Market's invisible hand vanishes

Post-Communism - Varieties of Transition
March 21, 1997

One of the most interesting things about the literature on the transition to democracy in Eastern Europe is the way in which it serves to actively construct or "re-invent" the West. For it is just not the case, as Claus Offe suggests in Varieties of Transition, that comparison between the capitalist and socialist blocs came to an end with the end of communism. Though they may often be tacit, notions of East-West difference nevertheless remain key to the interpretation of change in Eastern Europe. What is more, the effects of postcommunist transition are not restricted to the level of discourse or political theory in the West: they also have implications that are institutional in character. The origins of new Labour, as Tony Blair has explained, lie in the evident failure of state socialism and the realisation of the necessity for a reduced role for the state in British society. The irony of the 1990s is that the "birth of civil society" in Eastern Europe has in effect contributed to the narrowing of political debate in the West.

The literature on the transition is largely about confounded expectations. Most typically the failure of Eastern Europe to arrive at western-type democracy has been explained as being due to the "obstacles" created by the cultural legacies of the region's communist past - where democratisation and marketisation are otherwise assumed to be "normal" and "natural" processes. Three of the four accounts in Post-Communism: Four Perspectives, are within this mould. For example, John Mueller sees both democracy and free markets as an almost biological feature of human nature which will emerge by default unless "thugs with tanks" stop it. In his account, capitalism fosters honesty, fairness and peace. In the same volume, Robert Skidelsky views the over-ambitious communist state and its collectivist policies as a "monstrous mutation". For him, communism is a more extreme form of revenue state. State welfare, he warns, can lead - via macroeconomic instability - to war. Mueller's and Skidelsky's views strain credulity - and have been firmly placed in appropriate perspective by the violent debacle of pyramid investment schemes in the new democratised Albania. The third contributor to the volume, Charles Gati, upholds the view that the spread of liberty is the principal political trend of the modern era and that economics drives politics not vice versa, but considers it possible that democracy may not in fact be able to "deliver the goods" in Eastern Europe because of the poisonous political legacy of the past.

These three accounts stand in contrast to the contribution from Stephen Holmes, who provides a sustained argument against "cultural legacies" as a catch-all category for explaining the chaotic and uncharted developments in the former Soviet bloc. His chapter is essential reading for all those who would unthinkingly ascribe postcommunist "non-democracy" to "reopened wounds" or "reborn" fascisms in Eastern Europe. We are drawn to this kind of standard formula, he writes, because they allow us to give a familiar name to a situation we basically cannot understand. Nationalism does not "pop up" and "the return of the repressed" is a metaphor, not an explanation, while it is only the current wave of antistate sentiment in the West that stops people from recognising that state weakness is what is really responsible for the failure of democracy and capitalism to take root in the region.

Holmes's "weak state" theory of postcommunist transition could be usefully explored by comparing transition in the former GDR with what is happening elsewhere in the former Soviet bloc.

Offe, in Varieties of Transition, presents his account of why the postwar reconstruction in West Germany was, to the surprise of many, a much easier undertaking than the process of postcommunist integration in Germany. A strong state, in other words, would not appear to resolve all the anomalies and puzzles of postcommunism, for Offe himself professes surprise that the east Germans do not seek political reformation, but only a better standard of living.

One of the main virtues of Offe's book is that it does bring the West into the frame of analysis, not simply as a fixed and unquestioned standard by means of which to judge postcommunist "progress" - but as an active player in the transition process. For if on one level transition in Eastern Europe has been accompanied by the construction of democracy and capitalism as natural and normal processes, western bankers and governments have certainly not acted as if they really believed that that was true. The top-down installation of capitalism in Eastern Europe has prompted jocular references to the vanishing of Adam Smith's "invisible hand". Thus while David Stark has suggested that the "the failure of socialism rested precisely in the attempt to organise all economic processes to a grand design", Offe's dry observation is that that equally applies to the consultants from elite American universities and the World Bank who were swiftly flown in after 1989. If Offe does not fundamentally question the truth of western democracy's universalising claims, he does see that the West's conceptualisation of itself is also at stake in its possibly failed management of change in Eastern Europe, while western internal politics undergo rightwards transition as a result of Eastern Europe's revolution.

Peggy Watson is senior research associate, faculty of social and political sciences, University of Cambridge.

Post-Communism: Four Perspectives

Editor - Michael Mandelbaum
ISBN - 0 87609 186 9
Publisher - Council on Foreign Relations Press
Price - £14.00
Pages - 208

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