Re: GLOBAL KEYNESIANISM

At 10:26 PM 4/27/2000 -0400, you wrote:
>On Fri, 28 Apr 2000, Paul Riesz wrote:
>
>>What they do not want to admit, is the fact, that all past attempts to
>>create such an ideal society have turned out to be dictatorships of a 
>small
>>minority, that brought few, if any benefits to the great majority of
>>ordinary citizens.
>
>This is false. State socialist countries brought comparatively tremendous
>benefits to their people. Under communist parties these countries were
>substantially better off than they were before socialism and they are now
>much worse off after the fall of state socialism.

I don't think that anyone here is arguing that there was no such thing as a
rapid improvement in living standards in the European states occupied by the
Soviet Union following the conclusion of the Second World War. 

I think, though, that a very good case can be made to the effect that absent
state socialism, living standards in the European states occupied by the
Soviet Union -- particularly those of central Europe -- would have improved
much more rapidly, and that these gains would have been easily retained
absent a major catastrophe. 

Timothy Garton Ash, in his _The Uses of Adversity,_ (Granta, 1989) touches
upon the relative decline of Soviet bloc productivity, particularly in his
essays "Does Central Europe Exist?" and "Reform or Revolution." In that
latter essay, particularly from pages 230 to 236, he discusses the utter
failure of communism as an economic system capable of outproducing that of
the west. In East Germany, Silesia, or the Czech lands, per capita output
rarely matched that of western European countries. Even Yugoslavia, probably
the most productive communist state in the world on a per capita basis, per
capita GNP was only half that of the European Community average before the
dissolution of the Yugoslav federal state. Due to ideological and
technological reasons, Central Europe was simply unable to adopt the
technologies being widely used in the dragon economies of the Far East, not
to mention those of the Triad. 

Perhaps more to the point, living standards began to decline in the 1970's,
as Soviet bloc consumer industries were insufficient to meet popular demand,
income dropped, pollution increased greatly (remember that the worst of the
black forests were in Czechoslovakia and Poland, not France and Italy), and
the Communist party elite gradually established itself as having first dibs
over everything from health care or higher education. And the political
repression need not be mentioned.

I think that it's important here to mention the levels that some of the
states of Central Europe were at. Unfortunately, I can't provide exact
sources, since I've collected these little facts over several years of
reading. I can tell you that:

* Estonia and Latvia were roughly as developed as Finland.

* Czechoslovakia was roughly as developed as France.

* East Germany was as prosperous as the rest of Germany.

And what is the result now?

* GNP per capita in Estonia and Latvia is but a fourth of that of Finland,
which incidentally has mostly caught up to its Scandinavian partners.

* Per capita output in the Czech Republic -- which has recovered its
pre-Wende GNP per capita -- is less than half that of France.

* The former German Democratic Republic seems to be a permanently depressed
part of Federal Germany.

Let us put forward a counterfactual scenario: At the end of the Second World
War, the areas of central Europe, the Baltics, and the Balkans that fell
under Soviet hegemony fell instead under Anglo-American hegemony. What
factors would prevent these regions from developing as quickly as their
western European counterparts? Why _wouldn't_ life in Czechoslovakia remain
as enviable as life in France? Couldn't Poland and Lithuania -- poor
agricultural economies, just like Spain and Portugal -- catch up to at least
Portugal and thereby double their GNP per capita? What would prevent
Estonia, or Latvia, or Slovenia or Hungary from joining Italy and Finland in
rapidly becoming modern industrial and post-industrial economies?

Please, keep in mind that I'm not dismissing all of the Soviet/communist
achievements. Literacy _did_ rise greatly, industrial output did grow
hugely, life expectancies grew steadily longer. I'm just saying that life in
the social democratic states of Europe improved much more rapidly than in
the state socialist states.

>Between 1960 and 1980
>all state socialist countries compared favorably with middle and
>upper-range capitalist countries,

If you don't mind my asking, in what respects?

>and all state socialist society easily
>surpassed the bottom third capitalist countries. In fact, there were after
>1960 no state socialist societies in the bottom third of poorest
>countries. 

Naturally -- all of the state socialist states had ready access to the
capital and technology needed to industrialize. It was public domain. But
then, most of these states were located in Europe, and many had already
industrialized at least in part -- Czechoslovakia and East Germany were
European leaders, in fact. And yet, after a spurt in the 1950's and 1960's,
they experienced accelerated relative decline. The most fortunate states --
the Czech Republic, Slovenia, perhaps Hungary -- now compare roughly to
Portugal, Greece, or the Southern Cone region. The less fortunate, according
to the latest statistics, are rather worse off than most of South America.

>There was substantially less inequality in these countries, and
>the ruling parties, while having some bit more of the social surplus than
>the average person, were much less well off than their counterparts in
>capitalist societies (a Soviet leader, if so inclined, could only dream of
>the wealth and privilege of the US politician). All this came with a high
>level of social services.

What about Sweden, or Federal Germany, or France, or the Netherlands?

>State socialist societies were not perfect. There is no requirement that
>any society be a utopia or live up to any ideal to be a desirable
>alternative. There is probably not a single wage-laborer who desires to be
>a slave. We live in the real world, Paul, and we always will. People
>living under state socialist regimes were much better off than most people
>living under capitalism. They really were.

If you compare the most prosperous states of the Soviet bloc
(Czechoslovakia, East Germany) with the most prosperous states of the
Western bloc in Europe (France, Federal Germany) there are clear
discrepancies. Social democracy, as practiced by the post-war democracies of
western Europe, worked far better in improving living standards than state
socialism did. (And I'm not including in the term "living standards" basic
human rights like the freedom of the press and freedom of association --
even at their very worst, basic freedoms were much more secure in France or
Federal Germany than in any state of the Soviet bloc. Look at Amnesty
International reports.)

>Andrew Austin
>Knoxville, TN

Randy McDonald
Charlottetown PE
Canada