Marko Hočevar – Slovenia: the crisis of a parliamentary republic in the swamp of neoliberalism

The case of Slovenia shows once more that in the EU “There is no alternative”, just neo-liberalism.

Marko Hočevar is a postdoctoral researcher at the Faculty of Social Sciences, University of Ljubljana (Slovenia).  

File:Slovenia in Europe.svg - Wikimedia Commons

After the downfall of socialist Yugoslavia, the specific case of the Slovenian transition from socialism to capitalism was considered a success story. Slovenia did not adopt the “shock doctrine”, which was promoted across Europe and in Slovenia at that time by Jeffrey Sachs. Instead Slovenia implemented a more gradualist approach of transition thus avoiding rapid privatisation, while it gave priority to managerial, worker, and state ownership and not foreign capital. In the mid 1990’s a strong neo-corporatist system emerged, similar to the German one, which was marked by strong trade-unions, while a consensus was made among the politicians, “red managers” (most of them had also been in key executive positions during the socialist period), and the trade unions about the primary goal of the state – to become an EU member state. These processes were led by the LDS (Liberalna demokracija SlovenijeLiberal democracy of Slovenia), a liberal party, whose president was Dr. Janez Drnovšek, one of the last of the rotating “Presidents of the Presidency” of the socialist Yugoslavia. Thus, some sort of political and economic continuity was established, while a strong export driven economy was emerging, enabled by internal devaluation – intensification of labour and limiting the rise of wages.

Europeanisation, neoliberalism and crisis of 2008

This specific class compromise came to an end around 2004, when Slovenia became a member of the EU and NATO. LDS lost the elections, new pressures became evident because of taking over the euro. The right wing SDS (Slovenska demokratska strankaSlovenian democratic party) won the elections and the new prime-minister was Janez Janša. His government wanted to impose a flat tax rate, which was strongly and successfully opposed by the trade unions. However, the new government managed to adopt many tax cuts for the richest (lowering tax rates on capital gains, reducing progression in personal income tax, abolishing the payroll tax), while its primary target was to end the gradualist approach and rapidly implement a social-market economy (a concept developed by the German ordoliberals).

In this sense, it would be correct to identify the year 2004, the accession into the EU, and the victory of the neo-liberal SDS in the elections, as a turning point in Slovenia – the new direction was neoliberalism (although also from the early 2000s the LDS-led governments were pushing for privatisation, emphasising the need to make the economy competitive.

During this period the attempt to create a specific Slovenian capitalist class (national bourgeoisie) became most evident. Namely, since many companies were not privatised during the 1990s and they were controlled mostly by “red managers”, while the new right wing neoliberal government wanted to create a new strong privately owned economic base. Thus, the processes of privatisation had been intensified through buy-outs and takeovers by red and not-so-red managers. However, the crucial problem was that the managers did not have enough money for these operations. The state-owned banks therefore played a crucial role in this process of “primitive accumulation”. The banks provided the necessary money for the takeovers, although they also did not have enough money for this, but had to the take out loans from other international banks in order to finance these operations. In this situation, it was only a question of time until the entire scheme collapsed. The crisis of 2008 brought this about.

When the crisis hit, the recession in Slovenia was one of the deepest in the EU. Loans that were given to the managers to become proper capitalists had been secured through stocks and real estate, which were both extremely overrated. A problem occurred when the markets collapsed, with Slovenian banks having to repay their debts but being unable to do so since the most loans they had granted for the buy-outs and takeovers were bad loans. Bad debt soon accumulated and the burden fell on banks, which had to repay their debt to other banks. The only possible solution was to recapitalise the banking sector multiple times which consequently led to the rapid rise of public debt.

The tax reforms of neo-liberal Janša’s first government and the socialisation of the banking sector’s losses, mostly a consequence of the policies of Janša’s first government, led to a huge increase in debt and the deficit. By January 2012, the rating agencies had lowered their credit ratings for Slovenian government bonds. The international markets wanted to send the Troika (the European Commission, the European Central Bank and the IMF) to Slovenia and to establish a technocratic government unless the state would adopt radical austerity measures to meet the requirements of the Maastricht Treaty and the Stability and Growth Pact.

