Transformation from Below

Two places symbolized the dawn of a new, capitalist era in postcommunist cities in the early nineties: kiosks and bazaars. Kiosks had existed under state socialism, selling the same range of products as newsagents: newspapers, magazines, drinks, cigarettes, candy, tram tickets, and a few items of stationery. Following liberalization in 1988, more diversified kiosks emerged in Warsaw and other Polish cities—some for cakes and pastries, others for fruit and vegetables, cosmetics and sanitary products, or pantyhose and underwear. Some sold all the above at once. How the proprietors, many of them women, stored all their goods within a few square feet remains a mystery, yet in this way they made an independent living.

Open-air bazaars followed the reverse spatial principle of commercial sprawl. The Różycki bazaar, a well-known black market hub in Warsaw’s Praga district on the eastern side of the Vistula River, spilled out over an ever-growing area. Similarly, the bazaar on Mexikoplatz in the central 2nd district of Vienna and the “Polish market” on Reichpietschufer in Berlin soon proliferated. Traveling traders set up stalls around Warsaw’s Dziesięciolecia stadium, which had stood mostly empty since its construction for the communist International Youth Festival in 1955. During the nineties, an increasing number of anthropologists, ethnologists, sociologists and economists were drawn to study the vast bazaar at the stadium,7 fascinated by the emergence of this site of burgeoning supply, as well as semilegal and illegal activities, including occasional shootings.

Initially, however, the largest bazaar in central Europe was not in Warsaw but at the aforementioned Reichpietschufer in Berlin, close to Potsdamer Platz and the western side of the Berlin Wall. Polish citizens, who made up the majority of the traders, could travel to West Berlin or Vienna without a visa. Here they purchased Western products of all kinds for resale at home at a high profit. As Polish historian Jerzy Kochanowski has shown, Warsaw thus evolved into a distribution center for the entire Eastern Bloc, or a “stronghold of speculation,” as communist officialese labeled it.8 Soviet customers played their part by paying for scarce goods such as jeans, nylon pantyhose, or Western electronic devices with barter objects such as gold, furs, or other valuables. GDR customs and border officers attempted to contain the export trade from West Berlin to Warsaw, frisking Polish travelers as stringently as the class enemy from the West. But when the Wall came down, their zeal dwindled and cross-border trade became easier. According to official estimates, some eight thousand traders and many more customers attended Berlin’s “Polish market” in winter 1989–90 (see fig. 6.1).9 The Polish traders hoped to escape poverty in Poland; the Berliners came out of curiosity and to find a bargain, not least smuggled cigarettes.10

Fig. 6.1.  Polish traders at Berlin’s “Polish market” on Reichpietschufer, February 1989. Photo: ullstein bild / Günter Peters.

The label “Polish market” (Polenmarkt) signalized an operation of dubious repute. Old prejudices against Poles, vigorously propagated by the Nazis, still circulated in both parts of Berlin. The GDR regime had revived them in response to the emergence of Solidarność and “commercial tourists.”11 “Polish economy” became a dirty word again. Tasteless jokes were common, along the lines of “once it’s plundered, it’s in Poland …” (“Kaum gestohlen, schon in Polen…”). The presence of so many Poles in the city and the goings-on at the bazaar made Berlin’s senators decidedly uneasy. The city government dispatched dozens of police officers, food hygiene inspectors, and customs investigators to crack down on the trade. A “Polish market work group” was set up, cooperating across several senate administrations, to organize checks on the bazaar at Reichpietschufer and the seizure of contraband. But no matter how closely the authorities monitored the traders, the latter were almost always one step ahead. Unauthorized stalls could be folded up and carried away in the blink of an eye. At the still existent intra-German border, the smugglers organized so-called “ant trade.” The “ants” were a chain of contacts going back and forth across the border, carrying the largest permissible amount of cigarettes, liquor, and other customs-taxable goods each way. After a few fruitless attempts to contain the Polish market, it was banished to the less-central district of Wedding in 1993, and eventually closed down. The traders took their business to the border towns along the Oder and Neisse rivers, primarily Słubice, Gubin, and Zgorzelec. According to one estimate, this “small border trade” achieved a turnover of seven billion marks in 1996.12Just a fraction of that amount would certainly have helped Berlin’s ailing economy.

While Berlin closed its Polish market, the Jarmark Europa bazaar at the Dziesięciolecia stadium flourished (see fig. 6.2). From 1990, and before EU enlargement, Warsaw had the locational advantage that neither Western Europeans nor their eastern neighbors, Russians, Ukrainians, and Belarusians, required visas to visit. The Polish capital was therefore an ideal meeting point between East and West. The stallholders at the stadium quickly converted their market stands into permanent, covered structures, creating a kind of strip mall. Jarmark Europa was essentially a vast, open-air shopping center. Unfortunately the fields surrounding the stadium became trampled and strewn with cigarette butts and garbage, creating a layer of brown sludge that spread inexorably over visitors’ shoes and trouser legs.

