Andrew Leahey PSCI-610 Dr.

Rudra Sil Final Project - Review

Review Article The Political Economy of Transitions Andrew Leahey Bruce J. Dickson, Wealth into Power: The Communist Partys Embrace of Chinas Private Sector, Cambridge, Cambridge University Press, 2008. Timothy Frye, Building States and Markets After Communism: The Perils of Polarized Democracy, New York, Cambridge University Press, 2010. Anna Grzymala-Busse, Rebuilding Leviathan: Party Competition and State Exploitation in PostCommunist Democracies, Cambridge, Cambridge University Press, 2007. Stephan Haggard & Robert R. Kaufman, Development, Democracy and Welfare States: Latin America, East Asia, and Eastern Europe, Princeton, Princeton University Press, 2008. Introduction The fall of communism in 1989 gave those in favor of a democratic Eastern Europe every reason to be optimistic. The communist parties across Europe, seemingly stable and without serious opposition, had been suddenly swept away. The initial presumption was that the immovable object of communism had met the unstoppable force of democratic transition and civic values, and come up wanting. As time went on and the transitions progressed, a better picture of the last days of the communist bloc came to light. This lead to alternative explanations for the sudden collapse: explanations not requiring a well-oiled democratic machine. The progression was initially assumed to be well organized opposition groups with a commitment to democracy overthrowing powerful communist parties, but it began to look more like loosely organized groups meeting ideologically and disillusioned communist leaders. This weak states/weak societies position was posited by David Stark and Laszlo Bruszt (1998),

stating: From such a perspective it is no longer necessary to invoke a democratically organized society as the agent that overthrows the old order these were extraordinarily weak civil societies without organizations strongly rooted in their citizenry, without leaders, and without deeply engrained traditions of democratic habits and practices (p. 16). As the unbridled initial optimism gave way to the reality of the weakness of democratic legacies in Eastern Europe, the tenuousness of the transitions became apparent. In the years following the fall of communism questions were posed as to whether the newly emerging democratic states in Eastern Europe possessed the necessary prerequisites to support a persistent turn to democracy. The lack of formal political parties and leaders, as well as a civil society and middle class with a tradition of entrepreneurship were seen as potentially insurmountable hurdles for the new democracies. There were dissenting opinions, however, as Greskovits (1998) argued that, the legacy of Soviet-style communism is not advantageous [it] is not enough to prove that democracy cannot take root in the East in any form (p. 3). As the turn to democracy in Eastern Europe increasingly appeared permanent, these more pessimistic estimations of democratic chances in the East gave way to attempted explanations for the variance seen in the newly democratic states. Towards the late 1990s, scholars were beginning to discuss in detail these variations in democratic states emerging from post-communist Eastern Europe. Herbert Klitschelt argued that the differing experiences of the newly democratized states under communism had explanatory power with regards to their varying economic and public policy outcomes. Klitschelt saw two distinct decision points in the communist party coercion process that gave rise to varying modes of communism and eventually varying post-communist democratic experiences. The first entailed how the party handled corruption and clientelism: specifically, whether it was via

exchange and personal loyalty within networks, or a formal bureaucracy that curtailed corruption (Klitschelt, 1999). The second variation revolved around how the communist party retained its grip on power, through repression or cooptation (Ibid). These differences produced distinct modes of communism, which Klitschelt understood to be predictive of variation within postcommunist democratic experiences. Since the turn of the last century, an explanation of the variation in post-communist democratic outcomes has dominated the field. A notable exception in the literature is a group of scholars that seek to explain the exceptional case of China. The Chinese economic reform, lacking a turn to democracy, simultaneously casts serious doubt on any causal link between economic reform and democratic liberalism and raises specific questions regarding how the Chinese Communist Party (CCP) has successful retained its grip on power. This is a question one of the authors reviewed in this paper aims to shed light on. With the inclusion of the Chinese case, the body of literature from the last decade can be reasonably described as a study of the various interactions between political and economic reforms in communist and post-communist states. As scholars worked to explain the variation in democratic outcomes, there was a push to find meaningful metaphors for the transition occurring in Eastern Europe. The use of the Third World as an appropriate analogy for the emerging post-communist states was questioned early and often. Latin American cases were frequently used in pessimistic accounts of the future of post-communist democracies and thus, to some extent, the Latin American baby was thrown out with the pessimistic bathwater. Greskovits (1998) argued that Adam Przeworskis statement that the East has become the South was incorrect: the direct application of the Third World or Latin American analogy turns out to be a failure (p. 6). One of the authors in this review seems

