Capitalist euphoria proved short-lived in Europe. Five years ago we witnessed the collapse of the post-Stalinist empire, which folded with unexpected ease. By 1991 it was the turn of the Soviet Union itself What had started seventy-four years earlier as a leap into the future ended with the parody of a putsch. Triumphant capitalism was spreading across the Continent, eagerly awaited by the Eastern Europeans, But the infatuation did not last, The reality did not correspond to the picture projected by American television serials, and when the people were given an opportunity, they expressed their disappointment. Last year the Poles and then the Russians voted massively against the practitioners of the shock therapy prescribed by the I.M.F. and the international financial establishment. This year it was the turn of the Hungarians to elect the former Communists,
In Western Europe, too, the mood has altered. Though the economy is finally emerging from the long depression, the prospects are gloomy. Mass unemployment has come to stay. In a deregulated world, where capital can flow freely in search of cheap labor, the European establishment preaches that the welfare state is a luxury that is no longer affordable, To talk about "capitalism with a human face" has ceased to be fashionable.
But if capitalism is no longer celebrating its triumph, it is still victorious. It would be a serious mistake to read the electoral and other symptoms of deep discontent in both halves of Europe as signs of a socialist revival. There are none on the horizon. We are in living a strange period of transition when an old system has outlived its time, but there is nobody to push it off the stage or even to indicate how the pressure should be applied. The success of the system, and its main safeguard for the time being, has been its ability to convince most people that there is no way out and that it is not even worth it to look for one.
Discontent may reach the breaking point, however, whatever the pundits may say about the nonexistence of a solution. And if progressive outlets are unavailable, reactionary ones will be tried. Increasingly we are getting alarm signals, both reminders of the past and pointers to the future: The rise in popularity of the neo-Fascist Gianfranco Fini in Italy, the 23 percent of the vote captured in Austria's parliamentary election by Jorg Haider's xenophobic Freedom Party and the 28 percent conquered in Antwerp. Belgium, by the even more obnoxious Flemish Bloc are some of the recent examples. Yet in the German elections the extreme right did poorly. To find any immediate threat of people running amok as they did before World War I1 we have to look to Eastern Europe, where the recent upheaval has torn the social fabric and driven large sections of the population to despair.
Five years ago, as Eastern Europeans voted with their feet and their Trabant cars for capitalism, it was hard to imagine that they would be putting ex-Communists back into office so soon. Granted that the latter have been converted and rebaptized as Social Democrats; and, even more important, the vote in their favor was not a vote for the ancien régime but a protest against the hardships and inequalities of the new one. Nevertheless, we must try to understand how such high expectations crashed so spectacularly. To do so, we must examine the nature of the Eastern European transition.
Back in 1989, as regimes tumbled with the wall, an entire system was collapsing. The opening of frontiers and the switch toward convertibility of currencies meant that the weaker system would inevitably be swallowed by the one with higher productivity. This was to be coupled with a development without historical precedent-the rapid creation of a new class of property owners, within a few years rather than over decades or centuries of accumulation as in the Western world. It is the combination of these two trends that accounts for the bitterness and complexity of Eastern European politics.
Capital tends to leap frontiers and destroy industrial value, turning the invaded territory into a virgin land. From the point of view of Western capital, the best solution was the one carried out in eastern Germany once the country was unified. There everything was restarted as if from scratch. Old industries could be uprooted and employees dispensed with at will. The whole process was rendered bearable--though barely so--by various forms of unemployment benefits. West German big business was thus subsidized by the nation as a whole (and to some extent by the European Union, since Germany's deflationary policy, which extended the recession in Western Europe, was dictated by Bonn's need to transfer huge sums to the east).
Such methods were unthinkable for the former Soviet Union and its satellites. Not even a new Marshall Plan could have provided the necessary subsidies. Each country, therefore, had to proceed in its own fashion. Poland, for instance, a pioneer in the transition to capitalism, achieved its first phase by dint of the betrayal by Solidarity of its origins and its working-class constituency. Here was the only genuinely independent labor movement in the whole area. When its leaders proclaimed that shock therapy was the only possible medicine, the nation, however reluctantly, swallowed it for a time. The price was the discrediting of Solidarity.
But the road to capitalism is hardest, understandably, in the former Soviet Union, and not only because, after three-quarters of a century of a different form of management and exploitation, the very idea of capitalism is rather alien. As a result, production has been more disrupted there by the upheaval than in the rest of Eastern Europe. The sudden introduction of frontiers into an economy that had been tightly integrated and that in its division of labor had ignored the borders of its republics had catastrophic results. To make matters worse, in Russia and Ukraine the military industrial complex was huge, and it is now being dismantled rather than converted in an orderly fashion. To explain the continuing slump, Oleg Soskovets, the First Deputy Prime Minister, argued in September that in the past two and a half years Russian expenditure on arms had gone down by 70 percent and output by 60 percent. He added that all investment during that period was cut by 65 percent. Reading the success stories of Russian capitalism in magazines like The Economist, one has the impression that some in the Western establishment see Russia's future in neocolonial terms: as a mass importer of manufactured goods and a supplier of raw materials, with huge oil and gas companies, preferably with Western participation.
