Dark Continent: Europe's Twentieth Century (60 page)

Sharks and Dolphins:
The Collapse of Communism

Patiently endured so long as it seems beyond redress, a grievance comes to appear intolerable once the possibility of removing it crosses men’s minds
.

—DE TOCQUEVILLE
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 … 
small fish will turn into dolphins so will the sharks so will the sharks because it has to be so
.

—RUDOLF RIMMEL, 1968
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“Despite [the] problems, liabilities and handicaps that the Soviet Union incurs from its continuing imposition of Communism on East Central Europe,” an authoritative textbook on the region concluded in 1988,“there is no signal that Stalin’s heirs are prepared to retreat from it, nor any flagging of their political will to dominate the area.”
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The almost universal failure to predict the collapse of communism drove a large nail into the coffin of Western political science. But it was not just the academics who were taken by surprise; so were policymakers and intellectuals. In 1984 the Hungarian writer György Konrad proposed—not entirely seriously—in response to the failed uprisings of 1956 (Hungary), 1968 (Czechoslovakia) and 1980–81 (Poland): “Now let the Russians do it.” His preposterous suggestion was shot down by Vaclav Havel: “To me personally,” wrote Havel, “that seems just lovely, though it is not entirely clear to me who or what could induce the Soviet Union to dissolve the entire phalanx of its European satellites—especially since it is clear that, with its armies
gone from their territory, it would sooner or later have to give up its political domination over them as well.”
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To recall such prognoses is not to mock their authors, who were after all entirely in sympathy with the outlook of their times, but rather to recapture some essential elements of what happened in 1989 itself. The collapse of Soviet control was fast, unexpected and peaceful, and it swept across the region as a whole. None of these features should be forgotten or taken for granted: they are clues as to the real nature of what happened.

The mistaken forecasts of continued Soviet domination should also make us wary of some of the more naive or triumphalist explanations of its demise. In what sense did the West “win” the Cold War? A victory for democracy there was, to be sure, but hardly of the kind or in the manner anticipated, since no such victory had really been foreseen. Was this a glorious triumph for “the people” and for the cause of European freedom over tyranny? But popular protest had—as Konrad observed—been tried and found wanting in the past, and came late in the day this time round. Freedom was the outcome; desire for it was not necessarily the cause. The subject of the fall of communism has scarcely begun to attract the interest of historians; this chapter serves simply to map out some ways of understanding this final act in Europe’s ideological drama.

