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European Rust Belts. West-East Comparisons – and Beyond

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State Agency and Industry in Post-Socialist Europe: On the Visible Hand in the Organizational History of Two Shipyards during Transformation

Researcher: Peter Wegenschimmel
Project Duration:: 2016-2019

A state-owned enterprise in neoliberal Eastern Europe, nationalization of major industrial sites after the experience of socialism, return to forms of self-administration after twenty years? The project "State Agency and Industry in Post-Socialist Europe" presents a picture of the post-transformative industry of Croatia and Poland, characterized by paradoxes, path dependencies and subversive workers' protests.

The instrumentalization of the public stake could be called a kind of counterrevolution during the market transformations in Central and South-Eastern Europe. Despite decentralization and self-administration gestures during the transformations, the formerly socialist states sticked to their interventionist, almost promethean tradition, by establishing capitalism "from the top" (Ekiert, 2003). The consequence was a privatization process, which was badly negotiated with the workers, on the one hand, and the continued existence of state governance within the large-scale industrial enterprises on the other. The project investigates the institutionalization of new forms of state agency in the industry as the reverse, epiphenomenon and premise of neoliberal hegemony (Ther, 2015) and as a phenomenon of simultaneity of the non-simultaneous (von Puttkamer, 2012).

Decision of the Workers' Council of Uljanik on the conversion to a company with the majority shareholder Hrvatski Fond za Razvoj.

The really existing transformations have contributed to the destabilization of publicly governed economic organizations as well as to their reinstitutionalization. The case of Croatia, in particular, illustrates the ambivalent expansion of state-economic actors during the first phase of privatization, which began with the adoption of the Act on the Transformation of Social Enterprises. With this law, a self-management economy became a market economy. In fact, in connection with the establishment of an ownership economy eighty percent of the companies’ assets were allocated to the state, which was described as "delayed privatization" (Dobias et al., 2000: p. 97). Like the Yugoslav transformation of the 1980s with its austerity policy (Musić, 2016), the transformations around 1990 implied a movement in the direction of centralization and nationalization (Woodward, 1995).

In Poland, the Act on the Financial Management of State Enterprises, which was issued by Treasury Secretary Leszek Balcerowicz, actually constituted a "primacy of the economy" (Ther, 2015: p. 25), which for the first time made financial control, doubts about soft budget constraints (Kornai, 1979, 1980), and thus insolvency executable. A factual criticism of the economic state as such, however, was not necessarily linked to it.

Thus, both in Poland and Croatia, the state institutionalized itself as a business owner – an institution was said to be provisional during its initial introduction (Wegenschimmel, 2016).

 

Research Design

One theory

The project is characterized by an organizational historical approach, which attempts to tackle issues of business and labour history by means of neo-institutionalist organization theory. With this focus on legitimation strategies, the neo-institutionalist organization theory has proven to be particularly fruitful in investigations of heterogeneous economic organizations with an ambivalent relationship to their environment, such as non-profit organizations and public enterprises. According to neoinstitutionalism, profitability and KPIs are not yet sufficient conditions for the survival of a company.

Two cases

Letter to the Ministry of Treasury, in which the rehabilitation is approved with condition of the privileging of the shares of the ministry.

In addition to macro-economic quantitative material, a case study of industrial companies from Poland and Croatia in the period from 1980 to privatization/insolvency is investigated in the structuring of these business (hi)stories. According to a theoretical sampling, two shipbuilding companies were selected, which look back on a long and complex trajectory of state interventionism. The two case studies begin in the "late socialism" phase, which is currently one of the most dynamic fields of Eastern European research (Boškovska et al., 2016), and extends to the institutionalization of public enterprises in Eastern and South Eastern Europe after accession to the European Union. Both case studies come from shipbuilding and thus represent an industrial-political or commemorative "strategic" and emblematic branch of industry.

Three levels

As a multi-level analysis, the work combines the company perspective with the sectoral level and with the institutional environment (municipality, state) of the selected enterprises. In order to take into account the agency, impacts and fields of action of all stakeholders at all three levels, an informative amount of material is used at the company, industry and government level. For a more detailed analysis of the agency of the actors at each respective level, interviews are conducted that supplement the archival source material.

Four categories of analysis

Through a content analysis, four categories were determined inductively from the qualitative data material. These represent the basis for the attempt to generalize a corporate history to an organizational history, taking into special account the influence of the variable "influence of the state".

  • Transformations of the legitimacy discourse
  • Transformations of state supervision
  • Transformations of the boundary between enterprise and state
  • Transformations of the bargaining Situation

 

Project results

Presentations

Socialist Bargaining: The Power Resource Approach in Socialist Economies, symposium "Workers of the World: Exploring Global Perspectives on Labour from the 1950s to the Present" organized by Sociological Research Institute, SOFI, Göttingen, June 2017

Counter-Revolutions during Post-Socialist Transformations: Insights Provided by an Organization-Based Approach, workshop "Institutional Change in Political Economies and Varieties of Methods in Social Science Research on Postcommunism" organized by Graduate School for East and Southeast European Studies and the Department of Sociology, LMU, May 2017

(with Filipkowski P.) Perspektywa oddolna w badaniu historycznym , Conference „The History of the Gdańsk Shipyard”, Gdańsk, November 2016

Transformation of Labour Relations in the Gdynia Shipyard, XVI Polish Sociological Congress "Solidarity in the Times of Distrust" in the panel ”Maritime Sociology”, Gdańsk, September 2016

Labour Relations after Tito: A Questionnaire for an Industrial Case Study under Transformation, doctoral workshop "Yugoslav Socialism: Similarities and Exceptionalities" organized by Juraj Dobrila University of Pula Faculty of Humanities, Department of History & Centre for Cultural and Historical Research of Socialism, August 2016

The Impact of Transition on the Legitimization of Workers‘ Self-Management from a Comparative Perspective, Conference "Falling Behind and Catching Up: Southeast Europe and East Central Europe in Comparison" organized by the Vienna Institute for International Economic Studies (wiiw) and the Institute for Eastern European History (IOG), June 2016