Europe in Transformation

In the United States today, it is still more common to refer to postcommunist change as a transition than a transformation. In some respects interchangeable, the two terms nevertheless accentuate different aspects. The term transition is borrowed from the Spanish word “transición” as used by Juan Linz and other political scientists to refer to the establishment of democracy after dictatorship and the demise of the military regimes in post-Franco Spain and South America.20 An academic discipline of transitology has emerged, focusing on democratic consolidation and political value changes in societies formerly ruled by dictators. After the events of 1989, economists David Lipton and Jeffrey Sachs published an article in the magazine Foreign Affairs pleading the case for “dual transition” in Eastern Europe following Poland’s example. By this, they meant establishing market economy, which they regarded as essential for democracy.21 This dual telos of planned economy to market economy (the first dimension of transition) and dictatorship to democracy (the second dimension) reflected the dominant trend in contemporary thought, also represented by Francis Fukuyama’s aforementioned essay.

The changes began to be termed transformation by social scientists, mostly in Europe, who were more skeptical of untrammeled market economy and wanted to draw attention to the social dimensions of the changes. As this book aims to explore the bigger picture, it, too, uses the term transformation. The state of research in the field cannot be given in a nutshell; suffice it to say that its focus has shifted over time. Initially, political system change and the consolidation of democracy were the main objects of investigation. Later, economic reforms and privatization with all its side effects, such as corruption and mass unemployment, began to garner scholarly interest. During the nineties, the processes by which states were rebuilt (the third dimension of the transformation) were more intensively researched. Most recently, the focus has shifted to the fourth dimension: the influence of external actors such as the World Bank, the IMF and the European Union.22

This broad field of research has produced an enormous yield of facts, data, and analyses that are invaluable to historical study. But it should be borne in mind that contemporary writers were at least indirectly influenced by the hegemony of neoliberalism, if not always convinced by it as an ideology. These scholars and theorists were often employed as political and economic advisers and played their part in steering the course of transformation. Publications of the time should therefore be regarded as part of the transformation discourse and as historical sources requiring critical appraisal.

As well as considering neighboring disciplines in the social sciences, this book extends the conventional timescale. The year 1989 is often regarded as a kind of “year zero.” Indeed, it was one of the most important caesuras in modern European history. But successful businessmen and convinced supporters of democracy did not suddenly mushroom in Eastern Europe that year. The dysfunctionality of planned economy, resulting in widespread scarcity, forced growing sections of Eastern Bloc societies to start playing the market some time before 1989. The human capital comprising these actors cannot be measured in the same way as economic data. Yet it was crucial for transformation and helps to explain why, for example, Poland experienced an “economic miracle” and other countries did not. Hence it seems a good idea not to fixate on the caesura of 1989, which was just the start of a revolutionary phase that lasted de facto until 1991. Taking continuities and longer-term influences from the period of state socialism and even the precommunist era into consideration helps us to understand the different paths of development, some far more dynamic than others, of the various countries and regions.

The book will also endeavor to broaden some spatial horizons. Previously, the transformation has been viewed within a territorial container, defined by spatial concepts such as “Eastern Europe.” A few scholars, chiefly political scientists, have compared the political system change in Eastern Europe with developments in South America and other parts of the world. (See, for example, Samuel Huntington’s The Third Wave, a classic work on the three waves of democratization.)23 But by and large, the Cold War boundary dividing Europe into East and West has remained strangely intact in the minds of academics. Only East Germany got out of the box, because it was absorbed into the prosperous West when Germany unified. Yet it is more accurate to regard the Federal Republic of Germany (FRG) as another country in economic transformation, even if neoliberal reform debates reached West Germany only in the late 1990s—around a decade later than in the postcommunist world.

As the reforms progressed and the European Union enlarged, the terms transformation and transition lost some of their earlier allure. Padraic Kenney was the first historian to draw a provisional balance sheet of the transformation era.24 For historians, whose métier is analyzing the changes that occur over time, the term transformation is only useful when applied in a specific sense. In a historical perspective, transformation denotes the especially far-reaching, extensive, and accelerated change of a political system, economy, and society.

