Conclusions

There is no doubt that the collapse was the result of not one, but many causes, systemic, economic, political, social, psychological etc. The causes were directly or indirectly linked.

ECONOMIC FACTORS

Economic factors, understood very broadly, were no doubt one of the main causes of the collapse. Of the economic factors four should be specially stressed: the increasing gap between the East and the West in the level of technology, the unfavourable development of the standard of living, the excessive socialisation of the means of production, and the growing indebtedness.

The increasing gap in technology resulted from the inability of the small countries as well as the USSR to match the West’s pace of technological progress. The slow technological progress turned out to be an insufficient substitute for the exhaustion of the extensive factors in economic growth. And this was one of the chief reasons for the declining economic growth rates and the unfavourable development of the standard of living. The slow technological progress was reflected primarily in civilian production and even more in private consumption. All this meant that the socialist camp was losing the competition with the West.

The unfavourable evolution of the standard of living was of course a powerful factor for several reasons. Most people judge systems and governments according to the welfare effects they get from them. People in socialist countries were promised that the standard of living would continuously increase. The communist leaders were not only unable to meet their promise, but the standard of living was declining slightly or at best stagnating. In addition people believed that the standard of living they achieved in terms of real incomes or private consumption was much below the potential and blamed the socialist regime for this.

With the exception of Hungary which, thanks to its economic reform, was able to ensure a smooth-running supply of consumer goods to the population (though not in the rich mix which exists in the West), the countries under discussion, mainly Poland, suffered from shortages.

One of the greatest blunders the Soviet communist leaders committed was the socialisation of all the means of production. This concept was taken over by Czechoslovakia and more or less by Hungary; only in Poland did most of the agricultural land remain in private hands. It is understandable that a socialist system could not leave large and certain middle-sized enterprises in private hands, but it was a gross mistake to nationalise small businesses. Had they left them in private or genuine cooperative hands from the early stages of the system, they might have helped to supply consumer goods and services and enrich the selection of goods, and thus they might have functioned as a tool against shortages. Needless to say, such a treatment of small businesses would have had a politically stabilising effect, also because the communist leaders promised before the seizure of power that they would not touch the small private sector.

The revision in the attitude to the small private sector in the 1960s in connection with the economic reforms still had on the whole a stabilising effect. In the second half of the 1980s the private non- agricultural sector, in tandem with a black market, became a contributing factor to the breakdown of the socialist system in Poland and Hungary. The rapidly expanding private - legal and illegal - sector was proof for the majority of the population that the socialist system had failed in its economic tasks. Since this development was combined with higher prices, low income groups were affected the most, and this did not endear the regime to the public. In addition, the private sector which in the 1960s and 1970s was neutral vis-a-vis the socialist system since the system created monopoly conditions for it joined the opposition in the second half of the 1980s, because it felt that the socialist regime meant an impediment to its expansion.

Growing indebtedness to the West was greatest in Poland and Hungary, the two countries where the movement away from socialism had started and was strongest. There is no doubt that the large indebtedness turned out to be - contrary to expectations - an impediment to economic growth and in this way was a contributing factor to the collapse of the socialist system. The loaned funds were not used effectively: much of them was used to boost consumption. Due to the high interest rates a large portion of exports had to be used to pay for servicing the debt. As a result imports of investment goods from the West had to be restricted, and this had a negative impact on economic growth.

The critical economic situation was due to systemic factors and also to the applied economic policy. The traditional economic mechanism was not adequate for solving the problems which faced a modernising society, and was doomed to failure. The detailed planning of the economy from the centre was highly inefficient and necessarily created market disequlibria, one reason being that the price system was irrational. The incentive system, which was an integral part of the traditional economic mechanism, was not effective enough to make people work hard and produce quality products. For these and other reasons the reforms were a necessity. Poland and Hungary, which first rejected the socialist system and started a transition to a market economy, and caused a ‘domino effect’ in other East European countries, had been engaged in far-reaching reforms for some time. This is not to say that the reforms brought down the socialist system, though reforms are always dangerous to an authoritarian regime. However, the economic reforms of the 1960s in Hungary and Czechoslovakia, when it was the best time for reforms because people still believed in the reformability of the system, were halted in the former and reversed in the latter.

The traditional and reformed economic mechanisms should not alone be blamed for the failure. Also to blame are the economic policy, as it manifested itself in the industrialisation drive with great stress on heavy industry at the expense of consumption and services, and the social welfare policy. The industrialisation drive was largely motivated by security considerations. Participation in the military race on the side of the Soviet Union affected negatively many aspects of the economy. The countries had to spend a relatively big portion of their GDP on armaments, funds which could have been used for the modernisation of the civilian economy and for increases in the standard of living. In addition, the most talented professionals were lured to the military industry from civilian production and services.