Neoliberalist hegemony and liberal narrative of “new faces”

The crisis management under the strict EMU regime was based on different policies which all had one goal – to restore the competitiveness of the Slovenian state and economy via austerity. Four dimensions and sets of policies were adopted as the cornerstone for regaining the confidence of EU institutions and financial markets: 1) tax reforms that have affected the entire population; 2) austerity measures and the adoption of the Fiscal Balance Act aimed at decreasing public spending; 3) the inclusion of the fiscal rule in the Constitution; 4) privatisation of state owned companies and banks. Thus, during the crisis of 2008 and rescuing capitalism, the Slovenian state had undergone a transition from, to use Wolfgang Streeck’s concepts, a debt state to a consolidation state with harsh austerity measures. The period after 2011 until 2018 could be defined as the victory of neoliberalism in Slovenia since the measures explained above aimed at fiscal consolidation were imposed and pursued by different governing coalitions – from right wing to liberal.

The rise of the debt state and its transformation into a consolidation state also marked another important shift. The attempt to establish a Slovenian capitalist class – a national bourgeoisie – collapsed. Many of the former tycoons were imprisoned. Thus, a new group emerged, which could be labelled the “comprador bourgeoisie” – different bankers, politicians, managers, lawyers, lobbyists etc. who earned a lot of money as advisors to foreign capital and had connections to different political and economic institutions. They earned fortunes through privatisations of public services, state-owned companies, and banks.

Another important novelty coincided with the rise of the Slovenian debt state and its transformation into a consolidation state. Since the downfall of the liberal LDS, formerly the strongest party, after 2010, many different liberal parties began to emerge before every election while these new liberal parties ended up winning or being the second strongest party behind SDS and managed to form governing coalitions. This process became known in Slovenia as the politics of “new faces” (politika novih obrazov), who were actually not-so-new faces, but members of the same political elite.

All these parties had the name of the “new face” as the name of the party, which shows a clear personification of liberal parties and, with only one exception, all of them promoted strict austerity and consolidation. The policies advocated and implemented by the second Janša’s government (2011–2012) and the two liberal governments afterwards led to a rise in inequality and precariousness, while the state sold everything to various sources of foreign speculative capital. Instead of clear socio-economic measures aimed at improving the livelihoods of the poorest and weakest the neoliberal consensus led to cultural struggle between conservative and liberal neoliberals.

COVID-19 and the crisis of liberal republic

Thus, before the election of 2018, liberal and conservative neoliberalism were the only game in town, while it was becoming obvious that liberal neoliberalist politics seemed to prevail in Slovenia. The coalition government formed after the election 2018 was comprised of five parties: LMŠ (Lista Marjana Šarca), SMC (Stranka Modernega Centra), SD (social democrats), DeSUS (party of pensioners), SAB (Stranka Alenke Bratušek), while the Left (Levica) – a party, which declared itself to be a democratic-socialist party, while embodying the young academic and artist circles and proposing traditional social-democratic policies – was supporting the government, although not taking part in governing.

During this liberal government one important step was made – the minimum wage was raised. This was a big hit to domestic and foreign capital, but since the economic growth was stable and growing, it was impossible for any government not to raise the minimum wage. This was a measure proposed and advocated by the Left and it was their condition for supporting the government. However, when the time came for the government to propose a new act on medical insurance to the National Assembly – this act would have brought an end to privatised medical insurance and was again most fiercely advocated by the Left – the minister of finance resigned followed by the prime minister. When the prime minister resigned, he was certain that new elections would be held in few months. Instead it resulted in a third Janša’s government established in March 2020. This was all happening in February 2020. Thus, the outbreak of the COVID-19 crisis in Slovenia coincided with the governmental crisis.

The outbreak of the COVID-19 crisis led to many restrictions, even the curfew in Slovenia was one of the longest in Europe. However, the restrictions are only one part of the story. The second part have been various gifts by the government to businesses and to different professional ranks. The new government adopted many policy packages and gave a lot of money to the biggest companies as a way to “save” them from insolvency or even bankruptcy, while not demanding any guarantees that these companies would not lay off workers (which indeed many did). At the same time the government gave out huge grants to the most exposed during the crisis – especially doctors. However, this led to rumours that doctors were receiving double or triple salaries while not treating any patients at all (due to COVID-19 restrictions). The increased spending for the military is a typical neoconservative and neoliberal measure, while the current Slovenian government is giving more and more money to the military for the pursuit of various NATO-led wars for foreign capitalist interests. Meanwhile, taxes for the wealthiest have been reduced..

