Volume 54 (2018): Issue 4 (December 2018)

The main aim of this paper was to shed a new empirical light on the nature and most salient features of the evolving postcommunist capitalism in 11 Central and Eastern European (CEE11) countries against the backdrop of Western European models of capitalism. The research approach capitalizes on the conceptual framework put forward by Amable [2003, The diversity of modern capitalism, Oxford University Press, Oxford] , i.e., it seeks to identify the current clusters or models of capitalism in 25 European Union (EU) countries in six institutional areas. However, in contrast to the original Amable’s methodology, the subspace clustering method was used, what allowed to take into account a vast set of 132 institutional measures and to analyze their change between 2005 and 2014. The main finding is that CEE11 countries developed their own distinct model of capitalism dubbed “patchwork capitalism.” In all but two areas, i.e., product market competition and financial intermediation, postcommunist countries form their own institutional clusters that are substantially different from those observed in Western EU countries. In addition, the paper shows that each CEE11 country followed its own distinct vector of change, which eventually led to a unique patchwork of institutions. Yet, the institutional variance within the region is smaller than the difference between CEE11 countries and other country clusters in the EU.

Can comparative capitalism (CC) assist us in understanding both the rise and the current challenges of emerging market capitalism? This article applies analytical instruments developed in CC scholarship on emerging markets to address this question. During the last two decades, CC scholarship – defined by common features such as the emphasis on institutional contexts that are sticky and most important at the national level – has evolved considerably. This contribution to the third generation of this scholarship highlights the degree of international economic integration as the central strategic choice to be faced by emerging economies. It does so by systematically comparing dependent market economies of East Central Europe with the state-permeated economies of China, India and Brazil. The core finding is that both types of capitalism have been able to mobilize substantial institutional complementarities during the last three decades but will face considerable economic and political challenges in the years ahead.

A growing literature examines institutional arrangements in Central and Eastern European (CEE) market economies. Some sources claim that there is a distinct model of capitalism in this region. This paper overviews and analyzes the results of these studies in connection with crucial methodological issues showing the limitations of institutional analysis. Despite all methodological difficulties, with a combination of different methods, institutional comparison is able to provide essential insights into the position and future prospects of CEE member states. One of the most important insights is that the maintenance of economic convergence to Western European countries requires substantial institutional changes. This paper also suggests that a broader historical context can help to evaluate opportunities and the risk of path dependency. It seems fruitful if the current development is fit into the conceptual framework which conceives of CEE as the region of “in-betweenness,” where the legacy of incomplete modernization attempts hinders the optimal institutional arrangement.

The post-2008 slowdown in economic convergence by countries of east central Europe towards the level of western Europe is interpreted with the help of a concept of dependent capitalism. Convergence appeared to be rapid up to that year, but then stalled, albeit with differing results depending on the measure used. Dependent capitalism meant that the driver for economic growth comes from inward investment by multinational companies (MNCs). Domestically owned businesses failed when faced with international competition, and their agenda hampers policies supporting an active role from the state. Inward investment is attracted by low wages and has contributed to substantial growth, but the slowdown in investment was accompanied by much slower economic growth and dangers that past investment could turn into a burden on the external balance. The strategies pursued by incoming MNCs have brought areas of upgrading, but frequently leave technological levels somewhat behind those of western Europe. Even where they use the same technologies as in their home countries, wages still remain significantly lower. Achieving full convergence would require a different growth model following a substantial change in economic policies: this does not appear likely in the near future.

The paper analyzes the institutional architecture and the effects of product market competition in 11 countries of Central and Eastern Europe (CEE). The aim of the research was to find out how similar or dissimilar are the CEE countries in the area of product market competition compared with the four models of capitalism prevailing in Western Europe: the Anglo-Saxon (liberal) model (the UK), the continental model (Germany), the Scandinavian (Nordic) model (Sweden), and the Mediterranean one (Spain). The research method involves calculations of the coefficients of similarity and the analysis of polygons, being the extension of our own concept of the hexagons of similarity. The dynamic approach adopted in this study allows to examine the path dependence in order to assess how the institutional environment evolved over time. The analysis indicates that almost all CEE countries were the most similar to the Mediterranean model of capitalism represented by Spain. However, the variety of results for the individual variables is also a proof that the model of capitalism prevailing in CEE in the area of product market competition may be called a patchwork capitalism.

The purpose of the article is to characterize selected theoretical and methodological advantages, controversies, and limitations of the varieties of capitalism (VoC) approach in application to Central and Eastern European (CEE) countries. It indicates the reasons for the usefulness of such an approach for the study of postcommunist capitalism in the region. The application of the VoC is considered as going beyond the dominant approaches to systemic changes in CEE in the 1990s, such as the strategy of neoliberal economic reforms and the “transitology” prevailing among political scientists and sociologists who referred to democratic patterns of change in Southern Europe. After a decade of reforms, due to different trajectories of development in the countries of the region, such interpretations lose their explanatory power. Other ways of analyzing transformations in CEE have become needed. The need for new theoretical inspirations has also been strengthened by the European Union (EU) accession of the same postcommunist countries. The accession has generated a search for a new language of description and analyses of institutional changes in all the countries of the enlarged Union. In this context, the VoC approach seems to fill the theoretical vacuum left by the end of the “transition” debate in the political research on CEE and provides a major post-transition research agenda and has also built a bridge between discourses which were previously separated in the political economy, neo-institutional approaches, economic sociology, and political sciences. The key advantages of the VoC approach are presented, which made these perspectives influential among researchers of institutional changes in postcommunist countries. The theoretical and analytical framework, classifications, typologies, clusters, indexes, indicators, and so on are tested and widely applied as well. Selected weaknesses and limitations of the VoC approach in the application to CEE are also analyzed. Their manifestation is the confusion associated with the use of various classifications of models of capitalism and the functionalistic character of the VoC focusing on explaining the results, but not the causes of the institution’s activities, as well on institutional determinism diminishing the significant role of the social factors of change.