to implicitly be supporting the salience of the Latin American metaphor, with regards to postcommunist transition study, by including cases from that region in a work also discussing East Asia and Eastern Europe. While the field has continued to evolve, and regions have been included, excluded, and re-included, a few questions persistently remain at the forefront of the literature. The first and most obvious question is whether or not economic and democratic reforms go hand in hand. There is something intuitively sensible about the idea that economic liberalization necessarily gives rise to democratization. The early experiences in post-communist Eastern Europe seemed to reassert this correlation. The second involves the methods of co-option or coercion available to the party or state in order to maintain its grip on power and maximize returns for itself. The initial question was whether the newly democratized states would fail entirely due in part to their lack of formal party structures. This gave way to arguments that incumbents required more plausible opposition parties to keep state predation in check, and that these opposition parties could not be organized in the new democracies. A third persistent question surrounds the importance of international political actors, such as the European Union, in pressing for democratic reforms. Starting from varying perspectives, the books included in this review shed some light on each of these questions. While there seems to be a progression in the subfield of the political economy of transitions, the literature is not without its fair share of old wine in new bottles. This review aims to examine four books that discuss the political economy of transitions in a few different regions. Each author does not cover the exact same set of cases from the same perspective, and thus the subsections of this review will have a subset of the authors in conversation with each other. The author tasked with the heaviest load is Anna Grzymala-Busse

(2007), who aims to explain how and why powerful post-communist democratic parties vary in their level of extraction from the state. Her scope is Eastern Europe, specifically the cases of the Czech Republic, Bulgaria, Latvia, Slovakia, Estonia, Hungary, Lithuania, Poland and Slovenia. Grzymala-Busses argument turns on the concept of robust competition being necessary for preventing state predation. Somewhat conversely, Timothy Frye posits that too extreme competition between incumbents and opposition parties leads to political polarization, which he deems as fatal for a positive correlation between democracy and economic and institutional reform. Bruce Dickson seeks to challenge the perception that economic development necessarily gives way to democratic reforms by examining the Chinese case, and positing an explanation for how the Chinese Communist Party has successfully co-opted the entrepreneurial class. Stephen Haggard and Robert R. Kaufman examine a wide array of cases from Latin America, East Asia, and Eastern Europe. The focus of Haggard and Kaufman is on the trajectory of welfare reforms in these regions, a somewhat different perspective from the other three authors, but it is their historical institutionalist approach that renders them appropriate for inclusion in this review. Their perspective contrasts nicely against that of Timothy Frye, and their inclusion of the Latin American and East Asian regions is instructive when considering the role of the European Union in Eastern European post-communist democratic reforms. Democratic and Economic Reform Correlation The four authors are in agreement with themselves and the current consensus in the field that the correlation between democratic and economic reforms is, at best, one that comes with a number of caveats. Grzymala-Busse (2007) cites the cases of the Czech Republic and Latvia as cases where democratic and economic reforms came hand-in-hand, but were not met with state reconstruction (p.18). Grzymala-Busse cautions that even if democratic and economic reforms

