UNCERTAINTY , CONGRUENCE , AND UNEVEN INSTITUTIONALIZATION : THE DYNAMICS OF INSTITUTIONAL INNOVATION IN TRANSITIONAL SOCIETIES

The purpose of this article is to analyze the varieties of Capitalism that emerged in Latin America and Central-Eastern Europe since 1980 as instances of institutional transfer. The article considers the possibility that Capitalism, as occurs with democracy, is a complex institutional package rather than and elemental institution. Some of its’ components travel faster than others through hybrid forms. These, rather than being instances of imperfect transplantation, or intermediate stages in a process of successful transfer, represent new frameworks, with potential for institutionalization.


IntroductIon
The purpose of this paper is to examine the varieties of capitalism that emerged in the transitional societies of Latin America and Central-Eastern Europe since the 1980's as instances of institutional transfer.
In the two cases, the transitions were initiated by state and political elites, following the demise of relatively closed and etatized capitalist economies (what I call autarkic capitalism) and in most cases authoritarian regimes in the first of these regions, and of state socialism in the second.In the cases in which business elites were strong (some in Latin America), they also took part in the process of institutional innovation.In some cases, the objective was the establishment of open market capitalism, along the lines of the United States and Western European models, and in others a neo-mercantilist economy, in which the economy, and the capitalists, serve the interests of the state.Both programs of social transformation have entailed the large-scale privatization of government-owned firms and at least some de-regulation.The open-market model required in addition more substantial de-regulation and the opening-up of the economy 1 .These processes have been more radical, of course, in the case of European state socialism, where all the firms had been part of the state, central planning determined the relations among firms and between firms and consumers, and trade and capital flows with the world capitalist economy were of secondary significance.However, autarkic capitalist economies in Latin America were based on large public sectors, which included transportation and manufacturing firms, their private firms operated behind very high tariff barriers and were, to a large extent, dependent on the state for financing and international trade; and their economies were highly regulated.

the dIvergent outcomes of the economIc transItIon
After about three decades of economic transitions, the outcomes are diverse, and for the sake of expediency they can be classified into three pure types, which are presented in Table 1.The first category corresponds to the cases that basically resemble the American or West European models, in that they have combined their central traits: private property and control of the means of production, and relatively open markets for goods (at least for non-agricultural ones) and capital.These regimes have two characteristics.First, they have limited government, in the sense that government regulates central economic processes, but it leaves the basic economic decisions to the firms.Secondly, their capitalist classes are relatively strong: They are autonomous from the government and, to a considerable extent, they are internationally competitive.The Czech Republic or Poland in Central Europe or Chile and Brazil in Latin America would be examples of this regime type (See Table 1).
The second group consists of countries whose capitalism is characterized by a higher control of the productive sectors of the economy by the state, even though private property still prevails, and substantial restrictions to market mechanisms, especially in relation to international trade and investment.These governments are trying to establish neo-mercantilist regimes, for they view economic development, industrialization in particular, primarily as a means for increasing the power of the state.Regimes of this sort are akin to the autarkic capitalist ones that emerged in the middle of the XX th Century in Latin America and Spain.This pattern leads to a state that owns a large sector of the economy and very strongly regulates manufacturing, natural resources, and other strategically important sectors; and Even though, in most cases, these processes of institutional adoption were endogenous, the transitions were also influenced by external demonstration effects, both positive and negative; and they were facilitated by external economic and political factors: the globalization of markets for goods and capital and the support offered by major Western powers, both directly and via international financial agencies.After two or three decades of the inception of this process of social transformation, it is quite clear that the outcome has been the institutionalization of different types of capitalism, and hence of capitalist classes, a result that is puzzling from the perspective of institutionalist theory.I will propose a typology of these outcomes, and make three claims.First, the elites' guiding principle, which determined the institutional design they pursued, was the control of uncertainty: The pre-existing institutions had failed, but the elites' objective was to put in place new ones that would, as much as possible, protect their interests.Of course, the extent to which the outcomes matched the intentions varied considerably, as we will see.Second, the successful transfer of complex institutions such as capitalism and democracy requires a substantial congruence between these institutions and attributes of at least two critical components of the broader institutional framework in the recipient society, the state and civil society.The third proposition is to a large extent the corollary of the previous ones: Capitalism, as well as democracy, is a complex institutional package, rather than an elementary institution, and some of its components "travel" more easily than others, hence the hybrid forms.These, rather than being instances of imperfect transplantation, or intermediate stages in a process of successful transfer, represent new frameworks, with potential for institutionalization.

