In the mid-2000s, the field of postcommunist transition took an international turn. Early works in the field, such as Adam Przeworski's Democracy and the Market, treated transition as a domestic political story of how local actors managed tradeoffs between democratization and market reform. A decade of transition brought a wider awareness of the pervasive international influences on transition, however. Scholars began to address areas such as the military, banking, pensions, and human rights, where reform agendas were determined in large part by transnational actors.
Juliet Johnson's Priests of Prosperity represents a new high point for this literature, based on a detailed exposition of a single, yet highly relevant, and not frequently studied, area of postcommunist transformation, that of central bank independence. Johnson demonstrates that central bank independence was one of the most successful neoliberal institutional reforms in postcommunist countries. No other western-oriented policy reform was copied so faithfully or had such a great impact on economic policy throughout the former Soviet bloc.
In part, this has to do with the nature of central banks themselves. Central banks are relatively small institutions with stable staffs, long tenures, and high pay. Therefore, the transnational community of central bankers is exceptionally tight-knit. In the early 1990s, it benefited from a very well-developed practitioner consensus about best practices in the field. Johnson's argument is that this community had an outsized impact on institutional change in postcommunist central banks. National central bankers often shared more in common with their transnational colleagues than with other domestic officials. This created a “wormhole” effect whereby transnational central bankers directly influenced economic policy in postcommunist states through relationships with local central bankers, overriding domestic politics.
Johnson's telling of this story is remarkable for several reasons. First, she develops a unique theoretical structure that frames the analysis. Second, the research is exceptionally rich and detailed. Third, she explores the challenges to the consensus on independent central banks after the global financial crisis of 2008.
Johnson develops a three-stage theoretical framework of choice, transformation, and internalization in institutional transplantation. First, countries choose an international model to emulate. Second, they transform their institutions. Third, they internalize the new institutions in a specific domestic institutional and political setting. Johnson thereby moves beyond the usual debate between different causal mechanisms of emulation—such as learning, competition, coercion, and socialization—and admits that many of these mechanisms operate simultaneously. She emphasizes that, at each stage of an institutional emulation process, different actors and mechanisms matter.
Johnson then examines how this three-stage emulation process works in multiple postcommunist countries in great detail, in a readable narrative focused on illustrative examples. Based on 160 interviews with the transnational and domestic central banking community over fourteen years, as well as surveys conducted in Hungary, the Czech Republic, and Kyrgyzstan, Johnson is able to provide a wealth of detailed examples of how the transnational central banking community trained its postcommunist counterparts, how power relations developed between them, the nature of the epistemic community, its closeness through multiple encounters, and, at moments, the coercive force that transnational central bankers were able to deploy, sometimes together with their local peers.
The result is an unusually rich story of the early days of institutions such as the National Bank of Slovakia and the special difficulties it faced founding a central bank from scratch and yet eventually joining the Eurozone. It includes also the travails of the Hungarian National Bank and how key leaders pushed past initial transition turmoil to establish a well-functioning institution. One of the biggest surprises of the book is Johnson's profile of the Russian central bank, particularly how it first challenged and then superseded the Soviet central bank, turning into perhaps the most liberal governmental institution in Russia. Supported by its transnational peers, it resisted other Russian institutions well into the Putin era, even after the invasion of Ukraine.
These case studies and others show that the very speed of institutional transformation of central banks often made it difficult for their effects to be accepted by other domestic actors and institutions. Johnson also demonstrates the challenges the transnational central banking community faced after 2008.
In short, this book provides a unique theoretical framework for institutional emulation and a well-developed analysis of the diffusion of central bank independence throughout the postcommunist countries. It will be read and valued by experts and anyone working on the political economy of transition, central bank independence, or institutional emulation worldwide.