Fig. 6.2.  The Jarmark Europa market in Warsaw in September 2007. Photo: Masti.

The bazaar offered counterfeit brand-name clothing, with and without the little crocodile, outerwear and underwear to fit all requirements, shoes, CDs and music cassettes (mostly pirated copies), cosmetics, over-the-counter drugs, water faucets, showerheads, tools, scrap iron (often sourced from the bankrupt agricultural cooperatives, no doubt), and contraband cigarettes—and, under the counter, firearms and other illegal items. Cheap clothes and shoes made up around a third of the market’s turnover.13 Occasionally, the police carried out raids and hounded rogue traders through the narrow galleries, but for the most part the city council seemed to have accepted the impossibility of controlling the bazaar.

Soon Jarmark Europa’s trade, which reached a climax in 1996–97, extended across the entire country. Over half its turnover was achieved by supplying goods wholesale to smaller markets in Poland and the “Polish markets” along the German-Polish border. In 1997, some 8,500 people worked in Jarmark Europa; its external suppliers employed around 24,500. Around a quarter of a million jobs are estimated to have been created by the sixteen largest Polish open-air markets. But when the first modern shopping malls opened in the late nineties, the markets began to attract fewer shoppers and employ fewer people. Poles were growing more affluent and had less demand for cheap textiles. The ruble crisis in 1998 inhibited patrons from farther east. After the turn of the millennium, the Jarmark Europa bazaar never regained its former glory. It was finally closed to make way for the stadium’s refurbishment in preparation for the 2012 European Soccer Championship. Nevertheless, Warsaw economist Marcin Peterlik has concluded that “the markets … were an important element in the evolution of private business and thus of the establishment of market economy.”14

The markets in Vienna were never as large as Jarmark Europa, and usually open only on Saturdays. The largest was located on Mexikoplatz, stretching for a time to the adjacent Handelskai on the right bank of the Danube, where tourist coaches habitually parked. The street traders on Mexikoplatz (and at other Viennese flea markets, such as Naschmarkt) sold anything that might be converted into cash: dilapidated antiques and picture frames, crockery and glassware, battered musical instruments, discarded tools and scrap metal, huge piles of musty-smelling clothes from any era, and in some corners, agricultural produce direct from the farmers. The revenue from sales enabled the traders from Poland (who were the most numerous), Hungary, Slovakia, Romania, and the disintegrating state of Yugoslavia to finance their journeys and purchase Western products for sale at home, which was a way of escaping hyperinflation. At Mexikoplatz, too, not all transactions were entirely legal. The most lucrative scam was the sale of contraband cigarettes and liquor. In spring 1990, when the bazaar was at its zenith, the police arrested two hundred black-market traders during a major raid.15 In one instance, Austrian customs officers, acting on a tip, uncoupled and searched a carriage of the express train from Warsaw. Hidden behind the carriage’s side and ceiling panels they found not only fur caps, silver fox wraps, binoculars, cameras, household devices, and sports equipment, but also 360 cartons of cigarettes. (The customs officers reported 72,650 cigarettes to emphasize the enormity of the haul.) Goods weighing 4.2 tons were confiscated; the smugglers were forced to pay a thirty-thousand-schilling fine. The tabloid press devoted much coverage to such raids. Right-wing populist politician Jörg Haider seized on their allegations of criminal tendencies among Eastern Europeans to support his xenophobic 1990 election campaign. The Austrian government caved in to the pressure thus created and cancelled visa-free travel for Poles and Romanians in September that year.

The city of Vienna reacted with greater tolerance and laissez-faire, merely dispatching cleaning squads at the end of the day and collecting stallholder fees. In any case, beginning in the early nineties, the bazaar on Mexikoplatz steadily dwindled. The Polish tax on spirits had been raised, making liquor more expensive than in the West; prices for cigarettes leveled; supplies from Russia (presumably the source of the aforementioned furs) dried up; the demand for Eastern Bloc products and cheap paraphernalia was largely exhausted.

Due to the nature of the trade, the exact volume of sales achieved at Mexikoplatz is not known, but Vienna certainly profited from it. The traders often used their earnings to buy goods to export back home; some of them returned to the city later in other capacities. Retail trade in Vienna actively courted customers from the Eastern Bloc. In the shopping street Mariahilfer Strasse (popularly known at the time as Magyarhilfer Strasse in reference to the many Hungarians among the customers, taking advantage of the travel freedoms introduced in 1988), clockmakers, jewelers, and other stores displayed advertisements in Eastern European languages and Cyrillic script in their windows. Austrian banks offered anonymous accounts—a good hiding place for illicit earnings.