InstItutIonaLIst theory
The obvious question is whether this diversity of outcomes represents a stage in a process of convergence, a proposition consistent with sociological institutionalism, or the crystallization of new frameworks for the organization of the economy (and polity, given the variation in political outcomes), as the multiple modernities approach would expect.
Institutionalism presupposes a mechanism of institutionalization: Modifications in the normative environment alter the incentives and constraints that shape individual preferences (in some versions) or their routines, scripts, and schemas (in others) 2 .As a consequence, individuals change their behavior, and their new practices reinforce the rules and contribute to their stability.
With respect to major institutional frameworks, such as forms of economic or state organization in the modern world, the sociological variant of new institutionalism would predict isomorphic tendencies, either as a consequence of imitation (e.g. the transitions in most of Central and Eastern Europe and Latin America), or coercion (e.g.Afghanistan or Iraq today).Dependence, uncertainty, perception of relative efficacy, and the shortage of visible organizational alternatives would be the determinants of mimetic processes 3 .In Walter Powell and John DiMaggio's formulation, "organizations tend to model themselves after similar organizations that they perceive to be more legitimate or successful" 4 .Of course, for states and major societal actors in the semi-periphery or periphery of the world system in the second half of the XX Century, the market economy (as well as liberal democracy in the polity) appeared to enjoy these qualities.These three types of capitalist class tend to be oriented toward different types of economic behavior.In the countries whose institutional framework is more similar to that of the Western model, capitalists will be more likely to take risks, for instance by investing with longterm horizons, and to integrate themselves more in the international economy as autonomous participants.In the second case, capitalists will accommodate to the neo-mercantilist environment by seeking from the state guaranteed markets, i.e. they will become rentiers.When they venture abroad, they will do so only with strong government support and guidance.Finally, capitalists in countries with weak states are likely to focus almost exclusively on production for domestic markets and engage mostly in speculation and other investments with short-term horizons.
The outcomes of the political transitions have also been heterogeneous.The demise of the previous authoritarian and post-totalitarian regimes (the former in most of Latin America, the latter in Central and Eastern Europe) has led, in some cases, to polities that resemble the Western models (Chile and Uruguay in Latin America, the Czech Republic, Hungary or Poland in Central Europe), while, at the other extreme, Belarus is a pseudo-democracy, and Russia and Venezuela are plebiscitarian regimes with strong authoritarian traits.A large proportion of the remaining countries have low-quality democracies, in which there may be elections and oppositions, but in which other aspects of democratic governance may be weakly established or lacking altogether.

