Dividing the pie: Support for the free market and state interventionism models of market economy 1

Claudiu D. Tufi Research Institute for Quality of Life

Democracies are (or should be) spaces of debate on issues of relevance to their citizens. And, more often than not, they are such spaces. People talk about how the society should be; they argue about animal rights, about the environment, about changes in the family structure, about institutional structure, about the relationship between state and church, and more generally, about any issue that has risen to the publics attention. Most of these debates, however, are short-lived, either because a solution is found or because people lose interest in the issue. Out of the remaining debates, one stands out, due to both its importance for peoples lives and to the impossibility of finding a perfect (or near-perfect) solution. This is, in its simplest formulation, the debate about who gets what, when and how. How should a society distribute its limited resources? What should be the role of the state in this process? Rephrased, this is a debate about the preference for one of two alternative models of the structure and functions of the market economy: the free market model versus the state interventionism model.2 This is the topic addressed here. The present chapter focuses primarily on understanding the mechanisms of support for these two ideal models of market economy and on identifying both individual-level and societal-level factors that push the balance towards one model or the other. While the existing literature tends to present support for market economy as a uni-dimensional phenomenon, my approach is to think of the two models not as the opposite ends of the support for market economy continuum but as two distinct dimensions. For some people and in some contexts these two dimensions may be strongly related, while in other cases the two dimensions may be independent of each other, suggesting the existence of distinct support-generating mechanisms. The results will show that this bidimensional operationalization of support for market economy better describes the reality. In addition to this change of perspective, I also assume (and test the assumption) that the mechanisms of support for the two models of market economy in former communist countries are different from those existing in older democracies. Although I analyze a larger sample of countries, the results will be
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This research was supported in part by a grant from the Romanian National University Research Council (grant ID56/2007). I am thankful to Mlina Voicu, Loek Halman and Paula Tufi for their helpful comments and suggestions. Details about the analyses discussed but not presented in the chapter can be obtained from the author (e-mail address ctufis@iccv.ro). 2 Fish and Choudhry (2007: 256-261) refer to the two models as the Washington Consensus and the SocialDemocratic Consensus. The models could also be labelled the liberal model and the social-democratic model.

interpreted primarily from the perspective of the former communist countries in Central and Eastern Europe. Their recent transition from a planned economy to a market economy and the costs associated with this transition make these countries of particular interest. This will allow identification and description of the factors that have different effects on support for a market economy in the two groups of countries, an approach that is largely missing from the previous literature on this topic. The chapter is structured as follows. The first section of the chapter presents a brief overview of the literature on support for different types of market economy and the theoretical framework used in this chapter. This is followed by the description of the data and the methodology used in the chapter. The main part of the chapter is devoted to presenting and interpreting the results of the data analysis, followed by a section that summarizes the main findings of this study.

Two visions of a market economy

The end of the 1980s marked the fall of communism in Central and Eastern European (CEE) countries. The countries of this region started a complex transition: it was not only a political reform, as was the case in the Latin American transitions to democracy; it was rather a holistic reform, a radical social change. It was a transition that required structural changes in the political, economic and social domains of society, and a transition that was going to last quite a long time:
[T]he political transition takes a relatively short time. However, it may be several years before this framework operates smoothly and appropriately. The second process is the economic transition, the change from a command economy, controlled by the single ruling party, to a market economy operating with a money mechanism, with the absolute majority of private ownership. This is more difficult and complicated. Finally, the third process is the cultural change and the development of civil society, which takes an even longer time (Vitnyi, 1999: 187-188).

This dilemma of simultaneity, the establishment of both democracy and a market economy at the same time, represented the main characteristic of the post-communist transitions (Schopflin, 1994; Offe, 1997; Pickel & Wiesenthal, 1997). It was, at the same time, the main argument for a series of warnings regarding the chances of success of the post-communist transitions (see, e.g. Przeworski, 1991; Diamond, 1992; Haggard & Kaufman, 1995; Nelson, 1995). Fortunately, in most cases these grim predictions have been disproved: amazingly little resistance from below has come to those reforms that have been instituted (Hall, 1995: 89). The only negative effect of the post-communist transitions, from this perspective, was that the transition to democracy was complicated and prolonged by the transition to a market economy. The economic transformations had a paramount role in the post-communist transitions. The Washington Consensus, although initially designed for the Latin American context, once applied to the Central and Eastern European countries linked democracy and a market economy as two inseparable goals for the post-communist countries, suggesting that one cannot have democracy without a market economy.3 Capitalism was often recognized in the literature as fundamentally inconsistent with democracy, but capitalism is the only economic order that has so far proved to be consistent with polyarchy (Dahl, 1996). Democracy and market economy cannot be analysed separately in the postcommunist context: *O+ne of the most delicate sets of conditions for the success and sustainability of democracy relates to socio-economic problems. Democracy cannot be treated in isolation from other
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See Williamson (1990, 2000). It should be noted that the most important international financial institutions (especially the International Monetary Fund) have consistently conditioned their assistance on the implementation of the economic and fiscal reforms they suggested.