Though particularly visible, kiosks and bazaars were just one element of the transformation from below.16 Small construction companies, handicraft firms, and services mushroomed in postcommunist cities, creating more new jobs than even the bazaars and far more than the state sector. But the open-air bazaars provide fascinating evidence of the diverging responses to the opportunities presented by transformation and, especially, borders opening. While Warsaw made the most of new economic activity, even at the expense of forfeiting bureaucratic control, reunified Berlin deemed itself above such trade.

These observations on the course of transformation from below can be supported by quantitative data. In Poland, 128,000 firms were established in the first five months of 1989 alone; in the ensuing four years, the number rose to 1.8 million.17 Warsaw was at the epicenter of the boom. In 1991, over 40,000 “national economic units” (podmioty gospodarki narodowej) were registered here; in 1992, 65,000; in 1993, 132,000; in 1996, 205,000. Not all of them were companies within the meaning of most Western trade-and-industry laws, but certainly the large majority.18 Figure 6.3 clearly shows the dynamic development of free enterprise in Warsaw.

Fig. 6.3.  New business boom in Warsaw and Berlin, 1991–2011. SourceRocznik Statystyczny Warszawy (Warsaw Statistical Yearbook); Amt für Statistik Berlin-Brandenburg.

The powerful boom left its mark on the popular culture of the transformation era. In 1993, the weekly newspaper Polityka invited readers to submit literary texts on the subject of privatization. It received such an enthusiastic response that it was able to fill several pages with “privatization poetry.” The compiled sonnets, rhymes, and limericks read like a satirical revue of the reforms and their social consequences.19 Most of the poems are so context-specific that they defy translation, but at least one example must be given here: “A girl filled with desperation / resorted to privatization / But to her it was all the same / When it turned into a one-woman game” (“Jedna dziewczyna w wielkiej desperacji / Chciała się oddać prywatizacji / A że nie była to tęga głowa / Wyszła jej spólka jednoosobowa”).20 Indeed, many residents of Warsaw, Budapest, and Prague were not acting entirely voluntarily when they ventured into self-employment. The high number of newly founded businesses was linked to rising unemployment and dwindling incomes. Several participants in the Polityka poetry competition channeled criticisms of the economic and social changes into satirical, sometimes cynical texts. But most of the poems conveyed a sense of light-hearted, ultimately affirmative irony.

A similar upsurge started in Czechoslovakia in 1990. By summer 1992, 1.2 million private enterprises had been founded—even more, in relation to the total population of fifteen million, than in Poland. Hungary had seen the first signs of a business boom in the latter years of state socialism, and it continued at a steadier pace after 1989. A few years later, the Baltic states experienced an equally dynamic development. In Ukraine, small businesses began to emerge in the western regions, which had not become Soviet territories until 1944, and in the capital, Kyiv, but the rest of the country continued to languish for many years. This boom—at least four million new enterprises were founded by the mid-nineties in the Visegrad countries alone—provides evidence of the middle-class capitalism considered in the typology of reform outcomes below.

In comparison to Warsaw, Berlin fell distinctly behind. According to information from the regional statistical agency, 108,000 companies subject to turnover tax were registered in both parts of the city in 1994, dropping slightly by 1996. If one includes microenterprises that were not liable to pay turnover tax (as in the statistics on Warsaw), the numbers are slightly higher. Still, the trend was clear: after a short upswing in the years 1991 and 1992, the number of trade and business registrations stagnated at about forty thousand per year, while an increasing number of self-employed businesses closed down. Beginning in the mid-nineties a “phase of weakness” set in, as the Berlin Investment Bank (Investitionsbank Berlin) put it, during which there were almost as many cancellations as registrations.21 At the same time, Warsaw’s boom went from strength to strength; the number of companies in relation to the population was three or four times larger than that in Berlin.

In postcommunist Germany, many small-business owners who risked self-employment in the early nineties were among the losers of transformation.22 The German government had opened up a new market for West German companies without sufficiently supporting the transformation from below. As a consequence, new small enterprises could not withstand the competition from the larger, established businesses from the West. In turn, the lack of entrepreneurial activity gave rise to the stereotype of the “Jammerossi,” the apathetic, complaining East German. The nineties business boom in Berlin and East Germany, then, was weaker than in Poland, Czechoslovakia, Hungary, or the economically active Baltic states. Southeastern Europe and the successor states of the Soviet Union also saw fewer business-formings. In Bulgaria, for example, only 180,000 businesses were formed between 1989 and 1993. That number pales in comparison to the 1.8 million businesses formed in Poland (with a population nearly four times larger).23

If you find an error please notify us in the comments. Thank you!