Creeping Capitalism

Creeping Capitalism

Europe’s landscape is changing–dramatically in its Eastern half, which is groping toward capitalism, and less spectacularly in the Western part, which is on the road to a single market.


Europe’s landscape is changing–dramatically in its Eastern half, which is groping toward capitalism, and less spectacularly in the Western part, which is on the road to a single market. The following notes on recent transformations suggest that the two trends are not unconnected.

Big if Not Beautiful. The announcement on July 30 of the long-heralded takeover of International Computers, Britain’s champion in this field, by Fujitsu, the big Japanese specialist, created quite a stir in Europe. It was a reminder that in several fields European corporations cannot compete with the giants of the international marketplace. But Fujitsu’s move was taken as a challenge not to Europe’s big producers of mainframe computers–the German Siemens, the French Groupe Bull and the Italian Olivetti–but to I.B.M., the American giant.

There is no complaint about the invasion of American capital for the simple reason that for some time now money has been flowing across the Atlantic in the opposite direction. The only novelty, according to a recently published study, is that in the past few years French companies, particularly state-owned ones, were the leaders in this transAtlantic transfer of capital. While new, this development should not be surprising. In the earlier phase of the Industrial Revolution business concentration had proceeded much further in Britain and Germany. It is now the turn of Panorama and Espresso and the successful daily La Républica. As to the ownership of Mondadori itself, the battle for its control was a real-life Dallas, a saga of power, passion and money that has fascinated Italians for the past year.

In one comer you had the ingegnere (“engineer”), Carlo de Benedetti, whose European empire is built around his Olivetti base. In the other, you had sua emittenza (“his broadcasting highness”) Silvio Berlusconi, king of commercial television and owner of three Italian channels. In the middle stood the original owner, the Formenton family, which at first was intimately linked with de Benedetti. But part of the family switched to the other side and there followed an intricate legal battle which ended, if such feuds ever do, last June, with the victory of the ingegnere.

Most press lords in Italy are industrial tycoons such as the Agnelli family of Fiat. Berlusconi, like the Frenchman Robert Hersant, belongs to the new breed of media magnates who tend to expand beyond national frontiers. When one objects to both kinds of vulture that increasingly have come to dominate European culture, the standard reply is that such moguls are needed to stand up to the mighty Americans. But the problem is not keeping out Twain, Faulkner or Doctorow. The problem is to resist American trash, and it is small consolation if this commercial rubbish acquires European citizenship.

Grazhdanin Kane. In 1986 Bertelsmann A.G. had to pay a fortune to purchase Doubleday, the U.S. publishing house. On July 30 it spent a mere $2.14 million to acquire a controlling interest in Nebszabadzag, Hungary’s biggest daily and not so long ago the mouthpiece of that country’s Communist Party. Such are the ironies of history, and Bertelsmann is no pioneer. In Budapest it follows in the footsteps of Axel Springer, Robert Maxwell and Rupert Murdoch. Indeed, citizens Kane and Co., our Western gang of plunderers, are now scanning Eastern Europe. The prices are dirt cheap, yet they are looking less for immediate profit than for long-term domination. For the moment they have moved strongly only into newspapers and publishing, but, as deregulation proceeds, they will be spreading into radio and television. And they are already dreaming of the huge Soviet market.

Nobody is nostalgic for pre-glasnost Pravda, censorship, Zhdanov and “socialist realism” (which had no connection with either socialism or realism). Yet anyone who visited strongly Eastern Europe knows that there was another side to this story: that newspapers, books and other publications were cheap, that the general public could afford tickets for the theater, that opera was not for the happy few. Those advantages are being rapidly tom apart by the logic of the capitalist gospel. The freedom we are bringing to Eastern Europe in this domain is the subtle slavery of commercial culture.

To be accurate, we are exporting our system at its worst, minus the cushions provided by prosperity, minus the fat of the foundations. Unless the new regimes find a third way between neo-Stalinism and capitalism, unless they manage to combine new freedoms with some of their former advantages, these countries will find themselves in the worst of possible worlds, linking the most modem means for exploiting culture with the savagery of the capitalism of another age. They will have both Dallasty and primitive accumulation.

Privileged of All Lands Unite. The Soviet Union does not yet have a capitalist class, but it already has its spokespersons. A good illustration is provided by the lengthy dialogue, published in Literaturnaya Gazeta on July 18, between its editor, Fyodor Burlatski, an establishment figure since Khrushchev’s days, and the economist Nikolai Shmelev, whose famous adage “everything that is efficient is moral” turned him into the darling of the priviligentsia. The two compères talk at length about what is to come, giving “counsels to the presidential council,” but their real passion is provoked by the prospect of a progressive income tax.

As long as incomes were centrally determined in the Soviet Union, taxing them served little purpose, and the tax for the highest income bracket amounted to 13 percent. Now that wages and salaries are to be locally determined and highly differentiated, Mikhail Gorbachev’s advisers have proposed a more steeply progressive income tax, at least by Soviet standards. For the highest bracket, for people earning 3,000 rubles a month-more than twelve times the average salary–the tax will be in the region of 3 5 percent. This drives citizen Burlatski mad.

He begins by attacking smart alecks who point out that in the West income tax is even more progressive; they forget that “for an article a writer gets 10-20 times as much and the filmmaker or footballer–100 to 200 times.” He clearly prefers to be compared with Steven Spielberg or Joe Montana than with the average Soviet wage earner. He even asks wittily whether the purpose of the whole operation is, à la Plato, “to chase poets and musicians out of the new, market-regulated socialist paradise.” Burlatski then gets serious. Even Stalin, he argues, while killing intellectuals, paid the survivors well so as to get them to produce good tanks and planes, good literature and music. Even Khrushchev, while quarreling with the intelligentsia, kept their remuneration in line with prices. Et tu, Gorbachev? Both our men are cursing his advisers, who are leading him astray and who invent “laws for the stifling of culture.”

Such a plea against progressive taxation could be published in Fortune or Forbes. On second thought, it probably wouldn’t. Our panegyrists for the acquisitive society require greater sophistication, even if they may lack the zeal of these aspiring nouveaux riches.

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