LATVIA LIVING AT THE EXTREMES: SEEKING EQUILIBRIUM BETWEEN CENTRAL PLANNING AND FINANCIALIZATION
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Latvia has experienced remarkable economic growth during the past decade. It has also been heralded as a political success by many. Yet the economic and political foundations upon which this growth rests are fragile. Production is underdeveloped, the trade deficit is unsustainable, and inflation is the highest in the EU. In Latvia, the failure of the public sphere provided an opening for the lateral emergence of a private sphere. This arose from members of the state who utilized their comparative advantage in connections and knowledge of public property to their personal gain. This transformed elite created the contours of the New Europe while the Soviet system was disintegrating in the 1980s. It employed the language of civil society and democracy as a code that served the sometimes conflicting political economy exigencies within Western Europe. Just as the late Soviet period created a simulacrum of socialism, so post-Soviet Latvia created a simulacrum of democracy in which democracy could procedurally function and provide legitimacy for a neoliberal economic system that was rooted in a deeply corrupt regime of connections and privilege. It is from these origins that Latvia's democracy and market economy have emerged. They mask a system of kleptocracy in which corruption permeates government and economy alike. Its historical origins must be examined in order to make transparent the true functioning of its economy and society, and the culture of corruption in the political realm, hidden behind a façade of seemingly normal political parties.
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