No. 57, 1998 - Transformation as a Subject of Economic Theory

After a decade of systemic changes in Central and Eastern Europe there is a growing pessimism among specialists and the general public, both on the subject as such, and on the ability of the theorists to deliver anything meaningful. This applies a fortiori for the economics profession, where a peculiar version of the impossibility theorem is about to emerge, postulating theoretical economics’ inherent inability to say anything meaningful. And not only the uniformed public is ready to adopt such a defeatist stance. Having presented an earlier version of this paper to a research seminar at a large European university, the dean of the economics faculty commented: in the end, there is not much to be discussed, since the two topics are unrelated. At an other occasion yet another distinguished professor noted: economists nowadays are like philosophers, they do not care much about reality. They prefer their self-contained theorical constructs, and the art is in discussing minor modifications within the high guild.
But also among the area specialists there is a feeling on discontent. On the one hand we find self-justifying accounts over the accomplishments of traditional Sovietology while simultaneously conceding the field’s inability to predict the collapse of the Soviet system (let alone its timely sequence). This is certainly an analytical flaw and reflects the tradition of highly esteeming the collection of facts and figures, and playing down the importance of the analytical and theoretical frame in which these are integrated. The scientific issue clearly is not how high or low was the Soviet GDP, or the share of defence spending, but what we should think of the reasons for the collapse, as well as of many signs of decay, or of the nature of the crisis that has triggered the change in the regime.
Understandably there has been much irritation from the very outset over the „intrusion” of outsiders to this area, who have been criticised for a large number of fallacies, most prominently for having imposed their academic culture and inherited preoccupations over the political consultancy and decision-making process. This feeling has evolved into bulky volumes and vitriolic pieces, like the book of Lavigne speaking about the all-embracing neoliberal party line, or of van Brabant blaming neoliberalism for being irrelevant on growth and modernisation issues, or Przeworski cautioning against a naive minimalist approach to state interventionism, and the list could be extended at will by contributions from authors from the region itself.
The task of the present paper is to try overcome this obviously unproductive counter position, where rehashing one’s own stance or preferences often dominates the interchange of ideas. My basic thesis is that economics, when interpreted in sufficiently broad terms, can meaningfully contribute to interpreting facts and figures, provide an analytical frame for arranging them and even suggest some lines of action for policymaking. Meanwhile, doing so economics – like any other discipline – can not aspire for exclusiveness. The subject of analysis is a multidimensional, and in many respects open-ended, socio-economic process where several approaches are justified. However, methodological considerations, as well as practical experience caution against too much eclecticism, where the concurring paradigms of various social sciences are mixed up. As Prybyla aptly put it, „one should be sceptical about onesize-fits-all constructs but also shun deconstructivist academic wooliness for which everything depends on everything. Attempts, trying to present a theory of everything and in the end, of not very much at all, are not a suitable substitute for even an inadequate economic theory”. In other words, while sociological, economic and political science or social anthropology visions may well never coincide, this might well not reflect more than various viewpoints, as of a same nude, painted from the back or from the side, or face-to-face. Thus in what follows I shall adopt a consciously one-sided, narrow economic approach and try to figure out what this area of research has to contribute to understanding systemic change, and vice versa, what new impetus can be derived from the experience of this area for general economics.

The paper is available here.