The reshaping of the economy has been coupled through- out with a transfer of property to private owners. It proved less difficult to destroy the old mechanisms of management and extraction of surplus value, an economic system that was in any case falling apart, than to introduce a new capitalist one. It also proved easier to privatize shops and other services than the big industrial enterprises. Throughout the entire area the process is still unfinished. The battle for property and, therefore, for power and privilege is still raging between the managerial and the financial lobby, between domestic swindlers and those with foreign connections, between mere profiteers and mafia criminals. The class interests are not yet fully crystallized, nor is their political expression. The parties thus can have no clear platform.
Take as an example the ex-Communist parties that did well in Poland and Hungary. They have the backing of many members of the nomenklatura of the old regime, who were in a convenient position to climb on the capitalist bandwagon and are now very happy with the transformation. But these parties need the votes of the workers, state employees and pensioners, who do not see the future so rosily. The confusion is compounded by the enduring curse of Stalinism: the terrible muddle in people's heads. Socialism is still identified in most people's minds with the cruel caricature of it they have experienced in their countries.
Yet, however bewildered they may be, people do gradually discover their interests, The events of 1989 were hailed everywhere with the slogan: At last, power to the people.'The people were soon to find out that in the new lingo this meant, "power to the purchasers according to the size of their purse." The majority began to perceive that its purse was shrinking dramatically, while that of an arrogant minority was growing disproportionately; and that the capitalist paradise also involved mass unemployment, a feeling of insecurity and rising inequalities in health, housing and education. And the majority did not like it. The swing to the left in several countries tore apart the masochistic interpretation of Eastern European history that is peddled by conservative pundits. The voters did not love the harsh medicine prescribed by the I.M.F. They voted for the xenophobic Vladimir Zhirinovsky but also for the Communists and their Agrarian Party allies in Russia; for the Peasants Party and converted Communists in Poland; for Communists in Hungary. But everywhere they voted overwhelmingly against the politicians in charge, those who had been pushing capitalism down their throats.
The electoral verdict dictated a change of tactics, if not of strategy. The new coalitions in Hungary and Poland,and the new government of Viktor Chernomyrdin in Russia, which got rid of its monetarist zealots, Yegor Gaidar and Boris Fyodorov, were supposed to be less doctrinaire, more pragmatic, more aware of the social implications of economic policy. They have tried for a time, but are running into trouble. They must meet the full blast of foreign competition and deal with international agencies, which insist on financial orthodoxy and private property. Even after the I.M.F. became slightly more flexible, Chernomyrdin had to report on his monthly inflation rate and Waldemar Pawlak, the new Polish Prime Minister, had to justify his failure to proceed more rapidly with privatization. The recent ruble crisis provided an opportunity for Fyodorov and his Western backers to bully the Russian government into tightening its financial policy so as to drive innumerable firms to bankruptcy and thus add mass unemployment to the list of the country's woes.
The danger is that if the allegedly pragmatic governments stick to the line of their predecessors and the voters in Poland or Hungary discover that the monetarist policies they threw out through the door are coming back through the windows, they will turn next time not to the left but to the extreme right. They will find their local Zhirinovskys proclaiming with irrational conviction that the blame for all their distress should be put on the Other, the alien, the Westernizer, the Jew or the cyclist (as in the old joke: Why the cyclist? Why the Jew?). In Russia itself, where he seems somewhat discredited, Zhirinovsky will have plenty of rivals. And if the social stalemate looks very difficult to break, it may provide an opportunity for a savior in uniform, a would-be Bonaparte. The question of whether capitalism can be consolidated in Eastern Europe by democratic means is more topical than ever,
What are the elements for optimism in this gloomy picture? The best that can be hoped for is that the pragmatic governments of Eastern Europe will have the courage to stick to a somewhat milder policy and the Western establishment will give them enough room for maneuver so as to gain time in which the people can add political consciousness to the growing awareness of their real interests. What we have been watching in the past five years throughout the East is a battle for power and property between privileged elites, with the working people occasionally striking to defend their own immediate position and at other moments being used as electoral fodder. Yet sooner or later they should enter the stage as the main actors, with their fundamental interests reflected in their own vision of society. If, or rather when, they do so, they will probably seek what they should have been looking for from the start: their own forms of management and democracy, a third way, their own, as strikingly distant from the Stalinist heritage as from capitalism with its inevitably inhuman face.
(In my next letter I shall look at the same period in Western Europe--a period dominated by the rise of Germany and the attack on the welfare state.)