A Quarter-Century of “Really Existing” Capitalism

Déja Vu

There is an anecdote saying that in 2004 in the United States a man woke up after more than a decade in a coma. He recovered fairly quickly and generally had no problems with understanding what had happened to him. But one thing caused his bafflement and disbelief: that after so many years Bush was still president and that the Gulf War was still going on.

I have similar feelings when I hear reports on sovereign debt crisis in the south of Europe. For was it not debt which brought the Soviet Bloc to its knees, ending the failed experiment with introducing “communism”? The debt of this block and the accompanying economic collapse achieved more than the Pope, Wałęsa and Reagan put together. After all, there were many revolts against the ruling regimes in the post-war history of Central and Eastern Europe (Poznań, Prague, Budapest, Gdańsk, etc.). None of them resulted in political change. When debt tightened the noose around the neck of the “communist” regime, the system proved easier to dismantle than it had seemed even to the oppositionists themselves.

From my childhood in the 1980s I remember the subject of government debt recurring in the media and in private conversations (I was growing up in a politically aware and dissident family, and I was initiated early: as a 10-year-old I knew the slang terms for samizdat, communists, security police and so on). It was a different debt, taken in the late 1970s in foreign banks, not counted in percentage of the GDP but in billions of dollars, nevertheless its economic weight was similar. The system was going bankrupt, just as Greece and a few other South European countries are standing on the verge of bankruptcy today. Remarkably, there was a similar neoliberal discourse of reforms, which, like today, was to serve as a remedy for the crisis. It follows the three main recommendations of the so-called Washington Consensus: liberalization, privatization and cuts in public expenditure. Just as they did in Poland in the late 1980s and early 1990s, experts from international financial institutions recommend reforms, which result in the growth of inequalities, poverty and social exclusion.

A Fluent Passage

The analogy between the current debt crisis and the one which a quarter century ago led to the political, economic and social reconfiguration of Central and Eastern Europe has a more than just anecdotal meaning. The downfall of the so-called communism can be looked at from many perspectives. You may talk about it as a clash between democratic movements and an oppressive and authoritarian regime, you may point at the failure of the planned economy model and victory of liberal capitalism or you may treat the whole process as a triumph of national liberation efforts (after all the Soviet Bloc was also an embodiment of Russia’s imperial ambitions). The point of view I would like to propose in my text is slightly different and focuses above all on external issues. Although I will be also interested in internal transformations in the region, their contribution to the global triumph of neoliberalism will prove more important.

The year 1989 functions in the collective memory as a powerful symbolic watershed. It is constituted above all by two events: Polish elections in June 1989, not fully controlled by the Party, and the collapse of the Berlin Wall in the autumn of the same year. Concentrating on these spectacular events, we are ignoring changes of lesser symbolic import, which had taken place in the second half of the 1980s. If we include them in the transitional narrative, it will turn out that the passage from “communism” to capitalism was much more fluent that it is commonly believed and that it had begun before 1989. I will demonstrate that on the example of Poland but in this period similar processes appeared also in other countries of the region.

In the twilight years of the People’s Republic, roughly from 1986, a slow but consistent change in economic policy occurred. Many reforms, which were fundamental for later transformations, had been launched then, introduced by the last “communist” governments of Messner and Rakowski. I mean here such decisions as a liberalization of currency trade, making the life of businessmen easier, tax reforms and so on. In 1986, Poland re-entered the International Monetary Fund.

These changes reflected the evolving outlook of the Party leaders. Although official propaganda remained almost the same and still proclaimed the necessity of “building socialism” (of course without the “deviations” and “with a human face”), the habitus of Party elites was evolving towards more liberal and pro-market positions.

At the same time, very importantly for the neoliberal transition of the early 1990s, the attitude of the dissident elites also changed in the 1980s. Before the introduction of Martial Law the most authoritative voices of the dissident intellectuals were supporting social and political changes but in the name of leftist ideals. The best example of that was the open letter to the Party written by Kuroń and Modzelewski in 1964. Social movements shared this left-wing character. “Solidarity,” today wrongly interpreted as an anti-socialist and pro-liberal movement, is the best illustration of that. In its most elaborate policy statement developed in the autumn of 1981 we will not find demands for privatization or introducing a free market. And this was not because “Solidarity” was afraid of radicalism. Both the demands and actual actions of this movement were bold and radical. “Solidarity” really was not a pro-capitalist and pro-market movement. It was a socialist movement in the purest sense of the word: created by workers and fighting for social justice. In the policy statement I spoke about the word “social” appears more than 160 times on about 60 pages and the demand for social ownership of the means of production is directly articulated. In this sense “Solidarity” may be called the greatest success of Polish “communism.”

But this attitude changed fundamentally in the second half of the 1980s. Martial Law played a significant role in this process. One could jokingly say that Polish Communist Party did a great favor to the capitalist world, successfully destroying a movement, which might have introduced a self-governing or even anarcho- syndicalist version of socialism. After the Martial Law “Solidarity” was a quite different movement, much less grass roots, with a stronger and more centralized leadership and a different ideological message. A powerful position in this new movement was acquired by liberal circles, previously having a weak impact on the mainstream of the opposition. They included liberals from the Krakow Industrial Society (with such members as Mirosław Dzielski, in that period an influential philosopher, admirer of Hayek and ultra-liberal capitalism, and Tadeusz Syryjczyk, industry minister in the crucial period of the transition, that is late 1989 and early 1990) and from Gdańsk, centered around the journal Przegląd Polityczny (Donald Tusk and Jan Krzysztof Bielecki came from this group).

