Fight Racism! Fight Imperialism 228 August/September 2012
Looking on at media coverage of the 20th anniversary of the fall of the Berlin Wall, the journalist Victor Grossman, a former resident of the GDR, commented that he found it ‘impossible to banish certain heretic recollections and doubts. For moments of mass euphoria, wonderful as they are for those involved, do not always explain history.’ As the capitalist crisis continues to devastate the countries of the former Soviet Union and socialist bloc, heresies continue to force themselves into the open. Did the people live better under socialism?
Joseph Eskovitchl reports.
After the brutal shock of capitalist restoration and a decade of crisis in ‘transition’, the financial crisis unleashed in 2008 once again demonstrated to devastating effect the extent to which the countries of the former USSR and socialist bloc have been subordinated to the interests of imperialism. No other region of the world underwent such a severe downturn. While the average rate of contraction in Western Europe was around 4.1%, it was double this across Central and Eastern Europe, and in the former Soviet Republics between 10 and 20%.
A recent report by the European Bank of Reconstruction and Development (one of the key players in forcing rapid privatisation in these countries), found that the social fallout of the crisis was even greater than the economic statistics suggested. 70% of households said they had to cut back spending on basic foods and healthcare as a result of the crisis across the region. The true cost of integration into the unregulated markets of international capital revealed.
Exports slowdown
For the industrial exporters of the region, such as Slovakia, Slovenia and the Czech Republic, dependence on industries built with foreign capital and tailored towards production for Western markets, Germany especially, left them extremely vulnerable to a slowdown in the core countries. All three suffered severe recessions in 2008/09. The export strategies of these economies, following the destruction of socialism, was based on the availability of cheap labour and low levels of technological development, with specialisation in industries such as car production in line with the needs of German capital.
Right-wing government coalitions in both the Czech Republic and Slovakia instituted austerity measures aimed at reducing the wages and living standards of workers and the reduction of employment protection and trade union rights. In the Czech Republic, over 100,000 people joined demonstrations against the measures in April 2012, the largest since 1989. At the start of 2011, up to 4,000 hospital doctors resigned en masse in protest against low wages, poor working conditions and the decision of Prime Minister Necas to cut all public spending, including on health care, by 10%. The government responded by threatening a state of emergency forcing doctors back to work.
Hungary, the Baltic states and south east Europe
The crisis has been even more severe in the Baltic states, Hungary and south east Europe. 80-90% of the banking sector is under foreign ownership, demonstrating the degree to which the economies of former socialist countries are now foreign assets of the imperialist banks. These institutions, concentrated in the core European countries, extracted massive profits from the region for years, fuelling growth based on imports and external credits, with loans denominated in foreign currencies (euros and Swiss francs). When the financial crisis broke, the private capital which had poured into the region just as quickly drained out as banks sought to recapitalise. In Estonia GDP collapsed by 13% and in Latvia and Lithuania by 18-20%.
The imperialist banks, at all costs determined to avoid currency depreciation and a devaluation of their assets, demanded that the populations of these countries be sacrificed on the altar of austerity. The EU and the IMF, which bailed out Hungary, Latvia and Romania, alongside the governments of overexposed countries such as Sweden and Austria, have ordered the implementation of the harshest austerity measures in Europe, brutal neo-liberal shock treatment of the kind meted out originally during the restoration of capitalism.
In Romania, which suffered a major downturn in 2009 and again in 2011, mass protests exploded in January following the forced resignation of popular Palestinian health official Raed Arafat over his opposition to the privatisation of the health service. Thousands took to the streets in Bucharest in opposition to the endemic corruption, crushing poverty and austerity measures accompanying the $26.6bn IMF loan, the rage spilling over into the most violent demonstrations seen in two decades. Public sector pay has been slashed by one-quarter and cuts have been made in all social expenditures, including heating subsidies for the poor as well as unemployment, maternity and disability benefits. Romania remains the EU’s poorest country, with GDP per head just 47% of the EU average and set to fall further.
In Bulgaria, where Greek banks control 20% of the total banking assets, official statistics show that ‘both the annual GNP and per capita income of the country have plummeted, the social-safety net has disintegrated, and even the physical survival of many impoverished Bulgar-
ians is in peril’.1
The Baltic states
On 5 June, IMF chief Cristine Lagarde praised the Latvian government for its ‘collective determination and resilience’ in implementing austerity. Instead of ‘spreading the pain over a number of years, doing it gently, you decided to go hard and to go quickly.’ She added that Latvia’s budget adjustment amounted to 15% of GDP over three years. Public sector wages have been cut by 30%, while unemployment rose above 20%. The extreme recession saw imports drop and its currency account improve: brutalised. The country is now held up as a model for the rest of Europe despite over 12% of its total population now working abroad: between 2001 and 2011 its population fell from 2.3 million to 1.9 million.
