First Published: In Struggle! No. 259, August 18, 1981
Transcription, Editing and Markup: Malcolm and Paul Saba
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The countries of Eastern Europe are a fairly unknown quantity for many of us. We can rhyme off quickly how they are neo-colonies of the USSR; that their governments are revisionist; and, above all, that they represent precisely the kind of socialism we do not want to build in Canada. But that’s about all anyone seems to know or to have to say about them.
We hope this article will begin to answer this question. N.B. This article does not reiterate all the historical events and dates needed for an over all view of the development of the people’s democracies. The reader is therefore strongly advised to reread the article on the Cold War, published in issue no. 246 of the paper as part of the series “Documents for the criticism of revisionism”.
The countries known as “people’s democracies” include Bulgaria, Hungary, Poland, the German Democratic Republic (GDR – more commonly known as East Germany), Rumania, Czechoslovakia and Yugoslavia. Albania should also be included, although beginning with the 1960s it parts ways, to a certain extent with the other people’s democracies. For this reason, Albania is not discussed in this article.
The people’s democracies have relatively small populations, as can be seen in Table 1.
|Table 1: Current populations of various countries (1980) (in millions)|
They are often referred to as a bloc, the Eastern European bloc. In fact, though, their economies are very different. The economic gap between some of these countries is comparable to the gap between some of the Western European countries. East Germany and Czechoslovakia, for example, are industrialized countries comparable in certain respects with a number of Western European countries, while in Bulgaria and Rumania a very substantial part of the population works in agriculture. (For other comparisons. see Table 2).
|Table 2: Gross national product per capita in 1978 (in US dollars)|
|Japan (for 1977)||6000|
Obviously, the Eastern European countries as a whole cannot at present be equated with the big industrial powers in Europe. This is especially true of the less advanced people’s democracies. But the very real gaps that exist between Eastern and Western Europe have been noticeably reduced over the last 30 years. As we will see in this article, this has surely been the biggest achievement of the people’s democracies.
The winners of World War One drew the frontiers of the Eastern European countries at the treaty table in Versailles in 1919. The result was a jumble of newly-created republics, designed to serve the interests of the imperialists, in a part of the world where national problems dating from the pre-war period (see “The working class storms the bourgeois parliament” in issue no. 216) had gotten worse instead of better.
Eastern Europe in the 1920s and 1930s resembled Latin America today. In Bulgaria, Rumania and Yugoslavia. 4/5 of the population was involved in agriculture. Hungary and Poland had both agriculture and industry, but a majority of the labour force still worked in agriculture. Czechoslovakia was the only industrialized country. (see Table 3).
|Table 3: Comparison of the population engaged in industrial activity in various countries 50 years ago (1930)|
|The table should be read: in Romania there are 40 times fewer people engaged in industry than there are in Germany,|
|30 times fewer than in Great Britain, and so on.|
As well as being agricultural and backward. Eastern Europe was poor: beggars were not uncommon. It was also noted for its authoritarian governments. During the inter-war years, reactionary and brutal dictatorships took power in Hungary, Poland, Rumania, Albania, Bulgaria and Germany.
The communist parties in most of these countries were some of the biggest in the Communist (or Third) International. (see Table 4). They had experienced members and cadre, a number of whom held important posts in the Third International. George Dimitrov, for example, was a Bulgarian who served as secretary-general of the Comintern (the Communist International). Some of these communist parties held power during the revolutionary upheavals between 1919 and 1923; others were involved in insurrections. (see “The working class seizes Slate power” in issue no. 218)
|Table 4: Communist party membership|
|Poland||4,000 (in 1942)||30,000||848,000|
|Albania||700 (in 1943)||2,800 (in 1944)||45,300 (in 1948)|
The countries of Eastern Europe were not all on the same side during World War Two. Albania, Poland, Czechoslovakia and Yugoslavia were occupied by the Germans or Italians, or both. Bulgaria, Hungary and Rumania sided with the fascist Axis powers of their own volition.
The war ruined agricultural production in these countries: The fascist troops plundered the economies of the countries they invaded. Yugoslavia was divided up by Germany in 1941: Hungary got part of it, Italy part and Germany the rest. The damages suffered by Yugoslavia amounted to 50 times its 1938 annual national income.
The war was also extremely costly in terms of human lives. There were mass mobilizations everywhere. Some of the biggest of the terrible slaughters of entire populations, including those of Jews, occurred in Eastern Europe.
Meanwhile, Hitler’s Third Reich moved much, of Germany’s industry to Poland and Czechoslovakia to escape the air raids that threatened German industrial centres.
