11 June 2008
Democracy and Capitalism: The Separation of the Twins
Ivan Krastev
According to Ivan Krastev, the fear was that Central Europe would embrace democracy and reject market economics. He says the case now is that Central Europe has accepted free markets but grown dissatisfied with democracy. Krastev is chairman of the Centre for Liberal Strategies in Sofia, Bulgaria.
Today historians are tempted to write the history of the post-communist transitions in Central and Eastern Europe as a story of the irresistible attraction between democracy and capitalism. But 20 years ago many feared that it would be a horror story.
While political theorists tended to agree that democracy and capitalism are natural partners and that free-market and competitive politics strengthen each other in the long run, the fear was that the political and economic reforms needed to transform East European societies would block each other.
How can you give people the power to do what they want and then expect them to choose policies that will lead initially to higher prices, higher unemployment, and increased social inequality -- this was the dilemma of the post-communist transitions.
In the view of the German sociologist Claus Offe, “a market economy is set in motion only under pre-democratic conditions.” And leading Polish political scientist and Solidarity activist Jadwiga Staniskis was convinced that “as long as the economic foundations for a genuine civil society do not exist, the massive political mobilization of the population is only possible along nationalist or fundamentalist lines.”
In short, Central Europe was seen as doomed to choose between market socialism and authoritarian capitalism. Happily, sometimes what does not work in theory does work in practice.
Central and Eastern Europe succeeded in a simultaneous transition to market economics and democracy. It was a magic mix of ideas, emotions, circumstances, and leadership that made the success possible.
Support for Economic Changes
The legacy of communism was reformers’ natural ally in transforming Central European societies. People were patient and endorsed reforms because they were impatient to break away from communism. The early 1990s was a surreal time when trade unions were advocating for job cuts and ex-communist parties were eager to privatize the economy.
There was anger against capitalism, but there was neither a party nor even political language able to mobilize the losers in the transition. Communism had eroded the capacity of society for collective action along class lines. Any criticism of the market was equated with nostalgia for communism. Anti-communist counter-elites, because of their ideology, and ex-communist elites, because of their interests, both supported economic changes.
The popular longing for a “return to Europe,” strengthened by the attraction of the European Union and NATO (North Atlantic Treaty Organization), allowed societies to reconcile the redistributive instincts of democracy with the need for long-term vision and patience as a pre-condition for economic success. It worked differently in different countries, but Euro-Atlantic integration secured continuation of economic reform and ensured against political backlashes.
The success of post-communist transitions led a new generation of political theorists to rethink the chances for the simultaneous emergence of democracy and capitalism. What had been viewed as historical luck was then declared a natural law. Democracy and capitalism were no longer viewed as a happy couple but rather as identical twins.
Skepticism About Democracy
The tendency was to ignore the tensions between democracy and capitalism. But it is enough to look at the experience of countries such as Russia, China, or Venezuela to be skeptical about the natural tendency of capitalism to lead to democracy and the natural tendency of democracy to support capitalism.
The experience of Central Europe also needs some rethinking. A year after the Central European democracies became members of the European Union, the region was shaken by the rise of populism and nationalism. Dissatisfaction with democracy is growing, and, according to the global survey Voice of the People 2006, Central Europe, contrary to all expectations, is the region of the world where citizens are most skeptical about the merits of democracy.
All over the region publics distrust politicians and political parties. The political class is viewed as corrupt and self-interested. The transition was an unqualified success for Central Europe but led to rapid social stratification, painfully hurting many while elevating a privileged few.
Many lives were destroyed and many hopes were betrayed in the time of transition. The fact that the major winners of the transition were the educated and well-connected members of the old regime did not help make it acceptable. The post-communist democracies are now viewed as a triumph not of egalitarianism but of anti-egalitarian communist elites and anti-communist counter-elites.
The external constraints imposed on the accession countries by the European Union were essential for the success of reforms but contributed to the perception that they were democracies without real choices.
Twenty years ago theorists feared that the newly emerging democracies might lack a taste for capitalism. What we see now is that most people in Central Europe have more trust in the market than in the ballot box.
The opinions expressed in this article do not necessarily reflect the views or policies of the U.S. government.
