Wild Capitalism in Post-Communist Transformation: The Case of Serbia

Wild Capitalism in Post Communist Transformation: the Case of Serbia Martin Upchurch (Middlesex University, London, UK), Darko Marinković (Megatrend University, Belgrade, Serbia) Introduction The process of transformation in post Communist states has sometimes been characterised by dysfunctional corporate governance and the deleterious consequences of liberalisation on business ethics (Gustafson, 1999; Harper, 2006). Employment relations are similarly fragmented, with state-owned enterprises retaining union membership and some form of collective regulation, while newly privatised enterprises seek to marginalise union activity and former collective agreements are abandoned (Pollert, 2000; Martin and Cristecu-Martin, 2004). Such developments have been variously attributed to the phenomena of crony or patrimonial capitalism, with agency deficiencies represented by insider dealing, corrupt and favoured relationships between businesses and the state, and imperfect market information and/or access to new entrants (Peev, 2002; Lane Bruner, 2002; Harper, 2006; King, 2007). A more expansive definition of dysfunctional market operation is ‘wild’ capitalism, which includes aspects of burgeoning and unregulated informal labour markets and the black economy. In this paper we consider in particular the phenomenon of wild capitalism in the former Yugoslavia, focusing specifically on the experience of Serbia, and contrasting with that of Slovenia, where such ‘wild’ capitalism is marked by its relative absence. We first attempt to unpick the key characteristics of what has been called crony capitalism, or sometimes patrimonial or wild capitalism. We then