The influence of the communist parties within the masses crew during the war, because of the parties’ concrete involvement in resistance movements. They participated in national anti-fascist coalitions with peasant and social-democratic parties, as well as with parties representing the big bourgeoisie.
The end of the war meant different things for the various East European countries. Rumania, Hungary and Bulgaria had been on the losing side; as a result, they were under the surveillance of an Allied Control Commission. For many years, they were compelled to pay war reparations amounting to up to 15% of their national income (this was the case of Rumania in 1947-48, for example). In contrast, the countries that found themselves in the victor’s camp Poland, Czechoslovakia, Yugoslavia and Albania – received economic aid from the Allies.
The communists’ first priority immediately after liberation was not to build socialism. The first job they set themselves was to rebuild the countries destroyed by the war. In Albania and Yugoslavia, where the communist parties were the only political forces that had not been discredited in the eyes of the masses, they were in sole control of the government. In all the other countries, power was in the hands of coalitions of the parties that had belonged to the anti-fascist front. The first policies implemented by these governments invariably reflected the fact that they were alliances of various different social classes, and strata.
For instance, parliamentary forms of government were maintained. There was agreement on repressing enemies, traitors and war criminals. Borders were redrawn and most of these countries sent the German minorities in their populations back to Germany.
Land reform was carried out gradually, through a series of laws. Basically, it consisted in giving land to the landless peasants by reducing the size of big landowners’ holdings or expropriating lands owned by Germans or war criminals, as well as the Church’s big holdings.
In industry, governments limited themselves to consficating the capital of enemies or collaborators and nationalizing a few basic industries. In other sectors, a policy of limiting big business was followed. Nationalizations were more wide-ranging in countries where the economy was dominated by foreign capital. In Poland and Yugoslavia, more than 80% of industry was nationalized. There was also substantial nationalization in Czechoslovakia. In Bulgaria, Hungary and Rumania, in contrast, nationalizations were not begun before 1947-48.
The membership of the communist parties grew ten and twentyfold. (see Table 4) For a large part of the masses, the communists were clearly the political force best able to solve the immediate problems they faced.
The communists became so popular and the fascists so discredited that a new thesis began to emerge in the communist movement. People’s democracy, it was believed, was a new way to achieve socialism without taking the road of the soviets (workers, peasants and soldiers councils). It was thought that socialism could be built without the dictatorship of the proletariat.
The beginning of the Cold War in 1947 caused the communists to change tactics and take power in alliance with the left wing of the socialist parties, with which they merged to form new parties in 1948.
By 1948-49, reconstruction was an accomplished fact in all the East European countries. More precisely, industrial production and national income were back to pre-war levels. With the exception of Bulgaria, however, agricultural production was only 75% to 90% of what it had been in these countries in 1938. So it was only in 1948-49 that the people’s democracies issued their first five-year plans and officially took up the task of building socialism.
The attempt to build socialism in the people’s democracies involved industrialization and the collectivization of land, just as it did in the U.S.S.R. and China.
A number of East European countries had tried to plan their economies as early as 1947. But these early plans only applied to part of the economy and covered very short periods (one to three years). Once the decision was made to extend planning to the entire economy, the plans covered five-year periods.
Right from the end of the war, the people’s democracies encountered financing problems. To industrialize a country, to overcome economic stagnation and backwardness, requires substantial investment. The problem was that there was little to invest. Within these countries, the local bourgeoisies were too weak to be of any use. Foreign sources of money dried up once the Cold War got under way. There was not much aid from the Soviet Union. For example, Soviet aid to Poland and Czechoslovakia combined in 1947 totalled $90 million, half of it in foreign currency.
As a result, the masses and their rulers had to make some choices. Because of their communist beliefs, these leaders chose the solution that was most advantageous for the working class as a whole. They decided to plan the economy, to organize every detail of economic life. In that way, the sums needed to invest in development could be raised out of the national income. The people’s democracies launched into ambitious plans calling for the investment of between 20% and 25% of their national income.
The kind of planning adopted by all these countries right from the beginning had been developed in the Soviet Union in the 1930s, and was commonly referred to as the “Soviet model”. What did it involve?
1) All significant means of production outside of agriculture were nationalized.
2) In agriculture, the predominant model was collectivization, either through the establishment of state farms or else, and more especially, through the creation of peasant co-operatives’ under State supervision.
3) Clear priority was given to heavy industry instead of light industry, development was financed with a surplus taken from agriculture.
4) The economy was organized in a very hierarchical way and required an army of civil servants. Decision-making was concentrated at the top. Businesses related to each other vertically, through their management hierarchies, rather than horizontally, through the market.
5) Every last detail of production was planned.
