Divide and Pacify: Strategic Social Policies and Political Protests in Post-Communist Democracies

Pieter Vanhuysse’s Divide and Pacify is a short and crisply argued account of the early years of post-socialist transition in East Central Europe, which not only offers a novel and provocative approach to the problems of policy and politics in transition, but also opens up an innovative research agenda for understanding the formation of political cleavages in East Central Europe today.

The volume sets off with an ambitious aim to resolve not one but two of the potentially greatest puzzles of post-socialist transition. The first revolves around the problem of popular quiescence in transition: taking their cue from Latin American experiences and relying on a number of theories that relate periods of economic hardship and expanding political opportunities to massive popular protests, social scientists have generally predicted turbulent times in post-1989 Eastern Europe.[1] And yet, in spite of rapid democratization and a recession “similar only to the Great Depression” (p.10), protest levels in East Central Europe (abbreviated ECE) remained decidedly muted, not only in comparison to Latin America a decade earlier, but even when compared to stable West European countries in the same period (p.19).

The second puzzle concerns the behavior of some ECE governments in the early nineties, which, in spite of their otherwise firm commitment to fiscal prudence, at the time of severe economic contraction and rising inflation disregarded the “international financial advice and economic common sense” (p.100) and resorted to offering various forms of “abnormal” retirement options to large portions of the population, such as early retirement and disability pensions. Not only was this measure to automatically reduce the tax base and increase the portion of welfare-dependents in a cash-strapped system, it also promised to make the problem permanent by withdrawing masses of relatively young people from the labor market and dramatically increasing the system dependency ratios (number of active workers per pensioner) for the years to come. Still, far from trying to contain this burden on public resources, some of the governments in the region even ensured that the pensions were becoming more generous (p.91).

Vanhuysse’s elegant, if somewhat stylized solution, is to unlock each of these puzzles by the other—according to him, East European governments resorted to such drastic measures to relieve the labor market not out of accident or ignorance, but in order to preventively stave off any popular reaction that might have endangered the reform process. In Vanhuysse’s own words: “in the initial stages of the transition, governments attached a high priority to low levels of disruption in the polity, whatever else they wanted otherwise” (p.49). In order to accomplish this, they used “strategic social policies”, breaking up the aggrieved population of workers threatened by falling living standards and rising unemployment into different “work-welfare groups” (workers, unemployed and pensioners), and creating distributional conflicts among them as each of these groups now laid a separate claim on state resources. On the one hand, Vanhuysse relies on theories of social networks to argue that, once taken out employment, former workers lose the local networks they used to rely on and are a lot less likely to engage in protest activities, exchanging public action for a “private exit” into the informal economy. On the other hand, he provides evidence of dramatic changes in the structure of welfare spending, demonstrating the rise of “abnormal pensioner booms” (p.73). These exceeded, by far, the increase of the populations aged above 60 (whose share, indeed, remained stable throughout the period) and was, moreover, accompanied by a growing generosity of pensions, which presented a further incentive to the threatened workers to withdraw from the labor market.

There are several advantages to this approach, which render it an important contribution to scholarly inquiries into post-communist transition. For one, Vanhuysse emphasizes the strategic and purposeful action on the part of the governments, rejecting the accounts that see the development of social policies in the region as a byproduct of ad hoc, “emergency responses”, or alternatively as a continuation of policies already laid out under socialism. He contrasts the cases of Poland and Hungary, which indeed experienced “great abnormal pensioner booms” with that of the Czech Republic, where the government preferred to keep workers “pacified” by keeping them in employment, even if that meant refusing to restructure loss-making enterprises, to prove that the governments indeed had a choice, although each choice came at a cost.

The “divide and pacify” policies of Poland and Hungary were thus neither necessity nor an accident but consequences of conscious institutional design. Moreover, it was a decision that has had lasting consequences on the configuration of political forces in these two countries. Transforming pensioners into a powerful voting constituency resulted in the entrenchment of certain socio-economic policy trajectories. In other words, social policies were not simply measures responding to “exogenously given groups of reform winners and losers” (p.3) but have instead contributed to the formation of winners and losers, substantially transforming the political-economic cleavages within these countries’ body politic.

