Big boost for social democracy
Elections on June 1st consolidated the strong pro-capitalist consensus in Eastern Europe's most "advanced" transitional society. But they also show a polarisation of the vote on class lines, and the growth of social-democratic resistance. by Adam Novak
The incumbent conservative coalition of Prime Minister Vaclav Klaus won 44 per cent of the vote, slightly more than in the last general election in 1992, but found itself two seats short of an absolute majority in the country's 200 seat parliament.
While one in three Czechs strongly approves of the conservative government, almost the same number chose to support the centre-left. The Social Democratic Party (CSSD) increased its vote from 6.5 per cent to 26.4 per cent. The gain came mainly from the evaporation of the centre ground in Czech politics. The votes for 10 parties, which polled less than five percent of the vote, were redistributed among the larger parties, mainly the CSSD and Prime Minister Klaus' own Civic Democrats (ODS), who took 29.6 per cent of the vote, the same as in
But the social democrats did not just win votes from the evaporating center-ground. Elsewhere in the region, resistance to neoliberalism is dominated by former Stalinists and nationalists. But in Prague, the westEuropean style Social Democrats have managed to capture the votes, sometimes the imagination, of most of those who are unhappy with the restoration of capitalism and the growing influence of Germany, which dominates the Czech economy more than the Soviet Union ever did, in terms of markets, investments, and role models for the country's ambitious youth.
The unreformed Communist Party won 10.3 percent of votes. Five years after loosing power, the Party has neither shed its nostalgia for the past, nor reached out to those younger workers alienated by the restoration of capitalism. Their audience is overwhelmingly senior citizens, and declining steadily. In 1992 the party scored 14.1
Only the social democrats have managed to combine demands for more social justice with proposals to deepen the democratic transformation of society, and increase personal liberties. These reforms may be very moderate, but they have exposed the authoritarian way in which capitalism is being restored, and widened the space in which rational, progressive alternatives can
The far-right Republican Party scored 8 percent, compared to only 6 per cent in 1992. But electoral mechanics mean that there are now 18 neo-fascist Deputies, compared to only five in the previous parliament. The immediate victims will be the country's half million black population, Romani ("Gypsies") of distant Indian origin. Republicans advocate forced assimilation or
" They can either behave as we do, or they can go. We don't care where, how, and who pays for it," says fascist leader Miroslav Sladek. One Republican pre-election TV commercial ad condemns Premier Vaclav Klaus for courting the Romani vote by "sending his wife to a Gypsy ball," and that Sladek would not even send his dog" to such an event.
The outgoing government based its election campaign on the economic "miracle" of the last four years. Their combination of neoliberal rhetoric and gradualist transformation of the state sector has taken the Czech Republic further towards capitalism than any of its neighbours, but with less social up-
This process was based on a unique combination of three policies: a key economic management role for the state, a particularly slow and gradual transformation of ownership of the means of production, and the high priority attached to social stability.
Like in Japan and South Korea in the 1950s, the Czech state made key strategic decisions, substituting itself for the fledgling capitalist class. When analysts suggested that the country's auto industry was too small to survive in global markets, it was the cabinet which chose to sell Skoda auto to Volkswagen, rather than Renault. But when studies showed that high quality breweries in neighbouring German could be profitable outside the multi-nationals, strict quality control legislation and a "Czech investor first" policy were enforced without hesitation, despite Anheuser-Busch's astronomical offer for the original Budwiess brewery (which has exclusive rights to the name "Budweiser" in
Legal ownership of 70 percent of state property was distributed fairly evenly among the country's 6.5 million adult citizens through the "coupon privatisation." This atomisation of ownership left effective control in the hands of about 20 bank-owned investment funds. And because shares in the banks were also split between millions of coupon-holders, the lines of control of the
Czech Republic * whole economy pass through a restricted elite of top civil servants, bankers, and the managers of the country's largest enterprises.
Corruption was evident at all levels of the process, but, as one Social Democrat deputy says in private, "as long as there was enough corn in the bucket, no-one stopped guzzling long enough to complain". In a symbolic "clean hands" operation, Jaroslav Lizner, former head of the Center for Coupon Privatization, was recently sentenced to six years imprisonment. He had been arrested on 31 October 1994 as he left a meeting with businessmen interested in buying shares in a dairy firm. He was carrying his "commission" of 8 million koruny ($300,000) in a
But corruption is not the defining feature of the economy. More importantly, and quite unlike the savage "new capitalists" of some other parts of the post communist world, Prague's central European bankers have aimed to reform management practices, labour relations, and investment patterns over a period of years. So, whereas Russian capitalism has produced hyper-inflation, massive criminality, and astronomical profits. the Czech economy has displayed modest, stable growth, with foreign investment geared towards long term production rather than short term profits.
This careful transformation has enabled enterprise managers to eliminate the massive wastage which characterised the Stalinist system. In countries where neo-liberal policies were applied to the letter, this potential was frittered away or destroyed The clearest example is Russia itself, where the economy is actually considerably less industrialised than in the "bad old davs'
Careful use of these windfall profits, and the proceeds from Prague's tourist boom allowed the government to maintain the purchasing power of wages and pensions, while allowing prices to rise towards West Euro-
Unlike the other countries of the region, a large section of the working class has felt some improvement in its living conditions. Jobs are less secure, and management is more authoritarian, but real wages are 30 per cent higher than in 1989, and unemployment is only three per cent.
