OKEXP 4

 

BACK TO OKEXP 

 

Excerpt from 

Oldrich Kyn: CZECHOSLOVAKIA
Economic
Reforms of 1960s
From: The New Economic Systems of Eastern Europe
edited by Hans-Hermannn Hoehemann, Michael Kaser and Karl C. Thalheim
published by C. Hurst & Company, London, 1975

 

IV.  Social, Political and Economic Background   

2. The Social Forces behind the Reform  

 

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.

 

 

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.

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

62) H. Ripka, Demokraticka forma socialismu (A Democratic Form of Socialism). From the Archives of Czechoslovak Socialist Party quoted by Karel Kaplan in 'Znarodneni a socialismus', Prace, Prague, 1968.

'Humanitarian socialism rejects therefore the total nationalization of the economy which gives to the state or government all economic and political power...."63) 

63) From the Draft of the Program of Czechoslovak National Socialist Party. Same source as fn. 62.

 

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.

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.

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 elite, (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. 

 

 

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

64) 'The prevalent bureaucratic modus operandi of socialism makes formal reorganization the main vehicle of change. Still, informal rearrangements (for example, the rerouting of communications outside official channels or unauthorized extension of command) are not uncommon. Naturally, such processes - in contrast to reorganization by decree, whether piecemeal or wholesale - are gradual.' Adrzej Brzeski, 'Social Engineering and Realpolitik in Communist Economic Reorganization', in Gregory Grossman (ed.), Essays in Socialism and Planning in Honor of Cart Landauer, Prentice-Hall, 1970, p.154.

It is therefore understandable that any major changes in the political or economic system must be necessarily  preceded by the radical changes in the views of the political elite. 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 the no less important role.

 

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 elite 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.
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 the 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 elite 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.

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 the evidence 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.

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 over-centralization 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.

 

 

 

BACK TO OKEXP