As mentioned above, such changes began before the revolutions of 1989. Yet this caesura should not be played down. Charles Tilly, like the sociologist Theda Skocpol, ranks it among the great European revolutions.25 The essential difference between 1989 and 1789, 1848, and 1917 was its predominant lack of violence and willful destruction. Insofar as violence was used in 1989, as in Romania, Soviet Lithuania, and Georgia and, most notoriously, on Tiananmen Square in Beijing, it was used as an instrument of power, wielded by counterrevolutionaries. In some respects, then, the radical changes of 1989–91, which ended with the collapse of the Soviet Union and the independence of its constituent republics, conflicted with the traditional concept of revolution.

The sociologist Zygmunt Bauman has linked the two phases of revolution and transformation by emphasizing the strong drive for political and social nation-building among the revolutionary elites of 1989.26 In this way, he places the transformation in a temporal continuum of sequential action, following on from the preceding revolutions in all their different guises. Hence the transformation can be regarded as a process of postrevolutionary change. Of course, the results of this change differed within the Eastern Bloc, from country to country, and especially within each country. That is the main subject of this book.

Such variance also existed in earlier revolutionary periods, such as the late eighteenth century and after World War I. The American Revolution is an example of a partial change. The founding fathers of the United States created a new state and political system but only slightly altered the social order. Nevertheless, according to Hannah Arendt, among others, there is good cause to regard the War for American Independence as a revolution.27 Despite the considerable distance in time and space, the events of 1776 show a certain similarity with developments in 1989 on the other side of the Atlantic. Both revolutions marked the establishment of constitutional democracies as one of their most important results. Neither ended in orgies of violence or mass terror, as in France after 1789 or Russia after 1917. The price for this was the survival, relatively unharmed, of some sections of the old elites. In some countries they were even able to return to positions of power. But this does not mean that revolution must entail extreme violence to be real. The bloody French and Russian revolutions, for example, produced surprising continuities with regard to imperial, autocratic rule. While such aspects are open to debate, it remains undisputable that the revolutions of 1989–91 and the postrevolutionary transformation are comparable with earlier processes of similar importance.

As in the case of earlier revolutions, it does not make much sense to identify a certain point in time as the zero hour. To understand the American Revolution, one must consider the period before 1776 and the British Empire’s ongoing struggle with political representation and participation in its transatlantic colonies, which were developing economically and socially at a dynamic pace. Alexis de Tocqueville’s and Edmund Burke’s observations on the French Revolution also begin with comprehensive analyses of the preceding regimes.28 Transformation was, then, never exclusively postrevolutionary, but gained a new dynamic with each revolutionary upheaval.

German sociologist Claus Offe has proposed that the synchrony of change in the state, economy, and society is an additional element defining transformation.29 Offe in turn owed a certain debt to Reinhart Koselleck, one of the most distinguished German historians of the postwar era, who dealt intensively with the (a)synchrony and temporality of historical processes. Indeed, a distinctive concept of time prevailed in the transformation epoch—the sense of time racing, and one historic moment following the next. History unfolded at a breathtaking pace between 1989 and 1991, similarly to the years following World War I, when Polish writer Maria Dąbrowska noted a sense of acceleration. In her Warsaw diary of 1918–19, she wrote: “One wakes up and finds oneself in another state, another life.”30

It is striking how often politicians and intellectuals spoke of historic moments, events, missions, and breaks with the past in 1989. The Canadian writer Douglas Coupland parodied what he saw as tediously frequent references to history as “historical overdosing”31 in his novel Generation X, published in 1991. Commentators went into overdrive in an attempt to capture the increasingly transient present. But for most of the postcommunist elites, history was no more than a negative background to contemporary developments. The communist era was demonized in the same way as the ancien régime in France after 1789 and the Habsburg, Romanov, and Ottoman Empires after their falls in 1918.

Equally, the period after 1989 was full of visions of future glory. The general tone of contemporary discourse was that the historic opportunity to usher in a future of liberty and prosperity was there to be seized. Ultimately, this call to historic action served to gloss over the rather gloomy present. Like all revolutionary events, those of 1989 occurred in connection with, and almost inevitably compounded, economic crises. The prevalent concept of time in 1989 and the early nineties is part of the transformation discourse that this book seeks to investigate in the context of neoliberal developments. As well as the course of reforms, growth statistics, and other “hard facts” of transformation, it will consider legitimizing strategies, semantics, and meanings in the sense of New Cultural History.32

This book is the product of years of scholarly interest.33 It builds on my own personal experience of the Velvet Revolution, my many years’ professional activity in the Czech Republic and Poland in the nineties, my extended research visits and trips to Ukraine, Russia, and the Caucasus, and academic cooperation with Eastern European colleagues. It was thanks to the changes of 1989–91 that this wide world was open to me at all. Strangely, no concept of a generation of 1989 has emerged, although many young protesters from that fall and the ensuing months of high hopes and idealism certainly perceived themselves as such. Unlike the generation of 1968 or 1848, they have not been immortalized in print. Any sense of generational community has since been weakened by the rapid pace of change, the divergent experiences of transformation depending on individuals’ gender and social background, and the sobering results of the changes in the early 1990s. It is the task of contemporary history to explore these subjective, individual experiences more closely than does mainstream transformation research, which has dealt primarily with states and economies on a macro level.