uNCERTAINTY, CONGRuENCE, ANd uNEVEN INSTITuTIONALIzATION: THE dYNAMICS OF INSTITuTIONAL INNOVATION IN TRANSITIONAL SOCIETIES
The building blocks in question are at least two: The stock of economic and human capital accumulated in the society, and the existence of a substantial capitalist class (even if this class does not operate within the framework of an open market economy), a well-developed managerial stratum, and functioning banks.In turn, these building blocks are a function of the degree of development, and of whether the pre-existing institutions were autarkic-capitalist or state-socialist.The degree of development would explain the degree of industrialization, the concentration of capital, the quality of schools and universities and therefore the stock of human capital, etc.The nature of the pre-existing economic institutions accounts for whether, in the beginning of economic liberalization, there was a capitalist class and the legal framework of capitalism was in place.From this point of view, autarkic capitalism was a favorable condition for the transition to an open market regime, even if in this regime market mechanisms were severely limited.On the other hand, some other conditions for the consolidation of new economic institutions were usually more favorable in state socialist societies: These countries were likely to have built, in the beginning of the transition, a substantial managerial stratum and a larger stock of human capital than their autarkic capitalist counterparts at similar levels of industrialization.
In the second place, there is the tradition that considers a country's position in the world economy as a central determinant of its internal institutions.All transitional economies are peripheral, but there is a special case, that of large-scale exporters of oil or other natural resources that generate large rents.There is by now a large body of literature showing that this location in the international system has negative consequences not only for the construction of an effective market economy but for development in general (the "curse of natural resources") 11 .
Most analyses of transitions to market capitalism have focused on different aspects of the countries' economic legacy.However, this factor is not strongly correlated with the outcomes we have seen above.The Central and Eastern European countries and the most important ones in Latin America are in the middle stages of development, as measu red by per capita gDP, most had in the beginning of the transitions large and non-competitive industrial sectors, and several are large-scale exporters of natural resources.The first of these regions had state-socialist modernities 6 .According to S.N.Some sociological institutionalists are aware of this fact.Meyer et al., in particular, point out the prevalence of partial decoupling: "Some external elements are easier to copy than others, and many external elements are inconsistent with local practices, requirements, and cost structures" 9 .In any case, the multiple modernities approach introduces a heuristically important corrective to the convergence thesis.The problem with multiple modernities, though, is that it is little more than a perspective, which still lacks more specific propositions, let alone testable ones.
I will argue that the dynamics of institutional transplantation is a function of the interaction between imported elements and the frameworks onto which these elements are grafted.The degree of successful isomorphism would depend on the extent of congruence between critical areas of the institutional framework of the recipient society and the requirements of the new rules and practices.Therefore, similar institutional frameworks, when transferred to societies with different institutional trajectories and the cultures attached to them, would almost necessarily result in diverse outcomes.

economIc LegacIes and transItIonaL capItaLIsm
Sociologists aiming to explain the diversity of transitional economic institutions would find two independent variables in their standard tool-kit: the presence or absence in these countries of the building blocks of the market economy, and the countries' location in the world economy in the beginning of the transition 10 .

CARLOS H. WAISMAN
independence.This may mean an orientation toward open-market capitalism in some cases and toward neomercantilism in others.Thus, in post-communist Europe, central European and Baltic state elites oriented their institutional design toward open market capitalism in order, among other factors, to be able to join the European Union and NATO, and thus extract themselves from the Russian sphere of influence.On the other hand, Belarus was so involved economically and culturally with Russia, and its political institutions were so similar to Russia's, that neo-mercantilism appeared as the only viable option.Ukraine is as a contested case, in which different segments of the political elite pursue different models of economic design 12 .
This factor is not relevant for states that do not face a hostile or potentially hostile environment.In Latin America, no state experienced a geo-political threat, so the central determinant of institutional design was the relation of forces between states and capitalists 13 .In the absence of substantial geo-political constraints of the type described above, there are two scenarios, described in propositions two and three below.
Second, when the capitalist class is strong vis-à-vis the state and is internationally competitive, the outcome of institutional design is likely to be open-market capitalism.This kind of capitalist class is powerful enough to fend off a state bureaucracy seeking to subordinate it to its directives, and it can do so because it does not need captive domestic markets or guaranteed foreign engagements that would be the counterpart to its subordination to the state.In Latin America, Chile is a case in point.The trajectory of economic policy in Brazil offers an interesting example: Since the beginning of the transition, there has been a gradual strengthening of this country's capitalist class, and in parallel a switch toward more open economic policies, designed to enhance the country's integration into the world economy.
Third, a capitalist class that is weak vis-à-vis the state and/or non-competitive internationally will welcome a neo-mercantilist outcome, and it may even push for it.For capitalists in these situations, the surrender of their autonomy in a neo-mercantilist arrangement maybe their only viable course of action.Russia, where the state and private capitalists are intertwined, is a clear example.Ve-regimes and the second autarkic capitalist ones, and yet there is a variety of outcomes within each group of countries.A case for the correlation between location in the world economy as an oil exporter and type of capitalism, the "curse of natural resources" argument, could still be made, based on the fact that both Russia and Venezuela have neo-mercantilist regimes; but Mexico does not.Therefore, economic legacies matter, but they do not appear to be the main cause of regime variation.
I turn now to the discussion of two factors that, in my view, provide a better account for the variability of capitalist institutions in transitional societies: the types of design sought by state elites in their quest to reduce uncertainty, and the degree of congruence between the new institutions and critical areas of the broader institutional framework of the society.Finally, I will argue that the cause of the hybrid institutional forms resides in the fact that capitalism (and democracy as well) is a complex institution, some of whose components can be more easily transplanted than others.

