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

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Wild Capitalism in Post Communist Transformation: the Case of Serbia

Martin Upchurch (Middlesex University, London, UK), Darko Marinković (Megatrend
University, Belgrade, Serbia)


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 describe the actuality of such
characteristics in post Milošević Serbia focusing on their effects on employment relations and
labour markets, before presenting an analysis of the causes of wild capitalism. We pay
particular attention to the interplay between wild capitalism and employment relations, noting
the fragmented nature of industrial relations within many post Communist states, and the
specific labour ‘regimes’ that have arisen. In doing so, we determine the specific set of norms
of behaviour as a product of both structural and agency dynamics. We conclude by locating
wild capitalism as an integral, rather than deviant mode of behaviour in Serbia.

Crony, Patrimonial or Wild Capitalism?

‘Varieties of Capitalism’ (VoC) frameworks assume liberal plurality of interests focused on
‘institutional complementarities in the macroeconomy’ (Hall and Gingerich, 2009: 450),
implying a normative assumption of societal stability within such frameworks driven by
collective employer interest (see also Boyer and Hollingsworth, 1997; Whitley, 1999).
Writers within the VoC tradition may view the mix of regulation and non-regulation of
markets by Governments and non-state agencies as a means to achieve societal and business
‘efficiency’ (Crouch and Streeck, 1997; Whitley, 1999). As such cronyism, or wild capitalism
does not feature in the literature as a ‘variety’ of (efficient) capitalism. The use of the
pejorative phrase crony capitalism became very prominent during the aftermath of the East
Asian financial crash of 1998. This crisis started in the South Korean banking sector in
December 1998, when banks in that country faced with severe liquidity problems wound up
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