6) The means of production – human resources as well as machinery and raw materials – were allocated in a centralized way.
7) Prices were not set in accordance with the law of value; in other words, they were not determined by the demands of profit-making.
8) Manipulation of the money supply (devaluation of currency, inflationist policies, etc.) was not used as a tool for intervening in the economy.
9) A bonus system was used to reward factory managers and workers who surpassed production targets.
10) Economic relations with foreign countries were handled by specialized corporations. The producers had no direct contact with foreign clients or suppliers.
The plans produced excellent growth rates – between 10% and 16% right from the start. But some observers soon began to note that productivity tended to decline despite a steady increase in the volume of industrial production.
The good results in industry came at the expense of agriculture, much like what had happened in the Soviet Union. In 1950, no people’s democracy had managed to exceed the 1934-38 level of agricultural production. Poland was the only one to do so in the 1954-56 period.
Agricultural policy consisted of a policy of coercively planned agriculture. In some cases the government was the only buyer for farm products. In others, the government placed orders for fixed quantities of products that the peasants were obliged to deliver. The government set the prices it would pay, and often its prices were not enough to cover production costs. As well, the government established compulsory guidelines. Until 1955 in Bulgaria, there were close to 600 compulsory guidelines that farmers had to respect.
This kind of policy ensured that people in the cities would be supplied with food. It also ’guaranteed supplies of raw materials for industry. It even produced stocks of farm products to export (given the backwardness of these countries, food products were often their only possible exports). But on the other side of the ledger, it bled agriculture dry. In other words, industrial development was achieved at the expense of the peasantry. Agriculture was not very profitable for peasants, and many of them became disillusioned about work in the agricultural co-operatives. There was discontent.
With priority going to heavy industry, there was not much development of light industries. As a result, there were shortages of consumer goods that seriously affected working people. Inevitably, there were also some errors that resulted in surpluses of certain goods; the attempts to get rid of them made the shortages of other goods all the more intolerable.
The negative aspects of this economic policy led to calls for changes.
Starting in 1952-53, the people’s democracies implemented a series of measures, with local variations.
1) To improve economic productivity, freer play was given to market forces. There was a combination of a planned economy and a market economy.
2) Enterprises were allowed more autonomy in relation to the plan. Production targets were reduced. In Hungary, they were simply abolished.
3) The goal of enterprises became profit instead of increased production.
4) Bonuses were paid out of the profits made. This encouraged competition between businesses and also between workers, since workers could not earn bonuses unless the factory made profits.
5) Enterprises were allowed to contact each other directly. Clients were allowed to deal directly with their suppliers.
6) The pricing system was modified to raise the prices paid by the government to peasants for agricultural products.
7) The law of value played an increasingly important role in the economy as a whole.
Some countries – Hungary, for instance – undertook to decollectivize agriculture. Yugoslavia and Poland also went a long way in the same direction, decollectivizing 80% of their agriculture.
The other East European countries, on the other hand, moved ahead with collectivization after 1957. At the same time, they implemented reforms to preserve a private farm sector (individual plots of land) alongside the State sector. Planning guidelines were changed to give local management more leeway. For example, production guidelines were simplified and the amounts of compulsory deliveries reduced to allow the peasants to market more of their production. Prices for agricultural products bought by the government were increased. Despite these measures, agriculture continued to experience persistent difficulties, due to the fact that the prices’of the industrial goods the peasants had to buy rose faster than the prices of agicultural products.
These measures were applied to varying degrees in the different countries. In industry, liberalization went less far in Poland, East Germany, Rumania and Bulgaria than it did in Yugoslavia or Hungary, where the plan was almost completely abandoned. The only country that seemed totally unaffected by the trend towards decentralization was Albania.
When a country encounters serious economic problems, bitter struggles over economic issues occur as each class or social stratum tries to defend its interests. The internal struggles in the communist parties in the Eastern countries were generally concerned with the path of economic development. The lines promoting national or distinct roads to socialism were political expressions of the drive to decentralize the economy and restrict the scope of economic planning.
Who profited from these changes?
It was in the interests of the party apparatus, generally speaking, to stick to a planned economy since it was the party that managed the economy. It is said that opposition from the party apparatus brought reform to a halt in Bulgaria in 1968. Decentralization was authorized but within certain limits. In Yugoslavia, for instance, Milovan Djilas – one of the leaders pushing decentralization – was expelled from the League of Communists of Yugoslavia as soon as he began to argue in favour of a multi-party system.
Most civil servants, including the host of white collar workers, had an interest in maintaining a planned economy. Economic decentralization made them redundant. The number of civil servants was cut by 30% to 40% in Hungary after decentralization.
