Political economy of economic reforms in Latvia: expectations, promises, implementation and consequences

Straight after returning from Africa I had my next trip to Sweden which from one side is nothing particular. I think i can easily call Sweden as my second home as i have been visiting it since 2000 at least once a year for different reasons. So, it was just normal that i am going there again. However, the challenge this time was 1) to switch off my very fresh impressions from my Africa trip and 2) to present my paper at the 9th conference on Baltic Studies in Europe – Transitions, Visions and Beyond at Sodertorn Hogskola, where i was actually studying as Erasmus exchange student back in 2000!

Though i have been working on my research since spring 2009 and even after completing it as my Master thesis in September 2009, i have never stopped working on this subject. In my paper I am challenging mainstream thinking about what, how and why has happened in Latvia after independence and offering a different approach to analyze processes. In a way i am looking at economic and political processes from social perspective, which is not common and typical. Obviously, not all would agree to my approach and my conclusions, but i received very encouraging feedback and will continue my work with an aim to prepare publication. So, watch this space. 🙂

For those who are interested in the topic more in detail and possibly in some sort of intellectual cooperation, here is the abstract and please feel free to contact me if you have anything to say:

“The central aim of this paper is to examine neoliberal policies being introduced after Latvia‘s independence and to assess their impact on a long-term development and people’s wellbeing. By reviewing expectations of the Latvian nation twenty years ago, promises of the neoliberal policies, actual implementation of these policies in four specific areas – privatisation, trade, FDI and taxes, and consequences, it is possible to argue that neoliberalism has not met the expectations and has not kept its promises.

While mainstream explanations regarding neoliberalism’s failure to fulfill its promises are focused on the problems related to implementation of neoliberalism, this paper will argue that by ignoring Latvia’s actual unpreparedness and by underestimating the pre-transitional social, cultural, economic, political, historic and geopolitical context, neoliberalism was a ‚wrong medicine in wrong time‘. By analyzing country’s political and economic (in)dependence, legacy of Soviet regime,  social costs and bargaining power, it can be argued that neoliberalism has reproduced Latvia‘s dependence, re-legalized the rule of the elite and marginalization of the poor, created serious governmental pathologies, parasitic wealth and degenerative social costs, discredited democratic values and sovereignty, and legalized concentration and internationalization of national capital.

Moreover, in the context of current financial crisis, it is argued that the causes of the dramatic face of this crisis in Latvia are hidden in the economic growth, which was based on the power of international capital rather than the real sustainable development of national economy. It will be concluded that neoliberalism has created  opportunities for local elite and international capital, but has neglected the expectations and needs of the society at large. Regarding society’s mood and reaction, it will be argued that the dominant approach of silent protest (cynism, apathy and emigration) is a clear expression of dissatisfaction, however it is too weak to challenge the current political and economic system.

Therefore despite the fact that the ‚third way‘ has never become a serious alternative to the neoliberal policies, current experience of financial crisis shows that neoliberalism is not appropriate development model for the ex-communist/ totalitarian countries and debate on alternative development models should be re-established.”

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