Institutions, interests, and ideas: The political economy of economic policy-making in Poland and Hungary

Policymakers in Eastern Europe encountered a number of similar economic challenges throughout the 1970s and 1980s, yet responded to them in quite divergent ways. Polish policymakers attempted a series of mini-reforms to cope with these economic challenges, while Hungarian policymakers formulated and implemented a very comprehensive reform--the New Economic Mechanism--to confront these problems.Prevailing models of communist politics neither explain adequately why two similar countries, facing similar economic imperatives, adopt divergent strategies, nor do they incorporate state-societal relations into explanations of politics. However, in his 1986 work entitled Governing the Economy: The Politics of State Intervention in Britain and France, Peter Hall developed a model of institutions, interests, and ideas to explain why two similar countries such as Britain and France adopted divergent economic policies in the face of similar economic challenges. Hall (1986) argued that the organizational/institutional conjuncture of the political and social realms had the most important consequences for economic policymaking. Hall (1986) suggested that five variables were most determinative in explaining differences between economic policymaking: the organization of capital, the organization of labor, the organization of the state, the position of each country in the international economy, and the organization of the political system. Specifically, Hall (1986) found that the organization of capital, the organization of labor, and the organization of the state were primary factors, whereas the organization of the political system and the position of each state in the international economy were secondary factors.This dissertation represents an attempt to develop the core insights of Hall's model in a state socialist setting to explain why policymakers in these countries formulated and implemented such divergent policies. The conclusions suggest that Hall's five variables did indeed impact economic policy in state socialist countries. Given the very different nature of state-society relations in Poland and Hungary, however, the configuration of the variables was quite different when compared to Britain and France. Specifically, the organization of the state, the organization of the political system, the organization of labor, and the position of each country in the international economy were of most importance.