This text is a slightly expanded conclusion of my article “Politička kriza bez ekonomske cene?”, originally published in Serbian on Peščanik. The full version (in Serbian) is available here: https://pescanik.net/politicka-kriza-bez-ekonomske-cene/.
Political crises are typically associated with economic disruptions, even when they do not escalate into full instability. From a Marxist perspective, this connection runs through the circuits of capital as described by Marx in Capital, Volume II: interruptions in any phase — production, circulation, or realisation — can halt accumulation. Contemporary empirical research (Alesina et al., 1996) confirms that coups, mass protests, and violent political transitions slow growth primarily by discouraging investment.
Within this framework, three channels stand out. First, political unrest can interrupt the circulation of capital: strikes, protests, and blockades halt production, delay the realisation of surplus value, and — in sectors dependent on exports and tourism — reduce foreign exchange earnings, limiting the conversion of surplus value into globally tradable capital. Second, uncertainty changes the behaviour of domestic capitalists: it can slow capital turnover, encourage hoarding of liquid assets, and accelerate capital flight — patterns consistent with Serbia’s peripheral political capitalism, where state resources are directed towards politically connected sectors rather than broadly based productive investment. Third, foreign capital reacts quickly: it halts “greenfield” projects, delays expansions, and more aggressively transfers profits abroad. In a model of dependent accumulation that relies heavily on foreign direct investment, such moves alter the distribution of surplus value between domestic and foreign capital.
In this framework, financial instability is not merely a technical imbalance but also a mechanism of redistribution: currency depreciation, inflation, and higher interest rates transfer value from labour to capital. In Serbia, political crises have often been transmitted through global and regional financial channels, amplifying class effects until they threatened accumulation itself.
Yet, data for January-July 2025 depict an economy that, for now, is weathering political turbulence without visible shocks. According to official statistics, real GDP grew by 2.0 percent in both the first and second quarters, implying an annual rate just below the 3 percent forecast by the World Bank and IMF — a shortfall hardly dramatic, especially given that growth usually accelerates toward the end of the year. Industrial output, retail, and employment show no signs of collapse; the dinar is stable; capital outflows have slowed.
Still, the capital accounts tell a more nuanced story. Net inflows of foreign direct investment have weakened, while portfolio outflows and domestic investors’ placements abroad have increased. In the first half of 2025, monthly data show a mix of modest net inflows and occasional outflows — including the unusual case of April, when domestic investments abroad (€416 million) exceeded incoming FDI (€240 million). Such a balance had not been recorded in either 2023 or 2024. While it is too early to call this a trend, these movements may signal the first signs of eroding confidence in the domestic economy. The decline in FDI inflows points to greater caution among foreign investors, whereas domestic capital, production, and consumption remain largely unaffected by political upheaval — further evidence of inertia and the absence of political will for change. From the perspective of capital reproduction, there is still no indication of an imminent break in the accumulation cycle.
This economic resilience has its political counterpart. Neither the fragmented parliamentary opposition nor the student protest movement has articulated a convincing vision of Serbia’s future (including an alternative economic model) that could, in Lenin’s words, “become a material force by winning over the masses.” The role of the working class in these upheavals is telling: my research on income distribution between labour and capital in Serbia over the last two decades shows remarkable structural stability. Real wages have grown, profitability has remained steady, and the long-term balance between labour and capital intact – a kind of distributional peace without redistribution. According to the Statistical Office, the average net wage in May 2025 was 107,705 dinars, while the median wage stood at 84,408 dinars. In January–May 2025, net wages increased by 10.8% nominally, or 6.2% in real terms compared to the previous year. These trends confirm earlier findings: real wage growth occurs within stable profitability, leaving the labour–capital relationship practically unchanged. In this context, trade unions have remained largely passive, refusing to mobilise or encourage mass action, reinforcing the impression of social inertia beneath the surface of protest.
The limited reach of the protests can be better understood through the concept of a “middle-class revolt.” In her analysis of the One of Five Million protests, Jelena Pešić shows that the main participants were members of the so-called civic elite, whose demands transcend economic issues and focus on democracy, rule of law, and media freedom. Kenny (2017) recognises a similar pattern in the global context, while Ishchenko (2024) speaks of “Maidan revolutions” – cyclical middle-class uprisings that succeed in changing governments but not the accumulation regime, thus repeating without resolving structural antagonisms. This weakness of the middle strata is not new. As early as 1913, J. Justin Dempsey in his essay The Revolt of the Middle Class described their “parasitic” position vis-à-vis capital, their lack of organisation, and their blind dependence on elites.
Unlike then, when middle strata in advanced capitalist societies were a tiny minority compared with the numerically dominant proletariat and poor peasantry, their share increased significantly in the 20th and 21st centuries. According to the Statistical Office of Serbia, around 43% of employees today (managers, professionals, technicians, and administrative clerks) can be classified as middle class – in line with Kenny’s global estimate that the middle class makes up about 40% of the population. Yet despite their numbers, the lack of organisation and clear political articulation means these strata rarely produce transformation of the accumulation regime.
This dynamic is evident in Serbia’s present situation: protests remain without clear class articulation, making it easier for the regime to dismiss them as elitist and unserious, while the economic order continues to function almost unhindered.
This stands in stark contrast with Serbia’s experience at the end of the 20th century. Slobodan Milošević’s fall in 2000 came after a decade of economic collapse marked by sanctions, hyperinflation, wars, and the NATO bombing of 1999. By then, GDP had dropped by more than half compared with 1990, and in 1999 alone the economy shrank by over 10%. The regime faced not only mass political mobilisation but also a broad social consensus that the existing order had exhausted its possibilities. Crucial, too, was the presence of a positive horizon of expectation – the prospect of rapid accession to the European Union, modelled on other post-socialist states. In that dynamic, the working class, unlike today, played a visible and organised role: the Kolubara miners’ strike and farmers’ blockades became protest symbols, further underscoring that the political crisis was simultaneously social and economic.
From a Marxist perspective, the current disconnect between political confrontation and economic performance highlights two points. First, political change is rarely triggered by political crises alone; it becomes likely only when the capital accumulation process is visibly and materially endangered, as was the case in the late 1990s. Second, when accumulation proceeds without major disruption – as current data indicate – the social forces for transformative change remain fractured, and ruling-class dominance can be maintained even amid considerable political upheaval.
In this sense, today’s Serbia resembles less a pre-revolutionary situation and more a phase of stabilised peripheral capitalism, where structures of dependency and segmentation of political and economic elites mute the transmission of political shocks into economic crisis. Without a deep break in the accumulation process or a broadly accepted vision of an alternative future, the political turmoil of 2024–2025 may leave the economic order – and with it the regime’s material foundations – largely intact.