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The two capitalisms in post-socialist Europe

Between Neoliberalism and "exclusive solidarity"

03 April, 10:14

di Igor Guardiancich, politologo. Collabora con il Centro Luigi Einaudi di Torino e con l'Organizzazione Mondiale del Lavoro

 

(ANSA) - TRIESTE, 3 APR -

After the fall of the Berlin Wall, the countries of Central and Eastern Europe have faced the challenge of transition from a centrally planned economy to a market economy. At the peak of their popularity, neo-liberal economists, such as Leszek Balcerowicz in Poland and Lajos Bokros in Hungary, had prominent positions in the first democratically elected governments, initiating the so called ''shock therapy''. This therapy consisted of immediate price liberalization, macroeconomic stabilization and privatization of state-owned property.

It was just the beginning. During the next two decades, many countries adopted post-socialist vanguard neoliberal policies, such as radical deregulation of the labour market, ''flat tax'', privatization of pensions etc. Those countries had become for Western Europe of low-cost production centres and therefore had to report their competitiveness to foreign investors. In some cases, the reforms were launched against the advice of international organizations, such as the World Bank or the International Monetary Fund. The reform process was uneven throughout the region. The Baltic States put in practice a pure model of neoliberalism, Croatia and the Visegrad Group (Czech Republic, Hungary, Poland, Slovakia) adapted it to their own context, adopting the neoliberal dogma less accurately: they thus established state a more generous welfare state, a labour market only partially liberalized, selective privatization and deregulation. In other countries, such as in Bulgaria, Romania and South-Eastern Europe, neoliberalism took on the traits of a ''non-system'' based on political nepotism.

The differences between these countries have become greater over time after the 2008 crisis, especially with regard to economic policy. In their neoliberal avant-garde, Baltic States, Bulgaria and Romania have enhanced the reform process, introducing harmful austerity measures from the social point of view. It's not often that someone accuses the director general of the International Monetary Fund to be a left-wing intellectual and a supporter of state capitalism. Yet this has happened to Dominique Strauss-Kahn during his visit to Romania in 2010, while he was trying to convince (unnecessarily) local politicians to more evenly spread the cuts to the welfare state.

Central Europe has chosen to go a different route. After the crisis, the Visegrad Group dissociated itself from neo-liberalism, introducing some reforms, including re-nationalization of pension funds in Poland and Hungary, resumption of ''flat tax'' with progressive taxation in Slovakia, new taxes against banks and corporations etc. Central European countries are thus reducing their dependence on Western capital through modernization of their productive sectors and the 'populist' refusal of economic neo-liberalism, which had primarily attracted foreign investors.

The advent of anti-capitalist speech coincided with the rise of right-wing populist parties. The nationalist wave began with the election of the Polish party Law and Justice (PiS) led by the Kaczynski twins in 2005. The trend was consolidated with the victory of the Alliance of Young Democrats (Fidesz) in Hungary, led by Viktor Orban, that defeated the Hungarian left driving during the elections in 2010 and 2014. These political forces were joined by radical and openly racist parties, such as Jobbik in Hungary, Kukiz'15 in Poland or the Slovak national Party (SNS). These parties obviously attract voters through policies overtly hostile to migrants and minorities, it is not so clear why anti-communist political forces have adopted the rhetoric and anti-capitalist policies. Traditionally, the right-wing parties were supporters of a limited role of state in the economy, privatization, lower taxation and regulation. However, in recent decades we have seen a ''socialist'' revival in former pro-capitalist parties, such as the Front National in France and the Liberals (FPOe) in Austria. The working class, which used to be the main supporters of the Left parties, represents now the electoral core of Western far-right parties. The right-wing populists have taken advantage of this transformation and now opt for policies based on ''exclusive solidarity'' or anti-globalist solidarity measures, excluding immigrants and minorities from citizenship rights.

Likewise, rightwing anti-capitalism is getting stronger in Central Europe. This is due to the dissatisfaction of the citizens of the post-socialist states both with the EU and the transition to capitalism. Ten years after the Eastern enlargement of the European Union, hopes for a rapid convergence with Western living standards have been dashed. The growing economic inequality (more perceived than real) creates the impression that a minority of the population has benefited from market economy. The crisis has turned these feelings into a widespread protest, in which the proponents of ''exclusive solidarity'' (National Socialists) have come out the winners.(ANSA).

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