Мирослав Прокопијевић:

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Miroslav Prokopijević – Advocate of the Liberal Order

Scholars and journalists who understand the fundamentals of liberalism and are courageous enough to defend it in their writings and appearances were and, regrettably, still are a minority, even in the democracies of the West. They were a still smaller minority in Central and Eastern Europe. Miroslav Prokopijević was one of them. His knowledge was deep and broad, based in political philosophy, extending to the working of the market economy and its relation to human freedom. He was unafraid to express his beliefs in the most public spheres as well as in his academic writings. His was a strong voice for liberalism not only in former Yugoslavia and Serbia but throughout the region. His premature death has deprived us all of a courageous leader in thought.

I first came to know knew Miro through academic conferences, many organized by Liberty Fund. I am sure that readers of these papers will know about Liberty Fund – some might well have been at conferences with me as well. The conferences feature both formal discussion sessions and informal gatherings for conversation. They are excellent opportunities to become acquainted with other participants, both as scholars and individuals. There I learned of Miro’s abilities and character.

He wrote and published extensively on economics and other subjects. I do not claim to be an expert on his work – far from it. But to me, the report, “Two Years of Reform in Serbia: A Wasted Opportunity,” published in 2002 by the Free Market Center, demonstrates his understanding of economics, his political philosophy, and his moral fiber. The report was a joint effort by Miro and his team at the Free Market Center; Miro was the editor, not its sole author. I don’t know exactly how the work was shared by the team, but there is no doubt in my mind that it is basically his product.

The report is an exhaustive, detailed, and clearly written critique of policy in the immediate post-Milošević years. It argues in detail how the policies under the new regime either failed to remediate the basic problems in the economy or simply did not address them. As such, it uses a sophisticated knowledge of economics to show why the policies failed. This was due, no doubt, to a lack of understanding on the part of the new government. But, the report argues, it was also due to a lack of real commitment to reform. To quote: “…there is no political will to abandon the State’s active participation (ownership) in the sector….”, a point made with respect to the banking sector but one that would well apply throughout the economy. Socialism, after all, gives power to the government and to the politicians who run it. Why should the new regime make any real change?

The report contains many important insights. It is especially good on incentives. To take one example, it shows how and why foreign aid was counterproductive. Funds from abroad ease (temporarily) economic problems and thereby reduce the incentives for reform. Foreign aid is motivated by political, not economic, considerations. It is not subject to competitive economic forces and is thereby unlikely to improve the economy. It utilizes foreign consultants whose presence is counterproductive since they are often ignorant of the history and traditions of the country. Worse, the arrogance of these outside experts creates resentment, not cooperation. Foreign aid creates opportunities for corruption, which the report insightfully ascribes not to immorality but to rational responses to these opportunities. While external aid may lend credibility to the government in foreign eyes, it does not improve credibility to private parties that might otherwise invest in productive enterprises. It may even diminish the appeal of the nation for private foreign direct investment.

The report also emphasizes the importance of private property and the rule of law and the detrimental effects of state interference in the workings of the market. Privatization was impeded by a poorly designed and executed law. Lack of property rights, in part due to the lack of an adequate land registry and the restriction of rights of foreign entities to purchase land, resulted in an environment that deterred new business startups. The new law on excess profits was open to arbitrary enforcement. In general, the report is pervaded by a concern for the rule of law. Another quote: “There is only one way …to improve the economic position of Serbia, and that leads via improvement in the rule of law and further liberalization of the market.”

The report concludes with a set of policy recommendations. Taken together, these are, in effect, a blueprint for a liberal economic order. There are calls for the protection of private property; for freedom of contract; for liberalization of foreign trade, capital transactions, and the securities market; for complete privatization; for reduction in the role of the state by reducing its expenditures (and taxation); for legalization of the gray market; and a number of others. There are also pleas for strengthening an independent judiciary and reconsideration of the constitution. Overall, the report stands as a shining example of political economy, applied to a real world situation of great practical importance.

But besides its importance as a study in political economy, the report stands as a measure of a man. Coming as it did in a period of political uncertainty and unrest in Serbia, and going against the political forces in power, the report shows Miro’s singular courage in the face of political opposition and even, perhaps, popular opinion. When many others chose to side with the new government even when their beliefs were not in line with the direction being taken, Miro remained an independent voice in Serbia.

He was always very careful in his work. His views were informed by his philosophical position, but his arguments were always based on facts, which gave him great advantage over others who did not have his empirical ability or his passion for being on solid factual ground. He had an ability to anticipate questions and was therefore always prepared in discussions. He could identify the key points in any issue. He appreciated the importance of history and culture to political economy. He was devoted to Serbia and its prospects. His work was critical but constructive.

Through the conferences and visits to Serbia, as well as meetings in the U.S., we became friends. I cherish that friendship. Miroslav Prokopijević was a patriot, a scholar, and a truly good man.

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