Social costs of transition

Abstract

The risk of political and economic transformation in Central and East Europe after 1990 was based on the presumption that the reforms will collapse when the citizens realize that the cost they have to pay for them is too high. The classical claim was that democracy will be destroyed by democratic means-namely, that the losers in the transition will vote the way back to the authoritarian regime. The article offers an explanation as to the regress to the authoritarian regime will not be a consequence of the economic reforms. The article is divided in six section. Section 1 considers the general context of the start of the economic transformation in the light of the debate about the choice between the expert government and the significance of democratic procedures for economic reforms. Section 2 defines the context of Serbia within which economic transformation started out after 2000. Sections 4-5 consider economic policy of the two post-Milosevic government. The major finding is that it was the economic policy that was highly socially sensible that prevented social uprising and undermining democracy by democratic means. Section 6 concludes by applying the concept of equilibrium of partial reforms.

Keywords

• Economic policy
• economic transformation
• worker protest
• public expenditure
• labor market
• Labor law
• equilibrium of partial reforms