsive Western powers, and simultaneously reached an intellectual accommodation with core sections of the existing Polish regime that accepted the unleashing of untrammelled market forces as the only way to restructure the national economy.2
Communist Party dominance in ECE has left an important footprint on the post-communist space. State monopolisation of civil society has meant that there is limited historical memory of civil society in the transition states. Before 1989 civil society was skewed toward the needs of the Communist Party, so for example, while the education systems produced high levels of literacy and the fabled well educated socialist citizen (allegedly so useful for transition foreign investors), education was decidedly vocational and bureaucratic, designed to manage the ‘administrative–command economy’ (Gregory 2003: 1), a very different set of requirements than solving the problems of post-communist marketisation and preparing the labour force for a post-industrial, knowledge-based economy. The ECE educational system was designed to produce manpower for a type of Fordist manufacturing industry that the West had transferred to the developing world during the 1970s. Social security and the provisions of the welfare state were all filtered through the lens of a state in which leisure and medical services, for example, were organised around single-enterprise towns and villages. Along with differing degrees of urbanisation and agricultural collectivisation, these issues configure a complex set of post-communist social, political and economic arrangements after 1989 as these legacies interacted with the imperatives of globalisation. While the interaction is mediated through the domestic institutions of state and labour (Pollert 1999), this mediation is not necessarily symmetrical, as organised labour has suffered from intense disorientation and weakening, since the reshaping of employment relations in ECE has on the whole been undertaken by ‘unorganised’ labour because workers’ organisations like Solidarity had been increasingly marginalised since the end of the social partnership tripartite negotiations between unions, the government and employer organizations in the early 1990s (Iankova, 2002; Vickerstaff & Thirkell 2000).
Various measures had been taken in ECE to restructure the state in the interests of capital. These were not imposed on the state by globalisation as if by an external force. Rather they reflected the state’s role in representing the interests of a nascent bourgeoisie and bureaucracy, increasingly penetrated by transnational capital (Cox 1987). This has been most apparent in the more industrialised states but is increasingly evident in other states in the ministries and institutions that are most closely linked to the global economy. Thus the transformations in European (indeed global) governance structures are not just a case of the state “withdrawing”. The role of the state has not necessarily diminished, but the nature of state intervention has changed (Panitch 1996; Poulantzas 1975: 70-88).
Rather than a loss of power, this represents the restructuring of state apparatus and hierarchies. Agencies with direct links to the “national” economy, such as ministries of labour and industry, have been displaced, and progressively subordinated to finance ministries, treasuries and central banks. Thus the “national” has become the transmitter of policy through those agencies most closely linked to the global economy (Cox 1987: 214-81). Western social scientists offered ECE blueprints which in principle instructed each government in the correct techniques of transition (Burawoy 1996, 1106). These blueprints centred on the construction of a market economy based primarily on private ownership, the rolling-back of the state as collective owner and provider, and in the political sphere free elections, democratic constitutions and the rule of law. While at a more concrete level the transition programme entailed the liberalisation of foreign trade and capital movements, and potentially accession to a range of ‘Western’ intergovernmental bodies such as NATO and the EU, these were treated as natural components of a programme of post-communist transition that would allow ECE to successfully rejoin the European mainstream.
This is not a spontaneous process though, as class hegemony necessitates a constant stream of ideological and material forces to synthesise a long-term framework for political and economic interests (Gill 1990: 45). ECE capitalism did not just fall fully formed from the sky as the Berlin Wall fell in 1989. Neoliberal social forces have expended time, energy and resources to make it happen and ensure it keeps happening (Sklair 1997: 520).
The launch of the first wave of neoliberal transition in 1990 mapped out the parameters of the reform debate for the first half of the 1990s. The neoliberal context was configured in Poland as the basis for the only rational course of action. Once elected, Solidarity wholeheartedly embraced this with the Sachs-Balcerowicz Plan: draconian cuts in government spending, immediate liberalisation of trade, and comprehensive privatisation. It was adopted with little significant input from non-neoliberal components of Solidarity, whose gradualist programme was decisively rejected, since the ‘traditions and expectations of the Solidarity movement’ were incompatible with the agenda of a ‘decisive break in continuity’ (Tymowski 1993). Alternative strategies like an Employee Stock Ownership Plan were omitted as supposedly regressive community-based approaches to property rights, an omission rapidly reinforced by “objective” advice.3 The Sachs-Balcerowicz Plan aimed to foster private economic activity to enhance the productive capacity of the emergent economic order. Reaganomics and Thatcherism were taken as the only canon of a market economy; alternatives like the German, Japanese or Scandinavian models were taken to be deviations from the accepted rules of the game (Balcerowicz 1995: 233). It was assumed that allegiance to neoliberal rules would be rewarded by a dramatic improvement in general efficiency in the economy and sustainable growth, since the ‘invisible hand produces a particular set of results which are outside the control of human agency and is, therefore, impartial in its operation’ (Hardy 2006: 136).
