The Korean peninsula is the classic example of the importance of economic institutions. You can take an ethnically and culturally homogenous territory, mark out an arbitrary line, and thus create a natural experiment. Put a centrally planned economy in the North, and a (broadly) market economy in the South. Communism vs. capitalism. And see what happens…
The results are compelling. Not only in terms of economic growth and material wealth, but in living standards and basic human dignity. Regardless of how garish you might find McDonalds or how frustrating it is to have to choose between multiple brands of toothpaste, when people risk their lives to leave their home I take that as a sure sign that the system has failed.
So let’s be clear. As Robert Heilbroner famously conceded:
“the contest between capitalism and socialism is over: Capitalism has won” (Heilbroner, 1989, p.98)
As an undergraduate I found it intellectually satisfying to appreciate these points, and to feel that I really understood why. But once you’ve identified the set of economic institutions that work, the next question is how to go about implementing them. And as it turned out my affection for economics developed in the context of this great transition from communism to capitalism. Being a teenager in the 90s meant Cool Britannia, Brit Pop and Football Coming Home; but behind this was the end of the Cold War, the “first black US President”, a $1.4 trillion peace dividend, and the (mostly) peaceful liberation of 200 million people from living under oppression.
But one country was different.
“The fall of the Berlin Wall in 1989 ushered in a period of democratization and market reform extending across the East-Central European region, with one important exception: Belarus.” (Balmaceda et al, 2002, p.3)
I spent the summer of 2005 in Romania, doing fieldwork for my PhD. I was studying the spread of neoliberal economic ideas, with a particular focus on how the flat tax was adopted (see, for example, my 2009 book ‘The Neoliberal Revolution in Eastern Europe’). At the time there was a lot of discussion of the merits of radical reforms (i.e. “shock therapy”) as opposed to more gradual changes, and many western commentators pointed to the likes of Hungary as an example of a transition to a market economy that didn’t involve dramatic and destabilising shocks. The counter argument to this was that successful transition couldn’t be taken for granted. The real concern shouldn’t be between the speed of transition but whether it takes place at all. After all, the likes of Belarus, Turkmenistan and Uzbekistan remained authoritarian. I found this argument fascinating because although two of those countries were far off in Asia, Belarus is in the geographic centre of Europe!
“Belarus is basically ‘frozen’ in a state of stalled, unfinished market reforms, a point that most other post-communist countries passed already by the mid-1990s” (Dobrinsky, R., (Ed.) “The Belarus Economy: The Challenges of Stalled Reforms”, Vienna Institute for International Economics Studies, Research Report №413, November 2016)
I realised that I knew nothing at all about Belarus. Consider how Minsk has been portrayed in popular culture. There’s an episode of Friends where Pheobe’s first boyfriend, David (the “scientist guy”), is sent there on a research trip. The implication is that he will be unable to keep contact and their relationship is effectively over. His research partner doesn’t even know where Minsk is, stating that they’re going to Russia.
There’s also an episode of Seinfeld where George is charged $98 by a video store for losing a copy of ‘Rochelle Rochelle’, “the story of a young girl’s strange, erotic journey from Milan to Minsk”. In a later episode Bette Midler starred in the Broadway musical adaptation, and fictional posters have since appeared in real movie theatres.
So Minsk is far away and Minsk is mysterious.
Fast forward to 2006, and following a controversial Presidential election, protests began. This was the so called “jeans revolution”.
I was writing a blog called The Filter^ at the time and used it as a platform to witness history. Holed up in my Washington DC apartment I stayed up through the night live blogging events. I used Skype to contact random Belarusians to ask their thoughts and made contact with a number of people who participated in the protests. Some sent me their own photos of events which I published. You can see all the posts here. I can remember the Berlin wall coming down but it would be many years until I would become aware of those histories of the present. Despite proudly donning an orange scarf through the cold winter of 2004, I had been too late to pay attention to the Orange Revolution in real time. So I saw this as my final chance — I wanted to be there when Belarus finally began its post-Soviet journey. The young, Western oriented democratic voice of Georgia, Ukraine, and the Kyrgyz. Republic, had recently succeeded in peacefully toppling their leaders and it seemed inevitable that Belarus would soon follow.
But it didn’t. The revolution failed, Lukashenko consolidated his power, and the world stopped paying attention.
Over the subsequent years I’ve embarked on a number of interesting research projects, but always carried a latent interest in Belarus. On the 10th anniversary of the failed coup I decided to make it a priority. How can a dictatorship operate within Europe with such little exposure? As Gregory Ioffe has said,
“Belarus is the least studied and least understood European state to emerge from the breakup of the Soviet Union” (Ioffe 2008, p.231)
So I made an entrepreneurial decision to focus on a research subject that few other people seemed interested in.
One would think that anti-capitalists would trumpet Belarus, and writing for the New Statesman in 2011, Neil Clarke heaped praise on the “wonderfully retro ministry of economy” and the fact that “the unemployment rate is less than 1 per cent”. Clarke claims that “Lukashenko wins elections not through fear, but because he has delivered social protection and rising standards of living. Growth now stands at 7 per cent”. I can make an even stronger argument that Belarus is a success story. If we look at the Human Development Index, in 2016 Belarus was very close to being in the top 25% of all countries. And on the specific area known as the Multidimensional Poverty Index (MPI) Belarus’ score of 0.001 was the lowest of all countries surveyed (however, it hasn’t been updated since 2005). And there’s more: women get to retire five years earlier then men (the Minister of Labour justifies this “to compensate for the hard work at home”) and get 3 years of maternity leave with their workplace secured. In 2003 factory directors pay was fixed at ≤ 3.5 times the average worker. It sounds like a progressive, egalitarian paradise!