social and economic processes (Simai, 1999: 44). These countries were offered a package deal, either both democracy and a market economy or neither. As Centeno argued, *T+he question should not be whether a particular nation is ready for democracy or the market, but how a minimal social consensus develops about the rules involved in both. *L+ess attention has been paid to the process of creating the imagined community that could manage the transition (Centeno, 1994: 139). The availability of a new group of countries that could be used in analysis led to a significant increase in the number of studies that re-tested previous theories or offered new explanations for different phenomena related to the processes of democratization and marketization. Political scientists and sociologists used these new cases to study the relationship between the democratic transition and the economic transition. This was done at the macro level, focusing on the formation of new institutions and on their performance (see e.g. Burkhart & Lewis-Beck, 1994; Przeworski & Limongi, 1997; Kurtz & Barnes, 2002; Bernhard, Reenock & Nordstrom, 2003; Robinson, 2006), and also at the individual level, emphasizing mass support for political and economic reforms (see e.g. Duch, 1993; Hough, 1994; Evans & Whitefield, 1995; Finifter, 1996). Most of the individual-level literature, however, approached the topic of support for economic reforms or for a market economy in a general way, without discussing the fact that the fall of communism switched the focus of the debate from the market economy versus the planned economy dimension to a new one, defined by the role of the state in the economy, a dimension that puts the free market model in opposition to the state interventionism model of market economy. Studies based on secondary analysis of survey data, including this one, are usually restricted to a limited set of measures that can be used. Thus, depending on the availability of survey items, the previous literature contains different forms of analysis of support for a market economy. Some authors have used the item do you believe that a market economy is a good thing or a bad thing for the future of the country? (or an equivalent formulation) as an indicator of diffuse support for a market economy (see McIntosh et al., 1994; Evans & Whitefield, 1995; Firebaugh & Sandu, 1998; Plasser, Ulram & Waldrauch, 1998; Hayo, 1999). While this item captures peoples general attitudes toward a market economy, it fails to acknowledge that market economy may have different meanings for different respondents, and it does not differentiate among these meanings. Other studies have used a satisfaction item (how satisfied are you with the way the market economy is working?) as an indicator of support for the market economy (see Miller, Hesli & Reisinger, 1994; Przeworski 1996; Anderson & OConnor 2000). While this item has a more precise interpretation, it is not an indicator of support for a market economy, but one that expresses satisfaction with the functioning of the market economy. If the previous item is an indicator of diffuse support, this one is an indicator of specific support and, as such, it has a higher probability of being influenced by short-term economic changes and of having an evaluative rather than an affective component. Finally, a third group of studies has approached the topic by analysing attitudes towards specific components of a market economy: economic reforms, privatization programmes, social security, etc. (see e.g. Finifter & Mickiewicz, 1992; Duch, 1993; Kaufman & Zuckermann, 1998; Rohrschneider & Whitefield, 2004). These studies, however, cannot claim to analyse support for a market economy, but rather support for different sub-components or principles of a market economy. The concepts of diffuse support and specific support discussed above come from Eastons work on system support. Diffuse support is defined as evaluations of what an object is or represents not of what it does (Easton, 1975: 444) or as a reservoir of favourable attitudes or good will that helps

members to accept or tolerate outputs to which they are opposed or the effect of which they see as damaging to their wants (Easton, 1965: 273). Specific support is defined as a consequence from some specific satisfactions obtained from the system with respect to a demand that the members make, can be expected to make, or that is made on their behalf a quid pro quo for the fulfilment of demands (Easton, 1965: 268). Muller extended this definition and argued that the most useful conception of specific support is not that its distinctive characteristic is demand satisfaction, but simply that it involves members evaluations of the performance of political authorities (Muller, 1970: 1152). The most important consequence of distinguishing between the two types of support consists of the fact that a political system can maintain its stability for long periods of time, even when faced with low levels of specific support, as long as these are counterbalanced by satisfactory levels of diffuse support. The distinction between diffuse and specific support can also be interpreted, following Linz (1978), in terms of legitimacy (as diffuse support) and of efficacy and efficiency (as specific support). Linz argued, just like Easton, that the efficacy and effectiveness of a political system can strengthen, reinforce, maintain or weaken the belief in its legitimacy (1978: 18). The approach I am using in this study follows Eastons concepts of diffuse and specific support. Rather than using a single measure of diffuse support, I operationalize support for a market economy starting from four variables that indicate attitudes toward different components/principles of the market economy: competition, private property, income equality and responsibility for individual welfare. The respondents positions on these four items place the individuals on two dimensions: support for the free market model (defined by attitudes toward competition and privatization) versus support for the state interventionism model of market economy (defined by attitudes toward income equality and responsibility for individual welfare). Since the items I use represent support for the principles of a market economy, the resulting dependent variables are indicators of diffuse support for the two models of market economy (the two dependent variables are discussed in detail in the section on data and methodology). The main advantage of this approach lies in the clear distinction it makes between diffuse and specific support on one hand, and between support for the free market model and support for the state interventionism model on the other, thus addressing some of the problems identified in the previous literature. It should be noted, however, that one of the components of support for the state interventionism model (responsibility for individual welfare) has the potential to be influenced by short-term changes in the economy, which is characteristic of specific forms of support. As a result, although support for the state interventionism model is primarily a form of diffuse support, it may also have some of the characteristics of specific support. Distinguishing between support for the free market model and support for the state interventionism model of market economy is necessary because individuals occupy different positions in the space defined by these two dimensions. Some may have a purely liberal position, supporting the free market model and opposing the state interventionism model; others may support the free market model and may also offer some support to the idea of the state intervening in the economy to correct imbalances created by the free market. Still others may completely reject the free market model and support only the state interventionism model.

Support for market economy: Individual level

What are the factors that influence support for the two models of market economy? Support for different models of market economy indicates a preference for a certain structure of the economic system. Support for the free market model shows a preference for an economic system in which the

