The most distinctive characteristic of post-communist social structure in East Central Europe is the absence of a capitalist class.footnote1 Private property rights are in place, markets in labour and capital exist, these economies are open to world markets, and they have strong relationships with international financial institutions. However, there is no organized group of major capitalists. There are no interlocking corporate directorates based on ownership, and there is no class organization through networks of family property. Indeed, the result of privatization in most of the region has been highly diffused property rights. This is the puzzle we seek to understand: what explains the distinctive class structure of the fledgling capitalist economies of East Central Europe? In the absence of a capitalist class, who has power, and on what basis do they exercise it? How stable is the current balance of class forces? Can it reproduce itself for the foreseeable future?

Our answer, in brief, is that the distinctiveness of the new capitalist societies of East Central Europe is due to the coalition of class fractions and elites which currently rule them. This coalition constitutes a ‘power elite’, which controls the command positions of political, cultural, and economic institutions, and is busy making ‘capitalism without capitalists’. For the time being, this post-communist power elite does not look like a capitalist class whose ability to garner profits and to exploit workers is rooted in private ownership of the means of production, that is, economic capital. Nor does it resemble the communist nomenklatura, whose ability to dominate was based on a highly institutionalized form of social capital—party membership—which we call ‘political capital’. Instead, the new power elite of post-communism resembles most closely what Bourdieu has called ‘the dominated fraction of the dominant class’ in Western capitalism: it exercises power principally on the basis of knowledge, expertise and the capacity to manipulate symbols, in short, ‘cultural capital’.footnote2 What is most unusual about the current Central European context, however, is that this new power elite—so far—exercises its domination with no competition from a propertied bourgeoisie. The new power elite of post-communism is not composed of owners, but rather of the technocratic-managerial elite together with the new politocracy which constitute its dominant fraction, and elite humanistic and social science intellectuals which form its dominated fraction.

In what follows, we analyze the characteristics of the domination exercised by this new power elite as ‘managerialism’. In so doing, we critically reconstruct the classical theories of managerialism developed in the West, reworking traditional understandings of how classes and elites exercise power. Next, we trace the development of the post-communist power elite to the intra-class and intra-elite struggles of the communist era, which we argue, continue to shape processes of class formation in post-communism. In the final section of the paper, we present evidence to support our hypothesis that a new power elite is in the making. First, against theories of ‘interrupted embourgeoisement’ which anticipated a renewal of the pre-communist bourgeoisie, we show that the incumbents of economic command positions are those who were already in managerial positions prior to the fall of communism. Second, contrary to the expectations of political capitalism theory—which anticipated the making of a propertied bourgeoisie from the ranks of cadre and the nomenklatura—we demonstrate that the incumbents of these command positions are not primarily owners but managers, and the basis of their power is not usually property ownership but professional expertise. Third, we show that the managerial elite closely resembles the members of the new politocracy and cultural elite in terms of its lifestyle and possessions. Though managers are relatively well-off compared with the rest of the population, they do not own or earn significantly more than other segments of the elite. This corroborates our claim that a power elite is in the making, not a grand bourgeoisie. In conclusion, we assess the potential longevity of managerial capitalism in post-communist societies.

One qualification is needed before we continue. We have carefully circumscribed our claims to the geographical area known as ‘East Central Europe’—the Czech Republic, Hungary and Poland—as distinct from ‘Eastern Europe’ proper.footnote3 Indeed, we think that most of our arguments do not apply to the eastern part of the post-communist world, whose historical development has been markedly different from that of East Central Europe. According to the evidence available to us, the transition in Russia seems to have proceeded in marked divergence from the Central European path we will describe in this paper. Political capitalism theory, which we reject for Central Europe, seems to apply rather well to Russia. The former Russian nomenklatura, often in collaboration with Mafia-like groups, which are rumoured to be composed of former kgb officers, was more successful than its Central European sisters in turning public property into private wealth. This has led to a paradoxical situation, diametrically opposed to our reading of developments in Central Europe: while market institutions in Russia are developing only sluggishly, a propertied grand bourgeoisie is already in the making. Thus, if we characterize post-communism in Central Europe as ‘capitalism without capitalists’, it may well be fitting to label the emergent Russian structure as ‘capitalists without capitalism.’

Despite this qualification, however, we believe that our theory is general enough to be able to account for the historical roots of this Russian ‘exceptionalism’. As we shall argue later, the shape of post-communism in Central Europe was determined by the fact that the ‘revolutions’ of 1989 came just as the technocracy, in alliance with dissident intellectuals, defeated the ruling bureaucratic estate and took power in its place. But this is not what happened in Russia: there, the technocracy and the dissident intelligentsia were much weaker to begin with, due to historical reasons, and they had to wait until 1991 when, rather than defeating the old ruling estate, they compromised with it. The Russian technocracy was not able to impose its own rules on the privatization process and block the access of the old nomenklatura to private economic activity. Furthermore, dissident intellectuals were not able to successfully complete their historical project of creating ‘civil society’ in Russia. Thus the Parliament and the media are weak and exercise very limited control over the process of privatization. The result is widespread corruption, in which the ruling elite most closely approximates the model of a ‘kleptocracy’.

The theory of managerialism was first proposed as a particular version of New Class theory. In an earlier paper one of us defined the ‘new class’ idea as a theory or set of theories which, taking their inspiration from Marx, agreed that the propertied bourgeoisie was losing its dominant position in advanced capitalist societies.footnote4 In contrast to Marxism, however, New Class theorists did not envision society following the fall of the bourgeoisie as either classless or as subject to the dictatorship of the proletariat. Rather, these theorists predicted that the bourgeoisie would be replaced by a new dominant class—although there was little agreement about what this class would look like.

The first wave of New Class theories at the end of the nineteenth century was put forward by anarchist critics of Marx like Bakunin and Machajski. These theorists suspected that the radical, ‘free floating’, Marxist intelligentsia would form the basis of a new dominant class who would rise to power on the backs of the proletariat. Managerial theories belong to the second wave of New Class theorizing which occurred during the 1930s, 1940s and 1950s. Managerialists identified technocrats and/or managers as the new social agents who would wrest control of the command positions in the economy from proprietors. Although developed primarily as an analysis of Western capitalism, analogous theories were proposed by critical analysts of Soviet-type societies during the same period, and in these theories, the Stalinist bureaucracy was identified as the New Class.footnote5 The third wave of New Class theories were theories of the ‘knowledge class’, which were briefly fashionable during the 1970s. Proponents believed that either the adversary culture,footnote6 or the culture of critical discoursefootnote7 would be the vehicle by which the critical intelligentsia—or a New Class formed by humanistic intellectuals in combination with the technical intelligentsia—would undermine the power of the capitalist class.