SERBIA IN TRANSITION FROM SELF-GOVERNING SOCIALISM TO LIBERAL CAPITALISM
Creators: name: Stevanović, Simo
name: Milanović, Milan R.
name: Stevanović, Simo
name: Milanović, Milan R.
Publisher: name: Unknown
Year: 2013
Subjects: subject: International Development
subject: International Relations/Trade
subject: Political Economy
subject: transition
subject: neoliberalism
subject: the welfare state
subject: the European Union

description: The transformation of the socialist system and economy in the East-European countries and in the former SFR of Yugoslavia began with the pulling down of the Berlin Wall in 1989. For ten Countries from the Baltic, Central and Eastern Europe, this process was ended by their membership in the EU in 2004. With the exception of Slovenia, which has been an EU member state since 2004, and Croatia, which has been the 28th full member country of the EU since July 2013, the transformation into the “welfare state” (market economy and democratic society) in the other countries in the Western Balkans has been lasting for almost 25 years, without clear indications of whether it has reached an end. With the collapse of the socialist (“eastern”) bloc, liberal capitalism became the winner and the universal model of a future regulation of the world. “The invisible arm of the free market”, as liberal capitalism used to be referred to, should automatically have ensured that the states have economic stability, a high rate of growth, welfare and peace. Transition countries accepted this concept of economic development and started joining the process of market liberalization, privatization and the deregulation of economy at a quick pace. It was believed that this concept would establish a welfare society in such countries. As it turned out, transition per se does not lead a country to the “welfare state”. On the contrary, the process of the transformation from socialism to liberal capitalism per se does not mean the welfare state, either; it rather brings with itself certain problems which are being faced by smaller developed countries of the market economy. It was anticipated that, in the developed countries of the market economy, in the shadow of the “invisible arm”, there would always be the “invisible role of the state”, whose shadow could have been seen in the periods of a crisis only, forcefully directing economic flows, putting them back to the wanted framework, surrendering them to the “invisible arm” of the market again. By accepting a liberal concept, Serbia, as well as the majority of other East-European countries, exposed itself to the powerful market competition of developed economies. In that way, for a longer period of time, developed countries assured their privileged position in less developed ones and ensured for themselves a high rate of economic growth. Although nowhere in the world has the liberal model of the development of an economy fully become a reality in its original form, a very deformed neoliberal model of the development of economy is forced on transition countries via financial institutions. The imposed concept is identified with the model of the free market in developed economies although, every step of the way, it reflects a visible interference of the state in economic flows, which failed to appear in transition countries. The attractivities of liberal capitalism, which the majority of insufficiently developed economies are not prepared to accept without bigger negative consequences, are excessively elongated. An additional confusion in the development of the concept of neoliberal capitalism in East-European countries is created by the fact that such development has been founded on the concept of liberal capitalism, whereas the negative consequences of such development have been dealt with according to the socialist model of the development of economy. So, today, on the one hand, we have the development of economy based on the model of neoliberal capitalism, and, on the other, problems we deal with according to the socialist model of development. The insufficient interference of the state in the transition process in former socialist countries led to the uncontrolled creation of monopolies and the market chaos instead of free market. The creation of monopolies is supported by the globalization processes. In the grip of these processes, Serbia has accepted such a concept of transition and economic development irrespective of the clearly visible negative consequences. The unprepared economy of Serbia is exposed to the competition of developed countries without having previously restructured its enterprises and accepted the economic role of the state in compliance with the new world environment. This paper is aimed at applying a comparative analysis in order to determine the strengths and weaknesses of the model of neoliberal capitalism in Serbia and in countries in transition, imposed on and directed by international financial institutions as the only one breakthrough model of economic development.