Transformation for Better or for Worse? The Evidence from South East Europe

This blog is published as part of The Transformation Conversation: Blogs on the UNRISD Flagship Report 2016 and Agenda 2030. The series explores what it takes to design and implement innovative eco-social policies that will lead to transformative change and fulfil the potential of the 2030 Agenda for Sustainable Development. Together with the evidence, analysis and case studies in the UNRISD 2016 Flagship Report they are the part of the global conversation on implementing of the SDGs.

The first thing that struck me when I read the UNRISD 2016 Flagship Report was the meaning attributed to transformational change as a set of policies and structures that “expand rights, increase equality and reduce power asymmetries, and support sustainable and equitable structural change of the economy”. As a scholar of post-socialist transformation I have come to observe that in my field the notion of “transformation” has been associated with structural changes that generated social inequalities and boosted power asymmetries in societies which were previously relatively equal but perceived as inefficient. It made me think that the quality of any given “transformation” needs to be an important part of any reflection on the use of the term by the development community.

Two and half decades ago, when the period of so-called post-socialist transition started taking shape, critical voices claimed that a condition of full employment would no longer be possible, nor would the states be able to provide full income security for the unemployed or finance old-age protection, high-quality universal healthcare, free education and other public goods. Liberalization, deregulation and privatization were embraced as uncompromising policy options for the former socialist states, regardless of the social consequences they generated. This was in line with the widespread belief that free markets would anyway lead to growth and good governance. With the help of their loan arrangements, international actors promoted their reform agendas focusing on increasing efficiency within the social system and transferring experiences from the private to the public sphere. Various projects were implemented in different social policy areas, such as the multi-pillar pension model, health financing reforms and the introduction of diagnosis-related groups (as a means of evaluating hospitals), activating labour-market policies, targeted social protection and poverty reduction strategies.

Globalization and new technologies facilitated fast changes aiming to increase system efficiency. The adjustment to this modernization rhetoric also started generating new realities. The belief that almost everything could be individually navigated contributed to minimizing the importance of social policy as if other (social) factors had nothing to do with “success” in life. For instance, activation policies are intended to equip individuals so that they can best react to changing market demands. Regardless of its innovative character, this policy reform cannot work if there is insufficient job creation. When as a result of the post-socialist transformations whole industries collapsed and millions lost their jobs, it became the individual worker’s responsibility to adjust to the new conditions, although the frameworks for creating economic opportunities were quite volatile. Corruption, speculative practices and slow technology transfer were some of the factors which hindered economic development and in the absence of proper social safety nets many individuals fell prey to the vicious circle of precariousness and poverty. The individualization of risk brought about by economic liberalization thus may have the contradictory effect of producing less freedom to choose one’s place in society.

From social to unequal

National systems nevertheless vary in their susceptibility to these trends and ideas. My own research on the Yugoslav successor states shows that the transition made the former socialist states unequal—among each other but also within. While economic and political shocks have been disruptive to their national systems, some remained true to their local identity of a rather generous Bismarckian-Beveridgean social system comprising social insurance and social protection while others abandoned this commitment. In more positive cases, such as in Slovenia, the combination of a functional system of checks and balances, social participation and a favorable international environment stimulated both economic growth and facilitated relatively equal resource distribution. However, at the other extreme, dysfunctional institutions, corruption and unfavorable international pressures have been detrimental to social policies and have hindered economic and social progress altogether, as happened in Macedonia. Evidence has shown that (labour) tax cuts and decreased social spending have not necessarily contributed to economic development, formal job creation or poverty reduction. Still, some of these continue to be preferred policy recommendations even by what may be considered more progressive reports. In fact, austerity measures and fiscal consolidation have been the predominant policy responses to the global economic crisis. Tightened financial resources threaten to challenge established patterns even in more developed states that have upheld strong social systems and hence risk falling into greater economic and social imbalances. The crisis discloses the magnitude of international interdependencies, which suggests that future decision-making regarding resource allocation may depend more on the power constellations across countries rather than within them.

The real question is this: how can we ensure that future policy choices are informed by the lessons drawn from history , from analyzing the varying paths trodden by different states and the conditions that underpin the alternative choices? Will future economic development be guided by innovative ideas that are socially inclusive, as in the vision of the UN’s 2030 Agenda for Sustainable Development, or will policies that tend to stimulate social inequalities prevail? How can transparency be ensured and different ideas get their fair chance to be heard? The UNRISD Flagship Report with its research-based recommendations and analysis of innovative and transformative policies around the globe may certainly be an important source of guidance in that sense.

ABOUT THE AUTHOR
Marija Stambolieva is a Research Associate at the University of Applied Sciences Osnabrueck. She is the author of Welfare State Transformation in the Yugoslav Successor States: From Social to Unequal. 2016. Routledge.