The socialist governments were not able to cash in goodwill points for the social welfare they had built up. The social welfare policy - as it was manifested in the full employment policy, the narrow skill differentials, the housing policy, the subsidised retail prices of essential consumer goods and shelter, and social security - worked in many respects against the efficiency of the economy. Some of the programmes were not designed properly, such as full employment. Some, such as price subsidies, were not really needed; their objective could have been achieved much more effectively by other methods.

The importance of full employment was depreciated by the inability of the socialist leaders to achieve a combination of full employment with a good work ethic and quality of products, and therefore the economy was hurt. In the final analysis the undemocratic nature of the socialist system was to blame for the reluctance of the authorities to take proper measures against the abuse of full employment. This reluctance was also responsible for the improper labour-management relations.

Reports that in the West an unemployed worker was getting more in compensation benefits than a worker in socialist countries in regular employment did not help make people appreciate full employment. People frequently appreciate advantages only when they lose them.

The significance of health care was depreciated by the system of tips paid to the doctors, the slow progress in technology and the lack of most modern drugs. Great housing shortages also created a lot of dissatisfaction with the regime.

POLITICAL FACTORS

In my opinion, internal and external political factors, understood very broadly, including instruments used for exercising political power and for pursuing political objectives, played a more important role, or at least as important a role as, economic factors in bringing down the socialist system. Capitalist countries go through a deep recession from time to time; nevertheless the capitalist system is in no danger of collapse.

Of the political factors the focus here will be on the lack of legitimacy, the erosion of ideology, the anti-socialist propaganda, the disintegration of CPs, the dropping of Brezhnev’s doctrine and the role of the West.

Perhaps lack of legitimacy was one of the most important causes of the collapse of the socialist system. Legitimacy, as it is reflected in a pluralistic political system, is perhaps the most important protection of the capitalist system. If people are frustrated with the government of the day because it could not prevent a recession or created one by its policy or for some other reason, they can punish the ruling political party at the next election by dumping it and giving their trust to a rival party. Both parties usually take the same position on decisive systemic issues, such as capitalism, democracy, ownership, market, etc., and differ only in their attitudes which do not transcend the framework of capitalism. Nevertheless the voters feel some satisfaction at least for some time. After a while they may be tired of the new government and wait for the time when they can get rid of it. (See for example the rotation of the Conservative and Liberal Party in Canada, or the Christian-Democratic Party and Social Democratic Party in Germany, Conservative and Labour Parties in Great Britain, etc.)

The capitalist system is also protected by the media, which is mostly in the hands of corporations, the foundation of the capitalist system. The owners of the media sec to it, mostly with the help of subtle methods, that the media serves the capitalist system. Because the media is pluralistic it has tremendous influence on public opinion.

The socialist countries did not have a pluralistic system, and therefore the only way to punish the CPs for mismanaging the economy was to change the system. It is worthwhile to quote Fukuyama’s view (1992) on the importance of legitimacy. ‘Some have compared legitimacy to a kind of cash reserve. All governments, democratic and authoritarian, have their ups and downs; but only legitimate governments have their reserve to draw on in times of crisis’ (p. 39).

The erosion of the socialist ideology and the spread of capitalist ideology were further reasons for the collapse. The communists started out with an ideology which was contrary to the potential reality in many important aspects. Therefore it was changed several times in important points and with every change it was brought closer to capitalist ideology, a phenomenon which could not escape the notice of even the less educated segments of the population. In addition, people heard and read about prosperity in the West and the great gap in the standard of living between East and West. And domestic and foreign propaganda made the public believe that prosperity was within reach once the countries abandoned socialism and opted for capitalism. When the socialist ideology lost its influence, it was no wonder that people began to pin their hopes for a better life under capitalism.

Anti-socialist propaganda also had a share in the breakdown of the socialist system. Propaganda machinery, fuelled by the opposition, increasingly grew inside the countries against the system. It was strongest in Poland and weakest in Czechoslovakia. In this activity samizdat literature played an important role. Perhaps rumours about the great prosperity in the West compared with the poor conditions in socialist countries had an even greater effect. Tourists, who were lucky to get to Western countries, provided much of the material for the rumours.

One contributing factor to the effectiveness of the anti-socialist propaganda was that Russia was the dominant factor in the Soviet Union. The very nations which spearheaded the movement to eliminate socialism, namely Poland and Hungary, had good historic reasons for not liking the Russians. The latter were the ones who had thwarted or helped to thwart their national aspirations in the past. Resentment of the USSR, as the successor to Russia, was reinforced by the fact that it had used the liberation of East European countries to impose its own political and economic system on them. Socialism was therefore viewed as a foreign product, imposed from outside by a country which had been an enemy to national aspirations in the past. Regular interference by the Soviet Union made the situation even worse.