Under these circumstances active industrial, commercial, employment and foreign trade policies are merely redundant, an impediment to the actions of the invisible hand. Instead, it was the far more visible hands of the Balcerowicz team that assumed control of the reform process, constructing ground-rules for the functioning of the law of value rather than directly determining the disposition of investible resources. The new Polish government was convinced that the stabilisation programme suggested and supported by the IMF would be a necessary and sufficient condition for full membership in the EU, ‘[incorporating] the East European countries into a common European market’ (Sachs 1989: 24).
The reforms are related to a particular neoliberal understanding of both a type of capitalism and the global economy. By embedding transition within an uncompromising anti-communist and pro-Western normative framework, the first-wave neoliberal blueprint for transition supplied a clear set of definitions and an unchallenged set of goals, while simultaneously offering expertise as a means of implementation. The outcome was that it was considered better to undertake all the changes concurrently and as rapidly as possible, because the social costs and uncertainties arising from “shock therapy” were seen more as a threat to the potential “losers” than as a promise to any “winners” – a message that persists to this day (cf. Sachs 1994, World Bank 2002, EBRD 2007).
The neoliberal reform package worked rapidly, provoking recession and unemployment as enterprises laid off workers and curtailed production. Property rights were created and locked in through privatisation and the attraction of foreign capital (World Bank 1996: 48; Frydman, Murphy & Rapaczynski 1993). Privatisation, foreign investment, and hard budget constraints were no panacea and instead pointed to the need for an appropriate institutional context (Stiglitz 2000, Rapacki & Blazyka 2000, OECD 2001). The first wave had constituted a stylised form of transition, treating it as an axiomatically linear process and offering a pragmatic, one-dimensional ‘toolkit’ to solve the problems of ECE which at best provided a set of misguided signposts for transition states to follow and, at worst, contributed to the sobering wholesale impoverishment of large proportions of the population (Milanovic 1993, 1998). But despite this impact, the orthodoxy continues to hold sway in the international financial institutions, the EU, and the finance ministries of ECE.
If at first you don't succeed: A second waveof selective neoliberal Europeanisation
How has the perceived failure of the initial post-communist transition affected subsequent negotiations for EU membership and the second generation of reforms? Following the promises of membership made in 1993 and following a decade of hesitant flirtation, the EU finally adjusted to the collapse of communism. The 2002 Copenhagen summit reflected the irreversibility of enlargement.4 However, EU accession negotiations did not embed a socially inclusionist European social model. Instead enlargement reinforced the first-wave transition process by further embedding neoliberalism. The EU has become ‘the conduit through which the neoliberal social and economic model is being institutionalised in Europe’ (Wahl 2004: 38). Grabbe illustrates the pervasive influence of neoliberalisation as Europeanisation, describing it as
a set of processes through which the EU changes the logic of political behaviour at national level, by becoming part of domestic discourse, political structures, and public policies. Europeanization in the context of CEE corporate governance is seen as a process whereby the EU exports models of market regulation to CEE, and it affects the relations between firms, the state, and trade unions (Grabbe 2003: 247-8).
This second wave aimed to complete the transition process and open up oligarchic and exclusive institutional frameworks and practices to competition. Even in 1991 the European Bank for Reconstruction and Development (EBRD) considered such concerns vital:
The countries of [ECE] have shown themselves determined to create new democratic market economies. The linkages between the political, economic and social components of the changes have become increasingly clear. A market economy requires an adequate legal and democratic political framework to foster the spirit of enterprise, individual rights and institutional stability necessary for sound investment (EBRD 1991: 26).
