REFORMS  

CZECHOSLOVAK  ECONOMIC REFORM OF 1960'S

down

 

  IV.  Social, Political and Economic Background 

 

2. The Social Forces behind the Reform 

up
down

Although during the whole post-war period, Czechoslovakia has been socialist country, nevertheless both its economic and political 'mechanisms' were substantially changed at least three times. First, in February 1948, the system which had been previously based on the market mechanism and on pluralist democracy was changed into the Soviet-type command economy and totalitarian dictatorship of the Communist Party. Secondly, during the reform years of 1966-8 the economic reform which dismantled the command economy and almost revived the market mechanism was followed by the revival of the basic principles of political democracy. Thirdly, the Soviet invasion in August 1968 caused a return to the totalitarian political system and was shortly followed by the rebuilding of a command economy.

up

down

It is obvious that, at least in post-war Czechoslovakia, a close correlation existed between changes in the political system and in the economic system, the market economy being closely connected with political democracy and the command economy tied to the totalitarian political system. This in itself does not prove that a market economy is a sufficient and necessary precondition for the existence of political democracy, but it may imply that the symbiosis of a democratic system with a market economy and the symbiosis of a totalitarian system with a command economy is more probable than the opposite. This is no new discovery; such an interdependence was well understood by representatives of opposing political and social forces in Czechoslovakia.

up

down

There had been, for example, a widely shared opinion among Czechoslovak non-communist politicians before 1948 that to nationalization would be a prelude to the suppression of democracy and the creation of a one party system. This can be demonstrated by the following quotations: '. . . The total nationalization of the economy leads inevitably to totalitarian politics which is represented by the dictatorship of one political party.'62 'Humanitarian socialism rejects therefore the total nationalization of the economy which gives to the state or government all economic and political power...."63 
No wonder, therefore, that the non-communist parties wanted to maintain a mixed economy combining nationalized, co-operative a private sectors. This seems to confirm the view that the democratic political system was a hindrance to the switch from a market to command economy. It was not until after the outright liquidation of political democracy in 1948 that a command economy could easily be initiated.

up

down

Similar feelings were expressed by many economic reformers in the middle sixties. They were well aware that the entrenched political hierarchy would present the most serious obstacle to any reinstatement of the principles of market socialism. This knowledge, however, did not entirely dampen their intent to reform, their assumption being that since there was no conceivable means of changing the political system first, the initiation of the economic reform might well break the ground for the rebuilding of the political system. It was the same reasoning that made the progressive politicians and economists work hard for the continuation of the economic reform even after the Soviet invasion. They believed that while democratization of the political system had been lost for a moment, preservation of the economic reform might well leave the future to democracy. As it turned out, such a presumption was naive. It underestimated the gravitational pull of political realities. Once totalitarianism was revived, it did not take on the languid character of the Novotny era but rather the harsh character of the early 1950s. Reversal of the course of economic reform followed inevitably.

up

down

The fact of an interrelationship between the changes in the economic and political spheres is obvious enough. What is not immediately discernible is where the impulses for change originate and how they are accelerated or dampened through the interaction of social forces. The Czechoslovak experience suggests that the following factors play a crucial role in the mechanism of social change: (i) the ideology of the ruling e1ite, (ii) external influences, (iii) changes in the social sciences, (iv) the performance of the system, and (v) attitudes of the people. Their mutual interactions are described in the diagram. 

Click bellow to display the diagram

in this window

in a new window

The diagram shows that the decisive immediate cause for remodeling of both political and economic systems are changes in the ideology of the ruling e1ite.