The result of these reforms has been to win the middle class, and many skilled workers, to a pro-capitalist consensus, linked to intense nationalist pride in the country's relative stability compared to the other countries of Eastern Europe. Opinion polls consistently place Czech National Bank Governor Josef Tosovsky as the country's most popular personality, pushing Trade and Industry Minister Vladimir Dlouhy into second place. Vaclav Havel, the "chain-
September 1996 #280 9
Czech Republic smoking ex-playwright president of Bohemia" as the Western media loves to present him, comes a poor third.
Frustration with rising prices and job insecurity is captured by the Social Democrats, who propose change within the system. Their election campaign promised more social justice, higher spending on education and health, and devolution of power to regional and local government. Their programme reflected the concerns of health workers, teachers and transport workers, all of whom have engaged in industrial action to block or modify pro-capitalist reforms.
The media, overwhelmingly supportive of the conservative incumbent, ridiculed these priorities as "outdated," and "impractical." Though there was rather less scepticism about Vaclav Klaus' campaign• promises, including a pathetic populist promise to double the income of workers and pensioners within the lifetime of the new government.
According to the influential British business magazine The Economist, the result is a unique picture of stability. new government has inherited a country without debt, a balanced budget, and an economy that is growing at a healthy 5 percent a year." Once the conservatives and social democrats reach consensus, might easily wander down [neighbouring] Austria's road — into a cosy arrangement between a faintly rightwing party and a faintly left-wing party to share power and patronage" (June 8th). Trouble ahead
This complacent picture is unjustified. Because the very success of the Czech Republic's capitalist reforms creates the same kind of tension as exist in other countries with the same intermediate role in the world economy. After only a tew years of profitable sub-contracting work for German and Italian firms, the Czech Republic's low-wage advantage is slowly eroding, and even Czech companies are starting to source the labour-intensive part of their production further to the east and
At the macro-economic level, the constant increase in production costs is leading to a decline in exports. At the same time, demand for imports, partly for machinery and computers but also for luxury consumer goods, is increasing rapidly. For the first 11 months of 1995, the cumulative trade deficit was 86.7 billion koruny ($3.26 billion), more than seven times higher than for the same period in 1994. In November, imports were 29.6% higher than in November 1994, while exports were only 10.7% higher.
Sooner or later, the new capitalists will be unable to play with comparative advantage and marginal efficiency gains. They will be obliged to confront labour, and impose their will over the working class in a direct conflict. The only thing that will then differentiate the Czech Republic from the other post-Stalinist countries is the response of its workers movement. For the moment, that is an unknown quantity. * 10 International Viewpoint
European Union Marches against unemployment
Marches from several parts of the European Union will converge on Amsterdam during the June 1997 Inter-Governmental Converence. Radical trade unionists from accross the continent will meet in Paris on 21 September to finalise details of the campaign. Ideas under discussion include public hearings on unemployment, lowsecurity contracts and marginalisation in Brussels in January 1997, and a "black book" on the link between unemployment and the EU's neo-liberal policies, coordinated by Michel Husson of the French group AC! * Following the initial network meeting in Florence, the French delegation is acting as the secretariat of the campaign. For more information contact Christophe Aguiton, SUD <aguiton@sud.unions.eu.org> March vs. unemployment The Florence Declaration
There are 20 million registered unemployed in the European Union today, and 50 million people are living below the poverty line.
We could all, one day, be affected by unemployment and poverty. The breakdown of the welfare state, increasing unemployment and the onslaught of poverty are attacking people's dignity, as witnessed by lower standards of working conditions, dropping incomes and welfare possible level, and inciting racism by encouraging
At the same time, the people are not in control of capital, land or the means of production.
This situation is totally unacceptable.
The European Union has started discussions on the future of the Union, through the "Intergovernmental Conference"
We refuse to let these dis cussions be limited to institutional questions, allowing measures which claim to favour employment actually contribute to job insecurity. Everything suggests that the real social problems which preoccupy people will not be tackled at all.
We believe that, on the contrary, the only way forward is a targeted attack on the causes of unemployment with a radical, political solution.
Above all, our immediate objective is for all the unemployed, those on low incomes and the disadvantaged to be allowed a dignified life-style, and for small-holders to live off their land. This include, for both nationals and immigrants, the right to housing, education, health, freedom of movement, sexual equality and a decent living wage...
This programme reiterates: • A Europe of full employment where anyone with the will to work can do so, in return for a decent living wage. • The creation of new jobs, in professions including health, education, and environment, which respond to needs of society. • A different distribution of wealth, ensuring taxation of
A massive drop in unemployment can be brought about during a period of increased productivity, by a working hours, without a drop in wages, and an immediate increase in recruitment.
To ensure that this programme is acted on by politicians, all those who sense the menace of exclusion and insecurity - workers, the unemployed, small-holders, the young, the retired - must act as a single group throughout
We are calling for European Marches against Unemployment, Job Insecurity and
To continue the campaign for the Spring of 97, the signatories call for:
• the creation of national committees to organise the marches, grouping together unions, the voluntary sector and individuals committed to action at a European level.
• participation of all interested groups and individuals at the Seminar called to launch the campaign in
Brussels, during January 1997. *