However, in response to that New Statesman article Tyler Cowen responded, “if you want proof that F.A., Hayek is a brilliant and important thinker, there it is”. In The Intellectuals and Socialism (1949, University of Chicago Law Review), Hayek argued that opinion leaders have biases that prevent them from critically assessing the feasibility of central planning. Or, as George Orwell said “One has to belong to the intelligentsia to believe things like that: no ordinary man could be such a fool”.
Belarus’ growth model is nowhere near as successful as advocates would like to believe. Whilst per capita income is relatively high and there have been periods of genuine growth, such growth is (i) fragile (because it relies on favourable external conditions such as high global energy prices and Russian subsidies); (ii) immoral (i.e. the prevalence of arms deals with terrible regimes); and (iii) unsustainable (young demographics and low life expectancy means low healthcare costs but this is likely to change over time).
So I went live with my “Belarus or Bust” strategy and branded my activities as “Baseline Belarus” — a starting point and a standard. I set up a Twitter account to monitor news and share work in progress, and started attending interesting events.
In October 2016 I went to an EBRD conference in central London. I learnt about the current state of the economy and some insights into the strategic geopolitical context. I made contact with the Economist Intelligence Unit and the UK Embassy in Minsk.
In February 2017 I attended the Second Annual Conference on Belarusian Studies in the 21st century, at UCL. I listened to an array of established scholars of Belarus and gained exposure to recent academic research.
A few months after that I served as a discussant at the Association of Nationalities World Convention, at Columbia University. I provided my first contributions to the field, met Timothy Snyder and listened to presentations by some of the worlds leading experts.
My reading list began to increasingly reflect attention to Belarus, and the main introductory texts about Belarus that I’d recommend are:
- Zaprudnik, Jan (1993) Belarus: At A Crossroads in History, Westview Press
- Marples, David R., (1999) Belarus: A Denationalized Nation, Harwood Academic Publishers
- Balmaceda, Margarita M., James I Clem, and Lisbeth L. Tarlow (Eds.) Independent Belarus: Domestic Determinants, Regional Dynamics, and Implications for the West, (2002) Harvard University Press
- Ioffe, Grigory, (2008) Understanding Belarus and how Western Policy Misses the Mark, Roman & Littlefield
- Wilson, Andrew (2011) Belarus: The Last European Dictatorship, Yale University Press
- Bazan, Lubov, (2014) A History of Belarus, Glagaslav Publications
I wrote up my notes into a 373 page “Belarus Briefing Document”, which provides a thorough overview of the social, economic, and political history of Belarus. It’s intended to serve as a first point of contact for anyone wanting to gain a substantial understanding of this fascinating country. I also released an audio version:
If you prefer to listen in iTunes, or Overcast, the URL feed is here.
I also have a video surveying Belarus’ score on a range of international rankings.
Learning about Belarus is rewarding but intellectually self-indulgent, so I tried to utilise my existing research expertise and write some interesting articles.
I noticed some policy discussion relating to competitiveness, and so I collaborated with my colleague (and best selling author) Terence Tse to apply Michael Porter’s framework to the development of the mining trucks and tractor factories that make Belarus famous. It was published as:
- “A strategic plan for the East Belarus mechanical engineering cluster” (2018) International Journal of Competitiveness (with Terence Tse)
I was also intrigued with how Belarus adopted a monetary targeting regime following the currency crisis that occurred in 2015, and teamed up with renowned monetary commentator Lars Christensen to publish an article explaining the monetary history and potential future trends that face the central bank.
- “A Belarus Monetary Perspective” Markets and Money Advisory, March 2018
One of the outcomes of the work on competitiveness is that Belarus is not currently included in the Global Competitiveness Index.
So I started working with CASE Belarus to provide the raw data — they estimate that if Belarus were included in the 2014 Global Competitiveness Index they would have been 55th (similar to Italy and Bulgaria).
Prior to 2018 Belarus was also absent from the Economic Freedom Index, and so we used our raw data to estimate that Belarus would have been 77th in the 2017 Economic Freedom Index (putting it in the Second Quartile alongside countries such as France and Poland).
This chimes with recent improvements on other Global Performance Indicators, such as going from 50th (2016) to 37th (2017) on the World Bank’s Doing Business report; and from 157th (2016) to 104th (2017) on the Heritage Foundation’s Index of Economic Freedom.
When Belarus was included in the 2018 Economic Freedom Index it was based on data taken from 2016. So we started afresh, backdated our own work, and found that Belarus would rank 125th globally. However if we strip away the short term effects of the then occuring currency crisis, Belarus would have placed 93rd (rising from the 4th to the 3rd quartile and above countries such as India and China). The paper will be published as:
- “Ranking Belarus on Competitiveness and Economic Freedom” Journal of Entrepreneurship and Public Policy (with Sierz Naurodski)
I feel the real opportunities for using Belarus as a case study are in governance. I have a presentation loosely titled “Neoliberalism, authoritarianism and governance: an interesting case”. But it’s a work in progress and not publicly available.
There’s only so much you can glean from reading, and as a committed ethnographer I was desperate to visit Minsk. I made my first trip in May 2017.
I held a meeting with IPM Business School, who partner with Kozminski University (which host an ESCP Europe campus in Warsaw). And I also visited BEROC — the Belarus Economic Research and Outreach Centre.
My initial response was surprise. I’ve spent significant time in several post communist countries in Central and Eastern Europe. In 1992 I visited Moscow, and found it Soviet, Dirty, Scary, and Poor. I was expecting something similar in Minsk, but was surprised at how Clean, Peaceful and Affluent it seemed. I wrote up a Travel Guide to Minsk and it has received some coverage in Belarus. I even got requests for interviews from the national TV channel. My journey to Minsk was a long one. But an enlightening and highly enjoyable one.
Note: edits to this post have been made since it was first published.