wheredoenTrepreneurscome from
?
Among the immanent historical preconditions of the post-socialist transition, one can count the second economy and the high speed of the changeover of the elites before the institutional changes. Where these conditions are present, they help to reduce the social costs of transition (Lengyel 1992).
Hungary is an example where both preconditions seemed to be present in the late ‘80s – and where, suddenly, the idea of the “third way” appeared again on the intellectual horizon. Systemic change had just begun. New movements and parties were in the making, and the works of the reform-minded public intellectuals of the ‘30s became a point of reference once again. The “third way”
became a point of crystallization for a wing of national democratic ideologues and had been under attack by liberal democrats who declared that there was no “third way” in Europe.
Where doentrepreneurs come from?
Although the very concept of the third way was explicitly denied, the core of it proved to be very viable. If second economy and the active circulation of elites were historical preconditions, it also seemed to be generally accepted that a strong middle class was a structural condition for successful transformation.
However the context was completely new. There were some who argued that unrestricted foreign capital might generate a comprador bourgeoisie (Szelényi 1990). Others, without any third way sentiments, also put emphasis on a slow, organic development of the new proprietor class (Kornai 1990, Kuczi et al. 1991).
Yet, if the recruitment of the middle class is of outstanding importance, the question inevitably emerges: where do entrepreneurs come from? There are three types of explanations concerning the recruitment of bourgeoisie in East- European societies during the transition period. Two of them are diachronic: according to their logic one can find the roots of the bourgeoisie in the past; that is, the social rules of recruitment are determined by historical factors.
The first model might be called the long-term historical legacies explanation.
The core of this argument is that the new entrepreneurial class will consist of those whose families belonged to the bourgeoisie in the pre-socialist past; whose parents owned land or had employees. An example of this kind of explanation is found in interrupted embourgeoisement theory (Szelényi 1988). On the basis of empirical surveys during the early ‘80s concerning family agricultural production, Szelényi suggested that entrepreneurial activities might be best understood on the basis of family background. The heirs of middle and rich peasant families (i.e.
those who had learned to independently handle finances) are the most likely to be entrepreneurs. They inherited a culture of responsibility and decision making.
Their life history is mediated by their family background, but the emphasis is on social heritage.
Another aspect of long-term historical legacies is the ethnic background of potential entrepreneurs. If ethnic background was important in the early phase of modernization and even in the inter-war period, there might be reason to believe that there were surviving patterns of economic behavior. In the case of our research, the criteria for registering ethnic status was whether any of the grandparents belonged to a national or ethnic minority and if so, which one. One has to keep in mind that many of the grandfathers’ generation in ethnic groups were subject to political discrimination. Ethnic stereotypes contributed to the fixation of minority behavior patterns by influencing public opinion. In the early period of modernization, due to the admixture of these forms of minority behavior, cultural traditions and institutional constraints, socially mobile ethnic groups which were hindered in their social advancement drifted towards work
with low prestige but potentially fast material payback or compensation. As a result, they were considerably over-represented in certain business sectors. In the first half of the twentieth century, attitudes towards business started to change.
With the formation of large corporate hierarchies and increased professionalism the prestige of businesses grew and the importance of family and ethnic relations decreased (Lengyel 1990). On the other hand, due to the impact of the economic crisis in traditionally low prestige areas, among peddlers and hawkers of second-hand goods, intermediary agents and marketers, the ethnic composition was broadened.
The second diachronic model emphasizes short-term, socialist legacies. It argues that the most decisive factor in mapping a new social structure is the former position of power. Two diverging hypotheses may be derived from this. One is that cadres convert their power into private business positions. The other contradicts the first one by stating that former socialist party members are ideologically against privatization and entrepreneurship. The first has a positive and the second a negative effect on entrepreneurial inclination. But socialist legacies are predicted to play an important role in shaping the social space for entrepreneurship in both cases. Relying upon the Polányian concept of redistribution, Victor Nee proposed the thesis that when market allocation replaces redistributive mechanisms, the resources of power also shift from redistribution to the market, the market provides more incentives and this substantially affects social mobility (Nee 1989). In connection with this change, he also presumed that during a transition the role of political resources would decrease and that cadres would have negligible or no role in becoming entrepreneurs. The findings of his research (based on a sample from a Chinese village) disproved this hypothesis. Cadres – leaders at lower levels of the hierarchy in this case – had greater chances to become entrepreneurs than non-cadres did, even though the clear majority of entrepreneurial households were not cadre households earlier.
The vision of a “great coalition” of the old and new elites found that former cadres played a quite significant role in the making of the new bourgeoisie (Hankiss 1989). Another analyst, Erzsébet Szalai, stated that the new managerial elite are recruited from members of the “beat generation”. Because they are qualified experts with meritocratic values they are able to keep or transfer their power (Szalai 1989).
According to these versions of socialist legacy theory, potential entrepreneurs are those who had the power to accumulate wealth and connections during their former years.
Finally, the third model states that neither long- nor short-term historical legacies, family backgrounds or former political roles determines entrepreneurial inclination,
Where doentrepreneurs come from?
but rather it is available personal conditions, skills and demographic characteristics that matter (Kuczi et al. 1991). This model is a synchronous one: the emphasis is not on historical antecedents but on “here and now” personal attributes.
In the following I will test the validity of the models mentioned above concerning diachronic and synchronous explanations of entrepreneurial inclination. Data are based on a nation-wide representative survey from 1988 (3000 persons)2.