In the second wave of neoliberalisation, reformers pointed to the harm done by vested interests and rent-seeking in preventing the completion of transition. They called for opening up key sectors of the economy to competition (especially the coal, shipbuilding and steel industries), as well as for promoting entrepreneurship and removing existing distortions in the ECE labour market that impeded the supply and development of quality human capital. This approach resonated with wider changes in the global political economy and was implemented by the World Bank in its move towards “deep interventionism.” Deep interventions have three traits. First, they entail “irreversibilities”; second, they are distinguished from ‘shallow interventions that typically make up a part of “reform” packages’; and third, that a ‘large enough disturbance can move an economy in a direction that converges to a steady state equilibrium’ (Hoff & Stiglitz 2001: 419-20, cited in Cammack 2004). In essence, this abandons economic shock therapy and in its place proposes an institutional shock therapy. As the EBRD noted in its 1995 Transition Report,
the next period of the transition must be led by high-quality investment… With the right kind of institutions, leadership and partnership, the private markets in these countries can deliver the quality investment which is necessary for successful economic growth (EBRD 1995: 8, emphasis added).
Despite the shift in strategy, progress was slow: in 2004 it was noted that in Poland ‘little further progress has been achieved during the past three years to improve the investment climate, the competitiveness of the economy and the level of administrative capacity’ (EBRD 2004: 1). Instead then of the onset of an organic or spontaneous process of reform we witness a series of reforms promoted by a coalition of state managers and IFIs (international financial institutions), reinforced by the ever growing impact of prospective EU accession.
The new design of European assistance gave birth to three further instruments, PHARE/twinning, ISPA (Instrument for Structural Policies for Pre-Accession), and SAPARD (Special Assistance Programme for Agriculture and Rural Development), to help candidate states to enforce what has become the most prominent part of conditionality, the acquis communautaire.5 The three programmes concentrated exclusively on priorities for accession, as defined by the Council in the Accession Partnership for each candidate country. In 2000-06, PHARE provided some €11 billion of co-financing for institution-building support – through "twinning" and technical assistance – and for investment support.6
Rather like the way Shock Therapy became the answer to the problems bequeathed by communism, the catch-all solution to problems following the transition recession has come to be the EU. The EU’s wider reach in economic reform, demonstrated in the membership negotiations, means that the EU has taken over as the primary driver of neoliberalisation. During the early 1990s the EU had relatively little impact on the fundamentals of transition, in comparison with domestic social forces, the IMF and the World Bank. The Accession Partnerships changed that with, for instance, the threat of conditionality linked to financial aid. Agenda 2000 has been another attempt at readying the ECE states for membership. However, ECE remains stuck playing catch-up with the West, and the unevenness of its development is not necessarily ameliorated by EU accession.7
EU membership negotiations created a notable improvement in the business environment for investors in ECE during the late 1990s. Market-oriented reforms advanced under the new Brussels Consensus. However, a World Bank (2005) study of Poland shows a wide array of input from other – non-EU – neoliberal institutions. Indeed, the most recently negotiated Country Assistance Strategy between the Bank and Poland includes operations to be executed by the World Bank, EU, European Investment Bank, EBRD, IMF and OECD, as well as lesser activities associated with the UK Know How Fund, UNDP, and Global Environment Facility. This document reveals how key areas of reform have been assigned to different international organisations. For example, the lion’s share of responsibility for actively ‘improving [Poland’s] investment climate and enhancing competitiveness’ is ceded to the EU and the EBRD, though the World Bank does retain a role in competition-related policies such as infrastructural reforms, labour market reforms, and the modernisation of the Polish coal sector, and the OECD has reformulated its mission to become more actively involved in promoting competition law reform (World Bank 2005).8
Administratively determined conditionality predominates. While social learning and lesson-drawing may explain certain elements of EU rule adoption in ECE (Jacoby 2001), ‘conditionality has been the main driving force and the main condition of effective EU rule export in this region’ (Schimmelfennig & Sedelmeier 2005: 221). Right from the start, the process of accession has predominantly involved the assimilation of the ECE states as they shed their not-yet-fully-EU status (or Easternness) in favour of deeper Europeanness defined in neoliberal political economic terms (Kuus 2004).9 Enlargement was interpreted as a historical and political obligation that could generate benefits for old and new members but only if organised appropriately, and of course the appropriate organisation was to reconfigure homo sovieticus not just as home oeconomicus but homo neoliberal.