market is self-regulating through interactions among the relevant actors (including individuals). Support for the state interventionism model shows a preference for a different way of organizing the economic system, one in which the state has an active role in ensuring that the imbalances of the free market will not go beyond a certain threshold. An individuals preference for one model or the other can be determined through two main mechanisms, one based on resources and the other based on ideology. From these two mechanisms I derive four general hypotheses (the resource hypothesis, the ideology hypothesis, the needs hypothesis, and the ex-communist hypothesis) to be tested in this chapter. From these general hypotheses I also derive a series of hypotheses about the effects of the independent variables used in the analysis. The first mechanism that can determine an individuals preference for an economic model is resourcebased. According to this mechanism, the resources a person has at their disposal will determine, partly, the preference for a specific market economy model. Starting from the assumption that resources influence an individuals performance in the economic area, the following general hypothesis can be stated: The higher the level of resources available to an individual, the higher that persons level of support for the free market model of market economy and the lower their level of support for the state interventionism model of market economy (the resource hypothesis). The first set of independent variables I use is represented by indicators of socio-economic status: gender, age, education, income and employment. While it is difficult to think of gender as a resource, it is straightforward to think of it in terms of the advantage or disadvantage which is evident in the glass ceiling effect that exists even in some of the most developed countries. Based on this interpretation, gender may have a significant effect on support for a market economy, with men more likely to support the free market model and women more supportive of the state interventionism model. In addition to this effect, in some of the former communist countries (e.g. Poland and Romania) the transition to a market economy has proven to be especially damaging to the economic situation of women, suggesting that gender may have a stronger effect in these countries. Age should also have a significant effect on the two dependent variables. In one interpretation, age is an indicator of availability of resources: as people age they accumulate more and more resources, suggesting that younger people should show higher levels of support for the state interventionism model, while older people should be more supportive of the free market model. A second interpretation argues that, as a general rule, older people tend to be more conservative than younger people. Based on these interpretations I expect age to have a positive effect on support for the free market model and a negative effect on support for the state interventionism model in developed democracies. In post-communist countries there seems to be an additional pattern that links age to support for a market economy. In these countries age creates a significant distinction between winners and losers during the economic transition. Changes in the structure of the economy require adaptation through retraining, which becomes more difficult with age. Financially, retired persons were especially disadvantaged during the economic transition: while income generally failed to keep up with inflation, this was particularly true for retired persons. All these factors suggest that economic losses during transition are associated with age. I expect, then, age to have a negative effect on support for the free market model and a positive effect on support for the state interventionism model in former communist countries. Previous studies (see McIntosh et al., 1994: 504; Miller, Hesli & Reisinger, 1994: 403; Firebaugh & Sandu, 1998: 533; Gibson, 1996b: 968) have found a significant negative relationship between age and support for a market economy.

The next two variables, education and income, are the main indicators of resources used in our analysis. Education offers individuals a better set of tools that can help them to cope with changes in the economic structure. In addition to being able to adapt more rapidly to the demands of the new economic system, education is also positively linked to income, with the income of highly educated people staying ahead of inflation, while poorly educated people experienced a significant reduction of their real income over the years. Previous studies have generally found a positive relationship between education and support for a market economy. In the context of this chapter, I expect education to have a positive effect on support for the free market model and a negative effect on support for the state interventionism model. Eyal, Szelenyi and Townsley (1998) have argued that cultural capital played a significant role in the post-communist societies during the transition. If this is true, then the effect of education on support for the two models of market economy should be stronger in the former communist countries compared to other countries. Income should also have a significant effect on support for the two models of market economy. Respondents with a higher income should feel less attracted to the state interventionism model and be more supportive of the free market model. At low levels of income, respondents are more dependent upon social welfare and social security programmes provided by the state and, thus, should have higher levels of support for the state interventionism model. Regarding employment status, starting from the assumption that the type of sector in which one works has an effect on ones attitudes toward the economy, I expect to find higher levels of support for the free market model among those employed in the private sector, and higher levels of support for the state interventionism model among those employed in the public sector. Given that in the former communist countries retirement was usually associated with a significant decrease in income, I expect to find significantly more support for the state interventionism model among the retired people in these countries and significantly less support for the free market model. The analysis should also include a series of variables measuring evaluations of the state of the economy and optimism about economic prospects both for the individual and for the community. The way people perceive the economic situation is considered to be one of the most important determinants of support (see e.g. McAllister, 1999; Miller & Listhaug, 1999; Mishler & Rose, 1997, 2001; Rohrschneider, 1999). Unfortunately, the European Values Study surveys do not include many of the items used in the literature to capture the effects of these evaluations.4 The only evaluation variable available is satisfaction with life. This variable measures a generalized form of evaluation, based on the resources that individuals have at their disposal, without offering a referent for the evaluation. I believe this variable will capture in an indirect way respondents subconscious evaluations of the current situation in the country. The higher the level of satisfaction with life, the higher the level of support for the free market model and the lower the level of support for the state interventionism model. The remaining variables in the analysis influence support for the two models of market economy through the ideology-based mechanism. This mechanism is rooted in the assumption that people acquire and develop, during their lifetime, different values and beliefs that have to be integrated into a unitary and consistent set. If this assumption is true then the following general hypothesis should also be true: An individuals preference for the free market model or for the state interventionism model should be consistent with other values the individual holds (the ideology hypothesis).
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For a discussion of the sociotropic theory and of the personal experiences versus the national assessment hypothesis, see Fiorina (1981), Kiewiet (1983), Lewis-Beck (1988), Markus (1988) and MacKuen, Erikson & Stimson (1992).

Interest in politics has been interpreted as an indicator of citizens cognitive involvement in the political process (Plasser, Ulram & Waldrauch, 1998: 130). It also seems to be related to attitude formation and to political participation (Van Deth, 1990; Niedermayer, 1990; Marraval, 1997). It is less clear what the effect of this variable would be on the two dependent variables. Previous studies in the post-communist context have found that interest in politics is positively correlated with support for economic reforms, suggesting that it should have a positive effect on support for the free market model. I also use a variable indicating the number of information sources used during the last week as an additional indicator of interest in politics. The last two variables included in the models are indicators of respondents values. The first is the ideological self-placement in the leftright dimension. Since the two dependent variables can be interpreted as belonging to this dimension, preference for the left should be associated with a preference for the state interventionism model and preference for the right should be associated with a preference for the free market model of market economy, indicating some degree of value consistency. The second value dimension in the model is the materialismpost-materialism dimension (for details, see Inglehart, 1977, 1990). The materialism end of the dimension, which indicates concern with basic needs, should be accompanied by higher levels of support for the state interventionism model. As already indicated above, I do not expect to find differences in the effects of these variables on support for the two models of market economy between the former communist countries and the other countries included in the analysis. It should be noted that the resource hypothesis and the ideology hypothesis are not competing but rather complementary explanations. Each of the two hypotheses explains different paths that lead to a preference for one model or the other. Since previous studies have not distinguished between the two models of market economy, it is difficult to parse a priori the relative importance of the two mechanisms in explaining support for the two models. I expect, however, the resource mechanism to have a stronger impact on support for the state interventionism model than on support for the free market model (the needs hypothesis). This expectation can be explained by the fact that, when confronted with difficult economic conditions (low levels of resources), people tend to ask first for the states help (state interventionism to correct a temporary imbalance) rather than to ask for a completely different economic system. Given that the former communist countries experienced significant economic crises during their transitions from a state controlled economy to a market economy, generating high transition costs for the population, I also expect the effect of the resource mechanism to be stronger in the former communist countries compared to the other countries included in the analysis, especially with respect to support for the state interventionism model (the ex-communist hypothesis). On the other hand, the ideology-based mechanism should not be influenced by the economic context and should have the same effect in all countries.