What does it mean for a historian to tackle a domain of social science? The more recent the historical period in question, the more sociologists, political scientists, anthropologists and proponents of other branches of the social sciences will be investigating it. This changes the role of historical science, and especially hermeneutics, the methodology of text interpretation. On the premise that reality in the modern world is a construct, the media are an important source. Neoliberalism, which has ideological characteristics but not the coherence of Marxism or other “classic” ideologies, was made and conveyed by the media. A critical examination of neoliberal discourses is therefore essential for any historical survey. Reviewing past research, such as interviews conducted by social scientists thirty or forty years ago, can also be very fruitful. A closer look at everyday life in the 1970s and 1980s shows “real existing socialism” to have been not as gray or stagnant as the politburos of the time but the seedbed of a long period of change.

While some things become clearer as the events recede further into the past, other aspects are clouded. It seems to go without saying that the opinions of today’s historians on neoliberal transformation have no impact on the process itself. But this was not true of earlier social-scientific transformation research, which has now become historical, too. Many economists and sociologists dealing with postcommunist Europe in the nineties acted as political advisers and influenced the course of reforms with their expert opinions. The US economist Jeffrey Sachs was the archetypal analyst-reformer. Active first in Poland, then Russia (officially named the Russian Federation since 1991) and elsewhere as an economic adviser, he was one of the architects of the “shock therapy.” Sachs and the Brygada Marriotta, as the Western experts were ironically dubbed (after the swish Warsaw hotel in which they resided), stood out for their disarming self-confidence. A Harvard professor, Sachs’s absolute faith in the market made his prescription for improving the present and the future irresistible. It was characteristic of the neoliberal epoch that one country after the next adopted very similar economic models and reform packages, as Sachs advised. He and his fellow experts obviously expected the standard formulae to work equally well wherever they were applied.

But the reforms had very different outcomes. For around the last fifteen years, the various resultant economic orders have been analyzed under the banner of “varieties of capitalism.” They are considered here in chapter 4.34 Rather than following the social-science model of investigation, taking a top-down approach to focus on the ideology’s embeddedness in institutions and abstract economic data, the aim here is to provide a historical narrative of transformation from the bottom up. The book sets out to guide the reader through neoliberal Europe, for the most part chronologically, and across various spatial configurations (transnational regions, states, intranational regions, and cities).

Another characteristic of neoliberalism is the aforementioned fixation on private ownership. Considered an essential pillar of market economy,35 it went hand in hand with an aversion to big government, which was regarded as stifling and oppressive—as state socialism had demonstrated on the extreme end of the scale. While privatization became a top political priority in the former GDR and Czechoslovak Socialist Republic (ČSSR), with the former country pursuing restitution rather than the sale of nationalized property wherever possible, it was slowed down in Poland in the mid-nineties. To this day, much of the property nationalized by the communists remains in state hands. But Poland is nevertheless a functioning market economy. The history of the last twenty-five years, then, seems to challenge the dogma of privatization. When addressing questions such as these, contemporary history should resist the temptation to simply invert arguments. Russia is a reminder that this does not always work: here, the purchase and sale of state-owned real estate was delayed until the Land Act of 2003, resulting in the neglect and decline of large stretches of rural Russia.36

The Budapest-based political scientists Dorothee Bohle and Béla Greskovits have identified three distinct types of systems that became established in the new European Union member states as a result of different transformational processes and outcomes: “neoliberal capitalist,” “embedded neoliberal,” and “corporatist.”37 Each type corresponds with a specific geographical area, namely the Baltic states, the Visegrad countries (Poland, Czechoslovakia, and Hungary, which forged an economic and political alliance in the Hungarian town of Visegrad in early 1991), and Slovenia, respectively. If one extends the model to Russia, Ukraine, Belarus, and Moldavia—that is, the European successor states of the Soviet Union—the number of neoliberal-capitalist market economies with at most rudimentary welfare states is even larger. Hence the reforms can be seen to have had a predominantly neoliberal outcome. Russia and Ukraine did not establish stable democracies; their economies are dominated by oligarchs. The “oligarchic-neoliberal” system could, then, be added to the above typology.