...then try, try, try again: The promotion of a global agenda for neoliberal competitiveness
There is some parallelism in the reform agendas of various post-communist institutions. At the World Bank, Stiglitz emphasised the need for greater flexibility rather than the dogmatic application of a priori neoliberal models, and a greater sensitivity to national and regional conditions. This reflects what the World Bank saw as a “major challenge”:
to create a new economic framework, while simultaneously changing the political system, behaviour, and even the attitudes of the people involved, without creating intolerable social conditions which could seriously endanger their societies and threaten those nearby (EBRD 1991: 23; see also Fine 1999: 10).
The application of neoliberal strategies produces new institutional and regulatory landscapes with their corresponding logics and political imperatives (Peck 2004). Gough identifies new modes of socialisation arising as both capital and labour are confronted with economic and social problems resulting from neoliberal “roll out” and “roll back”. These modes of socialisation are necessitated by the inability of the core mechanisms of neoliberalism to provide the means for social reproduction. Instead, neoliberalisation ignores the palpable failures of inefficient production in its earlier accumulation regime (Gough 2002).
Such a conceptualisation of neoliberalisation necessarily comprises complex, contradictory, and contested processes. Peck and Tickell usefully identify roll-back neoliberalism as ‘the active destruction or discreditation of Keynesian-welfarist and social-collectivist institutions (broadly defined)’ (Peck & Tickell 2002: 37), essentially associated with the now traditional understanding of neoliberalism as based on multiple forms of privatisation (sale of publicly owned assets, deregulation, and public sector reforms like contracting out of those services). However, what Peck and Tickell add to this formulation is the notion of roll-out neoliberalisation, ‘the purposeful construction and consolidation of neoliberalized state forms, modes of governance, and regulatory relations’ (ibid.). This is intimately connected to emerging forms of global governance as well as escalating social intervention, public-private finance initiatives, and welfare-to-work programmes that seek to further discipline, criminalise, and marginalise those already suffering from the effects of roll-back neoliberalism (the by now notorious single mothers, those on low incomes, immigrants, racial minorities but now ever more ordinary citizens).
This can only be understood by grasping the global and local spatiality of the process. Crucially, the roll-out phase is being carried out increasingly under the rubric of promoting universal convergence on a particular global agenda for neoliberal competitiveness. Both roll-back and roll-out neoliberalisation have been subject to an a priori requirement, namely a redefinition of the relationship between national state and regional and international institutions, and the general closure of divergent economic paths to development. Competitiveness is the latest in the series of strategies employed by neoliberal social forces against labour resistance. According to a High Level Group report on the Lisbon Strategy10:
‘Competitiveness’ is not just some dry economic indicator ... it provides a diagnosis of the state of economic health of a country or region. In the present circumstances, the clear message must be: if we want to preserve and improve our social model we have to adapt; it is not too late to change. In any event the status quo is not an option (European Communities 2004: 44).
Labour market reform is an essential element of this strategy, and its principal objective, as elsewhere, is the creation of a ‘flexible’ labour force. Accordingly, the Kok Report argues that a coordinated reform process is required across all EU states and identifies key requisites for growth: ‘identify and remove barriers to competition’; ‘creating the right climate for entrepreneurs’; and ‘building an inclusive labour market’ which increases the adaptability of workers and enterprises, and the effectiveness of investment in human capital (ibid.).
This is a message delivered repeatedly since the late 1990s. For example, Agenda 2000 sought to ready Poland for EU membership, but within the broader context of a hegemonic neoliberalism:
Successive Polish governments have made serious attempts to improve competitiveness by framing ... an ambitious medium-term programme aiming at export- and investment-led growth, continued disinflation and sound public finance … a comprehensive reform … which focuses on the requirements of EU accession, and more specifically on the need for greater fiscal discipline and the channelling of national savings into investment (European Commission 1997: 33).
It is not surprising, given the significance of the dependent reintegration of the states of ECE into the global political economy, that the EBRD played a parallel role in promotion of a global agenda for neoliberal competitiveness. The 1990 agreement establishing the EBRD declared that its purpose was
to foster the transition towards open market oriented economies and to promote private and entrepreneurial initiative in the Central and Eastern European countries committed to and applying the principles of multiparty democracy, pluralism and market economics (EBRD 1990).
