Consumer and Social Welfare  

Living Standard in Communist Romania

by Thomas Jared Denslow

            Although low by Western standards, Romania has historically enjoyed relatively high standard of living in Balkan. Although comparisons of living standards depend on very subjective criteria, it seems that they continued to be comparatively high after the advent of communism and of the rule by Nicolai Ceausescu.  During this period, however, material well-being was gained at the cost of totalitarianism, and as the years progressed, the government controlled economy offered smaller and smaller living standard increases. The growth of material consumption lagged behind the growth of national income and was smaller than in other communist countries and much smaller than in the West.  This slow-down included both public consumption and social services, an area where Romania and other communist countries eclipsed most of the non-communist world.  But living standard cannot be considered only in material terms.  In addition to consumption of goods and services, freedom, opportunity, and income and ethnic equalization are also major factors when analyzing the standard of living of a people.  In terms of all these, Romania's crazed leader scuttled the early gains of both the pre-communist era and the early gains of his own government.

Under the progressive leadership of the monarchy and parliament, Romania experienced impressive growth in income and opportunity in the last quarter of the 19th century.  Romania was hardly a modern, industrialized, liberal democracy, but the gains in the living standard were impressive. These gains can be explained not only by the astute economic policy of the government but also by the abundance of natural resources, a relatively large population, and therefore consumption base, and a strategic geographic location.  By the time of the first World War, the "gang-buster" growth in Romania had waned somewhat, but in 1947, when the Soviet sponsored communist regime seized power, they inherited a strong and advancing economy.

  During communism, Romania's economy was under the complete control of the government. It was ruled by the president, Nicolai Ceausescu, who after the death of Gheorghe Georghiu-Dej assumed also the role of the first secretary of the Communist Party.  In the early years of the Ceausescu regime, Romania experienced incredible economic growth under the Soviet style industrialization program.  This program focused on producer rather than consumer goods, demanding austerity from the population.  After the Budapest revolt, however, the government imposed self-denial of the population was curtailed somewhat.  Ceausescu, seeing the unrest and dissatisfaction of Romania's northern neighbor, conceded to the demands of a grumbling public and increased the share of consumption and social services.  This he repeated in the mid-sixties after the political instability in Czechoslovakia.  In addition to satisfying the population, Ceausescu began to reach out to the West, securing investment capital and allowing more importation of consumer goods.  But Romania began to become more and more isolated from the West and the East by the early seventies and remained so until the December revolution in 1989.  During this period, the economic and social policies of the aging leader wreaked havoc on the welfare of his people.  The destruction of a nation and its people by a lunatic is, however, beyond the scope of this paper.

            The growth of the Romanian economy was substantial during the first half of the Ceausescu regime.  Between 1950 and 1963, the size of the economy increased 600%.  The pace slowed considerably after that, but the economy still registered growth of over 50% between 1965 and 1975.  During this first period, though, consumption grew by less than half of the astounding 600%, but it was still substantial.  Levels of consumption during the period of 1965 to 1975 increased at only a slightly higher level.  According to John Montias, consumption was higher during times of political instability, a phenomenon which did not occur again after the Soviet Union crushed the "Prague Spring."

            Besides public consumption, equalization and opportunity are also major considerations of living standard.  In Romania, the Consumption Fund determines the amount of resources available for public consumption, both in the form of material goods purchased and those provided by the social welfare system.  As with all communist countries, Romania's most impressive achievements during the first twenty-five years of Ceausescu's regime were in the equalization of the living standard.  Socialism eliminated the gross disparity of income among people.  Also, the average welfare of the citizenry increased immensely in terms of health, education, nutrition, and income security.  For example, during the period 1950 to 1971, the number of physicians increased 50% and the number of dentists increased 80%.  And no longer were health services only available in the urban centers.  Furthermore, nutrition for the average person in both rural and urban areas increased. Trond Gilbert asserts that there were indeed frequent food shortages in socialist Romania, but nutrition was "adequate", and the common bouts of famine and starvation among the peasantry were ended.  Other social benefits including pensions, education, homes for the elderly and handicapped, and special services for needy children are enumerated by Gilberg and the 1979 World Bank report on Romania.  These increased under Ceausescu, but their share continually decreased.  Indeed, the impression left by many recent reports suggests that even in absolute terms social services and consumption decreased in the 1980's.  The equalization of economic benefits also was extended to ethnic minorities in Romania.  The process of homogenization must surely be considered as an increase in living standard for these minorities.            

 In terms of opportunity, the Romanian's have suffered a net decrease under the communist regime.  Gilberg notes that although socialism equalized income, the social strata has been frozen, therefore denying any opportunity to its people.  This argument can be extended to include freedom.  Personal, economic, and political freedom all decreased under the post-World War II society.  Freedom, of course, is not quantifiable, but the recent actions of the long oppressed people of Romania prove that the living standard was hardly adequate.  And the similar actions of people's all over Central Europe confirm the universal principle that material well-being is not enough and hardly all that encompasses the standard of living.

Sources:

(1)  Gilbert,T.1975.MODERNIZATION IN ROMANIA SINCE WORLD WAR II.  Praeger Publishers.New York

(2)  Montias,J.1967.ECONOMIC DEVELOPEMENT IN COMMUNIST ROMANIA. MIT Press.Cambridge,Mass.

(3)  Tsanti,A and Pepper,R.1979.ROMANIA:THE INDUSTRIALIZATION OF AN  AGRARIAN ECONOMY UNDER SOCIALIST PLANNING. World Bank.Washington,D.C.

(4)  Turnock,D.1986.THE ROMANIAN ECONOMY IN THE 20TH CENTURY. St.Martin's Press.New York

 

 

 

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