The managers of factories that did well in a system of economic planning were not very interested in reforms that would upset things either.
Peasant landowners, on the other hand, had an interest in changes that would give more play to market forces. The same applied to the managers of enterprises, since more autonomy for enterprises meant more power, leeway and possibilities for personal enrichment for them. Liberalization was also in the interests of skilled workers (as opposed to manual workers and general office employees) – wages were higher in areas where profits were higher, namely where the most advanced technology was used. The technical, scientific and cultural intelligentsia also profited from a system which competition gave it more influence in managing social and economic affairs.
But unskilled, or relatively unskilled, workers and other low wage earners were at a disadvantage in a system in which prices were likely to rise, social spending could be cut back and unemployment could spread. For when profit becomes the goal in managing an enterprise, unemployment is one of the results. Lastly, regions with few natural resources or areas located a long way from major centres had an interest in keeping a planned economy in which the State helped offset the negative effects of their disadvantaged situation.
To sum up: the decentralization that began in the 1950s mainly benefited certain social groups – some party members, the intelligentsia and skilled workers. On the other hand, it spawned new contradictions for the most vulnerable strata of the labouring masses.
The single party is without a doubt the dominant political institution in the people’s democracies.
Power is held by the communist parties and it is most unlikely that they would willingly agree to share it. The rapid end of Milovan Djilas’ career has already. been mentioned. The strength of the one-party tradition can be seen in Poland, where Solidarity, the free union movement, is very careful to reaffirm its allegiance to the communist party.
We said it cannot be denied that, after liberation at the end of the war, these parties were the chosen vehicle of the progressive aspirations of the most dynamic parts of the populations in the people’s democracies. It must nonetheless be pointed out that there are what, to say the least are also some rather dark pages in the history of these parties.
In the late 1940s, there were massive purges known as “the trials”. Important party leaders, some of them long-time active members of the Comintern, were condemned to death and executed. The most notorious cases were the Slansky affair in Czechoslovakia, the Rajk trial in Hungary and the liquidation of Kostov in Bulgaria. The most bewildering part of it is that the persons who condemned them to the firing squads were for the most part the same ones who gradually rehabilitated them in the late 1950s, claiming that the condemned had been the victims of errors and rigged trials. Flamboyant comebacks from purges a la Deng Xiaoping would seem to be part of these parties’ political traditions. Gomulka in Poland was one famous example. Janos Kadar, the Hungarian leader, and Gustav Husak in Czechoslovakia went through similar ups and downs.
Contrary to common belief, the communist parties in the people’s democracies were not characterized by a drop in working-class membership and a disproportionate influx of the intelligentsia. Generally speaking, members from the industrial proletariat outnumbered members from other social classes and strata; industrial workers accounted for 40% of membership on the average. The most striking changes in the social composition of these parties were a reduction in the proportion of peasants, the growing importance of white collar workers and the emergence of a significant proportion of pensioners. in the membership. The changes reflect the transition from an agricultural to an industrial society. They also indicate that many long-time members still belong to the party.
These parties are also characterized by the fact that part of their leadership is made up of party members who are former workers. A number of them were already active in the days of the Third international. In Czechoslovakia. 40% of the national leadership in the 1960s did not have more than elementary school educations. A far cry from our super-educated elites!
Those classes which have to utilize the State a great deal to grow and develop generally find they have to work harder at building a broader base of support among the popular classes in order to establish the necessary political legitimacy. The social weight of the working class is hence much greater in the people’s democracies than it is in countries like Canada. Workers’ strikes in Czechoslovakia and East Germany in 1953 and in Poland in 1956, 1970 and today have been enough to change economic policies or bring down leaders and even entire governments. In contrast, when millions of workers went on strike in France in 1968, the regime did not falter.
The people’s democracies are no longer the backward regions abounding in beggars that they were before World War Two. In 1970, the infant mortality rate was between four and six times lower than it was in 1930-34. No one starves to death any more. The official statistics say that unemployment does not exist although that remains to be proven. In Yugoslavia, on top or an unemployment rate of 12%, there are more than 600,000 migrant workers working in other countries.
Most of these countries still have a long way to go in terms of personal consumption. Telephones are not yet commonplace conveniences, and televisions are even scarcer. Social consumption is better developed. The number of doctors per capita is much higher in Bulgaria than in either the United States or West Germany. The people’s democracies had to make choices, and they did.
