The Shadow Economy, War and State Building: Social Transformation and Re-stratification in an Illiberal Economy (Serbia and Kosovo)

ABSTRACT This article analyses the development and consolidation of an illiberal (or shadow) economy and its connection to political projects in Serbia and Kosovo. Here, some comparative remarks are made over the form of economy and its political connections and implications. In spite of methodological problems with sources being scarce or of varying quality, the phenomenon of illiberal economy and its coupling with political projects is too important to be neglected by researchers. To some extent ’soft sources ’ have been accepted here, where hard evidence is lacking. The article argues that the considerable consolidation of illiberal economies in Serbia and Kosovo (as elsewhere in the post-Yugoslav space) have been intimately connected to politics, political violence and conflict in the region, and produced a transformation of wealth and resources. In this manner the conflicts in the region can be analysed from the perspective of social transformation. The latter concept emphasises that the trajectory of social and political change is not necessarily linear, towards liberal democracy and market economy, which is implied in the concepts transition (where the end stage is assumed to be liberal democracy and market economy) or social breakdown (which assumes a possible reconstruction to the norm of a harmonious state). Instead we may see fairly sustainable alternative political and economic projects, capable in their own (illiberal) way o