do correlate, all democratic and free market systems are not created equally. She thus explores potential outcomes when democratic and economic reforms are successful, but the state reconstruction process leads to a highly exploitative, albeit free market, state. Frye (2010) has a more sophisticated and nuanced argument, positing that the impact of democracy on economic and institutional reform is conditional on the extent of political polarization (p. 11). Frye (2010) questions the ability for historical institutional approaches to accurately answer causal questions regarding the link between democracy and economic reform. He instead hopes to rectify the lack of attention in the argument to the preferences of policy elites (p. 11). Frye (2010) thus seems to be a taking a rational choice approach to explaining the variance in policy and economic outcomes of post-communist democracies. Frye (2010) sees agency on the part of policy elites as being a mitigating factor between economic and democratic reforms. Dickson (2008) similarly posits that democracy is not the consequence of economic and social change, but a political process driven by actors inside and outside the regime (p. 11). Dicksons argument against a necessary causal link between economic and democratic reform revolves around an assumption he sees in the literature that the Chinese Communist Party is not an active player, and in unable to alter its actions to affect its own survival. He sees the CCPs move from populist policy positions, to an embracing of the private sector, back to a partial adoption of populist reforms as being indicative of the party responding to ensure its survival separate from ideology. Haggard and Kaufman (2008), seem to echo Dicksons argument when examining the Eastern European cases, finding that repression of independent labor and peasant organizations was a necessary condition for a much broader socialist project that included the nationalizing of the commanding heights of industry and finance (p. 347). These authors further posit that, while democracy may increase the likelihood of consensus coalitions, the ability to

forge such coalitions is not guaranteed by democracy (p. 362). In this way, the application of Fryes polarization model could be instructive in fleshing out how varying historical institutions affect social policy outcomes. Robust Competition, Polarization and Co-Opted Capitalists Grzymala-Busse explores the shared motives, means and opportunities of postcommunist democratic parties with regards to exploitation of the state. The motive of the postcommunist democratic states covered by the author was the access to resources made available through exploitation of specific sectors of the economy; this was tempered by a shared fear of a return to authoritarianism. The author sees this mutual commitment to democratic institutions, along with access to local networks, as being the first constraining factors on what shape an exploitative state could take. The second tempering mechanism was that of robust competition, or viable alternatives to incumbent parties, which could reasonably be expected to make gains corresponding to incumbent losses. Her concept of robust competition seems to be the most valuable addition she makes to the literature in addition to simply raising a question that does not seem to have been explored in detail before. Grzymala-Busses (2007) means of post-communist democratic parties were the powers granted the parties with regards to policy control, the weakness of civil society following the emergence from communism, and the powerful position of being both potential benefactors and stewards of the economy in transition (p. 7). Similarly the opportunity was granted to the newly minted democratic parties by way of the deconstructed communist state, weakened internally and isolated from external constraints. The focus with regards to the emerging democracies was on democratic reform, and little attention was being paid to state

reconstruction. With all of this power vested in the hands of the new democratic parties, Grzymala-Busse sees the only viable source of oversight as coming from internal, robust, competition. A lack of constraints on state construction is likewise a factor in Dicksons treatment of the economic transition in China. The persistence of the CCP allowed for retention of the economic structures of exploitation and management put in place while the state was entirely nationalized. This permitted the CCP to remain the central actor in privatization, and undertake practices such as creating firm owners of former CCP firm managers. It is this elimination of internal sources of potential competition from the entrepreneurs made more powerful by economic reform that the author understands as being instructive in viewing the Chinese case. In the post-communist democratic cases of Europe, the groups that emerge from the initial set of reforms with power in terms of privatization and economic policy creation use that power to construct a state and economy that is structured in a way beneficial to them; they convert power in to wealth. The entrepreneurs of China are co-opted by the party, and economic reforms are undertaken to eliminate that pool of support that might give rise to Grzymala-Busses robust competition. The motive, means and opportunity all align to cause the CCP to seek economic reforms and preserve their power by suppressing political reform. At first blush it might seem that Fryes titular Perils of Polarized Democracy could be viewed as Grzymala-Busses robust competition taken to the extreme. Grzymala-Busses robust competition drives democratic parties to temper exploitation for fear of political losses, and support the installation of institutional oversight mechanisms. Frye (2010) defines political polarization as the policy distance on economic issues between the executive and largest opposition faction in parliament (p. 3). Frye aims to explain variation in the effect of democracy

