Romania’s decisive move from communism to democracy and capitalism began with a violent regime overthrow and the barbaric execution of the former dictator, Nicolae Ceaușescu, and his wife, by firing squad, on Christmas day 1989. The joy of successful revolution slowly enveloped a country prepared to take on the challenge of building a new society from the ruined communist edifice. Slowly, disillusionment grew to replace hope and despite rising living standards, dissatisfaction is rife, leading some to reconsider their views on communism. Before tackling the present and the nature of changes, it is worthwhile to take a step back and observe the historical developments.
After the Second World War, Romania fell under the cloak of Soviet Union influence and the Communist Party rose to prominence – in the absence of other contenders – and, eventually, to total dominance. The initial feelings towards socialism were negative: property nationalisation and the establishment of cooperatives as the pillar of rural development were bitterly received. The manifestation
of such dissenting attitudes was harshly punished, but by 1965, the system seemed to be settling down and gradually becoming humane. The glory years came to an end in 1972 after Ceaușescu’s visit to China and North Korea and the megalomaniac drive they instilled in him.
By the end of the 1970s, the system was losing steam and needing an increasing amount of foreign finance to ensure subsistence. 1981 marked a radical turning point in policy: the repayment of foreign debt became the primary goal and the already weak production and distribution system was stretched, as exports superseded the internal market in importance. The associated penury was a dreadful consequence, whose only current homologue is the North Korean communist reality.
Growing pressures imploded in December 1989, and by the beginning of the last decade of the century a new, clean slate was supposedly ripe for erecting a new Western-style economic and political construct, replacing the communist vestiges. The transition was effected through a ‘big-bang’, rather than gradual reform. Inertia, however, impeded such swift developments and the end result was a hybrid system, in an almost perpetual crisis by the turn of the millennium. Stabilisation seemed to occur after 2000, with membership in NATO and the European Union being achieved. The global financial crisis only amplified internal contradictions stemming from the new quest to find prosperity, and a period of austerity was imposed upon the population. Romania is only now coming out of the recession, but instead of an optimistic view, some are espousing concerns about growing inequality and continual political instability: everyone yearns for certainty and prosperity, but only some seem to achieve it and the others long for better days. The question remains, is nostalgia warranted? Several inextricably linked aspects need to be considered: economic development, consumer choice, attitude towards labour and political climate.
The Fallacy of Planning and Consumer Choice
The defining element of socialist policy is planning. As private property is limited and entrepreneurial activities are suppressed (thereby removing potentially the most important long-term individual incentives), the socialist state dominates the economic arena and its five-year plans become law. Heavy and light industry, foreign trade and domestic retail are all controlled by strategic system planners. Notwithstanding their respectable prowess
– word has it President Charles De Gaulle asked for Romanian specialists to aid French planning –, the dictatorship of planning is accompanied by the assumption that individual preferences are predictable and fairly stable. Indeed, preferences eventually come to respect the norm, but in a forced, non-natural way. This is a clear infringement upon individual liberties, as it constrains behaviour to regular patterns, inconsistent with freedom, generally: the system becomes self-enforcing and gradually slides into mindless totalitarianism.
A by-effect of planning is the tyranny of numbers: the country prides itself on objectively measured achievement. Statistics gain a propagandistic focus. This metric obsession leads to production beyond the plan: the system, however, is designed within specific guidelines, and exceeding them is just as bad as performing under-par. The shift in the intertemporal allocation of resources diminishes future potential by creating current costs (expanding storage facilities, delaying distribution and depleting inputs) in
the absence of market demand. As standards are pushed higher, production ultimately fails to attain its quota, so statistics are inflated to give the appearance of normality. This combination of diminishing available resources and overblown figures offers a glimpse into the inefficiency of socialist production.
Coupling this mechanism with excessive reliance on foreign funding, as Romania experienced throughout the 1970s, gives way to indebtedness – which must then be corrected. The fatal decision to eliminate this debt led Romanian socialism on the path towards extinction, as exports replaced the internal market and scarcity ensued: wages and employment were never the problem, but money couldn’t buy anything, and interminable queues and 10-year waiting lists for acquiring cars prove the bitter direness of the situation. Frequent power shortages and savings on anything imaginable made life a difficult undertaking.
The only upside was the strengthening of ties and social cohesion in the face of a perceived common enemy.
Changes, Changes Everywhere
Despite having allowed foreign debt to be effectively repaid by 1989, this scarcity involved a growing monetary supply ‘chasing’ an insufficient or unwanted production. With administered price ceilings, this was not a problem, but the subsequent switch to market forces and price liberalisation led to inflation in excess of 100% yearly. The 1990s were marked by volatility – for some eroding earnings, for others allowing increasing incomes. This first inequitable effect of transitions was generated by the application of (and obedient submission to) a ‘shock doctrine’, as recommended by international financial bodies. The overnight introduction of market relations exacerbated competitiveness deficiencies. A conspiratorial approach might even suggest this was intended – the market could then be subjected to foreign firm expansion.