THE WORLD ECONOMIC CRISIS AND EASTERN EUROPE

Although Stalinism as an ideology was in decline after 1956, the political
economy
of Stalinism was little altered in the following decades: a centralizing party and state apparatus promoted economic growth through the expansion of heavy industry and the tight control of trade, agriculture and consumer goods. Political discontent was periodically assuaged by adjusting the balance of investment in favour of light industry and improved living standards, but such adjustments were temporary and reversible. The economy was run according to the Plan not the market, in conditions of information scarcity and total political responsibility for economic performance. State socialism was, as one Polish economist put it, not a good idea badly implemented,
but a bad idea which was implemented surprisingly well. A development strategy which enjoyed considerable success in the early post-war era outlived any usefulness it might once have had, and ended up causing the collapse of communism as a whole.
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In the 1950s and 1960s, growth was spectacular across Europe. The real challenge came with the great crisis of the post-war world economy which began around the end of the 1960s and the early 1970s. In capitalist western Europe, surging inflation and mass unemployment bankrupted the post-war Keynesian consensus. The same economic forces buffeted eastern Europe, and post-war growth slowed down there too: from an average of 4.9 per cent p.a. in 1970–75 to 2.0 per cent in 1975–80 to 1.4 per cent in 1980–85. This drop was relatively slow at first: in the 1970s, east European growth rates (3.4 per cent) fell more slowly and were higher than in the OECD West (3.2 per cent), which may have even increased a sense that centrally planned economies were less vulnerable to the crisis than capitalist ones; but by the mid-1980s, they were lagging far behind.
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East as well as West, economic slowdown strained the welfare systems which had been created in the previous decades. Life expectancy actually fell, largely because of hazards at work—the deterioration of the capital stock was killing workers. From the 1970s, the gap with western Europe, which had been narrowing since the war, widened again. Only in terms of alcohol consumption was the East outstripping the West.
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Not only was the communist welfare model less and less attractive compared with its western counterpart; it was also failing to live up to its promises in the eyes of societies which took its egalitarian pledges seriously. Income equality was threatened by reforms to increase efficiency, and social mobility was blocked, provoking a growing anger within the working class at the privileges and perks of a relatively wealthy administrative, professional and technical elite. Welfare benefits were failing to equalize real incomes as they turned into Party privileges rather than universal social rights. Living conditions were dire: the average female Polish factory worker got up before 5 a.m., spent over an hour getting to work, fifty-three minutes a day queuing for food, nine hours working and less than six and a half hours asleep. The shortage of housing, above all, preyed on people’s minds.
“There’s no future here,” complained a Polish shipyard worker in 1972. “To receive an apartment you have to wait ten years. A man grows old, he wants to marry.” “The housing situation is worse than before, indeed it is hopeless,” wrote a senior Hungarian housing official in 1985. “Nothing has essentially changed, nothing has improved.” The communist “social contract” which western commentators discerned as the basis for regime legitimacy was, if it had ever existed, now coming apart.
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Politically, communists found it impossible to make the kinds of adjustments taking place in the West. In other words, the illness was (more or less) the same—declining productivity, the collapse of the old heavy industries which had formed the bedrock of the working class—but the symptoms were different. Inflation was marked by growing shortages, deteriorating quality and lengthening queues, not rising prices, which were controlled tightly by the authorities; black and informal private markets were another expression of the same trend. The result was empty shelves, increasing time wasted in queues and, at the extreme, food riots which threatened the rule of the Party itself when it did try pushing price increases through.

The crisis of heavy industry, too, had more serious implications in the East than in the West. The great iron- and steelworks—spearheads of post-war economic growth, following the Soviet model of the 1930s (which was itself modelled upon German growth patterns from the early part of the century)—were increasingly economically irrational but still possessed tremendous symbolic power. Stalinization as pursued in Romania, for example, led in the 1970s to the creation of monsters like the oil refineries which operated at 10 per cent of capacity, or the aluminium complex which used up as much energy as the whole of Bucharest.

The costs were visible on people’s skins and in their lungs. Pollution, by the 1980s, had become a frightening reminder of communism’s failed attempt to master nature. Eastern Europe had become an ecological disaster zone of dying rivers and barren forests, grimy cities, crumbling monuments and disease-ridden humans. It pumped out roughly double the amount of sulphur dioxide emitted by the European Community—East Germany’s alone was four times that of the Federal Republic.
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Yet this kind of outmoded industrialization—expensive,
unproductive and destructive of the natural environment—far from being disowned, received as much investment as ever. Party bosses had formed power bases around the old industries which fought off challenges from would-be modernizers, and even, as in the case of Poland’s Gierek, took them to national leadership.

The obsession with heavy industry had also brought into being a vast working class which the regime claimed to speak for: how could this be sacrificed on the altar of economic rationality? Hence communist regimes could not for political reasons adjust the economy through deflation or through mass unemployment after the fashion of their Western counterparts. They therefore chose the opposite strategy to that followed in the West, and kept consumers suffering through scarcity and shoddy goods in preference to throwing workers out of their jobs. But workers were consumers too, and did not always reciprocate the regime’s sentiments. In 1980 the rise of Solidarity showed the threat posed by workers turning against the Party which claimed power in their name.