In 1999 the Bank adopted an operational strategy, Moving Transition Forward, which reflects early formulations of the key aspects of the competitiveness agenda. In an uncanny echo of the World Bank’s Comprehensive Development Framework, it argued that
primary responsibility for shaping the response to the transition ‘challenges’ lies with the countries of the region themselves, and they are urged to foster investment, entrepreneurial and market skills and build popular support for them, while the IFIs and the international community will play a crucial supporting role (Cammack 2006: 356).
It should be no surprise that the EU and the European Commission have been prominent actors alongside the OECD and the World Bank in the attempt to cultivate a particular version of successful transition in ECE. However, there is an ambiguity at the heart of the process for the economies of the Western European core given the global pressure rooted in the new challenge of global competitiveness. ECE has emerged simultaneously as prospective new field of expansion and source of competition. Following the entry into force of the single market on January 1, 1993, the Copenhagen Council meeting in June set in motion the process that would lead to publication of the White Paper on Growth, Competitiveness and Unemployment in December, and at the same time pledged EU support for ECE countries as they pursued EU membership. In his address to the Council, Commission President Jacques Delors called for a programme of renewal: greater integration of the single market, measures to boost investment, reduced taxes on labour, and more active labour market policies (European Council 1993, Annex 1). The main Council report ‘underlined the importance of approximation of laws in the associated countries to those applicable in the Community’ and ‘agreed that officials from the associated countries should be offered training in Community law and practice’ (European Council 1993: 15).
The promotion of a global agenda for neoliberal competitiveness within the EU went hand in hand with its promotion beyond what were then its borders, as the Council set out a framework for dialogue and consultation with the associated ECE countries towards membership, intended to secure their full integration into the single market. The global extent of the promotion of competitiveness has not just appeared from nowhere. As evidence of the extensive consensus that has emerged around the competitiveness agenda we may note the synchronicity of three recent publications by key agencies in the competitiveness agenda: the OECD, World Bank and the EU. OECD findings revealed that ‘pro-competitive regulations improve productivity performance’ (OECD 2003: 10). The World Bank World Development Report 2005 argued that ‘a good investment climate encourages firms to invest by removing unjustified costs, risks, and barriers to competition’, promoting ‘an environment that fosters the competitive processes that Schumpeter called “creative destruction’’’ (World Bank 2004: 2-4). Considerable consensus exists at the international level as to the logic of competition-enhancing reform. Given the extent to which such institutions coordinate operations, this consensus points toward common adoption – or in the institutional discourse ‘ownership’ – at the national level of a competition-oriented reform agenda across all transition and developing states (Jessop 2002).
Competitiveness along these lines is being aggressively promoted by a number of the world’s leading governments, IFIs, and regional development organisations. By adopting the Lisbon strategy in 2000, the EU committed itself to becoming the ‘the world’s most dynamic and competitive economy’ by 2010 (European Commission 2000). Van Apeldoorn (2000) outlines a new competitiveness discourse sponsored by elite business organisations which imposes a set of benchmarks on policymakers reflecting the interests of European transnational capital. Such changes in global/international forms of governance are as evident in the reorientation of domestic/national economic and social policy.
What is perhaps most curious about these changes is the degree of consensus among international organisations in developing and co-ordinating policy initiatives, and transmitting them to national governments (Charnock 2008). It is commonplace to suggest that states continue to act as key nodes or points of transmission in an increasingly integrated global system (Jessop 2006; Jayasuriya 2004):
Over the last two decades international institutions have been acting with increasing purpose to promote unimpeded capital accumulation on a global scale by supporting governments committed to such reforms, and coaxing other governments towards desired reforms where they remain reluctant (Cammack 2007: 1).
Just as the shift in the 1990s to the second-wave emphasis on institutions reflects a refusal to change overall direction, since the mid-2000s – and especially since 2007/8 – we are witnessing the renewal of the neoliberal model, properly understood and applied through the competitiveness mechanism. Rather than providing impetus for an alternative, the crisis has reinforced a continued commitment to neoliberalism (Macartney 2009). The response to the crisis has been increased dialogue and cooperation with other IFIs, joining forces in investments and policy dialogue. The joint IFI Action Plan created by the EBRD, EIB and World Bank in February 2009 included bringing €25 billion of investment to the financial sectors of ECE, beginning in 2010 (EBRD 2009: 12).