Support for market economy: Country level

Given the different paths countries have taken on the road to a market economy, I analyse the relationship between support for the free market model and support for the state interventionism model at the aggregate level in five groups of countries: post-industrial societies, developing societies, Western ex-communist societies, Eastern ex-communist societies and low-income societies (for more details about this classification, see Inglehart & Welzel, 2005).

The relationship between support for the free market model and support for the state interventionism model of market economy should have different forms in the five groups of countries. More specifically, based on the path that has led to the formation of the market economy, I have the following expectations. First, since post-industrial societies established their market economies in an organic manner, through long-term development processes, I expect the correlation between support for the free market model and support for the state interventionism model to be negative. The economies of these countries are, more or less, stable and have not experienced significant shocks for a long period of time. In such an economic climate, individuals have structured their attitudes toward the economic system over time and on an ideological basis. Second, developing countries have also established their market economies over time, but their economies are more vulnerable to economic shocks. As a result of this, I expect the correlation between the two types of support to be negative, but weaker than in the case of the post-industrial countries. Finally, given their recent history of having a planned economy and the significant economic shock represented by the transition from a planned economy to a market economy, I expect to find a positive correlation between support for the free market model and support for the state interventionism model in the ex-communist countries. Taking cultural differences into account, this expectation can be modified in the case of the Western ex-communist countries, where this positive correlation should be weaker. Since average levels of support for the free market model and for the state interventionism model vary across countries, I use in the analysis a series of country-level indicators of the state of the economy: GDP per capita (logged), unemployment rate and inflation rate, all measured in the year previous to the survey year. The models will show the effect of these variables on the average level of support for the two models of market economy across the countries included in analysis.5 It should be noted that all these indicators represent resources available at the country level and, as such, their effect on the average level of support should follow the resource-based mechanism. The resource hypothesis presented above can be adapted for this level of analysis, leading to the following expectation: The higher the level of resources available to a country, the higher its average level of support for the free market model of market economy and the lower its average level of support for the state interventionism model of market economy (the country-level resource hypothesis). Based on this mechanism, I expect GDP per capita to have a positive effect on support for the free market model, while unemployment and inflation should have a negative effect on support for the free market model. In the case of support for the state interventionism model, the effects of the three country-level variables should be reversed.

Data, variables and methodology

Data
The individual-level data used in this chapter come from the World Values Survey (WVS) and the European Values Study (EVS) surveys conducted between 1990 and 2007. The descriptive analyses of the dependent variables use data from waves two through five, presenting an image of the evolution of support for the two models of market economy over time. The analyses identifying the factors that
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Unfortunately, the relatively small number of countries included in the analysis and the high correlations among these country-level variables do not allow testing for the effects of all variables simultaneously.

affect support for the free market and for the state interventionism model are based only on data from the fifth wave (2005-06) of the values surveys. The macro-level indicators used in the country-level analyses come from World Development Indicators Online (WDI), published by the World Bank, and from the United Nations Data Retrieval System (UNdata), published by the United Nations Statistics Division.

Dependent variables
The two dependent variables used in this chapter are based on four variables representing respondents attitudes toward four main principles of a market economy: competition (measured on a scale from 1, representing agreement with the statement that competition is good, to 10, representing agreement with the statement that competition is harmful), private property (measured on a scale from 1, agreement with the statement that private ownership of business should be increased, to 10, agreement with the statement that government ownership of business should be increased), income differentiation (ranging between 1, agreement with the statement that incomes should be made more equal, and 10, agreement with the statement that we need larger income differences as incentives), and responsibility for personal welfare (measured from 1, agreement with the statement that the state should be responsible for everyones welfare, to 10, indicating agreement with the statement that individuals should be responsible for their own welfare).6 Two of these variables, competition and private property, represent orientations toward a free market model of market economy. I have recoded these two variables so that the minimum value (1) represents accepting a value that is opposed to this model (competition is harmful, state property should be expanded), while the maximum value (10) represents accepting a value that is consistent with the model (competition is a good thing, private property should be expanded). The other two variables, income differentiation and responsibility for individual welfare, represent orientations toward a state interventionism model of market economy, one in which the state actively intervenes to reduce the inequalities produced by a pure market economy. These two variables are recoded so that the minimum value (1) represents accepting a value that is inconsistent with the model (income differences should be increased, individuals should be responsible for their own welfare), while the maximum value (10) corresponds to accepting this model (income differences should be reduced, the state should be responsible for everyones welfare). Based on correlations among these four items and on the results of exploratory factor analyses,7 I used the competition and private property variables to create an additive index of support for the free market model of market economy FM-ME (rescaled to range between 1 and 10). The other two variables, income differentiation and responsibility for individual welfare, were used to create an additive index of support for the state interventionism model of market economy SI-ME (rescaled to take values from 1 to 10). For both dependent variables, FM-ME and SI-ME, high values represent support for the corresponding model of market economy, while low values represent opposition to these models.

Independent variables: Individual level

The gender variable is coded 1 for male respondents and 0 for female respondents. The age variable is used as a set of three dummy variables: under 30 (the reference category), 30-59, and over 60 years old.
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These indicators of support for the liberal model and for the social-democratic model have been previously used, in different forms, in Finifter & Mickiewicz (1992), Duch (1993), McIntosh et al. (1994), Miller, Hesli & Reisinger (1994), Gibson (1996b), Firebaugh & Sandu (1998) and Hofferbert & Klingemann (1999). 7 The specifics of these analyses are discussed at the beginning of the section presenting the results.