This said, Vanhuysse’s account is far from unproblematic, not least because his arguments and intuitions are not always empirically well grounded. Just because the governments invested substantial efforts in pacifying the population, it does not follow that these were the cause of quiescence. Vanhuysse argues that dividing the population of threatened workers into several work-welfare categories weakened their mobilization potential, and moreover caused distributional conflicts between the workers, the pensioners and unemployed, creating obstacles to a unified action. There are two problems with this argument. The first is that “distributional conflicts” were still to be addressed to the single provider–-the government, and the competing demands were just as likely to escalate the protest actions, as each group demanded more than the other, so as to dampen them.[2] The second is that we are not really offered an explanation of why, if a threatened population is divided into two (i.e. a part of them is taken out of the labor market), should we see both sides pacified?

Vanhuysse goes at some length to explain why those who have lost their employment status would be difficult to mobilize. However, this should only have an automatic “pacifying” effect on those still in employment if it means that their own status is thereby improved (i.e. that the wages grow as a result of tightening labor market, or that the threat of unemployment diminishes). However, none of this follows from the data that Vanhuysse himself presents—the real wages continued to fall for a while, and even though Poland for instance retired “abnormally” almost a million people between 1989 and 1996 (p.89), it still had between three and four million unemployed well into the 2000s, and at least as many working poor.

What is missing from the explanation, in short, is a more meticulous analysis of how “groups vary in the ways in which they combine the hardship-induced propensity to protest with the context-induced capacity to do so” (p. 43). These could include the structural factors (state of particular factories, sector-specific employment and unemployment patterns) and, even more importantly, a study of the agency from the “other side”, workers’ understanding of their new status and interpretation of the “proper” ways to respond to the changing political environment. Vanhuysse indeed mentions studies dealing with this problem in greater detail, but fails to elaborate on their implications for his own framework.[3]

The reason this is so important is that Vanhuysse’s ambition goes well beyond describing an odd policy that surfaced in Poland and Hungary in the early 1990s. His aim is to theorize more broadly the ways in which the governments use social policy to transform political constellations within (and, sometimes, beyond) their national boundaries. In the conclusions of his book, he suggests that “strategic social policy” can take on different guises: divide and pacify along ethnic lines in the Baltics, or employment cum wage arrears in Russia (p.136). The danger, however, is that attempts at generalization without specifying the actors’ position and constraints more clearly threaten to render the very concept of “strategic policy” meaningless: if there was no protest anywhere in the region, does that mean that all governments implemented strategic policies? And if they did, what made them choose different policies, and why was each of them effective?

Vanhuysse’s insistence that “divide and pacify” policy-making in Eastern Europe was strategic and intentional is a strong claim, which requires a lot more empirical substantiation than is offered in this slim volume. But that is also what gives the book its provocative edge and broaches an interesting research agenda–of finding out how and why did the different governments in the region settle on such different labor market policies, and what consequences these choices had on the constitution of East European welfare states. It is also a direction that Vanhuysse seems eager to follow. In a 2009 volume he edited with Alfio Cerami, he argues for an even stronger version of “strategic policy-making”, contrasting the cases of Poland and Hungary, where shifting the constellation of reform winners and losers in favor of the pensioners transformed potentially class-based political conflicts into generational conflicts, with Estonia and Latvia where class politics through “policy engineering” gave way to ethnic politics.[4] Once again, Vanhuysse’s arguments constitute more of a challenge than an explanation, but they outline a potentially very fruitful venue of inquiry: exploring the political decisions and cleavages of early transition politics in order to trace the ways in which these resulted in specific political configurations and potentials for conflict we observe today. As the second decade of transition unravels a lot less peacefully than the first, for anybody interested in the fate of East Central European democracies, this is a challenge that must be taken up.

1 See especially Przeworski, A. Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America. Cambridge, Cambridge Univerity Press, 1991.

2 For a similar argument see Calmfors, L. Centralisation of Wage Bargaining and Macroeconomic Performance: A Survey, OECD Economics Department Working Papers 131, OECD. The author demonstrates that inflationary pressures are much higher when several trade unions are involved in collective bargaining than when there is a centralized union structure.

3 See especially Ost, D. The Defeat of Solidarity: Anger and Politics in Postcommunist Europe. Cornell University Press, Ithaca, London, 2005

4 In Cerami, A. Vanhuysse, P. (eds) Post-Communist Welfare Pathways. Theorizing Social Policy Transformations in Central and Eastern Europe. Basingstoke, Palgrave Macmillan, 2009