Simultaneously, the right wing government has been notorious because of the specific language used by its prime minister – attacking different journalists, NGO activists, politicians, seeing everywhere a Yugoslav and/or communist conspiracy against him. He is being investigated by different EP members who are accusing him of not respecting the freedom of speech and for attacking and diminishing the freedom of the press. An especially controversial issue is the fact, that the government is not fulfilling its legal duties and is not financing the Slovenian Press Agency. Political influence within the police was never bigger while the police themselves are becoming more brutal. That was seen during the protests of anti-vaxxers in October when tear gas and water canon were used almost every week, while the number of COVID-19 infections and deaths is rapidly rising again.

Liberal politics, KUL coalition and the downfall of liberal political reason

In spring 2020 protests began to emerge against the new conservative neoliberalist government. Many different actions were organised, but without much success. The prevailing themes are still to date liberal – human rights, freedom of the press, freedom of speech, rule of law etc. These protests are always incorporated in a cultural framework, while class questions are manifestly absent from them. Instead of addressing the issues of layoffs, rescuing large companies, tax cuts and socialism for the rich, the issues of freedom, morality, law, culture etc. are at the forefront of the political discourse.

At the same time, the previously governing parties formed a new opposition named KUL (Koalicija ustavnega lokaCoalition of constitutional arch, the abbreviation is pronounced “cool” in Slovenian). After several attempts and also one unsuccessful constructive vote of no confidence the KUL opposition seemed to be defeated, just to resurrect itself in a new form.

A month ago the four parties signed an agreement, where they committed themselves to post-election cooperation (which will be held in Spring 2022), while explicitly stating that they will not collaborate with any of the currently ruling parties. The crucial goal of the opposition KUL is to bring back the alleged normality before the third Janša government. They are also proposing modern reforms: more digitalisation, higher productivity, green transition etc. Class specific policies are absent from this very short agreement. What binds these four parties is the very widespread anti-Janša sentiment and the willingness to establish the status quo ante, which was more a liberal dystopia than the state of affluence, which fell apart when the profits of capital were seriously threatened (the act on medical insurance).

KUL seems to be a conglomerate of liberal neoliberalism, while the Left is becoming more and more liberalised and its anti-capitalist sentiments have been reduced to anti-neoliberalism. Thus, some sort of pro-capitalist and pro-market consensus has been formed – the question is only, how much market and how much capitalism. In this structural context, the constant demise of strength of trade unions is not surprising. Thus the Left has left the working people without proper political representatives.

Crisis of liberal republic and interregnum in Slovenia

In Slovenia we are seeing the dominance of “extreme centre”, a neoliberal consensus which is only sometimes upset by the neo-Keynesian and not anti-capitalist Left. The crisis of the liberal republic is reflected in the fact, that liberal politics cannot come up with anything different than the already defeated »third way« – liberal neoliberalism – , which was precisely the reason which enabled the rise of conservative neoliberalism of the right in Slovenia. Liberal politics has been reduced to the perpetual attempt to find “a new face”, a new, or not-so-new politician, who will attempt to reunite several different streams of the former LDS, and to the cultural war with the conservatives. It seems that the idea and practice of class struggle has been abandoned even by the Left, while the ruling conservative neoliberal government is dismantling the pillars of the liberal ideological framework (media, freedom of speech etc.) while promoting radical pro-capital policies (tax cuts, subsidies to businesses). situation of in

This is an interregnum. Antonio Gramsci defined an interregnum almost 100 years ago as follows: “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear”. This interregnum in Slovenia is seeing not only the rise of the neoliberal right, but more importantly a cultural war between conservative and liberal neoliberalism and the abandonment of anti-capitalism on the left. The current situation where we have neoliberal hegemony, right-wing-conservative government, which is saving capitalism better than the liberals would do, and the liberal “third-wayist” and cultural-academic arrogance in the form of KUL, is perhaps just one of the many morbid symptoms of interregnum in Slovenia.


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