transItIonaL eLItes and the controL of uncertaInty
As I pointed out above, elites conducting institutional innovations will try to reduce uncertainty by shaping the outcome of the process in order to reduce the uncertainty inherent to a massive social transformation.Their ideal goal is to protect and, if possible, advance their interests in the new institutional setting they are bringing into reality.
If we focus on state elites in the beginning of the transition, their decision to pursue open market capitalism or neo-mercantilism depends upon two factors: the relative strength of the state vis-a vis other states, and of the capitalist class vis-à-vis the state, on the one hand, and the world economy on the other.The argument can be summarized into three propositions.
First, the elites of states that are relatively weak in relation to potentially threatening hegemonic states are likely to orient the design of economic institutions in a way that maximizes the chances for their survival and  16 .Even if government leaders exercise selfrestraint, the major social and economic actors would fear such encroachment as a serious possibility, a consideration that would affect their economic behavior.This is why an effective market economy requires not only a strong state but also a strong civil society, whose function is to balance the state and prevent predatory behavior or despotism.
Thus, the successful transfer of market capitalism depends on the presence, within the broader institutional framework of the society, of a relatively strong state and civil society.When both are weak, the result is what I have called above anemic capitalism.A combination of a strong state and a weak civil society produces an environment prone to neo-mercantilism (See Table 2).
State capacity and civil society strength are murky concepts.Only certain types of capacity are of strategic significance for the establishment of a market economy, and civil society is defined in so many different ways that the concept requires clarification.
nezuela, with a much weaker bourgeoisie, would be a Latin American case.
In any case, it is crucial to distinguish between elite goals and the objective outcomes of their actions.All transitional state elites engage in institutional design, but results vary.The degree to which their objectives are accomplished depends, of course, on many factors related to the agents we have discussed, but success is largely contingent on the capabilities of their instrument, the state apparatus, regulatory and extractive capabilities in particular, a topic to which I will return.The question is whether this instrument, the state, is adequate for the task at hand.The institutionalization of the third outcome I have discussed, anemic capitalism, is obviously not an intended consequence of elite action.It is the result, whatever the elites' objectives, of a state with low capacities, especially in situations in which capitalists are non-competitive internationally.This is, in the regions we are discussing, a frequent correlate of sate state weakness.

nodes of InstItutIonaL congruence
The contemporary theory of capitalism suggests that two critical nodes for the articulation between an open market economy and the broader institutional framework of the recipient society are a property of the state, its capacity, and a characteristic of the social structure, the strength of civil society 14 .A high-performance open market economy presupposes a state with certain capacities, especially the ability to establish a strong protection for property rights (not only for the owners of capital, but also for workers, savers, and consumers) and, more generally, a robust rule of law, without which market capitalism, an economic sys- distributive and innovative, are essential for the analysis of more specific characteristics of economic institutions, and for understanding political regimes) 21 .
Regulatory capacity refers to the extent to which the state is able to guarantee to non-state actors the effective exercise of their economic, civil, political, and cultural rights, and maintain and improve the quality of economic and political institutions.The core of this capacity is the rule of law, and it also includes the regulation of markets and the functioning of the state itself and of political institutions.Indicators would be measures of regulatory quality, official corruption, and the effectiveness of the judiciary.In the second place, extractive capacity denotes the state's ability to appropriate revenue from the society.Its indicators would be the amount of direct taxation and the rate of tax evasion.
An effective market economy presupposes a substantial level of regulatory state capacity: Absent a strong protection of individual and collective property rights (for all economic agents, not just for the owners of capital), there will be low levels of trust, and the norm will be the prevalence of short-term contracts, both explicit and implicit; limited use of banks; speculation as the predominant form of capital deployment; etc.Moreover, a state with insufficient regulatory ability would not be able to generate and maintain competitive markets, and many areas of economic activity, especially those that are technologically stagnant, would be captured by rent-seeking agents (often, capitalists, and sometimes, unions).In addition, a well-functioning market economy requires a level of extractive capacity that would support relatively autonomous, technically competent, and hopefully transparent state bureaucracies and judiciaries (of course, a much higher level of extractive capacity would be required for social-democratic capitalism, which is based on a dense social safety net and extensive public programs in health, education, pensions, and poverty alleviation).
If the state is weak, the outcome is likely to be an anemic economy.When the state is relatively strong, what I have called neo-mercantilism becomes possible.In this regime, state strength appears as mainly as coercive capacity, ra ther than through the mediation of institutionalized capacities such as the regulatory or extractive ones.

