Tõnis Saarts: Estonia's success story and 21st century challenges

Tõnis Saarts.
Tõnis Saarts. Source: Siim Lõvi /ERR

It seems that Estonia has spent too long resting on the laurels of the positive path dependency of the post-communist era, failing to realize that 21st century challenges will require entirely different approaches and solutions, Tõnis Saarts finds in Vikerraadio's daily comment.

It is hardly a surprise that re-independent Estonia is considered one of the most successful transitional states among Eastern Europe's new democracies. But the challenges of that post-communist society were quite different from what the 21st century is throwing at us. The looming climate crisis, galloping technological advancement, growing social inequality and the tide of political populism require different approaches from what helped pull Estonia from the post-communist swamp 20-30 years ago.

Indeed, Estonia has been lucky in many ways. Looking at the post-communist world, we can see at least four "maladies" many transitional societies are still grappling with.

1. High corruption and the influence of oligarchs

2. Difficulties offering people benefits and services and the resulting mistrust and disillusionment with the democratic system

3. Party-political instability

4. Deepening social inequality

Estonia has been rather successful at treating the first three maladies. Various indicators suggest we are one of the least corrupt states in the former Eastern Bloc, and no one is talking about "Estonian oligarchs."

We have a functional state apparatus offering citizens necessary services. That is why trust in democratic and state institutions is much higher in Estonia than it is in Eastern Europe on average. The Estonian party landscape is quite clear, and while new parties make the scene from time to time, our political party system has remained relatively stable since the mid-2000s.

The only bottleneck we have not managed to solve is high social inequality. While our Gini income inequality index score has improved slightly in recent decades, it remains far higher than in the Nordics, which we like to emulate. Our regional income inequality rate is the highest in Europe, together with Latvia's.

How has Estonia managed to avoid most of the aforementioned maladies of the post-communist world? Social sciences describe the phenomenon of "path dependency," meaning that if a society has chosen a certain path in a critical stage of development, started building certain social, political or economic models, it is difficult to change course later as certain interests and habits have crystallized around the initial choices.

In other words, Estonia's recent success is based on path dependency. The reformers of the 1990s made the right calls at the right time to stop the emergence of oligarchs, introduce functional institutions and shape sufficiently strict political rules to make it difficult for populist forces to upend the system. Ruining our effective and non-corrupt state apparatus and stable political system and turning Estonia into a so-called typically problematic Eastern European state now requires far more effort.

However, it needs to be emphasized that Estonia's post-communist development has rested on the neoliberal principle of the "market will sort everything out" and the understanding that the government needs to stay out of the economy and the distribution of wealth for as long as possible. That is why Estonia's rulers have spent little time worrying about social inequality, hoping that the market will balance it out and everyone will benefit from economic growth in the end.

And yet, many social scientists maintain that social inequality that continued to deepen throughout the neoliberal period is the main driver of the recent rise and success of populist parties. Inequality stands to only get worse in the wake of increasingly rapid technological development, more specifically the advent of AI and robotization. How can we rise to these new challenges if our neoliberal path dependency has taught us to largely ignore social inequality?

Keeping climate change in check also requires a far more proactive and economically and socially meddling public sector than what is prescribed by Estonia's post-communist minimal state tradition. How can one end up on the winning side of the new green economy and transition still following the "market will sort everything out and the government can butt out" mentality?

It seems that re-independent Estonia, set to turn 32 this Sunday, has rested too long on the laurels of the positive path dependency of the post-communist era, failing to realize that 21st century challenges require entirely different approaches and solutions. Therefore, let us always keep fresh in our minds the brilliant words of President Toomas Hendrik Ilves: "That which has brought us here cannot take us forward."


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Editor: Marcus Turovski

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