on economic and institutional reform through varying levels of political polarization in postcommunist states. These two arguments are not incompatible, and indeed Fryes political polarization model could be used to add nuance to Grzymala-Busses explanation of variation in those states meeting the robust competition requirement Grzymala-Busse sees the requirements for robust competition to include clearly identifiable separate and competing parties, and the plausibility of the replacement of the incumbents by one of those parties. This plausibility element seems to contain the starting point of Fryes polarization argument. Whereas Frye defines his polarization as the distance between the incumbent and main competitors in terms in of policy position, Grzymala-Busse (2007) defines plausibility as being measured as the share of parliamentary seats held by parties that have not been ostracized by all other parties as potential coalition partners (p. 12). Plausibility leaves open the possibility of parties being ostracized for reasons other than avowed policy positions, such as an unacceptably high level of state exploitation. It is interesting to consider whether Frye would include exploitation as being a component contributing to polarization. Frye and Grzymala-Busse are in agreement that the proper level of competition between parties in states in transition gives rise to conditions that prevent the poles of unchecked state predation and a trapped transition due to mutually incompatible incumbents and opposition parties. Additionally, both authors are focusing on states that have undergone regime changes, with a return to authoritarian communism an unacceptable outcome for all parties. This is contrasted against Dicksons understanding of the economic, but not democratic, transition in China; the Chinese Communist Party remains unreconstructed and authoritarianism persists. Dicksons discussion of the methods employed by the CCP to co-opt capitalists and prevent their

becoming agents of change is instructive when considering the what if question for regime change in Eastern Europe. Regime Change In reconstructing the state, Grzymala-Busse (2007) sees post-communist democratic parties as being constrained by their commitment to democracy and lack of institutional support structures to support clientelism (p. 31). This is partly an implicit byproduct of competition from other parties, but is mostly a result of regime change. The author seeks to clarify that her view of local organizational resources (that would support predation through clientelism) comprise not so much party membership or a strongly institutionalized vertical hierarchy as local party presence that is organizations, activists and affiliated party brokers (Ibid). Regime change in Eastern Europe broke apart these support structures and eliminated clientelism from the field of choices for emerging opportunistic democratic parties. In contrast to the Eastern European cases covered by Frye, Grzymala-Busse and Haggard and Kaufman, the Chinese case presented by Dickson presents the alternative view. The unreconstructed CCP does not need to rule out clientelism, as it is faced with the choice of economic reform or the empowerment-through-disenfranchisement of an entrepreneurial class. This clientelism has taken the form of crony communism, which retains the CCP as the central actor in the economy (Dickson, 2008, p. 22). With neither the democratic commitments, nor the deconstructed local support structures of post-communist Eastern Europe, the CCP is tasked only with successfully co-opting the entrepreneurial class to ensure economic reforms do not lead to democratic reforms.

While Dickson sees the lack of democratic reforms in China in spite of an economic transition as being indicative of the CCPs successful elimination of entrepreneurs as a threat, a comparison of the cases covered in these books would indicate otherwise. It is more likely that transitioning states face similar constraints and motivations, faced with similar initial conditions and transitioning regime types. New democratic parties emerging from post-communist states and economically reformed or reforming communist parties in authoritarian states are driven to maximize gains for themselves and are constrained by competition and local and regional support structures. In the cases of Eastern Europe, those states with more competition, already constrained by democratic commitments and insufficient support structures to make clientelism feasible (the Czech Republic, Bulgaria, Lativa, Slovakia) saw free extraction from the economy by the state; those states with more robust competition (Estonia, Hungary, Lithuania, Poland, Slovenia) had more limited extraction (Grzymala-Busse, 2007, p. 13). Dickson (2008) argues that the CCP retained power by co-opting the entrepreneurial class and adopting a grasp the large, release the small (p. 30) position on privatization as well as co-option. This fails to account for how the CCP retained sufficient power to be in a position to make such a decision, and it is more plausible that the causal arrows are not pointing from CCP economic policy to power retention, but instead share a causal mechanism. One potential source for this retained power may be the existence or absence of reform pressures from international political actors. Lure of Europe or External Barriers to Fusion A major question with regards to the politics of transitions revolves around what role external pressures play in pressing for economic and democratic reforms. Frye (2010) recognizes the importance of the question of the Lure of Europe but offers no answer: The role of the EU in shaping policy choices is certainly an important part of the transformation of the post-