Since Bohle and Greskovits identified more or less neoliberal system types in all postcommunist countries, with the exception of Slovenia, the question is raised of how precise the concept is. Does it not overstretch the concept of neoliberalism to apply it to almost the entire former Eastern Bloc and beyond, indeed to the global order since the mid-eighties?38 Have the outcomes of political and economic system change not been too various to be covered by one neoliberal umbrella? The course of reforms and the intentions of the actors involved certainly varied greatly, from country to country and year to year. Yet the basic principles inscribed in the Washington Consensus were applied across the board. Every postcommunist country in Europe attempted liberalization, deregulation, and privatization, often with unexpected consequences and ripple effects. The one common outcome in all countries prior to European Union enlargement was growing inequality on a social and spatial level. As this common ground was so predominant, it is accurate to speak of the establishment of a new, neoliberal order, despite the many differences.

While postcommunist countries and English-language scholarship continued to take a skeptical view of the welfare state, some continental European transitologists began to regard fully functioning government as a precondition for successful system change. In 2007, the most prominent German expert, Wolfgang Merkel, proposed that state continuity, especially with respect to education and social security, facilitated transformation. The Harvard-based political scientist Grzegorz Ekiert considers government reforms, such as the building of local and regional administration, to have been a key factor in Poland’s rise since 1989.39

In this regard, one can differentiate between three groups of countries: those that enjoyed territorial continuity and whose statehood remained largely intact throughout the period 1989–91; those that emerged from collapsed empires and multinational states and had to first consolidate their (mostly weak) new statehood; and a third group struck by ethnic conflicts and violence. The civil wars in the Caucasus and the former Yugoslavia, and the bloodshed they caused among the civilian populations, overshadowed all other transformational experiences.40 But Yugoslavia must nevertheless be included in the history of the transformation era. After all, the collapse of this multinational state was linked to disagreements over reforms. Yugoslavia, like the entire Eastern Bloc, had been in the midst of a deep economic crisis since the mid-eighties. The IMF and international creditors prescribed reforms which only some sections of the political elites accepted. Because the country was federally organized, the reforms could not be implemented. It was in the subsequent dispute over whether to extend federalization or to return to centralization that the battle lines of the future armed conflict were drawn.41 Romania was also on the brink of civil war in 1990. In Bucharest, regime-loyal miners clashed with students and intellectuals in violent riots known as mineriads; interethnic conflicts also helped the postcommunists to stay in power.42These conflicts should not be missing from any balance sheet of transformation.

A central focus of transitology is how democracy is consolidated and political values change in postdictatorial societies. The state of research on these issues is excellent. This book will therefore concentrate mostly on questions of social history. But it also aims to shed some light on the strikingly divergent developments on the road to democracy. In East Central and Southeastern Europe, and in the Baltic states, the dominant trend was to orientate political change toward the German system of parliamentary democracy. Presidential power was curtailed and parliaments accorded greater authority. Poland, which had been at the vanguard of regime change in 1989, took a leading role again. In the countries of the former Soviet Union, by contrast, presidential systems have come to predominate. In Russia, Vladimir Putin has established an authoritarian regime.43This discrepancy in the outcomes of political system change shows that Samuel Huntington’s “third wave of democratization” occurred unevenly, giving rise to new forms of governance that had not been anticipated in the early nineties. China and Vietnam are particularly striking examples.44The establishment of market economy in these countries did not lead to comprehensive democratization. Does this mean that postcommunist capitalism can work without democracy? Russia, in spite of its structural problems and high dependency on oil and gas exports, seems to point in this direction. Authoritarian state capitalism has certainly become a serious rival to the West since the crisis of 2008–9 (see chapters 5 and 10).