In Lithuania, the number of people living in poverty increased by 200,000 in two years, unemployment grew from 4.1% in 2007 to 18.3% in the second quarter of 2010, with a concomitant rise in emigration from 26,600 in 2007 to 83,200 in 2010. Like Latvia, it has been drastically depopulated: from 3.7 million in 1990 to 3.0 million today. ‘This was the highest level of emigration since 1945 and comparable only with the depopulation of the country during World War II.’2
These ‘models of austerity’ represent social disaster on a huge scale.
Growing conflict
A crucial condition for the ascension of the former socialist countries to the EU from 2004 was the imposition by the imperialist countries of a brutal neoliberal model which forced candidate countries to liberalise trade, deregulate markets, reduce worker protection and impose widespread privatisation to allow free rein for western banks and multinationals. Countries were forced to reduce their public spending through the convergence criteria of the Maastricht Treaty and the European Stability and Growth Pact, and promote the independence of central banks. While the rich countries of the centre would have access to new markets and cheap labour, the emerging countries of new Europe would benefit from a new flow of foreign capital, freedom of movement and a boost for exporters. The crisis has revealed the collapse of this project, and given the lie to the myth of ‘convergence’. Conflict is set to grow.
On 15 May, the headlines of business daily newspapers screamed ‘Eastern Europe revolts against austerity.’ Eleven of Europe’s poorest nations, all former socialist bloc countries with the exception of Portugal and Malta, defended a proposal to increase the 2013 EU budget by 6.8% to €138bn. In a joint statement signed by countries including Bulgaria, Estonia, Lithuania, Latvia, Hungary, Poland, Romania and Slovakia, the group stated: ‘Current economic circumstances demand difficult policy choices. The EU efforts and scarce public resources should be focused primarily on growth and jobs.’ Against them stood the wealthier nations of Britain, France, Germany, Finland, Austria and the Netherlands, demanding that the EU should face the same austerity as national governments.
Conflict is emerging between sections of the upper middle class and domestic bourgeoisie in Eastern Europe and international finance capital. The deeply reactionary government of Victor Orban and his Fidesz party, elected in Hungary in 2010, is focused on supporting a ‘young and entrepreneurial middle class, conservative and nationalist.’ Committed to the free market, it is viciously racist and anti-working class, determined to destroy the remnants of the welfare state. Increasingly authoritarian, it has also introduced legislation curtailing the right to strike. As member of Parliament and former ‘dissident’ GM Tamas wrote recently: ‘people who don’t work – because they can’t – are considered inferior, and social assistance or state subvention is seen as an abuse by lazy immigrants, single mothers, the unemployed and unemployable, pensioners, the handicapped.’3 Imperialism is in total agreement with these policies. Yet in line with its populist ideology, the Fidesz government has introduced a special tax on banking and other highly monopolised sectors of the economy, renationalised the pension system and also sought to assert some control over the Central Bank.
While remaining silent over the brutal attacks on workers and ethnic minorities, the IMF and EU, have launched huge protests against Orban’s nationalist rhetoric and limited measures against the banks and foreign monopolies. The last instalment of an EU/IMF loan was suspended in July 2010, and in February 2012 the European Commission threatened to freeze almost €500m of the cohesion funds set aside for Hungary – essentially blackmailing the country. The Fidesz government, in the final analysis committed to a neo-liberal agenda, is facing an increasing political challenge from the openly fascist Jobbik party.
The collapse of socialism
The current crisis has finally extinguished any illusions that the populations of the former Soviet Union and socialist bloc can expect anything from integration into the capitalist world system other than dependency, crushing poverty and unemployment.
The destruction of the Soviet Union and the socialist bloc was a historic triumph for imperialism. It was a disaster not only for the peoples of the socialist countries themselves, but for the working class and oppressed the world over as huge new forces of labour and resources were once again opened up to exploitation. As virulently anti-working class regimes were established across Eastern Europe, we wrote at the time:
‘Their mission is to secure the final subordination of the ex-socialist bloc’s wealth and labour to imperialist capital, whilst consigning the majority of their peoples to unprecedented poverty… With the collapse of the socialist bloc we are witnessing the defeat of the first sustained effort to build societies free of capitalist exploitation.’4
Only the most craven ‘leftist’ could call such a process anything other than counter-revolution on a grand scale. Yet many ‘left’ intellectuals and British labour movement leaders joined with Reagan and Thatcher in celebrating the downfall of socialism. Their privileged positions made them indifferent to the effects of mass privatisation, poverty and the destruction of socialised industries and make out that these represented a working class ‘victory’. James Petras is right to conclude:
‘The “anti-Stalinist” left have never engaged in any serious reflection regarding their own role in bringing down the collective welfare state nor have they assumed any responsibility for the devastating socio-economic consequences in both the East and West…while Western intellectuals still boast of their triumphs over Stalinism, the real existing workers in the East are engaged in day-to-day militant struggles to retain and regain the positive welfare features of those maligned states.’