In retrospect, the central communist dilemma of the 1980s was that economic transformation was necessary but impossible. At the time, however, it did not seem out of the question that communism might reform itself in the same sort of way that capitalism had done in the 1940s. Many in the West saw capitalism and communism as two converging ways of managing a modern industrial economy. Political scientists emphasized the striking formal similarities of the two rival systems—their enormous bureaucracies and reliance on experts, their encouragement of higher education, science and technology, their pursuit of the common goals of material prosperity. Such theorists argued that Western and Eastern economies existed at different points on a continuum with varying combinations of state intervention and market. The implication was that communist reformers could succeed in peacefully transforming east European economies into something closer to the mixed economies of the West.

This belief in the reformability of communism was shared in the East as well and underpinned a series of debates and experiments in eastern Europe and the Soviet Union, curtailed but not ended by the Soviet invasion of Czechoslovakia in 1968. In general, Brezhnev’s long reign was a period of conservative reaction to Khrushchev’s
efforts at improvising reform. But even under Brezhnev, some east European leaders initiated reform movements as a means to modernization and greater efficiency. In East Germany and Bulgaria, this took the form of administrative decentralization, which left the basic central-planning mechanisms untouched. More radical in its implications was the economic decentralization pursued in Czechoslovakia (until the invasion) and Hungary, which tried tentatively to introduce real prices and costs into the economy.

Hungary’s was the most enduring and intriguing case. Through the so-called New Economic Mechanism (NEM) which was introduced in 1968, János Kádár cautiously encouraged a process of gradual marketization. Trading with the outside world was decentralized and measures to encourage greater efficiency and productivity were introduced. Firms were encouraged to make profits rather than solely to meet production targets. In the West there was a good deal of interest in the NEM, and much talk of the reformability of communism. But there was just one problem: it was not very successful economically. Hungary ended up with the highest per capita hard-currency debt behind the Iron Curtain, and growth rates which lagged well behind those of such resolute Stalinists as the Czechs, the East Germans and the Romanians. Honecker’s own acerbic view was that capitalism and communism were “as different and incompatible as fire and water” and he insisted as late as 1986 that the GDR was “no field of experimentation.”
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His thinking could not be faulted on economic grounds, as East Germany’s record was far superior to that of the Hungarians. Hungarian reform was a soft variant of adjustment which shied away from allowing bankruptcies or unemployment. In retrospect, its main significance was not economic but political, enabling Kádár cautiously to detach Hungary from the Soviet embrace, and to tiptoe through trade policy towards more autonomy. There is an illuminating parallel with another Hungarian leader trying to manoeuvre alongside a great power—Admiral Horthy and his astute handling of Hitler in the decade after 1933.
¹¹

Borrowing capital from the West was—as it had been in the 1920s, too—another inviting means of avoiding painful decisions and cushioning
the shock of modernization. The path beaten to the City and Wall Street by Yugoslavia and Romania was followed by the rest. The transnational and volatile financial markets which emerged in the 1970s, awash with petrodollars, saw eastern Europe, with its highly stable regimes and well-trained workforce, as a neglected area for investment. Bankers with short memories (which certainly did not stretch back the requisite fifty years) convinced themselves that the Soviet “guarantee” over the Eastern bloc ruled out any chance of default. Communist elites saw Western capital as a means of buying off public opinion and delaying the harsh impact of structural change in the economy. Communists and bankers fell into each other’s arms.

As a result, hard-currency debt grew fast everywhere in East Europe. From $6.1 billion in 1971 it rose to $66.1 billion in 1980 and $95.6 billion in 1988. Perhaps the country most affected was Poland, whose borrowing rose from $1.1 billion in 1971 to $25.0 billion in 1980. In the last phase of unquestioned Party rule—during the early 1970s—first secretary Gierek borrowed heavily to engineer a consumer boom. When this began to falter, in the second half of the decade, and living standards fell again, two things emerged: first, that the use of foreign capital had been unsuccessful in modernizing the Polish economy and improving its technological base; and second, that levering up living standards temporarily and artificially had not purchased social peace.