Education is used in the models as a set of dummy variables indicating lower education (the reference category), middle education and upper education. The income variable is measured by deciles of income. Employment status is used in the models as a set of dummy variables indicating employment in the public sector, employment in the private sector, retired persons, or other, including students, housewives and unemployed respondents (the reference category). Satisfaction with life is a ten-point scale with higher scores indicating higher levels of satisfaction with life. Interest in politics is measured on a four-point scale, with higher scores indicating a higher degree of interest in politics. An additional variable counts the number of information sources (newspapers, news broadcasts on radio or television, printed magazines and in-depth reports on radio or television) used during the last week. This variable ranges from 0 to 5, with higher values indicating better informed respondents. Ideological self-placement on the leftright dimension is measured using a ten-point scale, with 1 indicating a preference for the left and 10 indicating a preference for the right. The last variable included in analysis, the materialismpost-materialism dimension, is used as a set of dummy variables: materialist orientation (the reference category), mixed orientation and post-materialist orientation.

Independent variables: Country level

The three variables that I include in the models as level-2 predictors are indicators of the current state of the economy: GDP per capita (logged), unemployment rate and inflation rate. All three variables are measured in the year previous to the survey year.

Methodology
The first analyses I present are simple univariate and bivariate descriptive analyses, performed in SPSS 15. When analysing individual-level data, instead of the regular OLS model I estimate the models using HLM 6.06, in order to account for the clustering of individuals within countries (for details about hierarchical linear models and about the HLM software, see Raudenbush & Bryk, 2002). Since the country samples have different sizes, in all individual-level analyses I use a weight variable so that all samples have the same size (N = 1500). Missing data are deleted listwise. The multilevel models are also performed in HLM 6.06.

Results and discussion

As shown in the previous section, this studys two dependent variables are created starting from four variables indicating support for different principles of the market economy. Theoretically, these four variables should group on two dimensions: support for the free market model and support for the state interventionism model. The first step in creating the dependent variables was to check the correlations among the four variables, followed by a factor analysis (principal components with extraction of factors with eigenvalues greater than one and with varimax rotation) in each of the 44 countries included in the fifth wave of the WVS and EVS. These preliminary analyses led to an interesting finding: the four variables group on the two dimensions, as expected, only in countries from the Western world and from Latin America. The only exceptions are Australia, Bulgaria, Finland and Sweden, where all four variables group on a single factor. When requiring the extraction of two factors, the factor analysis procedure leads to the two theoretically expected factors in these countries as well. In most of the countries from Africa and Asia the four variables do not follow the theoretical expectation, either because of non-significant correlations (in China, Hong Kong, India, Indonesia, and Trinidad and Tobago) or because the variables group in other ways (in Brazil, Burkina Faso, Ghana, Malaysia, Mali, Rwanda, Korea and Zambia). The only countries

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outside the Western world and Latin America where the four variables group as theoretically expected are Ethiopia, Japan, Taiwan and Vietnam. This finding suggests that the theoretical distinction between support for the free market model (defined by support for competition and support for private property) and support for the state interventionism model (defined by attitudes towards income equality and responsibility for personal welfare) of market economy does not apply in all contexts across the world. This is a finding that requires more detailed analysis, which I will not pursue in this chapter. However, given that all countries in which the free market/state interventionism distinction does not work are from Africa and Asia, it seems very likely that the explanation for this difference has a strong cultural component. It is also possible, since most of these countries are low-income societies, that economic factors are also responsible for this difference. Given the results presented above, I discuss in this chapter only post-industrial societies, developing societies, and Western and Eastern ex-communist societies, i.e. countries in which the distinction between support for the free market model and support for the state interventionism model is supported by the data. Figure 1 through Figure 4 and Table 1 present the relationship between these two types of support in the four groups of countries defined above, using data from 1990 to 2007 (the countries included in each group are presented in the appendix).
Table 1 Correlations between support for free market model and support for state interventionism model

1990-1995 Post-industrial societies N Developing societies N Western ex-communist societies N Eastern ex-communist societies N -0.799 *** 22 -0.529 # 13 -0.551 12 -0.710 5

1996-2000 -0.490 * 17 -0.177 15 0.472 15 0.536 * 18

2001-2007 -0.705 * 9 -0.354 19 0.865 3 0.513 # 13

All years -0.691 *** 48 -0.417 ** 47 -0.221 30 0.307 # 36

Notes: Data sources are WVS and EVS 19902007. *** p < 0.001, ** p < 0.050, * p < 0.010, # p < 0.100. The results reveal a series of interesting patterns. First, it should be noted that support for the free market model and support for the state interventionism model have a significant and strong negative correlation in post-industrial societies, both for the whole period of time included in analysis and for the three shorter time periods (1990-95, 1996-2000 and 2001-07).8 This result confirms the expectation presented earlier: since these countries have had a market economy for a long period of time and since their economies are generally resistant to significant economic shocks, people living in these countries have had enough time to develop their attitudes towards principles of the market economy in a stable or slowly-changing environment. Thus, preferences for a type of market economy in these societies are clearly defined and have a strong ideological component.

In interpreting the results from Table 1, be aware that some of the cells have only a few cases. It should also be noted that the countries in the four groups are not representative samples. They are, in fact, availability samples. Their inclusion in the analysis depended only on the availability of the four items used for constructing the two dependent variables. This is, however, a problem that affects almost all comparative studies based on survey data.

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Figure 1 Support for market economy models in post-industrial societies (average score, 1990-2007)

Figure 2 Support for market economy models in developing societies (average score, 1990-2007)

Figure 3 Support for market economy models in Western ex-communist societies (average score, 1990-2007)

Figure 4 Support for market economy models in Eastern ex-communist societies (average score, 1990-2007)