The cause of women made giant progress as soon as the people’s democracies were created. The first constitutions guaranteed the equality of men and women at work and in the home. They also guaranteed health care for mothers and children. and their well-being. Day-care centres were opened and day care has continued to expand steadily. From 1948 on, women in Czechoslovakia had a right to 18 weeks maternity leave with full pay. In 1970, this was revised to 36 weeks at 90% of their regular pay. In 1956, nearly all the people’s democracies passed legislation making it easier for women to have abortions. Thera was substantial improvement in the level of women’s education including at the university level.
Although very real, however, this progress did not make women in these countries genuinely free. Studies done in Czechoslovakia in the 1960s indicated that women have the worst-paid jobs, in spite of legislation stipulating that women had to be hired in most industrial sectors.
Liberal economic policies have put pressure on women to return to the home. Learned economists have tried in vain to prove that it was more profitable to keep women in the home than to subsidize the day-care system they need in order to work. Religious forces are still around in the people’s democracies and actively combat policies like the one of easily-accessible abortions.
In 1952, the Union of Women in Czechoslovakia was disbanded in the belief that the fate of women was indistinguishable from the fate of the working class. It was believed that since women were present in all sectors or society, and notably in key posts, the well-placed women could use their positions to promote the cause of all the rest of the women. By the 1960s, however, Czechoslovakian women had to rebuild another Union of Women.
Finally, responsibility for children still lies largely with women. It is natural for a woman to have time off from work if her child gets sick. But it is much less natural for a man to miss work for the same reason. The challenge is, of course, one that few societies have yet to meet successfully.
It is fairly impressive to see how each of the East European countries had acquired its own heavy industry and consequently now possesses the basis for economic independence comparable to that of the leading countries in the capitalist world. For countries that, according to some, are supposed to have been subjected to the dictates and selfish interests of the U.S.S.R. ever since they were founded, it has to be admitted that their relations with the Soviet Union are very different from the kind of metropolis/colony relations that history has familiarized us with.
Each of these countries has followed its own path. This began with the dissolution of the Comintern in 1943 when it was decided that the tasks of communists were to he accomplished first and foremost in the framework of each country. Things could have been different. As early as 1945, the socialist camp could have been organized as a single, vast country. When Khrushchev did propose the idea in the early 1960s, it was rejected when Rumania vetoed it at a meeting of the Comecon.
Instead, the impression one gets is that the communists gave national cohesion to republics that had not yet acquired it. The phenomenon was comparable to the creation of nation-States a century earlier. These countries overcame their backwardness and were pushed forward into the modern world. Their development was a real feat: in 30 years they did what the hourgeoisies of Western Europe and North America took 200 years to do. Moreover, there can be no question that this immense progress was achieved in a much more civilized fashion than the way capitalism came to Great Britain two or three centuries ago.
It did not require brutal dispossession of the peasantry from its land. Progress has not meant surrounding the cities with shantytowns filled to overflowing with the poor, as happened in Iran under the shah or in the notorious ’Brazilian miracle”. Civilization was not achieved at the expense of plundering colonies and exterminating their native populations.
The history of these countries is similar to the history of the People’s Republic of China in many respects. Although the internal struggles were of a different nature, we can see that similar models of development ultimately prevailed. This model required capital accumulation at the expense of the peasantry and achieved social progress by relying on cadre, experts and the most skilled workers. Seen in this way, it resembles the way Westetn-style capitalism developed as well. But in other respects, the form of capitalism that exists in the people’s democracies is not exactly like the kind of capitalism we are more familiar with either.
In the people’s democracies, the proletariat is in a better position to take power on its own. In most cases it has become the most numerous class in society. Nor should it be forgotten that the official ideology in these countries consecrates the working class as the master of the country – not a negligeable factor.
The history of the people’s democracies is far from over. They are not yet 40 years old. We should avoid concluding that the destiny of these countries has been settled once and for all.
Plan and Market: Economic Reform and Eastern Europe, edited by Morris Bornstein; Yale University Press, New Haven and London.1973.
A collection of various texts by American academics with a lot of data on the economy.
Economic Development in East-Central Europe in the 19th and 20th Centuries, by Yvan T. Berend and Gyorgy Ranki; Columbia University Press, New York and London, 1974, 407p.
An economic history of Eastern Europe through until 1948, or the end of reconstruction. Written by two historians from Hungary. Lots of useful data.
The History of the People’s Democracies (2 volumes)
Political history from 1945 to 1979. A lot of information and a zealous one-dimensional point of view that tries to explain everything by the USSR’s interest in dominating other countries.
Les écomonies socialistes soviétiques et européennes by Marie Lavigne; Armand Collin, Paris, 1970.
By a French specialist, Much useful economic information.
Women and Socialism: Experiences from Eastern Europe, by Hilda Scott; Alison and Busby, London, 1976, 240p.
An excellent book that examines the women’s question in detail.