2. Preliminary comment
2.5 Brief summary
This research focuses on the evolution of the nature of property and on the theoretical concept of property; the accompanied political analysis mainly creates a necessary context. A systematic and comprehensive analysis of the socio- political aspect of privatisationin Croatia and Slovenia would be interesting and possibly very illuminating but it would require another investigation, another thesis. However, in the chapters that explain the processes of privatisation in both countries, I have provided some significant socio-political information about these issues; in the concluding chapters these insights are systematised. It is important to note that this systematisation is not conclusive: one should not conclude that the neoclassical paradigm backs up authoritarian regimes if the authoritarian Croatian regime used neoclassical rhetoric while distributing the
9 Lest the overall thrust of my work be misunderstood, the criticisms that I make of the neoclassical
view are not necessarily a request for governmental regulation. Rather, they point to the need to take institutions, and also traditions and cultural factors, seriously, and also that the adequate functioning of a market economy itself depends on them. However, institutions might be contributed by governmental action, or by private action, or by means of an interplay between the two. The role of theory is particularly important for my research.
10 However, the analysis of the shortcomings of the general equilibrium perspective - that will be
used in chapter III, as a background for the introduction of the basic concepts of the economics of property rights – could be misread as constituting a general criticism of neoclassical economics.
assets according to political criteria. This is simply not true; non-authoritarian Eastern European political regimes used neoclassical rhetoric and implemented neoclassical approaches to privatisation; many authoritarian Latin American regimes despise neoclassical economics.
The first aim of this research is to support the claim that Croatian privatisation
indeed followed the neoclassical understanding and that Slovenian privatisation
took place in accordance with the economics of property rights (incidentally or intentionally). How this happened, to which degree the paths were a matter of coincidence, were predetermined or were the result of the activities of economic experts and interest groups, are questions which could be answered only after it has, indeed, been established that these two different paths were followed in Croatia and Slovenia. Accordingly, the focus of investigation is on the real changes in the property regimes; and on theories of institutional change which, I will argue, are important if we are to understand the real process.
Academics, scholars and reformers in both countries relied on particular understandings of property and the market when they discussed the programs of privatisation. This is why theory matters: it creates expectations and justifies and legitimises policies. In the case of the Croatian privatisation, it is easier to find a direct influence from theory since neoclassical economics is capable of supporting policy prescriptions. The economics of property rights is not capable of producing a comprehensive policy of institutional change, but it is possible to present an indirect influence of the property rights school on the path of privatisation in Slovenia.11 The property rights approach was criticised for its incapability of
producing a policy program. Property rights theory responds that neoclassical economics does not reflect how a market economy emerges; therefore a program of privatisation based on a neoclassical understanding might not produce a market economy. Since the changing of the property regime and the distinction between private and public property were seen as crucial for the transition, theoretical concepts of property should be analysed.
11 As for the (indirect) influence of property rights economics on the process in Slovenia I would
like to mention that the Slovenian quote from section 1.1 of this chapter was originally published in a major collection of papers on the economics of property rights (Pejovich, ed. 2001, Vol II). Alexander Bajt, another influential Slovenian economist published in the same collection together with several Nobel Prized economists. Bajt belonged to pioneers of property rights school and already in 1992 published A Property Rights Analysis of the Transition Problems in the EAST; EIPF, Ljubljana. This paper, which presents Bajt’s proposal for the reform of socialist property regime, will be commented in the following chapters.
Chapter II and chapter III explore the same subjects (property, the problem of ownership, the origins and development of market institutions) from the positions of the two economic theories; the economic transition from socialism deals with identical problems. The ideas developed in these chapters are then utilised for the analysis of privatisation in Croatia and Slovenia. If the establishment of market institutions (among them, private property) by decree does not enable the emergence of a market economy, then the question remains: What is the substantive distinction between the old and the new property regimes? I am exploring how to understand the evolution of property regimes in Croatia and in Slovenia; why they diverge; and which theoretical concepts grasp the essence of the changes of property regimes?