Second, a significant negative correlation also exists in the case of developing societies for the whole period of time, but the correlation coefficient is smaller than that for the group of post-industrial societies. This result was also expected: these countries have had a market economy for a long period of time, but their economies are not as developed as the economies of post-industrial societies, and they are more likely to experience economic shocks. As a result, people living in developing societies are more likely to be affected by the state of the economy and this is probably the reason why, when aggregating the results at country level, the association between support for the free market model and support for the state interventionism model loses some of its strength. Lastly, the results for the former communist countries show a different image. In the case of the Western ex-communist societies, the correlation between support for the free market model and support for the state interventionism model is not significant. In the case of the Eastern ex-communist societies, by contrast, with the exception of 1990-95, the correlation is significant and positive, showing that countries with higher average scores of support for the free market model also have higher average scores of support for the state interventionism model of market economy. Figure 3 and Figure 4 also reveal an additional pattern. Former communist countries started the postcommunist transition with high average levels of support for the free market model and/or moderate levels of support for the state interventionism model. This should not surprise, given that during the communist regimes the state was the main owner of enterprises and income differences were rather small by design. The economic shock of the transition, however, changed this situation. Later in the transition, the former communist countries moved toward lower levels of support for the free market model and/or higher levels of support for the state interventionism model. This pattern is quite visible in Bulgaria, the Czech Republic, East Germany, Hungary, Poland and Romania. The move to less liberalism and more state interventionism suggests that at the beginning of the post-communist transition support for the free market model of market economy was artificially inflated by the absence of a market economy, while support for the state interventionism model was artificially reduced by these countries recent history. As people experienced both the advantages of a market economy and the disadvantages of economic reforms, the publics mood changed, as revealed by the data. It should also be noted that the highest levels of support for the free market model at the beginning of the transition were recorded in countries that implemented radical reforms (e.g. the Czech Republic, Hungary and Poland) and in countries that delayed the necessary economic reforms (e.g. Bulgaria and Romania), suggesting that the implementation of economic reforms did not depend on the public but rather on the political elites. This finding, however, should be analysed in more detail in order to be confirmed. I move now the focus of the discussion from these descriptive analyses to multivariate analyses, using only the data from the fifth wave of the WVS and EVS (2005-07). Previous results have suggested that the distinction between the free market model and the state interventionism model of market economy does not apply in all contexts. Therefore, these analyses include only the 23 countries in which the four variables used for the dependent variables grouped on the two theoretical dimensions (the list of countries is presented in the appendix). Given the structure of the data, with people nested within countries, all the individual-level analyses presented next are performed using HLM, thus accounting for the clustering effects. The first model I estimated (see Model 1 in Table 2 and Table 3) was a fully unconditional model (i.e. a one-way random-effects ANOVA model), which partitions the variance of the dependent variable into variance within countries and variance between countries. 16

Table 2 Support for the free market model of a market economy

Table 3 Support for the state interventionism model of a market economy

The results show that 9% of the variance in support for the free market model is between countries (with the remaining 91% being within countries between people). In the case of support for the state interventionism model of market economy, only 5% of the variance is between countries (with the remaining 95% of the variance being within countries between people). Although for both dependent variables the proportion of the variance between countries is significantly different from zero, it should be noted that most of the variance is between people rather than between countries, suggesting that country-level variables may not achieve significance in multilevel models (especially in the case of support for the state interventionism model). A second set of models (models 2, 3 and 4 in Table 2 and Table 3) include only individual-level variables. Model 2 includes only socio-economic status variables. Model 3 adds satisfaction with life, interest in politics and materialismpost-materialism. Model 4 also includes ideological self-placement on the left right dimension. Model 5 allows the slope of the intercept to vary across countries and includes GDP per capita as a predictor of the slope. I also estimated a series of models that allow each of the independent variables to have varying slopes, using a dummy variable indicating a post-communist country as a predictor for the slope. I included in the tables (models 6a through 6d) only those models which had significant interactions between post-communism and the independent variables. The complete individual-level model (Model 4) explains 7% of the variance in support for the free market model and 10% of the variance in support for the state interventionism model of market economy. Recall in this respect that the most important predictors of support for a market economy identified in the literature (economic evaluations) are not available in the WVS and EVS data sets, thus reducing the explanatory power of the model. Gender has a significant effect on both dependent variables, with men having higher levels of support for the free market model and women having higher levels of support for the state interventionism model. The effects are consistent across all model specifications. It should be noted that the effect of gender is about twice as large in the model predicting support for the free market model compared to the model predicting support for the state interventionism model. The interaction term between postcommunism and gender is not significant, suggesting that gender has the same effect in post-communist countries as in the other countries included in analysis. Age has a marginally significant effect in both tables for the complete individual level model (Model 4): people over the age of 60 seem to support the free market model more and the state interventionism model less. However, when the interaction between age and post-communism is taken into account (Model 6a) the results change. Age has a significant positive effect on support for the free market model in post-industrial and in developing societies. The cross-level interaction between age and a former communist country has a significant negative effect for people over 60 years old. This result suggests that this category of respondents has a lower level of support for the free market model in the former communist countries (the age intercept coefficient for this group is 0.355 and the interaction coefficient is -0.528, resulting in a negative total effect in these countries). In the model predicting support for the state interventionism model, the results are reversed. In postindustrial and developing countries people support the state interventionism model less as they age, while in the former communist countries, where the coefficients for the interaction terms are significant and positive, people show higher levels of support for the state interventionism model as they age (the total effect is 0.4 in the case of people over 60). These results show that the effect of age differs significantly depending on the type of country.

