Identity Politics and Economic Reform: Examining Industry-State Relations in the Czech and Slovak Republics

Abstract

OVER THE PAST DECADE THE capitalist and democratic transformations in Eastern Europe have enabled certain countries to integrate successfully in Western institutions and organisations. In contrast to Slovakia, three Central European states, Hungary, Poland and the Czech Republic have already become members of NATO and expect to join the European Union before long. Curiously, a rapprochement between the West and Slovakia has been much slower. The diverging paths of Slovakia and the Czech Republic are quite surprising given their identical starting point in 1989. Analysing this divergence may offer insights into understanding the trajectories of other post-communist states vis-a-vis the West. An area of divergence of particular interest between the Czech Republic and Slovakia involves the process of transforming the command economy to a market economy, and specifically the politics that facilitated or obstructed liberalising economic reforms. In the transformation of former communist economies more generally, success in advancing liberal economic reforms can be seen to depend upon the ability of state actors to mediate, and even suppress, the demands of pivotal social and industrial actors. Most post-communist governments recognised the importance of the managers of medium and large enterprises as a key group that could facilitate or hinder the process of capitalist reform. While governments varied in their choice of whether to appease, co-opt, disempower or ally with managers, no government undertaking structural economic reforms could choose to ignore them-as the managerial elite (also known as the former industrial nomenklatura) constituted one of the most powerful interest groups at the end of the communist period. Indeed, after the collapse of the former regime, managers in many post-communist states continued to enjoy widespread powers and privileges. Through their links to technocrats in the branch ministries and through their paternalistic relationships with the labour force, managers were well poised to obstruct or redirect the government's approach to reforming the economy. In this article we explore the relationship between management and the state in economic transition in order to understand why certain economic actors are better able to shape policy making in some contexts than others. We consider two examples of post-communist economic reform-the Czech and Slovak cases-and analyse the extent to which managers shaped the privatisation process and altered the direction of