So the late 1980s brought a political and ideological configuration which was favorable for a neoliberal transition. Advocates of socialism not only were sidelined within the opposition but they also went missing among the party elite, which started taking over state property towards the end of the decade and in the 1990s they became businessmen (this process was thoroughly investigated by Jadwiga Staniszkis). The biography of Leszek Balcerowicz looks interesting against this background. He joined the Party in 1969 (that is a year after the anti-Semitic purge in the Party, which forced such people as Zygmunt Bauman or Leszek Kołakowski to leave Poland). At the turn of the 1980s, Balcerowicz worked in the Institute for Problems of Marxism-Leninism and headed the board of economists advising the prime minister. In the 1980s, he travelled to the West, to such places as Sussex, Marburg or New York. It was there that he came in touch with neoliberalism, then the vanguard of the theory of turbo-capitalism. When in 1989 two American economists—David Lipton and Jeffrey Sachs— came to Poland with an IMF mission, Balcerowicz turned out to be an ideal candidate for selling their plan of a radical free-market economic transition to the Polish public. Labeling this plan with Balcerowicz’s name is a marketing success of the Polish economist but is does not reflect the true situation and does not give justice to the actual authors of the reforms program. In its general concept, it is difficult to discern anything original or attributable to Leszek Balcerowicz. Its solutions are in line with the Washington Consensus and are based mostly on the experiences of market reforms in Latin America (for example in Chile, Bolivia and Argentine).

Towards a Neoliberal Universalism

The reforms of the 1990s, introduced after the downfall of the Soviet Bloc, mark an important moment in the history of neoliberalism as a practice and as a set of ideas. They mean for neoliberalism what the revolution in Haiti meant for the French Revolution two centuries before—a repeat opening neoliberal orthodoxy to universalization. For the first time neoliberal reforms were implemented in European countries, peripheral but for more than a millennium living in a more or less the same social and cultural tradition as France, Germany or England. What is more, capitalism thus triumphed over its iconic rival— the Soviet Bloc. It was a spectacular success, for societies of the former Soviet Bloc were subjected to a shock therapy much more drastic than anything that Thatcher or Reagan had attempted to do in the West. This of course did not escape the attention of today’s Hegelians. Fukuyama’s End of History from early 1990s is an answer to these events. Roughly in the same period the French philosopher Alain Badiou published a short book called Of an Obscure Disaster: on the End of State- Truth, where he comments on the collapse of the Soviet Bloc in a much less enthusiastic way:

(…) the fact that the Stalinist mode of politics was saturated and moribund—these are all excellent things […]. But instead of opening the path to an eventuality from which the deployment of another mode of politics would proceed, another singular figure of emancipation […], this collapse occurs under the aegis of the “democracy” of imperial owners. That the supreme political adviser of the situation is Bush; that the desire flaunted is that of inequality and ownership, that the measure of all things is the IMF, that “thought” is only the vain reassessment of the most basic and most convenient opinions. If this were really to be the course of things, what melancholy.

Today, in 2014, we can look at this “dark and melancholy disaster” in the context of the crisis in the south of Europe. Twenty-five years have passed but the recipe of the IMF for Greece is the same as the recommendations for Poland then: privatization, liberalization and cuts in public expenditure. After three years of such therapy the public debt to GDP ratio rose by more than a quarter, wages fell by almost 30%, unemployment is twice as big and privatized companies are bought out by foreign capitalists. The situation is very similar to what was happening in Poland in the early 1990s. Welcome to the club!

But this is not the most alarming thing. The Greek case means pushing the neoliberal foot further inside the door which neoliberalism opened in Central and Eastern Europe in the early 1990s: for the first time neoliberal advisors can so extensively format the economy and society of a country belonging to the group of the most developed countries in the world (Greece is a member of the OECD, the European Union and the eurozone). It is difficult to rejoice, knowing that the crisis we are mired in since 2008 to a large degree results from previous “successes”of neoliberal globalization.

The whole process shows an interesting new pattern, which is worth noting in conclusion. For the most part of the second half of the 20th century discussions on social and economic development were dominated by various versions of the modernization theory, proclaiming that developed countries demonstrate to the developing ones what their future will be. This principle was behind the reasoning of Francis Fukuyama in his book I mentioned above, published 25 years ago.

The recent history of neoliberalism and the trajectory of its universalization (from exotic Latin American peripheries through the less distant Central European peripheries to the peripheral areas of the European core in Greece) shows that the pattern is exactly opposite: we are living in an era of de-modernization and it is the crisis-stricken countries, which tried to develop but failed in that endeavor, that demonstrate to the developed ones what their future will be. The French, the Germans, the English and Americans wandering about the future course of their countries should study the recent history of Central and Eastern Europe and look at the current state of the region, where, paradoxically, quite good macroeconomic indices (low inflation, GDP growth, stable capital markets, good foreign trade balance, and so on) are coupled with a disastrous social situation (high inequalities, a bankrupt pensions system, demographic calamity, mass emigration, deficient public infrastructure, low quality of and limited access to the health service, low level of professional activity, unstable working conditions and so on).

It would be difficult to imagine a more ironic turn of events: a region for centuries lagging behind global history, always catching up and imitating, a region haunted with unfulfilled ambitions, a sense of backwardness, unoriginality and peripheral character, all of a sudden becomes a vanguard of social and economic changes. I do not think it is that kind of success that the neoliberals had in mind but well, as the familiar saying warns, be careful what you wish for, it might just come true.