The promotion of a global agenda for neoliberal competitiveness is the latest strategy employed by capital against labour aimed at reducing policy flexibility at the national level. A fundamental shortcoming of analysis to date lies in the incomplete assessment of neoliberal reforms under the rubric of competitiveness, as the account revolves primarily around the imperatives generated by economic restructuring. This means a stunted assessment of the deeply political nature of the process throughout. The explicitly neoliberal content of reform activities is therefore concealed behind the apparently benign technocratic advisory process. It is more appropriate to see this as a strategic initiative aimed at securing the social relations of capitalist accumulation, ensuring competitiveness not just for ECE, but for capital on a global scale.
Conclusion: The re-politicisation of neoliberalisation
This paper has argued for the re-politicisation of the processes associated with post-communist transition, in contradistinction to the thrust of the current literature which focuses on transition, EU enlargement, and integration as an incremental and technocratic process. Such a focus conceals just as much it enlightens, through its tendency to focus on the application of a set of formal rules which by definition prohibit meaningful debate. It evades discussion of alternatives and the political content of post-communist neoliberalisation. Our argument has been based on three inter-related claims: first, that neoliberal social forces wish to see the market reform process advanced to the point of completion in ECE; second, that the discourse of transition, EU enlargement, and more recently competitiveness, reifies neoliberal institutions (especially the market) so as to close down the categories of political economy and deny their contradictory social constitution, whilst neglecting due consideration of the historicity and contingency of reform; and, third, that neoliberal social forces are engaged in shoring up the hegemonic assumptions of powerful transnational epistemic communities of experts, policymakers and capitalists, thereby delimiting the space for counter-hegemonic ideologies and limiting the debate on possible alternatives to neoliberalisation.
Political content has been supplanted by technocratic evaluations which have in practice frustrated the aspirations of ECE populations who aspire to rejoin a non-neoliberal version of the European mainstream. What debate exists is predominantly sterile. In strategic terms the additional disadvantage is the danger that by postponing political debate until it is too late, the default option for ECE is the neoliberal model becoming ever further entrenched in both East and West.
Neoliberalisation in ECE has entailed two waves to date: the first-wave, “roll back” phase aimed at reducing the scope of state interventionism in the economy and the fiscal pressures this brought to bear; whilst the second wave, “roll out”, was oriented towards compensating for the ‘manifold failures of the market, the state, and governance that are persistently generated within a neoliberal political framework’ (Brenner & Theodore 2002: 27), intimately correlated with potential and actual EU membership. The post-communist transition state is thus retheorised as:
not a thing, container, or platform, but a socially produced, conflictual, and dynamically changing matrix of sociospatial interaction. The spaces of state power are not simply ‘filled’, as if they were pregiven territorial containers. Instead, the state … is actively produced and transformed through regulatory projects and socio-political struggles articulated in diverse institutional sites and at a range of geographical scales (Brenner 2004: 76).
ECE is now embarked on a third wave of neoliberalisation best understood as aimed at restoring stable patterns of accumulation under the lexicon of promoting competitiveness within a multiplicity of regional, national, and sub-national spaces through the reorganisation and de-socialisation of ever more politico-economic institutions. We increasingly live in an epoch of a global agenda for neoliberal competitiveness in which the dynamics of global capitalist competition are more present and powerful than ever before, and in which the systemic conditions that drive competitiveness further forward and purposive action in promoting it are mutually reinforcing. Counter-tendencies and tensions exist; in ECE we see the rise of populist social forces. The international institutions that have cropped up repeatedly in this paper – from the EBRD, the IMF, the World Bank, and the OECD to the EU – are seeking to build a culture of neoliberal competitiveness at a number of different scales, primarily regional and global. What is most striking when investigating these concerns is quite how universal and synchronous these processes have become.
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1. Including think tanks, research institutes, business schools, management consultancy, and the business media as well as political parties. Gramsci employed the concept of historic bloc as a contribution to what he considered problems with the relationship between base and superstructure. The historic bloc reflects a necessary reciprocity between structure and superstructure realised through specific intellectual, moral, and political practices which translate narrow particular interests into more general. The historic bloc illustrates, according to Gramsci, how ‘material forces are the content and ideologies are the form, though this distinction between form and content has purely didactic value’ (1971: 366-7).