 

up

down

The ideology of the ruling e1ite comprises the basic views concerning the best form of economic and political organization held by those who occupy important places in the economic and political hierarchy. In a totalitarian society the process of organization as well as economic management are highly centralized. Any institutional changes must be decided on or at least approved by the Central Committee of the Communist Party.64 It is therefore understandable that any major changes in the political or economic system must necessarily be preceded by the radical changes in the views of the political e1ite. In a democratic society, where political and economic decision-making is more decentralized, some institutional changes may emerge spontaneously even though the ideology of the dominating power group plays a no less important role.

up

down

There are three ways by which ideology can be changed. The first way is by the intervention of a foreign power, which was the case o February 1948 and August 1968. One seemingly perplexing point lies in the fact that the Soviet Union made no substantial steps to stop or hinder the Czechoslovak economic reform in the years 1965-7. The second way is by a replacement of the people at the top. New leaders bring a new ideology with them. This method was also used in February 1948, when communists purged the whole state apparatus of the opposition. On the other hand, neither of the various personal changes during the period 1949-67 had any considerable degree of influence on the ideology of the ruling e1ite in Czechoslovakia. This method was implemented once more during 1968. This time the rank and file members of the Communist Party refused to re-elect many of the old party bureaucrats. The progressive communists new elected to the top posts strove to change the prevailing ideas about the best form of social organization, Most of them, however, were purged during the post-invasion period, thus causing once again an ideological reversal.

up

down

The third way is by the change of the views of the people in power without actually replacing them. This happens only under very special conditions, because usually very strong resistance exists against major changes in ideology. This resistance, however, is somehow weakened whenever the system does not work well and an aversion to it develops among the people. Of course, the willingness to accept changes in ideology comes about slowly and with a considerable time-lag.
Bad economic performance is usually a point of origin for the whole process. Prolonged economic difficulties cause discontent among people as well as criticism and dissent in the field of economic theory. The ruling e1ite immediately tries to overcome the malfunctioning of the economy by some minor changes in economic policy, as for example by tighter centralization, reorganization of ministries, and partial reallocation of resources. It also uses conventional political tools such as propaganda, censorship and political repression to suppress dissent and to contain the spreading of popular discontent.

up

down

 If these actions happen to be successful, the whole process is stopped. If however, economic performance does not improve and the discontent and dissent are not suppressed, then the growing conflicts lead to visible deterioration of the performance of the political system. The mutual interaction between the mentioned factors accelerate process which eventually results in the general economic and political crisis. Encouraged by the prevailing negative attitudes toward the system, economists and social scientists begin to propose economic and political reforms. It is only when the deteriorating situations continues long enough and common discontent is evidenced that the ruling elite is prepared to absorb the new theoretical proposals and may agree to more radical changes in the political and economic systems.

up

down

The described processes can be easily traced in the postwar history of Czechoslovakia. Both periods of poor economic perform (1953-4 and 1962-4) were immediately followed by growing popular discontent, and shortly afterwards by the appearance of dissenting voices, which criticized overcentralization and argued for a restructuring of economic institutions. The fact that the reform proposals in 1960s were much more radical than those in the 1950s can be explained by the following reasons: (i) the economic difficulties in 1960s were more severe; (ii) popular discontent went much deeper; experience showed that the partial solutions in the 1950s were inconsistent and therefore ineffective; (iv) economists were unable to suggest radically new solutions in the 1950s, while they were able to do so in the 1960s; (v) and the more favorable international situation rendered radical changes in the 1960s more possible. The main difference, however, was that in the 1950s the authorities were able to handle the situation by the usual political tools of the totalitarian system whereas the same tools proved ineffective when applied in the middle 1960s.

 

 

 
up
down

Unlike in the 1950s, when changes in the ruling ideology were minimal, the prevailing ideology was profoundly changed during the second half of the 1960s. It is interesting to note, that the same people who had originally believed a Soviet-type economic system to be the best and the only feasible economic system for a socialist country were influenced to accept and in turn supported a program of market socialism. And similarly, some of the previous exponents of communist totalitarianism began to work towards revival of democratic political institutions.

up

down

It is apparent from the previous analysis, that changes in the social sciences played a very important role in the preparation of economic and political reforms in Czechoslovakia. The interrelation between social sciences and the ideology of the ruling e1ite is twofold. 
(i) ideology influences social sciences either directly when scholars share the same ideology as the ruling elite, or indirectly when the rulers use tools of political repression such as censorship, dismissals, imprisonment, etc., against scholars whose theories may contradict the views of the rulers. The latter method was used widely during the Stalinist period and once more after the Soviet invasion.
 (ii) The theories of the social sciences may play an important role in reshaping the ideas of top politicians. Sometimes the theoreticians themselves assume top political posts. This happened in 1968 when Ota Sik became a deputy prime minister and Zdenek Mlynar became secretary and later also a member of the politburo of the Central Committee of the Communist Party.

