Guest comment The fall of Eastern Europe
In the mid-1970s, the "socialist" countries seemed to be catching up with the West in economic terms. In the 1990s, Eastern Europe has been a crisis region. Some national economies are emerging from depression but most are financial basket case. The region is lying, bleeding, on the deserted economic battle fields of the cold war. László Andor
The mid1970s were a turning point in the economic history of Eastern Europe. By rapid industrialization the Soviet Union and east European countries had managed to close the development gap between the advanced capitalist countries and themselves. Their economic mechanism, however, was only tuned to deliver quantity. High quality products were largely limited to the Soviet military and space industries.
Following the oil price shocks of the 1970s, the "socialist" countires found it hard to cope with their deteriorating terms of trade and continue their remarkable industrial build-up without cutting the living standards of the working people.
They started to borrow heavily on the international financial markets-like Latin-America, and with very similar consequences.
In addition to the general difficulties of peripheral countries, they also had to face economic sanctions of the Western powers under the Carter and Reagan presidencies.
Domestic ills and the accelerated arms race exhausted the Soviet economy, which also became unable to support the other "socialist countries. Some, particularly the indebted ones like Poland, Hungary, Romania, Yugoslavia and the GDR, began to intensify economic relations with the West. The IMF gained leverage over the economic policies of some. This was a source of repeated austerity measures, and also helped to adjust the ideologies of the so-called communist parties to neo-liberalism. The centralized political systems, and the intense Western pressure, ruled out any alternative, more democratic economic reform experiments.
The decline in economic performance and the agreement of the Soviet Union with the USA to abolish the so-called "external empire" in East Central Europe resulted in a political crisis at the end of the 1980s.
The collapse of state socialism in 1989 was partly a consequence of the decade long stagnation, but it
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Netherlands. e-mail <iire@antenna.nl> years earlier, while Slovenia, Slovakia and Hungary came close to their 1989 production levels.)
Part of this decline was unavoidable. But subjective factors have played a great role as well. For example, the governments of Romania and Hungary were comp letely helpless in fighting the consequences of the disintegration of the Eastern trading block, the Council for Mutual Economic Assistance. Of course, the dismantling of the CMEA was itself a policy of neoliberal experts within (and outside) the former "socialist" countires.
Also, nobody forced upon the Hungarian government the suicidal agricultural policy that disrupted the collective farm system and thus eliminated a third of the agricultural production of the country just when the country's traditional trading partners collapsed.
After 1989, privatization was supposed to be the magic policy to help revive the ailing post-socialist economies. Most of the advantages of the new private sector, however, derived from lay-offs and tax breaks for new entrepreneurs and multinational investors. Few people have realised the devastating social and environmental consequences of this period
The failure of the market reforms and the capitalist restoration in Eastern Europe should provide a basis for a change of paradigm in economic theory. In i reality, however, there are just very few signs of such a change. The state of economic thought lags behind the evolution of the real world economies by about twenty years. * The author is an associate professor at Budapest University of Economic Sciences. This article first appeared in the US magazine Dollars and Sense International Viewpoint #314 September 1999 27
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Booknotes
National questions Michael Löwy, Fatherland or Mother Earth? Essays on the National Question, (Pluto Press/International Institute for Research and Education), 1998, 108 pp. $17.95, paper Reviewed by Joe Auciello
In the world today national conflicts are hardly confined to the Balkans. Russia, Canada, the Spanish state, the United Kingdom, India, and the African continent are all experiencing some degree of nationalist and separatist pressures.
In Western Europe right-wing parties thrive by nationalist appeals against foreigners, immigrants, or poorer regions of their own nation. Despite recent setbacks, the Kurdish fight for a homeland continues, as does the struggle in Palestine. National antagonisms and even wars loom in the world's future.
To make sense of these tumultuous events, as national conflict increasingly dominates the world stage, and to develop a liberating internationalist political strategy, a theoretical guide is needed. Michael Löwy's book, Fatherland or Mother Earth?, is a timely and necessary work.