1. Slovenia: Basic Forward, Basic Back
BSSB.BE visio-institut.org 23.05.2018
Danube Ex-USSR Europe
*During 1995–2015, Slovenia saw substantial improvements in overall economic freedom. Progress, however, was far from uniform.
- The Travails of Slovene Transitioning
Economic transition is a loaded term. At its most broadly conceived, it describes economic regime change (either a gradual or a revolutionary/‘shock-therapy’ process) whereby an economy moves from one type of economic system, say “A”, to a new one, say “B”.
Note the metaphorical dimension of space – the economic transition is usually conceptualised as a unidirectional movement from one distinct point of departure to another point of destination. In the specifi c case of Central and Eastern Europe, “A” clearly refers to a centrally-planned socialist system and “B” to an economy of the free-market type
Moreover, the economic transition is usually dated to the early 1990s and is supposed to have concluded, at least in broad strides and in most of the countries throughout the region, by the early twenty-fi rst century.
But this is subject to uncertainty. Differently put, economic transition properly belongs to the realm of ‘unfi nished history’. It is as much a thing of the recent past as it is of the present, despite a plethora of potential historical signposts. In the case of Slovenia, economic transition has been repeatedly declared accomplished with the country’s entry into the European Union (in 2004),3 or the European Monetary Union (in 2007)4 .
But has Slovenia indeed transitioned? A simple metric (by no means conclusive) is to compare the country’s performance on a multi-dimensional ranking (i.e. along several dimensions of economic change) between the 1990s and today (See Table 1). Using the Economic Freedom of the World framework, two conclusions stand out. Firstly, Slovenia did indeed experience signifi cant progress on its way towards a free market economy.
The overall summary ranking improved from 5.31 in 1995 (87th place) to 7.00 in 2015 (73rd place) – unfortunately, data availability issues prevent us from examining the crucial fi rst years in the transition in the early 1990s.5 Secondly, the transition has been far from unidirectional.
Table 1 lists the dimensions where Slovenia’s performance in 2015 was markedly worse than twenty years earlier (it excludes the likely insignifi cant drop – of a mere 0,5 % – associated with the military interference in rule of law and politics). Except for government consumption, all areas of Slovene reversal – private sector credit regulation, as well as the legal system and property rights – can be subsumed under a wider heading, that of the “Rule of Law”
This is worrying since the long-run effects of Rule of Law are not easily picked-up by annual indices, even though there is a wide-ranging consensus among political economists that rule of law does matter. To cite an infl uential paper: “We fi nd that democracy and the rule of law are both good for economic performance, but the latter has a much stronger impact on incomes. […] Rule of law and democracy tend to be mutually reinforcing.”
Moreover, the fi nding of Slovenia’s deterioration in rule of law appears robust to the instrument used to measure it. It has been noted by several scholars, using a variety of methods, in various fi elds of inquiry. The legal scholars Bojan Bugarič and Alenka Kuhelj, for instance, “argue that the Slovenian case represents a very subtle form of democratic regression where competitive political elites control democracy in an opaque and non-transparent manner.
Since the rule of law and political competition still exist, although in a quite rudimentary form, Slovenia is better described as a diminished form of democracy rather than a diminished version of authoritarianism.”
The political scientist Béla Greskovits differentiates between two types of reversals in the transition process of ten East- and Central European EU member states. “The fi rst of these refers to the general European problem of declining popular involvement in politics, termed hollowing of democracy,” while the second challenge is “captured by the term backsliding, which suggests destabilization or even a reversal in the direction of democratic development. Backsliding is usually traced to the radicalization of sizeable groups within the remaining active citizenry, and the weakening loyalty of political elites to democratic principles.
As Greskovits clarifi es, both types of reversals can be dated. The hollowing of East Central European refers to the period 2000–2007, while their backsliding is dated to 2009–2013/14.8 Like Hungary, Slovenia has been characterized as a case of “low hollowing/high backsliding”. In other words, in Slovenia, the destination point “B” of economic transition turned out to include many aspects of the departure point “A”
- The publication is not an editorial. It reflects solely the point of view and argumentation of the author. The publication is presented in the presentation. Start in the previous issue. The original is available at: visio-institut.org