A chapter in a report published by the United Nation’s Economic Commission for Europe in 2004 conveys the true history of this period. It begins by stating:
‘At the end of the 1980s all the countries of eastern Europe and the former Soviet Union enjoyed relatively high levels of human development and social welfare. Extensive social investments during the period of communist rule meant that literacy was almost universal, and well above other countries with comparable levels of per capita income, and life expectancy averaged 68 years. Unemployment was unheard of and – at least officially – poverty did not exist.’5
The report describes the position at the end of a decade of transition. An estimated 158 million people in Eastern Europe and the CIS were living in poverty, of whom 50 million were living in extreme poverty. In 1989, inequality as measured by the Gini co-efficient was lower than the OECD average in every single one of the socialist countries; by 2001, it was almost without exception higher. In 1993, average real wages in Armenia fell by 94% of their 1989 level, and even by 2001 wages remained around just half of their 1989 value in Azerbaijan, Bulgaria, Lithuania, Russia and Ukraine and below 40% in all the rest of the Confederation of Independent States. Nearly half the jobs which existed in 1990 disappeared within two years of the collapse of the USSR.
For the first time, financial cost became a barrier to health care: estimates of the number of people unable to afford care who had borrowed money or sold assets to obtain it ranged from 13% of respondents in Russia to 94% in Georgia. The destruction of education meant that ‘it is likely that the high literacy rates of the past will not be sustained in future generations’. Malnourished children do not make good students.
These bare facts represent a bleak indictment of capitalism’s inability to provide for the most basic needs of humanity.
Disillusionment in the promises of the market is profound. A survey conducted in 2010 found that 60% of Romanians thought communism was ‘a good idea.’ Over 49% of respondents agreed that life was better under socialism, citing factors such as decent living conditions, the availability of jobs and housing provision. Only 23% thought life was better today. In East Germany, two decades after the fall of the Berlin Wall, more than half of respondents in a survey defended the GDR. One 38-year-old man thanked God that he had lived in the East because it was not until after German reunification that he saw for the first time in his life homeless people, beggars and impoverished people who fear for their survival. A poll of Hungarians in 2008 found that 62% thought that life was better before the collapse of socialism.
What is clear is that the historical experience of hundreds of millions of working people in attempting to construct socialism, in all its advances, successes and failures, cannot be wiped out or dismissed as one monolithic totalitarian nightmare, as many on the left seem content to do. Huge efforts have been expended in trying to eradicate enthusiasm for socialism. In Russia, an entire industry of vicious anti-communism has been built up since 1991, a ‘battle for memory combined with the promotion of commercial values’ fought by the media, historians and journalists, and ‘backed by a vast Western, chiefly US, network of institutions, universities and foundations’.6 At the same time as Bolshevism is condemned, its opponents – the perpetrators of White Terror, and even Nazi collaborators – are rehabilitated.
Yet despite all this, polls by reputable institutes confirm that 57% of Russians want the USSR back (2001); 45% consider the Soviet system better than the current system; 43% actually want a new Bolshevik revolution (2003). ‘[T]he rehabilitation of the USSR is based on mature reflection far removed from stereotypes … the authorities and media have failed in their attempt to present 70 years of Soviet rule as a nightmare.’7
Conclusion
‘What has to be realised,’ wrote the noted educationalist Professor Theodore MacDonald in FRFI (1996), ‘is that people who tried to establish their societies according to the theories of Karl Marx were not being frivolous. They attempted it in order to solve certain problems which had arisen under capitalism.’ These self-same problems face the people more starkly than ever today. In the countries of the former Soviet Union, the accumulated experience of hundreds of millions of people engaged in an attempt to build a life free of want and misery cannot be erased, but neither can it be repeated. In Cuba, Venezuela and Bolivia, these same problems are being answered with revolutionary democracy and socialism, in the interests of the working class. The triumphant epoch of imperialism which proclaimed victory over the corpse of the Soviet Union is itself now rotting fast.
1 ‘The Tragic Failure of “Post Communism” in Eastern Europe’, Dr Rossen Vassilev, Global Research, March 2011 (www.globalresearch.ca/index. php?context=va&aid=23616)
2 ‘The Baltic Tigers: False Prophets of Austerity’ Counterpunch online, December 2011 (www.counterpunch. org/2011/12/06/the-baltic-tigers% E2%80%99-false-prophets-of-austerity/)
3 GM Tamas, ‘Hungary without safety nets,’ Le Monde Diplomatique, February 2012
4 The Legacy of the Bolshevik Revolution (London: Larkin Publications, 1992), p8
5 United Nations, Chapter 7, Economic Survey of Europe, No 1, 2004, Economic Commission for Europe (Geneva) www.unece.org/fileadmin/DAM/ead/pub/041/041c7.pdf
6 Jean-Marie Chauvier, ‘Russia: nostalgic for the Soviet era,’ Le Monde Diplomatique, March 2004