InstItutIonaL congruence at the top: state reguLatory capacIty
The question of state capacity, understood as the efficacy with which the state executes the tasks it sets for itself, or that social forces expect from the state, has been underanalyzed in the social sciences.From Max Weber on, most analyses have focused on whether a state exists in a territory, i.e. what Juan Linz and Alfred Stepan have called "stateness" 17 .As a consequence, scholarly attention has been concentrated on the estimation of an attribute, the monopoly of the legitimate use of force, i.e. the determination of whether existence a minimal state does exist.
However, state capacity is implicit in Weber's discussion of the bureaucracy as an ideal type, and the issue has been addressed by several scholars.Douglass North and Mancur Olson have shown that the strength of institutions backed by the state, especially the rule of law, is a basic determinant of economic and political regimes 18 .Peter Evans and James Rauch have estimated the "weberianness" of agencies involved in economic policy-making in middle-developed nations and found that countries whose bureaucracies are more meritocratic and whose civil service allows for more established careers have higher rates of growth 19 .Francis Fukuyama has made a very important distinction between state scope and strength, and has discussed systematically the domestic and international implications of state weakness in underdeveloped countries 20 .Finally, state failure has become a central concern in the contemporary international system, due to its implications in relation with terrorism, drug trafficking, and money laundering.These analyses have placed the question of state capacity at the center of the agenda in state research.
Since state capacities may vary across areas of governmental activity, their analysis can only be multi-dimensional.
Of course, coercive capacity, or the effectiveness with which the state uses its military and security apparatuses, is essential and conditions the exercise of all others.When this capacity is absent, there is no state (even though there could still be a government, as in contemporary Somalia).
If we assume the existence of a basic level of stateness and focus on other areas of state capacity, two are central in relation to the economic outcomes we are interested in: the regulatory and extractive capacities (others, such as under-privileged.Further, scholarly arguments focus on civil society strength, a property that is vaguely specified and often misunderstood (e.g. when a highly polarized society in which major social forces are well organized is characterized as a "strong civil society" 23 ).
Following Tocqueville's (who did not use the term) and gellner's analysis of the relationship between civil society and capitalism 24 , I will refer to civil society as a slice of society, whose core is the web of voluntary associations that articulate the interests and values of all sectors of society, the powerful as well as the powerless, as long as these units are not under the control of the state.Civil society may contain communities and eventually civil society as a whole may generate a strong community, but it consists of associative units.In Weberian terms, civil society may subsume affectual collectivities, or Gemeinschaften; but it is constituted by Gessellschaften, driven by instrumental or value-oriented interests.Of course, this definition excludes economic society, and the family and other institutions in the private sphere.
In order to conceptualize civil society strength, it is useful to consider three analytically distinguishable dimensions of civil society: its density, autonomy and degree of selfregulation.First, density refers to the extent to which all the major interest and value communities existing in the society are organized and mobilized.Elites usually are, so the issue is the extent to which non-elite social forces are also organized and mobilized.Secondly, autonomy means self-rule, rather than absolute independence from the state.Of course, there is no reason to assume that civil society organizations will always have an anti-governmental orientation or will refuse to participate in governmental activities.Finally, self-regulation means that the units of the associational web, in representing the interests and values of their constituencies, function within the institutional channels of the democratic state.They may form coalitions and engage in conflict, but they act within the boundaries of the constitution and the laws.Scholarly arguments on strong civil society and its effects, from Tocqueville onwards, make sense only when they characterize civil society on the basis of these three dimensions, and the variables have high values.
A strong civil society contributes to an effective market economy in at least two ways.First, because of the stan-As I pointed out above, a neo-mercantilist state, rather than being a relatively passive regulator of economic relations and a last-resort guarantor of contracts, as the standard model of the market economy would require, becomes the driving force of economic activity.Since the central purpose of economic development is the strengthening of the state, both vis-à-vis the society and in relation to other states, the government places a large segment of the economy under its direct control and hyperregulates the rest.The state becomes the principal and the capitalists its agents.In typical instances, capitalists depend on the government for financing of their operations, protection from foreign competition, and the demand for their output.Thus, a rent-seeking capitalist class becomes the counterpart of a rentier state (the norm among large exporters of oil and gas and, hypothetically, other natural resources for which cartelized markets are possible).Crony capitalism, i.e. a situation in which only capitalists with direct ties to the government can thrive and in some cases operate, constitutes the ideal type of the capitalist class in this regime.
In neo-mercantilism, the state's regulatory capacity is either weak or selectively applied.The typical configuration is one in which the government's approach to the law is contingent and instrumental.Bureaucracies and judiciaries are run based on political criteria, their technical capacity is low or uneven, and corruption is relatively high.As for extractive capacity, it is generally limited as well, for the government is largely independent of the society for the procurement of revenue: It finances itself with proceeds from exports, and the export industries are either publicly owned or heavily controlled by the state.