2. The negotiations, termed the Round Table agreements, reaffirmed support for the previous regime’s reconciliation with the IMF following application for membership in 1987. This rapprochement, with its echo of Gramsci’s concept of a passive revolution, permitted the Round Table negotiations to produce free elections, but economic power remained in the same hands as before (Shields 2006).
3. Sachs noted (1993: 83) that “Significantly less than 2 percent of the industrial work force in the United States is employed in enterprises where workers own even 29 percent of the shares of the firm, and almost no major industrial firm is majority owned by the workers.”
4. The 2002 European Council summit held in Copenhagen 12-13 December made the formal decision to admit the 8 new members from ECE. This was the culmination of almost a decade of negotiations that had laid out the membership criteria for the ECE candidates. At an earlier European Council meeting (also in Copenhagen) in 1993, the EU had agreed that accession would happen if the candidates had satisfied the following obligations of membership known as the Copenhagen criteria: stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities, the existence of a functioning market economy and the capacity to cope with competitive pressure and market forces within the EU, the ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union. It is worth noting that no previous enlargement had required this degree of compliance with the membership criteria nor was there any mechanism in place in 1993 to ensure that existing members satisfied these criteria.
5. The PHARE programme is one of the three pre-accession instruments financed by the European Union to assist the applicant ECE countries in their preparations for joining the European Union. See http://ec.europa.eu/enlargement/how-does-it-work/financial-assistance/phare/index_en.htm. “A twinning is the coming together of two communities seeking ... to take action with a European perspective and with the aim of facing their problems and developing between themselves closer and closer ties of friendship” (http://www.twinning.org/en/page/a-quick-overview.html). Although twinning predates Community assistance, finance has been available from the European Commission to support twinning initiatives since 1989, and the PHARE programme links the twinning concept to redevelopment in ECE. Following the 1993 Copenhagen Council's invitation to ECE to apply for membership, PHARE support was reoriented to a marked expansion of support for infrastructure investment. By 1997 PHARE's emphasis became the candidates’ timetable for accession and the template for financial resources. With a set of Road Maps and Accession Partnerships alongside PHARE, the EU was able to discipline applicants into certain pre-accession behaviours through bilateral negotiations. From 1999, SAPARD and ISPA focused on rural development and transport infrastructure projects respectively.
6. The Copenhagen Council of 1993 defined conditionality around three criteria: 1) stable institutions (guarantee of democracy, rule of law, human rights, minority rights); 2) functioning market economy and capacity to cope with competitive pressures inside the EC; 3) the ability to adopt the acquis – the accepted aims of political, economic, and monetary union. The Madrid Summit in 1995 added that candidate states should have the administrative and judicial capacity to implement the acquis (European Commission 1997).
7. Agenda 2000 was intended to stimulate EU competitiveness after enlargement and was designed to address the reform of certain policies in the context of the perceived challenge of enlargement. The framework focused on the common agricultural policy, a more directed and limited structural assistance policy, and pre-accession instruments, all in the context of the imposition of stricter financial and budgetary constraints. "Agenda 2000: For a stronger and wider Union," http://ec.europa.eu/agenda2000/overview/en/agenda.htm
8. As the OECD notes, “Well-designed competition law, effective law enforcement and competition-based economic reform promote increased efficiency, economic growth and employment for the benefit of all. OECD work on competition law and policy actively encourages decision-makers in government to tackle anti-competitive practices and regulations and promotes market-oriented reform throughout the world.” OECD, ‘Competition Law and Policy’, http://www.oecd.org/department/0,3355,en_2649_34685_1_1_1_1_1,00.html.
9. Cf. Blokker (2005), for an interesting, if politically anaemic, historical sociological review of the forces for modernisation in ECE.
10. The Lisbon Strategy was set out by the European Council in Lisbon in March 2000 and was intended to deal with the sclerotic European economy and the low productivity of EU workers in comparison with other regions of the global political economy. It aimed to make the EU "the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion", by 2010. The strategy would achieve this by reconciling a Schumpeterian approach to innovation and competitiveness with the more inclusive social policies of the European Social Model. Innovation, the knowledge economy, and the open method of coordination would be at the heart of the strategy. Unfortunately, in attempting to reconcile the irreconcilable the Lisbon Strategy is considered a failure and was replaced by the Europe 2020 strategy.