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Education has a significant effect on both dependent variables. Higher education is associated, according to these results, with a higher level of support for the free market model and a lower level of support for the state interventionism model (it should be noted that the model also controls for income). In addition to these effects, Model 6b indicates that the effect of education on support for the free market model does not vary depending on the type of country. The interaction terms for education, however, show a significant and negative effect on support for the social-democratic model, suggesting that in the former communist countries highly educated respondents are less supportive of intervention of the state in the economy, compared to similarly educated respondents in the rest of the sample (the effect of education is doubled by the interaction term in the former communist countries). Income also has a significant effect on both dependent variables, consistent with the theoretical expectations. As their income increases, people are more attracted by the free market model of market economy and less attracted by the state interventionism model. In terms of size, the effect of income is stronger on support for the state interventionism model than on support for the free market model. The effect of this variable is similar in both types of countries. In the model predicting support for the free market model, employment status has a significant effect: those working in the public sector are less attracted to the liberal model, while those working in the private sector support it more. The coefficient for retired respondents is not significant in the model presented in Table 2. When the type of country is taken into account, employment in the public sector and employment in the private sector retain their effects. Retired people in former communist countries, however, show significantly lower levels of support for the free market model (the coefficient of the interaction term is -0.377). In the model predicting support for the state interventionism model, those working in the private sector are the only group that shows a significantly lower level of support. Again, taking into account the effect of living in a former communist country reveals a different image: for those working in the private sector in the former communist countries the interaction term is marginally significant and positive. For retired respondents in former communist countries, the interaction term is significant and positive, leading to a total effect of almost half a point. Despite the significant effects presented above, it should be noted that the socio-economic status variables together account, at the individual level, for only 3% of the variance in support for the free market model and only 4% of the variance in support for the state interventionism model. The behavioural and attitudinal variables I present next explain an additional 4% of the variance in support for the free market model and an additional 7% of the variance in support for the state interventionism model. Satisfaction with life, the only evaluation variable available in the model, has a significant effect on both dependent variables. The more satisfied respondents are, the higher their level of support for the free market model and the lower their level of support for the state interventionism model. The significant effects of this variable confirm previous findings, according to which evaluation variables play a significant role in determining attitudes toward the market economy. Moreover, the effect of this variable is some three times stronger on support for the state interventionism model than on support for the free market model, showing that as people are less and less satisfied they tend to think first of state intervention. Out of the two variables measuring interest in politics, the results show that the variable indicating the number of information sources accessed in the previous week is the one that has a significant effect.

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This suggests that information obtained from mass media (newspapers, magazines, television and radio) is used by respondents to update their attitudes toward the market economy, regardless of their interest in political issues. It should be noted that this effect is measured while controlling for education. The coefficients for the materialismpost-materialism dimension offer an interesting image of the effects of this value set on support for the market economy. First, it should be noted that the coefficient for a post-materialist orientation is not significant in any of the models, suggesting that issues related to the market economy have rather low salience for post-materialist respondents. The variable indicating a mixed orientation has a significant positive effect on support for the free market model, but this result is difficult to interpret. The most significant difference appears when the effect of living in a former communist country is taken into account. The coefficients for the interaction terms show that postmaterialists living in former communist countries have higher levels of support for the free market model and lower levels of support (although only marginally significant) for the state interventionism model. The last variable used in the individual-level models is ideological self-positioning on the leftright dimension.9 This variable has the predicted effects, with supporters of the right opting for the free market model, and supporters of the left preferring the state interventionism model. It should also be noted that the effect of this variable on support for the state interventionism model (-0.17) is almost twice as strong as its effect on support for the free market model (0.08). I also estimated a series of models including country-level variables that might explain differences in support across countries. These variables are included in the models as predictors of the intercept (random intercept models). The only model I present from this set is Model 5, which tests for the effect of GDP per capita. As argued, given the small number of level-2 units included in the analysis and the fact that macro-level indicators are highly correlated, the number of variables that can be included in the model at the same time is quite reduced. As expected, given the small proportion of variance in support for the state interventionism model across countries (only 5%), none of the country-level variables has a significant effect. This finding suggests that support for the state interventionism model is determined primarily by individual-level factors. In the case of support for the free market model, all three indicators of the state of the economy have a significant effect, although, when all three are included in the model at the same time, multicollinearity prevents the model from partitioning the variance for each of the variables so that none is significant. Due to this problem, I estimated the effects of these variables in separate models. GDP per capita has a significant positive effect, indicating that in wealthier countries support for the free market model is higher. The other two indicators, inflation rate and unemployment rate, have significant negative effects, decreasing the level of support for the free market model. In both models these variables explain almost a third of the variance in support across countries. The average level of support for the free market model is also influenced by a series of aggregate indices: the human development index, government effectiveness, regulatory quality, rule of law and control of corruption (results not presented here). All of these additional results suggest that support for the free market model is higher in more developed countries, where the state generally performs better. Since these countries are, in fact, countries that have had a market economy for a long period of
9

It should be noted that when this variable is included in analysis, the number of cases drops from 20,102 to 16,651 in Table 2 and from 23,051 to 19,077 in Table 3. This happens because the variable has a large proportion of missing values. Comparing the coefficients obtained in models 3 and 4, however, it can be seen that the loss of cases does not change the substantive interpretation of the results.

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time, it is possible that support for the liberal model is determined, in part, by the fact that people from these countries have lived most of their lives in such an economic system.

Conclusions
As I stated at the beginning of this chapter, this study is based on the idea that the market economy concept is too complex to be captured by treating support for a market economy as a unidimensional phenomenon. Starting from this, I distinguished between a free market model and a state interventionism model, and tested whether this theoretical distinction better reflects reality. The analysis was aimed at identifying the mechanisms that generate a preference for one model or the other, focusing on resources and ideology, and at describing the way these mechanisms work in different groups of countries, especially in the former communist countries. The results presented here reveal a series of interesting findings. A first result, one that should be analysed in more detail, is that when measuring support for a market economy, analyses should take into account the fact that people have different understandings of what a market economy is or should be. I distinguished a free market model and a state interventionism model of market economy, yet the results show that this theoretical distinction does not work in most of the African and Asian societies included in the analysis. The results also indicate that the relationship between support for the free market model and support for the state interventionism model varies across countries. The two forms of support are negatively correlated in post-industrial and developing countries, have a non-significant correlation in Western excommunist countries, and are positively correlated in Eastern ex-communist countries. This result reinforces the idea that, in analysing support for a market economy, special attention should be given to the different principles that define the economic system. Treating support for a market economy as a multi-dimensional rather than a uni-dimensional phenomenon represents one of the main contributions of this study to the literature. A second contribution is the use of a multilevel framework of analysis, one that permits identification of both individual and country-level factors that affect support for different models of market economy. The results, presented in Table 2 and Table 3, show that this should be the statistical approach used when analysing different groups of countries. The results offer support for the general hypotheses presented at the beginning of this chapter. The coefficients for gender, age, education and income are consistent with the resource hypothesis: they show that respondents with more available resources tend to have higher levels of support for the free market model and lower levels of support for the state interventionism model. The behavioural and attitudinal items included in the analyses show that the preference for one or the other model of market economy has an ideological component (as indicated by the significant effects of respondents positions on the leftright and materialistpost-materialist dimensions), and it is influenced by respondents evaluations of the current situation and their level of information. These results are consistent with the ideology hypothesis. Comparison of the corresponding coefficients in tables 2 and 3 also offer some support for the needs hypothesis. The two variables that show resource availability (education and income) have a stronger effect on support for the state interventionism model than on support for the free market model. These different effects suggest that support for state interventionism is more likely to be influenced by peoples needs than is support for the free market model.