InstItutIonaL congruence outsIde the state: cIvIL socIety strength
Civil society is a diffuse concept in the social sciences, and the fact that it has entered political discourse has limited further its applicability in academic research 22 .Definitions vary widely, from some that encompass everything outside the state to others that restrict the term to very specific segments of society, such as the non-profit sector, or what writers define as the "good guys" in social cleavages, e.g. the NgOs that represent the poor and the

CARLOS H. WAISMAN
congruence between the requirements of the models of capitalism being established and the broader framework of the recipient societies, but also of the inherent complexity of major institutions.
Capitalism is a composite institution, in fact a bundle of institutions whose degree of correlation is empirically variable (the same happens with democracy), and some of the components of this package are more easily transferable than the others.This is why the outcomes of institutional transfer vary in terms of their resemblance with the ideal models, or with the prototypes that served as demonstration effects, as a function of the configuration of state capacities and civil society in the countries into which institutions are transplanted.
Capitalism involves three central dimensions: the existence of private property of the means of production, a free labor market in Marx's sense (i.e. the removal of institutional barriers, within a society, to the mobility of labor between positions in the economy), and a market for goods and capital (i.e. the abolition of substantial restrictions to the flows of goods and capital).The most efficient contemporary capitalist economies have reduced these barriers to a minimum, for capital and most goods.
The experience of the recent transitions, and in fact the historical record since the development of capitalism among late industrializers in the XIXth Century, indicates that it is easier to establish effectively the private property of the means of production and a free labor market than the absence of restrictions to the movements of goods and capital. In