Transitologists have approached their core fields of interest—political system change, the adoption of market economy, and the transformation of statehood—almost exclusively from a nation-state perspective. Journals such as the Economist and various think tanks have orchestrated a kind of international competition between nations battling toward democracy and market economy. Points are awarded for the degree to which the respective governments have achieved the targets advocated by the IMF and neoliberal think tanks. In the early nineties, the Czech Republic and Hungary were considered model transformation countries while Poland was criticized for its reliance on agriculture and general backwardness. Hence a country’s level of modernization or perceived lack of sophistication was a second, rarely overtly expressed criterion for evaluation. Ironically, this continued a tendency of state socialism. The communists had made great efforts to catapult Eastern Europe to a Western level of development by forced industrialization, collectivization, and other means.45 After 1989, “catch-up modernization” remained the primary goal, but without the utopian promise of communist paradise. The ideal now was wealth and consumerism.

At the Copenhagen summit of 2002, the European Union candidate countries were commended for having achieved the transition to market economies and democracies. This success, and European Union enlargement in the years 2004–7, posed a problem for transformation studies. It rendered a number of its research objects irrelevant, insofar as it adhered to the old backwardness paradigm. In terms of gross domestic product per capita (which is of course only one of many indicators), the wealthiest postcommunist countries had already overtaken the poorest old EU member states by 2002–3. Taking only capital cities into consideration, the East caught up at an even faster pace. Far less scholarly attention was paid to this upswing than to the previous transformation crises. Perhaps contemporary academia had internalized the journalistic rule of thumb that only bad news is good news.

With the crisis of 2008–9 came the anticipated bad news. Some postcommunist countries went into recessions almost as deep as the economic collapse of 1990 or 1991, with negative growth rates of up to 18 percent. The former Eastern Bloc countries managed to overcome the crisis faster than the Southeastern European countries, albeit at the cost of more radical social cuts. The IMF now exemplifies states like Latvia as crisis-beaters to be imitated by countries such as Greece. Whether neoliberal reforms actually generated any economic growth is a question that runs through this entire book, and is discussed by the example of a number of case studies in various periods. Germany felt the impact of the second wave of neoliberalism not only from without—in economic competition from its easterly neighbor countries—but also in its adjoined Eastern half, the former GDR. Postcommunist reforms here created many new problems for the unified German state and its social security system. Strangely, this cotransformation in Germany and Europe as a whole has been very little researched. Transformation research has by and large remained a field of “area study,” restricted to Eastern Europe. Even if one were to regard postcommunist transformation as completed by certain key years, such as 2004 or 2009, neoliberal reforms and post–welfare state transformation continue to be topical issues, pertinent to Southern Europe and the entire eurozone.

In this book, elements of cotransformation, or East-West transfer (terms such as “influence” and “diffusion” are too simplistic since they suggest the straightforward adoption of foreign models), are discussed predominantly in the context of contemporary German history and three main points of inquiry: political transformation discourses before and during Germany’s pension and labor market reforms of 2001–5; academic and public debate on the concept of “civil society”; and the role of politicians from the former GDR (such as Angela Merkel), whose political identities were formed during German transformation. Transfer history is not only made up of “successful” transfers, in which one culture adopts and adapts elements from another, but also processes of demarcation. They occurred not only in postcommunist states, especially Putin’s Russia, but also in the West.

As mentioned above, transitologists as well as traditional historians of Europe tend to adopt a nation-state perspective. There are certainly plausible arguments for this: Nation-states steer macroeconomic development, adopt reforms, organize social security systems, and are the most important framework for democratic decision-making. But as is shown below, there can be tremendous intrastate divergence—growing gulfs between rich and poor, large cities and rural regions—which has a particular impact on the everyday lives of the populations.46 Research on urban transformation after 1989 has focused on the geographical and social metamorphoses of cities and urban areas.47 This book will further zoom in on the cities, because they bear striking witness to the rapid changes of the past twenty-five years. Literature, information, or source material on individual urban districts, villages, or streets, and the groups, families, and individuals who inhabit them is hard to come by. But social anthropologists and ethnologists have begun to close this gap with studies of factory communities, small social groups, and specific environments, which are of great interest to historians.48 The state of literature on the transformation era is low (with the exception of the aforementioned short book by Padraic Kenney). Tony Judt, Hartmut Kaelble, Harold James, and most recently Konrad Jarausch have discussed the 1990s in the respective last chapters of their major surveys of twentieth century or postwar European history.49 But there is still no book conceptualizing the quarter-century since 1989 as a distinct historical epoch.50 Neoliberalism was the guiding ideology of this epoch, so it deserves to be the center of attention. Knowledge of its history is the precondition for understanding the present, in Europe and beyond.

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