Interview with Daniel Chirot at Eurozine:
AS: Much of the present social disillusionment in eastern central Europe, and Lithuania in particular, has been caused by the large-scale privatization policies introduced immediately after 1990, which were only partially successful and, in many cases, socially unjust. As we know, privatization was strongly backed by the western powers and international organizations such as the IMF and World Bank. Indeed, the first two decades of post-communism coincided with the world-wide reign of neoliberalism both in international politics and the economy, even though there had been cautious voices against total privatization (such as John Kenneth Galbraith or communitarian thinker Amitai Etzioni). These days, when neoliberalism seems to be losing its ground, can any lessons be extracted for eastern Europe?
DC: I agree that the prescriptions of the so-called "Washington Consensus" of the 1990s, in other words the rigid application of neoliberal free market economic policies, have turned out to be foolish. They brought the Great Recession of 2008 that still persists, and adherence to such ideas is probably responsible for much of the misery in southern Europe. It isn't that capitalism can be said not to work, but that free markets cannot by themselves function or hope to support a reasonably fair society without government support. Karl Marx may have been wrong about many things, but he understood the contradictions of capitalism and its propensity to create huge inequalities and periodic crises. What made his predictions fail is that the leading capitalist societies eventually adopted institutions to
mitigate these problems. Too many experts, particularly Americans, gave poor advice in the 1990s, not only to eastern central Europe, but to other countries as well, including their own, the United States. We are paying for this now. On the other hand, eastern central Europe is still better off than it was before 1989, even though some sectors of the population are doing poorly. Considering how much of a disaster late communist economies really were, reforms could have turned out to be much worse. I hope that the failure of neoliberalism teaches everyone the right lesson. Capitalism works, but not its most unregulated form. We would do well to go back to the ideas of John Maynard Keynes and abandon once and for all the "Chicago School" economics of Milton Friedman and his even more extreme followers.
AS: You have argued that economic backwardness in eastern Europe has its own peculiar historical roots. Could you summarize these? What are the prospects of eastern Europe overcoming its eternal fate of being "semi-peripheral" to the modern world? More generally, do you subscribe to the world systems theorists' classification of the world into categories of centre, periphery and semi-periphery and forecast different degrees of economic success for these regions?
DC: No, these categories only made sense in the past when a few western powers dominated the world economy and controlled vast empires. The question as to why the region was behind western Europe is the wrong one. Instead, we need to ask what made a small part of the West different. Once the West began to grow economically and to industrialize, the parts of eastern Europe that interacted most with the advanced parts of Europe did not go backward. They became, instead, the most advanced parts of eastern Europe. So the whole theory of peripheralization is wrong. Even today, it is Poland, the Baltic countries, the Czech and Slovak Republics, Hungary and Slovenia that are better off than the Balkans, which were shielded for a longer time from western trade and influence. I understand that intellectuals in eastern and central Europe love feeling sorry for themselves, but on a world scale, these societies are not doing so badly. There is no question that they were more backward in the nineteenth century, and that the twentieth century treated them badly; but World War I, World War II and decades of communist rule have caused more harm than any kind of peripheral or semi-peripheral status. I can understand why Marxists hold on to this notion that it is participation in the world economy that has caused backwardness, but the evidence simply doesn't point to that except for some obviously politically exploited colonial areas in the past.
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