Additionally, powerful communication machinery beamed subtle but well thought-out propaganda from Munich, which on the one hand portrayed the economic and political situation in socialist countries as being worse than it really was and, on the other, depicted the situation in the West in rosy colours on the whole.

The gradual disintegration of the Party and government apparatus was also a very important factor. There were several circumstances which led to the disintegration. One was the change in the personnel structure of the apparatus: more and more the jobs in the apparatus were occupied by people from a new generation who were more educated, less ideologically oriented and as a result also less committed to socialism and more pragmatic than the ones whom they replaced. The incessant crises in the 1980s, primarily in Poland, frustrated and demoralised the apparatus and many politicians alike, to the point that a feeling of tiredness, impotence and indifference began to set in. Poland went through martial law and a substantial decline in performance: in 1983-5 it seemed that the economy was on the way to recovery and Solidarity was muzzled; soon the economy plunged again into a crisis and a huge market disequilibrium set in and Solidarity started to flex its muscles. In Hungary, infighting within the CP, which was provoked by the worsening economic situation, removed Kadar, the old leader, in 1988 and brought on the scene an ambitious politician who was willing to accept market socialism. The removal of Kadar did not mean an end to the infighting; on the contrary it continued with greater intensity and resulted in a split in the CP. Only in Czechoslovakia was the infighting less intensive and the collapse the result of a ‘domino effect’.

The members of the intelligentsia, primarily those who were not in positions of responsibility within the CPs and governments, played an important role in bringing down the regime. One of the reasons why they turned against the regime was the shabby treatment which they had received from the authorities. Even in Poland and Hungary, where the intellectuals were relatively better treated, they could not be satisfied with their position. They were long denied the principal freedoms, essential for their self-realisation. More than other segments of the population, the intelligentsia was troubled by the encroachment on national sovereignty and the lack of democratic institutions and human rights. In addition, it had serious grievances: it felt that it was discriminated against in the process of income distribution and not given the social status in society it deserved. It regarded the narrow wage differentials for skill as disrespectful of its professions and interests. All this was sufficient to make the majority of the intelligentsia resentful of the socialist regime. On top of this, there was the institution of nomenclature, which excluded for political reasons well-educated people from positions of responsibility. This was only to some extent true of Poland and Hungary in the second half of the 1980s.

Of course, the West can be given some credit for the collapse. It exercised pressure on the USSR not to interfere with the disintegration process in the small countries. It also contributed by helping to win over a great segment of the intelligentsia for a capitalist economy; to this end it used very subtle methods such as invitations to conferences and research stays in the West, which were designed to show the participants the advantages of capitalism. No doubt, the Western intelligence services, mainly the CIA, had their share in converting the countries under review to capitalism.

The Brezhnev doctrine was declared in 1968, but it had determined the relations between the Soviet Union and East European countries, with the exception of Yugoslavia, since the end of the 1940s. The Soviet Union made it clear that it would not allow a genuine or assumed threat to socialism in Eastern Europe. The Soviet Union proved that it meant business when it suppressed the 1956 uprising in Hungary by force, occupied Czechoslovakia in 1968 and threatened to occupy Poland in 1981. Knowing that the Soviet Union was not bluffing and wanting to avoid a nuclear war, the Western countries did not interfere.

The communist leaders in the small countries felt secure against domestic upheavals or external interventions from the West. They knew that they were protected against such eventualities by the Soviet Union and they were willing to pay the price, which they could not avoid anyhow, to follow Moscow’s guide. The non-reform-minded leaders could use Moscow’s shield as an excuse for staying away from reforms. On the other hand, leaders who had Moscow’s trust could engage in reforms if they managed to present them as a useful experiment not threatening socialism. This was the case of Hungary in 1968.

After having held for some time the post of Secretary General, Gorbachev embarked first on economic reform and later on political reform. Both non-reform-minded as well as reform-minded leaders in small countries might have been scared. Both felt that Gorbachev was pushing too far and this contributed to the disintegration of the CPs. Once Gorbachev dropped Brezhnev’s doctrine the political leaders were no longer shielded against domestic opposition. The Czcchoslo- vak leaders tried in vain to enlist help from Moscow against domestic opposition.

In sum, the collapse was primarily the result of many internal economic and political factors. The coincidence of the gradual far- reaching political changes in the Soviet Union with the disintegration of the socialist system in Poland and Hungary was a very important factor. If in 1985 a less reform-minded leader than Gorbachev had been elected, perhaps the socialist system would still be around.