Certainly, preferential privatisations did occur and fabulous, if barely licit, fortunes were made. The cost, oftentimes, was the destruction of communist industrial structures: inefficient as they were, dismantled factories were sold off in small units or restructured for large profits. Another related line of reasoning contested the ability of indigenous management, and foreign ownership was brought onto the scene. One contentious example is the sale of 51% of the national oil company (Petrom) to an Austrian entity (OMV), a sale generally thought to have sealed Romania’ accession to the European Union. Admittedly, by the mid-2000s, the standard of living had risen, inflation had been tamed and the economy was functioning at ‘full speed’.
The downside? Growing household indebtedness, spurred by growing product and service variety; this diversity confounded Romanian buyers, who could now satisfy all their needs and wants. While mounting levels of inequality and the impulse to ‘keep up with the Joneses’ augmented the perception of attainable prosperity and induced excessive spending, a continually surging housing market fuelled a lending boom. Paralleled with political instability, the bubble was poised to burst, and the landing was anything but soft: austerity in government spending and higher taxes drained the resources needed to restore growth. Now, it seems that the economy is growing, but many feel this is despite government efforts, rather than as their result. Generally, real incomes have risen since the revolution and alignment with more advanced economies has been achieved to some extent, but the hitherto bumpy transition has proved uncomfortable and not everyone has enjoyed the benefits of the destination.
Under socialism, lack of incentives generally led to disengagement, so much so that by communism’s final years a dictum ruled labour relations: “they pretend to pay us, we pretend to work”. Slacking off became a social norm – hence, acceptable. In light of labour rigidity during socialism, supervised work was derided as a communist concept: people tended to reject it in favour of becoming ‘their own boss’ by starting new businesses. The suppression of entrepreneurship under communism was replaced by euphoric business creation after 1990, and the effusion of entrepreneurs undermined the meaning of labour, as cut-throat economic struggles pierced through any social cohesion. The excesses of freedom have subsequently been tempered. Currently, the main concern is that the labour market is inefficient, given insufficient growth
and an education system inadequate to real necessities.
The comparison with the ‘perfect’ job allocation under communism is made, often disregarding the value of individuals pursuing their own interest. In addition, the present mobility of education and labour has no communist equivalent, highlighting the trade-off between opportunity and certainty.
It’s All Politics
The regime overthrow did not produce a clean political slate – that would have been impossible. Predictably, the former communist elites, whose lifestyle had previously been envied, gained the upper hand in modern democratic politics and their subsequent financial gains show that little has changed. The multi-party system does theoretically allow the reflection of divergent views, but in practice political platforms are so similar that choices only favour the lesser evil. The dog-eat-dog, savage capitalist system applied in the past 25 years is simply a reflection of politics, where the quest for power has led to the alternation of predatory governments. Favouritism and corruption are still high, and many people fear that political parties have a tendency towards organised theft on a large scale, since they cannot be assured of continued governance. Some might even suggest that communists were lesser thieves,
for they could not lose power. Until political stability is achieved and strong reforms are introduced, government efficiency will remain elusive.
What Does It All Mean?
Both communism and capitalism have serious flaws, but one thing is clear: the glory of old days is only an illusion. The belief in a better life under communism is largely held by people whom the new system has not benefited, mainly the urban and rural poor, especially in less advanced regions (both inside the country, and within Eastern Europe). Moreover, this belief applies solely to the period 1965-75, when some liberties were restored, only to later be retracted. Those who remember those days are dwindling in numbers, and are joined only by those too young to remember the deficiencies of communism. The tendency to recall only the good moments thus biases the intergenerational transfer of collective memory. History textbook writers also avoid discussing the period, as it is far too ‘controversial’, so any positive news is reinterpreted by youngsters and amplified in meaning, since it contradicts the official rejection of communist practices by post-revolutionary governments. So what conclusions can we draw?
Yes, some trains may be slower now than fifty years ago. Yes, industrial and agricultural production is perhaps lower than it used to be. Yes, there is considerably more uncertainty and capitalism has increased social and economic inequalities. However, the benefits of Westernisation are gradually coming to light: there is a wider degree of social, economic and spatial mobility, services are booming, and we are aligning to Western practices and living standards. People are free to choose, people are free to move, people are free to speak. Meanwhile, any failures of capitalism can at least partially be attributed to it being preceded by five decades of dysfunctional socialism. Looking towards Western models, we see that capitalism can be tamed and inequalities kept in check, and we must strive for attaining this goal. Indeed, the price we pay for freedom and progress is risk, but it will be worthwhile.
and I still consider myself, I’m sorry to tell you, a Marxist and a Communist, but I couldn’t help noticing how all the best Marxist analyses are always analyses of a failure