The Second World War could not have been won without the aid of the Soviet Union and as one of the victorious allies it stood poised to help create the post-war order. Although the Soviet system was not democratic, it was as much a part of Enlightenment thinking as its Western counterparts. There was a great emphasis placed upon rational linear progress. Unfortunately, this did not concentrate on the progress of human emancipation, but focused on championing the advancement of industrialization. Moreover, this form of industrial- ization was to take place in an environment in which the state had ultimate control over production. It was the incompatibility of the Soviet economic system with the rest of the world, combined with its military aspirations, that would sour its relationship with its other wartime allies.
The Cold War and the Soviet Union’s largely closed economic system would separate it from the Bretton Woods post-war international eco- nomic order. The very basis of Marx and Engels’ political theory was the critique of capitalism. A fundamental aspect of this ideology was control over the means of production. As a result, the Soviet system was based on economic management that was the very antithesis of a market system based upon private entrepreneurship. There was a firm belief that industrial production could be used to organize society along rational lines and create a world of material abundance rather than poverty or want. Ultimately, the Soviet system hoped to employ
resources in a rational way so as to serve society’s needs rather than having to constantly pander to the profit motive of the capitalist (Hill, 1985: 145).
In practice, the Soviet economic system worked through a series of five-year plans. During the inter-war period the Soviets concentrated on collectivizing entire sectors of industry and agriculture. It attempted, through mammoth bureaucratic structures, to supervise the economic management of all sectors while implementing production targets set out in the five-year plans. Naturally, the ideal of complete centralized control proved unworkable and by the 1940s economic management had gone over to a complex system in which a host of different minis- tries developed their own industrial empires. This caused considerable duplication and resulted in a large amount of wasted resources. The only area of economic activity that was not controlled by a ministry were certain services (i.e. watch repair, hair dressing) which were organ- ized in small private co-operatives. Small plot, private farming also continued (Hill, 1985: 148). In all other aspects of production, state ministries would have absolute control. It was into this system that Poland, the Czech Republic and Hungary would be incorporated after the war.
After the Second World War the Soviets were concerned about the American Marshall Aid Plan for Western Europe’s post-war recovery. In response, they created their own organization. In 1949 the Soviets established the Council for Mutual Economic Assistance (CMEA, better known as Comecon) (Hill, 1985: 205). Comecon was to be the chief mechanism for controlling intra-bloc trade. Its trading partners would also become members of the Warsaw Treaty Organization established in 1955. Because of the nature of the Soviet state, Comecon was more than a trading organization. It was an instrument by which the Soviet Union could co-ordinate economic development between the member states. By the 1970s, Comecon was supervising the harmonization of the economic plans of member states. Even though membership of both the Warsaw pact and Comecon would encompass most of the Soviet satellite states and its allies, its main trading partners were East Germany, Poland, Czechoslovakia, Hungary and Bulgaria (Hill, 1985: 206).
The Soviet Union’s economic system was fundamentally anti-capitalist.
The absorption of the CEECs after the Second World War pulled these countries into a system that would limit their access to the interna- tional liberal economic order. It was the heritage of state planning and Soviet control that the countries of Central Europe were keen to move away from after 1989. The transition in these countries was, therefore,
a transition from the system that the Soviet’s had created, but could not maintain, to a system whose spread and control had been very successful.
They joined the Western-dominated international political economy. It was not until the fall of the Soviet Union that the international political economy truly became a global political economy.
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2
Western Developmental Approaches
Looking at theory as it has been applied to Central Europe tells us a great deal about the specific political and economic concerns of the day. Twenty years ago Western developmental approaches concentrated heavily on the ‘Third World’. Today, developmental literature, in the West, devotes considerable space to those countries in ‘transition’, that is former communist countries. Change in theoretical approaches can be heavily influenced by a given political environment. Therefore, it is not necessarily the most inventive or nuanced theories that become adopted as policy. The well-developed arguments of authors of critical theory, radical International Political Economy and post-modernism, have not been able to make a substantive impact on mainstream eco- nomic development policies. The Western developmental approaches applied to CEECs have tended, it seems, to be dominated by some form of orthodoxy. This, however, does not mean that the approaches applied have always been the same. Indeed they have changed dramat- ically over time. The thread that links approaches in this geographical region is an unfortunate one. All Western orthodox developmental theories, whether Realist or neo-liberal have either marginalized this area or exploited it. For scholars of economic development, particu- larly as it pertains to Africa, the above supposition would not be a new one. In the following section we hope to show how Western develop- mental approaches were strongly dominated by political Realism when applied to CEECs before 1989 and how this was exchanged for eco- nomically liberal approaches after the fall of communism. Moreover, the second part of this chapter attempts to establish how the theories which failed in Africa, such as modernization theory, structural adjust- ment, etc. have been applied to CEECs despite the fact that these theories’ to date have delivered a poor performance. The power of
Western norms has already been examined in Section 1.2 of this study.
The purpose of the next section will be to give an historical overview of its application.
2.1 Western developmental approaches towards Central