The collapse of communism in the Balkans does not appear to have brought an "end to history" [Fukuyama 1992]. Instead, it has produced a return to the sort of barbarism that Veblen argued was latent in late nineteenth century Germany [Veblen 1964]. Political parties devoted to national chauvinism and opposed to rapid economic reforms have exerted significant influence on the political scene in most former communist countries.(1) This of course was not supposed to happen. Rapid economic reform and shock therapy were supposed to lead to the creation of market economies, democracies, and integration into Western economic structures. While Slovenia, the Czech and Slovak Republics, and to a lesser extent Poland and Hungary have indeed made some headway toward the above goals, little, if any, real progress has been made in Southeastern Europe [Koves 1992; Sachs 1991; Schlack 1993; Poirot 1996].
While the transition in all of Southeastern Europe has been particularly difficult, the former Yugoslavia has disintegrated into separate ethnically based political entities and civil war. The conduct of the war has been particularly vicious, and the level and nature of atrocities committed by Serbian forces shocking to the European community [Almond 1994].(2)
What went wrong on the way to peace, freedom, and liberalism? Are there lessons that economists and others need to learn from the course of events in former communist countries? Habits of the Balkan Heart  by Stejpan Mestrovic, Slaven Letica, and Miroslav Goreta attempts to answer these questions. It explains the breakup of Yugoslavia as an understandable response to the anomie engendered by the fall of communism. The authors assert that Southeast European culture exhibits a dichotomy between Dinaric (aggressive, militaristic, expansionist) and Marian (peaceful, feminine, democratic) habits of the heart.(3) Liberalism has failed to take root in former socialist countries primarily because liberalism is not entirely compatible with either of these aspects of Southeast European culture. The authors do, however, suggest that the Marian elements are more likely to provide a basis for a transition to a market economy and a democratic political regime.
For reasons that I will demonstrate later in this essay, the authors do not entirely succeed in explaining the course of recent events in the former Yugoslavia as a conflict between the Marian and Dinaric aspects of Southeast European cultures. Nevertheless, Habits of the Balkan Heart provides a useful starting point for those interested in exploring the role of culture in the transition in former communist countries. Institutionalists will find more to agree with than to disagree with in Habits of the Balkan Heart. In particular, the authors' emphasis on understanding how cultural differences present an obstacle to Westernization in transitional societies will reinforce the arguments that institutional economists have made against shock therapy as a viable transition strategy.
The authors are especially critical of the modernist assumption that cultural differences will disappear over time and that progress in human affairs is teleological. They explicitly reject "grand narratives" that define progress in exclusively Western terms. In support of their argument, they rely on classical sociologists such as Veblen and Durkheim as well as on critics of Western culture such as Spengler. To a lesser extent, they also incorporate recent post-modern criticisms of Western society and science. They explicitly reject both positivism and falsification as examples of theoretical methods that rely on teleological theories of progress. Their support for post-modernism, however, is distinctively qualified by a firm commitment to the values of human rights, democracy, and respect for the individual that descend from the Enlightenment and the Reformation. The argument of the book can be summed up in one sentence: Culture matters.
By culture, the authors mean habitual actions of a given society. Following Durkheim , the authors argue that all human activity is embedded in a given social order and its attendant world view. Social order defines and constructs personality types and in turn shapes the character of a given society or nation. Here, however, the authors part company with Durkheim and rely more heavily on Veblen's theory of instincts and "habits of the heart" as the primary means of explaining human behavior. In doing so, the authors explicitly reject the rational choice assumptions underlying neoclassical economics.
In contrast, the authors stress the importance of social character and argue that social character often expresses itself in a dichotomous fashion. They cite de Tocqueville's study of American society as a means of illustrating both the importance of social character and its dichotomous nature. De Tocqueville argued that American social character displayed a dichotomy between democratic and egalitarian tendencies and racist, aristocratic tendencies. According to de Tocqueville, the differences in social character between the two types of personalities in American society and politics is clearly observable. The authors of Habits of the Balkan Heart argue that Slavic societies display a similar dichotomy.
In analyzing the cultural dichotomies in Southeastern Europe, the authors extensively cite the Croatian-American anthropologist Dinko Tomasic . Tomasic asserted that the fundamental dichotomy in Slavic, Romanian, Albanian, and Greek society was the distinction between the "Dinaric," or "Ural," and the "Marian" elements of south Slavic culture. The "Dinaric" aspect is rooted in pastoralism and the zadruga, or south Slavic extended family, with its emphasis on patri-local residence, patriarchal authority, collectivism, authority, and hierarchy. These elements are reinforced by the Orthodox Church, which is primarily an inward-looking religion. The Marian element in turn is rooted in the traditions of settled agriculture and is reminiscent of the more "feminine," peaceful, goddess-centered cultures that preceded the Slavic and Vlach migrations. To some extent, its reliance on Mary as a cultural symbol is reinforced by the Catholic Church. The latter is more open to outside influences due to the Catholic Church's emphasis on universalism.
In short, the traditional social order of the former Yugoslavia, Albania, Romania, Bulgaria, Greece, Russia, and other East European and Slavic societies is based on what Durkheim termed "organic solidarity" [Durkheim 1973, 63-86]. It is interesting to note that what unites the above countries is not a common Slavic culture or language, as neither the Albanians, Romanians, or Greeks can accurately be portrayed as "Slavic." What does unite these cultures is a traditional emphasis on pastoralism descended both from the south Slavic and the Vlach migrations. The Dinaric aspect of these cultures creates a personality type prone to aggression and authoritarianism. Thus, redemptive movements rooted in national mythologies of the "hero" and martyrdom can easily take root in such societies.
The analysis offered by Mestrovic, Letica, and Boreta suggests that the roots of totalitarianism in the former Soviet Union and in Southeastern Europe are not necessarily rooted in Marxist ideology. Rather, communism in Eastern Europe represented a fundamentally different type...