up

down

Sometimes the politicians accepted the conclusions of political, legal or economic theory. During several years before 1968, the Central Committee of the Communist Party sponsored establishment of scientific teams or commissions which were to prepare studies and proposals for the various political and governmental bodies. The most influential among these boards were: 
(i) The interdisciplinary team headed by Radovan Richta - this team published the book Civilization at a Crossroads, which strove to overcome the dogmatic interpretation o long-term goals of a socialist society; 
(ii) The group of economists headed by Ota Sik, which prepared the proposal for the economic reform; and 
(iii) two interdisciplinary teams, one headed by Zdenek Mlynar, the other by Miloslav Kral. Both teams concentrated on the study of the optimal organization of the social, political and legal system for an industrialized socialist country."65

up

down

Post-war developm ents in economics in Czechoslovakia can be very briefly summarized as follows: In the immediate post-war years non-Marxist economic theories coexisted alongside the rapidly spreading Marxist economics. Shortly after the events of February 1948, non-Marxist economists were silenced and Marxist economic theory degenerated into dogmatic Stalinism. Near the end of the 1950s, economics started to recover slowly from its dogmatic rigidity. This process was accelerated after 1963, when Czechoslovak economic thought began to absorb more and more non-Marxist tools and theories and was hence gradually transformed into a very unorthodox or revisionist Marxism. In the post-invasion period a reluctant return towards orthodoxy was initiated.

up

down

There were three basic reasons behind the transformation of the Czechoslovak economic and social sciences from dogmatism to their revisionist form. 
First, partial transformation of the political system occurred. While the system still remained totalitarian in principle, it became more and more possible to criticize and to express unorthodox views with impunity. In the mid-1960s the situation could even be characterized as a partial collapse of the totalitarian structure. There were several known instances when the top politicians wanted to punish, dismiss or otherwise silence dissident professors and students, but lower level members of the party and state hierarchy were not willing to carry out the orders and directly or indirectly protected the dissidents.

 

up

down

Secondly, the extremely poor performance of the economic system in the early 1960s was a major factor contributing to the transformation. The preaching of dogmatic textbooks and studies proclaiming the superiority of socialist planning which was supposed to guarantee fast, uninterrupted, and balanced growth, was in direct contradiction with the reality of economic stagnation and disruption. The system as personified in real life was adequate enough a demonstration that textbook level theorization had not merely 'oversimplified' or 'beautified' the system but had grossly erred as well."66

up

down

Thirdly, as mentioned above, the general discontent among the people concerning performance of both the economic and political systems, was a profound stimulus. This discontent had reached such a level that even some among the party and state hierarchy, not to mention the common people, began to sympathize with strong critiques of the system. The economists, sociologists and political scientists who promoted the reorientation of theoretical thought received wide support from the population and hence were less than timid demanding a radical reconstruction of the whole society. Each attempt by the authorities to curb their criticism served only to raise their popularity.

 

 

 

 

OK Economics was designed and it is maintained by Oldrich Kyn.
To send me a message, please use one of the following addresses:

okyn@bu.edu --- okyn@verizon.net

This website contains the following sections:

General  Economics:

http://econc10.bu.edu/GENEC/Default.htm

Economic Systems:  

http://econc10.bu.edu/economic_systems/economics_system_frame.htm

Money and Banking:

http://econc10.bu.edu/Ec341_money/ec341_frame.htm

Past students:

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

Czech Republic

http://econc10.bu.edu/Czech_rep/czech_rep.htm

Kyn’s Publications

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

 American education

http://econc10.bu.edu/DECAMEDU/Decline/decline.htm

free hit counters
Nutrisystem Diet Coupons