communist world, but identifying the magnitude of its impact is difficult (p. 16). For Fryes polarization model, the role of external pressures is less important than those models posited by the other authors. His internal polarization model would seem to only leave open a handhold for international actors through domestic party policies. Haggard and Kaufman (2008), perhaps as a byproduct of their including Latin America in their analysis, find that international political actors exert little influence on policy outcomes in post-communist states. They instead argue that, If there are international political factors that are relevant to our story, they probably exist at the regional level (p. 350). They argue that the influence of Western Europe on the newly democratized Eastern European states would be more salient than the European Union. This focus on regional international influences is better undertaken by Haggard and Kaufman than any of the other three authors. Their position on international political actors seems more convincing due to their cross-regional comparison between Latin America, East Asia, and Eastern Europe. Frye and Grzymala-Busse remain regionally bound to Eastern Europe, raising a question of case selection with regards to the salience of international actors and regional influences in political transitions to democracy. Grzymala-Busse does implicitly acknowledge the role of international political actors, specifically the European Union, in shaping policy and predation in post-communist democratic states. Her argument for why new democratic parties in Eastern Europe chose to temper their exploitation or extraction from the state turns on the idea that these parties were committed to democracy. This commitment was due in part to a fear of a return to authoritarianism, but it was also reinforced by the lure of Europe: The European Unions firm stance that only democratic countries could enter the EU further reinforced such [democratic] commitments (GrzymalaBusse, 2007, p. 35). In this way, Grzymala-Busse sees the EU as indirectly curtailing state

exploitation by new democratic parties through the mechanism of limiting the available methods of exploitation to less effective and complete means than state-party fusion. Dicksons (2008) treatment of international political actors is more economically minded than the other three authors. He criticizes the assumption that integrating China in to the world economy by way of trade will necessarily lead to political reforms. Dickson argues that the notion that American trade with China benefits American consumers as well as contributing to a democratic China is made in absence of any direct link between increased trade and the onset of democratization (Dickson, 2008, p. 12). The Chinese case seems to further illustrate there being a strong regional component to any effective international pressure for economic and democratic reform. Presumably the Eastern European states sought European Union membership for economic purposes, and the European Unions democratic requirement is due in part to it being a regional union. Absent regional concerns, China is traded with more freely, and this trade is justified by an assumption that increased trade will lead to democratic reforms. Privatization The economy of any given state is perhaps at its weakest point in transition during the period of privatization of state-owned enterprises. In the case of Eastern Europe, GrzymalaBusse sees the fear of a backslide in to authoritarianism as being a controlling factor limiting the level of politicization allowed in to the process. In addition to this concern for the democratic system itself, the new democratic parties must keep in mind the fact that over-politicizing the privatization process could be handing political weapons to their opposition. This is again where Grzymala-Busses robust competition comes in to play without a plausible alternative to the incumbents, there is no opposition a party must concern itself with.

In a similar vein, Frye sees too much polarization within the political system as having a negative impact on privatization. In the case of Bulgaria, he states By the end of 2000, the government had sold almost 78% of state-owned assets to the public. Yet the privatization program was perceived by many to be highly politicized, as would be expected given the bipolar conflict (Frye, 2010, p. 205). Despite the high level of polarization, it seems Grzymala-Busses robust competition can be seen at work in Bulgaria, as Frye (2010) admits: In some cases, the [Bulgarian] government attempted to curb the tight relations between the industrial conglomerates and the central government (p. 206). The purpose of driving a wedge between the industrial sector and the central government was both economic and political, reducing the political power of the industrial sector. Even where outright corruption was not present, democratic parties in post-communist states were free to slow down the pace of privatization. The authors are not in agreement with regards to what effect a slowed privatization process would have on state exploitation. Grzymala-Busse sees a slower pace of privatization as supplying more opportunity for state cooption or exploitation. She sees Polish cases of malpractice in public procurement, favorable awarding of concessions, and unregulated lobbying (Grzymala-Busse, 2007, p. 199) as being made possible by a very gradual process of privatization in that state. This stands in contrasts to Fryes contention that a slower pace of privatization actually leads to more consistent reforms and a decreased chance of policy reversals. To Fryes (2010) mind, this allowed them to delay privatization until relatively stronger institutions of corporate governance were in place (p. 221). This seems to be taking for granted the idea that corporate governance and institutional oversight bodies will necessarily appear given time, regardless of political environment.

