Impediments of Economic Policy under the Nexus of Institutional Constraints

Polemical Observations on Approaches to Economic Policy in Serbia

Authors

  • Vladimir Saso

Keywords:

Serbian economy is an exceedingly complicated object of steering, regulation and control. It is technologically stagnant, structurally unbalanced and under strong pressure of current consumption tending to overstep available resources as measured by the current GDP. More alarmingly, the political body of Serbia is highly differentiated and conflict ridden, its political parties are ideologically and programmatically far away from each other, the ruling coalitions are extremely difficult to form and equally hard to run and consequently its ruling directorates are bulky, slow moving and notoriously inefficient. Serbian coalition governments are faced with an inordinate multitude of constraints most of which have to do with opposed particularistic interests which are predictably converted in constraints as far as governmental operations are concerned. Regulatory mechanisms of the economy are clumsy and poorly working, adjustments to external shocks are therefore slow and incomplete, the urgently needed policy decisions are late and in permanent mismatch with economic realities and, as a consequence, macroeconomic stability is permanently jeopardized with indicators visibly below social needs and resource availabilities. There are ongoing processes of innovating business practices the results of which merge into exceedingly complex globally placed functioning mechanisms; it turns out next to impossible even to understand these mechanisms, not to speak of their control or steering. Much of what is observed as threat to stability and underperformance is conditioned by a broad range of dysfunctional institutional arrangements, which in turn persist due to complex and unworkable political system unable to produce needed social consensuses. As political peculiarities, untoward as they are, represent hard and impossible to transform social facts, with institutional arrangements being politically distorted, the constraints within regulatory framework are objectively given and economic performance, based on sadly constrained policies, cannot go beyond the modest statistically recorded achievements. Critically oriented analysts do not recognize these objectively given constraints and insist on results which are unrealizable. Ignoring constraints is at cross purposes with truly scientific approach and appears to be of little help in identifying developmental opportunities and enhancing efficiency of the economy as a whole. In view of institutional and political constraints for which no one can be held responsible, the officially recorded performance of the Serbian economy, while remaining quantitatively unchanged, should be reevaluated in a far-reaching way. The paper thus brings out two key points. Firstly, much of what is held controllable and consequently ascribed as the fault to ruling elites is ultimately objectively conditioned and consists to a significant degree of the unintended consequences and therefore is not ascribable to any set of social actors defined one way or the other. Secondly, the personalized current critiques pointed to the ruling elites rather than to the factors determining their behaviour are misplaced and do not contribute to betterment of the economic and social conditions., Economic performance, economic policies, institutional framework, institutional constraints on policies, political constraints on institutional development, institutional hysterezis, social consensus, the need for re-evaluation of economic performance.

Abstract

Serbian economy is an exceedingly complicated object of steering, regulation and control. It is technologically stagnant, structurally unbalanced and under strong pressure of current consumption tending to overstep available resources as measured by the current GDP. More alarmingly, the political body of Serbia is highly differentiated and conflict ridden, its political parties are ideologically and programmatically far away from each other, the ruling coalitions are extremely difficult to form and equally hard to run and consequently its ruling directorates are bulky, slow moving and notoriously inefficient. Serbian coalition governments are faced with an inordinate multitude of constraints most of which have to do with opposed particularistic interests which are predictably converted in constraints as far as governmental operations are concerned. Regulatory mechanisms of the economy are clumsy and poorly working, adjustments to external shocks are therefore slow and incomplete, the urgently needed policy decisions are late and in permanent mismatch with economic realities and, as a consequence, macroeconomic stability is permanently jeopardized with indicators visibly below social needs and resource availabilities. There are ongoing processes of innovating business practices the results of which merge into exceedingly complex globally placed functioning mechanisms; it turns out next to impossible even to understand these mechanisms, not to speak of their control or steering. Much of what is observed as threat to stability and underperformance is conditioned by a broad range of dysfunctional institutional arrangements, which in turn persist due to complex and unworkable political system unable to produce needed social consensuses. As political peculiarities, untoward as they are, represent hard and impossible to transform social facts, with institutional arrangements being politically distorted, the constraints within regulatory framework are objectively given and economic performance, based on sadly constrained policies, cannot go beyond the modest statistically recorded achievements. Critically oriented analysts do not recognize these objectively given constraints and insist on results which are unrealizable. Ignoring constraints is at cross purposes with truly scientific approach and appears to be of little help in identifying developmental opportunities and enhancing efficiency of the economy as a whole. In view of institutional and political constraints for which no one can be held responsible, the officially recorded performance of the Serbian economy, while remaining quantitatively unchanged, should be reevaluated in a far-reaching way. The paper thus brings out two key points. Firstly, much of what is held controllable and consequently ascribed as the fault to ruling elites is ultimately objectively conditioned and consists to a significant degree of the unintended consequences and therefore is not ascribable to any set of social actors defined one way or the other. Secondly, the personalized current critiques pointed to the ruling elites rather than to the factors determining their behaviour are misplaced and do not contribute to betterment of the economic and social conditions.