InstItutIons and the emergence of hybrIds
We are now in a better position to understand the variety of the institutional outcomes of economic transitions.However, the heterogeneity of results is not only a consequence of elites' different objectives and of the variable case of presidential regimes), or of a fusion in which the parliament appoints and can fire the executive (as in parliamentary models).All the transitional democracies have elections and most allow oppositions, but the extent to which they enforce to a relatively satisfactory degree the civil and political rights of their citizens and limit the power of the executive is highly variable.Hence, the contemporary range of variation in Latin America and Central and Eastern Europe, which spans from solid democracies to elective authoritarianisms.
The foregoing discussion implies that we need a better understanding of the varieties of capitalism (and, of course, of democracy as well).The study of the dynamics and long-term viability of the hybrid institutional frameworks discussed above has been quite neglected by sociological reasoning, which has tended to use binary categories (capitalist/non capitalist, or capitalism that is early/late, or autonomous/dependent, etc.).Yet, the hybrid formulae now flourishing in transitional societies have attained varying degrees of legitimacy and efficacy, and some could be successfully institutionalized.The understanding of these frameworks is essential not only because of their importance, both theoretical and empirical, but also for the conceptualization of capitalism (and democracy) as complex variables.
creatures.Governments and economic elites view globalization primarily as a menace to their interests.
As far as neo-mercantilism is concerned, property rights (at least for capitalists and other sectors of the society nurtured and managed by the state) may be more secure, depending on how well established is the rule of law, but restrictions to market mechanisms are inherent to this model, which is based on the relative closure of the economy and a selective integration into the world system.Neo-mercantilist states select carefully the international engagements of their economic agents, for they view globalization through the prisms of the protection of their sovereignty and the potential expansion of their international power and influence.
Likewise, some of the components of the institutional package we call democracy migrate more smoothly than others, and this fact accounts for the diverse outcomes of the transfer of political institutions.If we use the classic terminology of Dahlian analysis 25 , the dynamics of political transfer indicates that it is easier to institutionalize inclusiveness than contestation, and contestation than civil and political rights.The hardest element to establish is an executive whose powers are limited, either by the existence of an effective separation of powers (the uNCERTAINTY, CONGRuENCE, ANd uNEVEN INSTITuTIONALIzATION: THE dYNAMICS OF INSTITuTIONAL INNOVATION IN TRANSITIONAL SOCIETIES uNCERTAINTY, CONGRuENCE, ANd uNEVEN INSTITuTIONALIzATION: THE dYNAMICS OF INSTITuTIONAL INNOVATION IN TRANSITIONAL SOCIETIES

TABLE 1 :
VARIETIES OF TRANSITIONAL CAPITALISM CARLOS H. WAISMAN Eisenstadt, "The appropriation of different themes and institutional patterns of the original Western modern civilization in non-Western European societies... entailed the continuous selection, reinterpretation and reformulation of such themes, ... [producing]... new cultural and political programmes of modernity, and... new institutional patterns" 7 .As Bjorn Wittrock puts it, diffusion is limited by the fact that non-Western societies "remain characterized by the form they acquired during much earlier periods of cultural crystallization" 8 (and institutional crystallization as well, I would add).

uNCERTAINTY, CONGRuENCE, ANd uNEVEN INSTITuTIONALIzATION: THE dYNAMICS OF INSTITuTIONAL INNOVATION IN TRANSITIONAL SOCIETIES tem
based on contracts, both explicit and implicit, cannot operate effectively.Contractual interactions among firms and individuals run smoothly when the agreements they are based on, and the rules under which they operate, are validated by a tacit or, when necessary, manifest third-party enforcer, a function that only the state can perform.Carrying out this task requires a strong state, but such a state, when not limited by institutional barriers or the counterweight of powerful social forces, may be subject to the logic of organizational expansion: The state, after all, is an organization, and organizations strive, whenever possible, to extend control over their environments.A vigorous state facing a weak society might become a variety of Mancur Olson's "stationary bandit" 15 , a predatory state; or even Tocqueville's despotic one

TABLE 2 :
THE INSTITUTIONAL MATRIX OF TRANSITIONAL CAPITALISM what I have called the anemic variety of capitalism, all the dimensions of capitalism are in place, but they are weakly institutionalized.Private property of the means of production, and more generally property rights, do exist, but they are necessarily feeble in societies in which the rule of law is not firmly established.Even a market for labor may not be strongly institutionalized, if labor contracts and legislation in general cannot be effectively enforced.Markets for goods and capital are fragile and unstable, not only due to the weakness of the rule of law and the consequent low level of generalized trust, but also because capitalists, labor, and the state view high protective barriers as the only means for the preservation of these frail dard Tocquevillean argument: a society of this sort gemerate economic and cultural elites independent of the government.These elites balance the power of the state (in a democratic regime, not only via direct interest articulation but also through its mobilization within the party system and, in general, political society), hold it accountable, and constitute a barrier to its expansion into predatory or despotic directions.Secondly, this web or organized interest and values communities generates powerful pressures for the enhancement of the state capacities that a strong market economy requires, i.e. at least the regulatory and extractive ones.