The Moneywasting Machine

Five Months Inside Serbia's Ministry of Economy
$55.00 / €46.00 / £40.00
Publication date: 
June, 156 pages

For five months in 2013–2014, Dušan Pavlović took time off from teaching to accept a senior position in Serbia’s Ministry of Economy. This short period was long enough for him to make a penetrating diagnosis of the economic activity of the postcommunist government. He found that a coterie of tycoons and politicians live off the wealth of the majority of citizens and smaller entrepreneurs, while the economy performs below its capacities. In academic terms, extractive economic institutions create allocative inefficiency.

Vivid, suggestive, and even entertaining accounts depict how privatization is administered and foreign investment projects are handled, and how party members, relatives, and friends are hired into public administration and state-owned companies. They show how the managers of firms that queue for state subsidies resist the systematic screening of their businesses. The principles of Keynesian economics are distorted and misused to conceal deliberate fiscal mismanagement. Huge ill-conceived development projects siphon taxpayers’ money from “non-economic” activities like social services, health, education, science, and culture.

What Pavlović found in Serbia is acutely symptomatic of many other European post-communist regimes of our time, lending his book singular importance.

1 The Rise of Aleksandar Vučić
2 Overview of the Political Economy of Serbia prior to 2012
3 Extractive Institutions
4 Party Patronage
5 The Four Economic Policy Strategies
6 Inside the Money-Wasting Machine
7 Privatization
8 The Exit
9 The Resignation
Major Protagonists of the Book in 2013–2014

“This book is a major contribution to the study of postcommunist economies and politics in two interrelated ways. It shows how rent-seeking actually functions in a postcommunist state and how policymaking facilitates it. The Moneywasting Machine contains eminent empirical evidence on how various rent-seeking schemes function and evolve, a problem affecting all postcommunist states. Serbia may stand out as a typical example of this, but it is not an exception.”
“Written by an academic who can relate personal experiences to larger political and economic theories, The Moneywasting Machine provides an insider perspective into the structural aspects that enable economic mismanagement in Serbia, in particular in regard to investments and privatization. In doing so, the book offers unique insights into the larger processes of transformation, and how these processes can result in self-serving elites and state capture. There are few books that are able to combine these two aspects, while also offering empirical research on the mechanism of extractive institutions based on such personal experience.”