Institutional Oversight There is a common focus on the need for simultaneous institutional oversight creation and sector growth between several of the authors. Dickson characterizes the Chinese Communist Partys approach to sector oversight as one that focuses first and foremost on the larger industries and firms, turning its attention to smaller firms only when the largest parts of the economy have been successfully co-opted or subjected to party oversight. The CCP has carefully chosen where it has inserted itself and where it has stepped back to allow for independent associations, such as the business associations, to fill the void. Self-organized business associations are present, but they are unlikely to act as agents of political change because they are not interested in becoming independent from the party. The CCP remains central to the economy in part by remaining the sole voice of oversight and monitoring. The presence of self-organized business associations would seem to indicate there being some level of discontent with the CCP. Dickson finds that, while that does seem to be the case, the associations are not particularly political in nature. The CCP has separated out the roles of monitoring and oversight, and handed over only the ability to manage day to day business decisions to the business associations. This has created a situation where the entrepreneurial class is unlikely to become agents for change, so long as the CCP continues to allow them to achieve their goals. Grzymala-Busse sees the rapid adoption of oversight institutions as being one necessary element for successful transitions. The motivations for post-communist democratic parties were not unlike those of the CCP in China, namely self preservation and retention of power within the current political system. If the CCP feared losing control of the entrepreneurial class would lead

to political reforms, post-communist democratic parties feared that a lack of oversight could allow unreconstructed (and thus still feared) communist parties to regain power. She sees Hungary and Poland as having the unique experience of inheriting institutions of oversight from the communist party. The institutional oversight mechanisms were but the skeletons of their democratic sucessors (Grzymala-Busse, 2007, p. 103) however, and thus were substantially less the focus of the party than the oversight institutions in China were of the CCP. Fryes view of Bulgaria is one in which the high level of political polarization rendered the installation of oversight bodies unlikely to occur. The party continued the use of management-employee buyouts organized by line ministries with little oversight the government privatized Bulgarias largest foreign trading company by transferring bout 60 percent of the shares to managers and workers who paid for the shares with credits backed by promises of future profits (Frye, 2010, p. 201). For Frye (2010), the lack of early oversight gave rise to the solidification of collusive ties between large industrial conglomerates and the state (p. 201). The Bulgarian economy would eventually collapse before any mechanisms for oversight or curtailing of state-private collusion would be put in place. This seems to speak to the need for early introduction of institutional monitoring and oversight bodies, as once the ties between state and the private sector are allowed to grow strong, it becomes less and less likely that the cycle can be broken. Frye also somewhat contradicts himself, as earlier in his treatment on privatization he seemed to treat corporate governance and institutional oversight bodies as naturally arising given sufficiently gradual privatization. Comparing the cases of Eastern Europe detailed by Frye and Grzymala-Busse, against the Chinese case covered by Dickson, illuminates some interesting similarities. In cases where regime change occurs simultaneously with economic reforms, the need to focus on institutional

oversight mechanisms is not more apparent than in cases with persistent regimes. Even where economic reforms take place in the absence of political regime change, it takes an active party, willing to adapt to the changing economy and court the new classes created by the new economy, to retain oversight and monitoring power. The party must take an active role in freeing itself from encumbrances of ideology and path dependence in order to simultaneously frame itself in a way that maintains legitimacy with the populace and embrace the new emerging economies. A more detailed examination of how the Chinese Communist Party successfully substantiated its moves ideologically would be a natural progression from Dicksons work. Conclusion The picture painted for political and economic transitions in post-communist states by these three authors is one dependent on many factors. The political field must be competitive without falling in to the gridlock of polarization. In the absence of regime change, as in the case of China, economic liberalization can be allowed to occur without a subsequent move to democracy. This is due in part to the lack of constraints on the existing communist regime, in the Chinese case the CCP, and the persistence of their regional and local networks. Without a commitment to democracy, the CCP never had to consider alternative models of state exploitation, as Anna Grzymala-Busse sees in the cases of Eastern Europe. The transition was trapped and the CCP was free to allow economic liberalization to take place, while still retaining a grip on the entrepreneurial class. There is disagreement between the authors as to the salience of international political actors in pressing for democratic reform. Whereas Grzymala-Busse sees the lure of admission in to the European Union as helping to eliminate full state predation and state-party fusion,