References

1.Ahrens, Joachim (2002), Governance and Economic Development – A Comparative Institutional Approach, Cheltenham, UK * Northampton, MA, USA: Edward Elgar.2.Barro, Robert (1983), „Rules, Discretion and Reputation in a Model of Monetary Policy“, Journal of Monetary Economics XII, No. 1, July, 101-122. 3.Buchanan, James M. (2009), The Constitutionalization of Money, 12 May, First Draft, Rukopis. 4.Buchanan, James M. and Gordon Tullock (2001/1962/), The Calculus of Consent – Logical Foundations of Constitutional Democracy, Ann Arbor: University ofMichigan Press.5.Dallago, Bruno (1999), „Ownership, Incentives and Actors in Transition and the Role of Policies“, N. P. Ostojić and N. Scott, eds., Recent Lessons From Transition andPrivatization, Beograd: European Center for Peace and Development, 105-134. 6.Downs, Anthony (1957), An Economic Theory of Democracy, New York: HarperCollins Publishers. 7.Dušanić, Jovan B. (2008), Bećarska ekonomija – Tranzicija u Srbiji, Beograd: Beogradska poslovna škola.

8.Hajek, Fridrih A. (2002/1976,1979/), Pravo, zakonodavstvo i sloboda, Beograd i Podgorica: JP Službeni list i CID, preveo Branimir Gligorić. 9.Horvat, Branko (1984/1982/), Politička ekonomija socijalizma, Zagreb: Globus. 10.Kovačević, Miladin i Mahmud Bušatlija (2009), „Neophodna reforma javnog sektora i njeni potencijalni efekti“, referat na savetovanju Tranzicija u Srbiji i globalna ekonomska kriza u organizaciji Naučnog društva ekonomista sa Akademijom ekonomskih nauka i Ekonomskog fakulteta u Beogradu održanom 30. maja 2009, objavljen u istoimenom zborniku, redaktori B. Cerović i Milad. Kovačević, Beograd: Ekonomski fakultet u Beogradu, 323-410. 11.Kovačević, Mlađen (2007), „Aktuelni problemi ekonomsko-finansijskih odnosa sa inostranstvom“,uvodna studija, referat na savetovanju Ekonomsko-finansijski odnosi sa inostranstvom u organizaciji Naučnog društva ekonomista saAkademijom ekonomskih nauka i Ekonomskog fakulteta u Beogradu održanog 26. juna 2007, objavljen u istoimenom zborniku, Beograd: Ekonomski fakultet u Beogradu, 11-55. 12.Kovačević, Mlađen (2008), „Trendovi, stanje i perspektive ekonomsko-finansijskih odnosa Srbije sa inostranstvom“, uvodni referat na savetovanju Ekonomsko- finansijski odnosi Srbije sa inostranstvom u organizaciji Naučnog društva ekonomista sa Akademijom ekonomskih nauka i Ekonomskog fakulteta u Beogradu održanog14. oktobra 2008, objavljen u istoimenom zborniku, Beograd: Ekonomski fakultet u Beogradu, 11-56. 13.Krleža, Miroslav (1923), „Dijalektički antibarbarus“,Književna republika. 14.Lord Dahrendorf et al., eds. (2000), The Paradoxes of Unintended Consequences, Budapest and New York: Central European University Press.

15.Luković, Đ. (2009), „Rejting Koštunice i DSS oborili Crna Gora, Kosovo i svađa sa EU“, Press br. 1347, 26. septembra 2009, s. 3. 16.Madžar, Ljubomir (2008), Nedostajuće dimenzije u evaluaciji makroekonomskih performansi Republike Srbije, objavljeno uz pomoć Proojekta podrške UNDP Srbija Ministarstvu finansija Republike Srbije, Beograd: Ministarstvo finansija Republike Srbije. 17.Madžar, Ljubomir (2009a), Ekonomska politika pred izazovima skučene upravljivosti, objavljeno uz pomoćProjekta podrške UNDP Srbija Ministarstvu finansija Rebublike Srbije, Beograd: Ministarstvo finansija Republike Srbije.18.Madžar, Ljubomir (2009b), „Kriza, tržište i ekonomska politika“, prilog savetovanju Tranzicija u Srbiji i globalna ekonomska kriza, B. Cerović i Milad. Kovačević, red, op. cit, 157-213. 19.Mueller, Dennis (2003), Public Choice III, Cambridge: Cambridge University Press. 20.Pavlović, Dušan i Slobodan Antonić (2007), Konsolidacija demokratskih ustanova u Srbiji posle 2000. godine, Beograd: Službeni glasnik. 21.Pejovich, Svetozar (2008), Law, Informal Rules and Economic Performance – The Case for Common Law, Cheltenham, UK * Northampton, MA. USA: Edward Elgar.22.Poper, Karl R. (1993/1971/), Otvoreno društvo i njegovi neprijatelji, I i II tom, Beograd: Beogradski grafički zavod, preveo Branimir Gligorić. 23.Slonim, M. (1939), „Boris Piljnjak“, predgovor u zbirci B. Piljnjaka Ivan Moskva i druge pripovetke, Beograd: Profesorska zadruga.24.Trifunović, Dejan (2009), Asimetrične informacije na finansijskom tržištu – Primena teorije igara sa nesavršenim informacijama, doktorska disertacija odbranjena naEkonomskom fakultetu u Beogradu, Beograd: Ekonomski fakultet.

Published

03-09-2019