Yugoslavia's civil war was triggered by structural adjustment

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by Hans Dembowski

Technocrats don't appreciate democratic deliberation

I've recently written quite a lot about populist politics. This time, I'd like to shed some light on technocratic approaches. What they have in common with populism is that they tend to undermine the principles of democratic deliberation.

Populism is basically about leaders not spelling out nuanced policies but relying on an imaginary idea of common values and their self-evident norms. They stimulate anger about things not being the way they should supposedly be and target outsiders and minorities as culprits. Their rhetoric is often anti-elitist, but they don't necessarily adopt policies that might hurt the elites.

Populists destroy democratic discourse because they deny facts, shy away from complicated details and agitate against compromise and consensus. They see no need for nuanced debate but simply demand that the state fulfil the people's wishes, no matter how contradictory those wishes may be. Populists are happy to promise lower taxes and better social services at the same time. Once in power, they keep hounding scapegoats, blaming all kinds of “traitors” who supposedly prevent things from becoming as they should be.

Economic technocrats are similarly problematic, though their message is different. They do not promote ideas of what “every good” member of any given nation intuitively knows to be right; they insist on implementing economic models. Technocrats argue that, since their concepts are based on scientific theories, they are as valid as the laws of physics or chemistry. Again, there is no need for broad-based debate, compromise and consensus building. The right course is already known, and the only challenge is to implement it.

Implementation is normally difficult, however, because market dynamics tend to exacerbate inequalities. Technocratic approaches mean that the living standards of society's less-advantaged strata tend to decline, at least at first. In the eyes of the technocrats, however, recession is not a sign of failure, but just shows that more of their bitter medicine is needed for things to get better eventually.

I've already elaborated on why economic models do not reveal anything like the laws of nature and why they often serve special interests. I won't delve deeply into the matter now. The core issue is that a nation is not simply a national economy made up individuals who rationally maximise their utility, and, even more important, it is not made up of citizens who have equal opportunities. It matters whether one belongs to one social stratum or another and whether one's household can rely on massive inheritance or is saddled with debt. As politics serve to manage these matters one way or another, the radical enforcement of economic models can destroy a nation's social fabric.

One of the worst cases was Yugoslavia in the late 1980s and early 1990s. The country had suffered serious economic decline in the 1980s and was struggling with inflation and excessive sovereign debt. Egged on by the International Monetary Fund (IMF), the government implemented radical liberalisation schemes fast in the hope of improving matters. The policy went terribly wrong politically.

The problem was the people did not accept the technocrats' vision of things becoming better after first becoming worse. They only noticed that things indeed became a lot worse. Some 1.3 million people lost their jobs as thousands of uncompetitive companies had to close down, and GNP dropped by something like 7,5 % in 1990 and 15 % in 1991. In the devastating economic crisis, ethnic populism began to fester. Very bluntly put, Serbs accused the comparatively prosperous Croatians of not wanting to share, and Croatians accused Serbs of wanting to free ride. A brutal civil war erupted, in which the small country's various ethnic groups were pitted against one another. In the end, masses of people had been killed or displaced, and Yugoslavia no longer existed as a country.

I'll happily admit that technocracy does not normally trigger civil war. Yugoslavia was an extreme case. Its great ethnic diversity made conflict more probable and more brutal than it would otherwise have been. It is worth emphasising, however, that nationalistic agitation along ethnic lines only became truly murderous once the technocratic attempt to resolve the economic crisis had caused even more economic pain. It is also worth pointing out that the relevance of failed economic policymaking is normally downplayed, which is surely linked to the fact that Yugoslavia's history does not confirm the free-market paradigm that has been guiding global policymaking in recent decades.

The IMF and World Bank have toned down their technocratic stance somewhat since the 1990s. Both now stress that poverty reduction matters too. All too often, their structural adjustment programmes had compounded poverty and exacerbated social disparities in client countries, but failed to resolve debt crises. By the turn of the millennium, heavily indebted developing countries ended up in death spirals of ever more austerity, and the international donor community acknowledged that policies had failed. In terms of the political impacts of technocratic mismanagement, however, Yugoslavia should not be forgotten.

All this does not mean that economic models are worthless. They can be useful, but need to be taken with a pinch of salt. They do not reveal laws of nature. Academic expertise is no substitute for democratic deliberation. 



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