Haggard and Kaufman remain skeptical. It seems safe to say, based on these writings, that any external pressure for reform is felt more strongly within a region. It is difficult to ascertain whether pressure is greater in the presence of a regionally bound economic union, such as the European Union, or whether pressure from neighboring states would be sufficient. The timing of institutional bodies of oversight appears to be an important factor in determining their success. Grzymala-Busse finds a high correlation between successful oversight bodies and their institutionalization occurring concurrently with what they are overseeing. Frye sees political polarization as working to incentivize the politicians to weaken state institutions of oversight. The fear of empowering future governments headed by the opposition motivates incumbent parties to restrict the strength of the state. Similarly, Dickson understands the simultaneous growth of the oversight arms of the CCP with the emergence of the private sector to be necessary if the CCP was to retain its control of the economy. It seems then that the timing in relationship to economic reform or growth, and the political environment surrounding the installation of institutional oversight bodies, is important in determining the fate and success of those institutions. These works, at minimum, continue the tradition in the field of political transitions, especially in post-communist states, of aiming to explain the variation in democratic and capitalist reforms. Grzymala-Busse further takes on the ambitious task of attempting to determine the causes of variation between Eastern European democratic states with regards to state exploitation. She succeeds in this task, and her definition of robust competition should be something that is portable from her work and useful for future research.

Bruce Dicksons examination of the Chinese Communist Partys tactics in co-opting entrepreneurs and creating red capitalists seems to be a unique perspective on the Chinese case. An examination of the literature finds a laundry list of books and articles detailing how Chinese entrepreneurs made the CCP work for them, but it seems Dicksons work stands in limited company examining the question from the opposite perspective. Regardless of who coopted whom, acknowledging the fact that the CCP is a political actor capable of making strategic decisions to ensure its own survival, and not simply a coercion-machine, is instructive in shedding light on some of the implicit assumptions made by other authors. Timothy Fryes value added is his concept of political polarization, or polarized democracies. Much of this review focused on his answer to the how of political polarizations impact on democracy, but simply acknowledging a polarized democracy as a potential outcome of democratic reforms seems to be a worthwhile contribution to the literature. The spectrum need not be defined solely as consolidated democracies, successful in reform, and backsliders. Polarized democracies are democratic and possess free markets, but are delayed in their reform process by the contentious relationship between the incumbents and the most viable opposition party. To Fryes mind this has a host of negative effects on the economy, from a preference for liquidity in the entrepreneurial class, to a reluctance to create institutional bodies of oversight. Stephan Haggard and Robert R. Kaufmans work is considerably more expansive than this review gives it credit for. Their most significant contribution to the literature is, as their title would suggest, in the area of welfare policy. Their value added is a focus on the historical legacies of the three regions of Latin America, East Asia and Eastern Europe in attempting to explain variations in welfare policies in those regions. Their focus on the explanatory power of

historical contexts for varying policies seems to be, in and of itself, a unique addition to the literature.

References Dickson, B. J. (2008). Wealth into power: the Communist Party's embrace of China's private sector. Cambridge: Cambridge University Press. Frye, T. (2010). Building states and markets after communism the perils of polarized democracy. New York: Cambridge University Press. Grzymala-Busse, A. (2007). Rebuilding Leviathan: party competition and state exploitation in post-communist democracies. Cambridge: Cambridge University Press. Haggard, S., & Kaufman, R. R. (2008). Development, democracy, and welfare states: Latin America, East Asia, and Eastern Europe. Princeton: Princeton University Press. Kitschelt, H. (1999). Post-communist party systems: competition, representation, and inter-party cooperation. Cambridge: Cambridge University Press. Stark, D., & Bruszt, L. (1998). Postsocialist pathways: transforming politics and property in East Central Europe. Cambridge: Cambridge University Press.