Transnational Capitalism in East Central Europe's Heavy Industry

Focusing on the steel industry during the post-communist transition from 1989 through 2009, Aleksandra Sznajder Lee traces the transformation of flagship state enterprises in the Czech Republic, Poland, Romania, and Slovakia into the subsidiaries of large, international corporations. By analyzing this transformation at the three levels of enterprise, sector, and national-international nexus, she identifies the players—from international investors and European Union members to national labor unions and local industry managers—in the political economy of reform. Even in the midst of the transition to a capitalist, democratic system, Sznajder Lee finds, the state plays a key role in mediating between domestic vested interests and external pressures from international financial markets and institutions, on the one hand, and regional institutions on the other. Whereas state power may be employed to require domestic firms to operate as capitalists in the international market, it may also be used to shield enterprises from market pressures in order to promote the political and personal preferences of the elite.

This book has broad implications for the political economy of reform because it illuminates the political determinants of privatization and the resources used to resist it. In addition, Sznajder Lee sheds new light on why some countries are more likely than others to be subject to external constraints, such as IMF conditionality, and how some allegedly pro-market reformers manage to maintain public ownership over certain industry sectors.

“Transnational Capitalism makes a groundbreaking contribution to the lively debate on how communist legacies have shaped both political and economic changes after 1989—and how these legacies have interacted with a variety of external actors, most importantly the European Union (EU) that emerged by the late 1990s as the main external driver of internal policy change.”
—Milada Vachudova, University of North Carolina at Chapel Hill

“This book makes an important contribution to the scholarly literature by enriching theories of state capacity, which tend to emphasize narrowly the advantages of state capacity for economic reform. This study instead provides nuance to such theories by showing that state capacity can be a ‘double-edged sword.’ On the one hand, states with high capacity can use this capacity to promote market-oriented behavior and generate more efficient outcomes. On the other, it can be used to shield critically important firms from restructuring. A further strength of this book is the extraordinary richness of the empirical discussions on the restructuring of East European steel after communism. The process tracing is done with such meticulous care that it leaves the reader with no doubt of the author’s very clear understanding and accurate characterization of the steel industry and its process of reform. Hence the book is not only useful for theorizing on state capacity, it is also a valuable resource for those wanting to understand better the historical record of heavy industry’s restructuring in the region.”
—Hilary Appel, Claremont McKenna College

Aleksandra Sznajder Lee is Associate Professor of Political Science at the University of Richmond.