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The main contribution of this study, however, comes from the analysis of support for two different models of market economy while taking into account the effect of living in a former communist country. Models 6a through 6d show that the variables included in the analysis have different effects on the two dependent variables, depending on the type of country. Age has a negative effect on support for the free market model and a positive effect on support for the state interventionism model in the former communist countries. In the remaining countries the effects of age are reversed. Education has a positive effect on support for the free market model in post-industrial and developing societies, but in former communist countries it has no significant effect. With respect to support for the state interventionism model, education has a significantly stronger effect in the former communist countries (doubling the total effect). A similar mechanism is observed in the case of the retired population, which exhibits more support for the state interventionism model and less support for the free market model in the former communist countries. All these results offer strong support for the ex-communist hypothesis. Moreover, comparing the coefficients in Model 4 to the corresponding coefficients in models 6a through 6d it can be seen that when the type of country is included in the analysis the significance of some of the coefficients changes. Age, for instance, had no significant effect in the overall sample. Once the interaction term with type of country is included in the model, however, the coefficients become significant and indicate quite different effects depending on the type of country. Significant changes can also be observed for the education coefficients in the case of support for the free market model and for the retired people in both tables. Support for the two models of market economy is generated through different mechanisms, depending on the type of country. When this difference is not taken into account, the implicit assumption is that there are no differences between the types of countries and the results are averaged, leading to coefficients that are incorrect. Summarizing the findings, it can be argued that both general hypotheses describing the supportgenerating mechanisms (the resource hypothesis and the ideology hypothesis) are supported by the data. The results also show that resources play a more important role in determining support for the state interventionism model than in the case of support for the free market model, offering some support for the needs hypothesis. These findings suggest that, overall, support for the free market model is determined primarily through the ideology mechanism, while support for the state interventionism model is determined primarily through the resource mechanism. The country-level resource hypothesis is only partially supported by the results: more developed countries have, on average, higher levels of support for the free market model, but they do not differ in their levels of support for the state interventionism model. Returning to the distinction between diffuse and specific support, the findings presented here suggest that support for the free market model can be interpreted as diffuse support, while support for the state interventionism model has some elements of specific support. Finally, the ex-communist hypothesis is strongly supported by the data: support for the two models of market economy is generated through different mechanisms in these countries. Future research should focus on this finding and try to explain whether this difference is determined by cultural differences or just by development differences between the former communist countries and the rest of the European countries. All the results presented here offer support for the idea that support for a market economy is a multidimensional phenomenon that should be analysed by distinguishing among different understandings of

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what a market economy is and by the idea that support for the different forms of market economy is a context-specific phenomenon. At the same time, the results also suggest that future studies are needed in this area. These studies should focus on a larger number of countries, use additional independent variables (especially indicators of how people perceive the state of the economy), and attempt to explain why attitudes toward the market economy have a different structure in the non-Western world.

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Appendix
The following countries are included in the analyses presented in figures 1 through 4 and in Table 1. Post-industrial societies: Australia (1995, 2005), Austria (1990, 1999), Belgium (1990), Canada (1990, 2000, 2006), Denmark (1990), Finland (1990, 1996, 2000, 2005), France (1990, 1999), Germany-West (1990, 1997, 2006), Great Britain (1990), Iceland (1990, 1999), Ireland (1990, 1999), Italy (1990, 1999, 2005), Japan (1990, 1995, 2000, 2005), Netherlands (1990, 1999), New Zealand (1998, 2004), Norway (1990, 1996), Portugal (1990), Spain (1990, 1995, 2000), Sweden (1990, 1996, 2006), Switzerland (1996), USA (1990, 1995, 1999, 2006). Developing societies: Andorra (2005), Argentina (1991, 1995, 1999, 2006), Brazil (1991, 1997, 2006), Chile (1990, 1996, 2000, 2005), China (1990, 1995, 2001, 2007), Colombia (2005), Cyprus (2006), the Dominican Republic (1996), El Salvador (1999), Hong Kong (2005), Malta (1991), Mexico (1990, 1996, 2000, 2005), Peru (1996, 2001), Puerto Rico (1995, 2001), South Africa (1990, 1996, 2001), South Korea (1990, 1996, 2001, 2005), Singapore (2002), Taiwan (1994, 2006), Turkey (1990, 1996, 2001), Uruguay (1996, 2006), Venezuela (1996, 2000). Western ex-communist societies: Croatia (1996, 1999), Czech Republic (1990, 1991, 1998, 1999), Estonia (1990, 1996, 1999), Germany-East (1990, 1997, 2006), Hungary (1991, 1998), Latvia (1990, 1996), Lithuania (1990, 1997, 1999), Poland (1989, 1990, 1997, 1999, 2005), Slovakia (1990, 1991, 1998), Slovenia (1992, 1995, 2005). Eastern ex-communist societies: Albania (1998, 2002), Armenia (1997), Azerbaijan (1997), Belarus (1990, 1996, 2000), Bosnia (1998, 2001), Bulgaria (1990, 1997, 2006), Georgia (1996), Kyrgyzstan (2003), Macedonia (1998, 2001), Moldova (1996, 2002, 2006), Montenegro (1996, 2001), Romania (1993, 1998, 1999, 2005), Russia (1990, 1995, 1999), Serbia (1996, 2001, 2006), SrpSka (1998, 2001), Ukraine (1996, 1999, 2006).

The following countries are used in the analyses presented in Table 2 and Table 3. Australia, Bulgaria, Canada, Chile, Colombia, Cyprus, Finland, France (only Table 3), East Germany, West Germany, Great Britain (only Table 3), Italy, Japan, Mexico, Moldova, Netherlands (only Table 3), Poland, Romania, Slovenia, Sweden, Ukraine, United States, and Uruguay.

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