Is Transition Possible
Can Socialist Professors of Economics Teach Capitalism?
"After the Rain - How the West Lost the East"
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Lest you hold your breath to the end of this article - the answers to both questions in the title are no and no. Capitalism cannot be "learned" or "imported" or "emulated" or "simulated". Capitalism (or, rather, liberalism) is not only a theoretical construct. It is not only a body of knowledge. It is a philosophy, an ideology, a way of life, a mentality and a personality.
This is why professors of economics who studied under Socialism can never teach Capitalism in the truest sense of the word. No matter how intelligent and knowledgeable (and a minority of them are) - they can never convey the experience, the practice, the instincts and reflexes, the emotional hues and intellectual pugilistics that real, full scale, full blooded Capitalism entails. They are intellectually and emotionally castrated by their socialist past of close complicity with inefficiency, corruption and pathological economic thinking.
This is why workers and managers inherited from the socialist-communist period can never function properly in a Capitalist ambience. Both were trained at civil disobedience through looting their own state and factories. Both grew accustomed to state handouts and bribes disguised as entitlements, were suspicious and envious at their own elites (especially their politicians and crony professors), victims to suppressed rage and open, helpless, degrading dependence. Such workers and managers - no matter how well intentioned and well qualified or skilled - are likely to sabotage the very efforts whose livelihood depends on.
When the transition period of post-communist economies started, academics, journalists and politicians in the West talked about the "pent up energies" of the masses, now to be released through the twin processes of privatization and democratization. This metaphor of humans as capitalistically charged batteries waiting to unleash their stored energy upon their lands - was realistic enough. People were, indeed, charged: with pathological envy, with rage, with sadism, with pusillanimity, with urges to sabotage, to steal, to pilfer. A tsunami of destruction, a tidal wave of misappropriation, an orgy of crime and corruption and nepotism and cronyism swept across the unfortunate territories of Central and Eastern Europe (CEE). Transition was perceived by the many either as a new venue for avenging the past and for visiting the wrath of the masses upon the heads of the elites - or as another, accelerated, mode of stripping the state naked of all its assets. Finally, the latter propensity prevailed. The old elites used the cover of transition to enrich themselves and their cronies, this time "transparently" and "legally". The result was a repulsive malignant metastasis of capitalism, devoid of the liberal ideals or practices, denuded of ethics, floating in a space free of functioning, trusted institutions.
While the masses and their elites in CEE were busy scavenging, the West engaged in impotent debate between a school of "shock therapists" and a school of "institution builders". The former believed that appearances will create reality and that reality will alter consciousness (sounds like Marxism to me). Rapid privatization will generate a class of instant capitalists who, in turn, will usher in an era of real, multi-dimensional liberalism. The latter believed that the good wine of Capitalism can be poured only to the functioning receptacles of liberalism. They advocated much longer transition periods in which privatization will come only after the proper institutions were erected. Both indulged in a form of central planning. IMF-ism replaced Communism. The international financial institutions and their hordes of well-paid, well-accommodated experts - replaced the Central Committee of the party. Washington replaced Moscow. It was all very familiar and cosy.
Ever the adapters, the former communist elites converted to ardent capitalism. With the fervour with which they recited Marxist slogans in their past - they chanted capitalist sobriquets in the present. It was catechism, uttered soullessly, in an alien language, in the marble cathedrals of capitalism in London and Washington. There was commitment or conviction behind it and it was tainted by organized crime and all-pervasive corruption. The West was the new regime to be suckered and looted and pillaged and drained. The deal was simple: mumble the mantras of the West, establish Potemkin institutions, keep peace and order in your corner of the world, give the West strategic access to your territory. In return the West will turn a blind eye to the worst excesses and to worse than excesses. This was the deal struck in Russia with the "reformists", in Yugoslavia with Milosevic, the "peacemaker", in the Czech Republic with Klaus the "economic magician" of Central Europe. It was communism all over: a superpower buying influence and colluding with corrupt elites to rob their own nations blind.
It could have been different.
Post-war Japan and Germany are two examples of the right kind of reconstruction and reforms. Democracy took real root in these two former military regimes. Economic prosperity was long lived because democracy took hold. And the ever tenuous, ever important trust between the citizens and their rulers and among themselves was thus enhanced.
Trust is really the crux of the matter.
Economy is called the dismal science because it pretends to be one, disguising its uncertainties and shifting fashions with mathematical formulae. Economy describes the aggregate behaviour of humans and, in this restricted sense, it is a branch of psychology.
People operate within a marketplace and attach values to their goods and services and to their inputs (work, capital, natural endowments) through the price mechanism. This elaborate construct, however, depends greatly on trust. If people were not to trust each other and / or the economic framework (within which they interact) - economic activities would have gradually ground to a halt. A clear inverse relationship exists between the general trust level and the level of economic activity.
There are four major types of trust :
And this is where most countries in transition are at right now. To a large extent, it is the fault of their elites. Providing orientation and guidance is supposed to be their function and why society invests in them. But the elites in all countries in transition - tainted by long years of complicity in the unseemly and the criminal - never exerted moral or intellectual authority over their people. At the risk of sounding narcissistic, allow me to quote myself (from "The Poets and the Eclipse"). Replace "intellectuals of the Balkan" with "intellectuals of the countries in transition":
"The intellectuals of the Balkans - a curse, not in disguise. a nefarious presence, ominous, erratic and corrupt. Sometimes, at the nucleus of all conflict and mayhem - at other times (of ethnic cleansing or suppression of the media) conspicuously absent. Zeligs of umpteen disguises and ever-changing, shimmering loyalties.
They exert no moderating, countervailing influence - on the contrary, they radicalize, dramatize, poison and incite. Intellectuals are prominent among all the nationalist parties in the Balkans - and rare among the scant centre parties that have recently sprung out of the ashes of communism.
They do not disseminate the little, outdated knowledge that they do possess. Rather they keep it as a guild would, unto themselves, jealously. In the vanity typical of the insecure, they abnegate all foreign knowledge. They rarely know a second language sufficiently to read it. They promote their brand of degreed ignorance with religious zeal and punish all transgressors with fierceness and ruthlessness. They are the main barriers to technology transfers and knowledge enhancement in this wretched region. Their instincts of self preservation go against the best interests of their people. Unable to educate and teach - they prostitute their services, selling degrees or corrupting themselves in politics. They make up a big part of the post communist nomenclature as they have a big part of the communist one. The result is economics students who never heard of Milton Friedman or Kenneth Arrow and students of medicine who offer sex or money or both to their professors in order to graduate.
Thus, instead of advocating and promoting freedom and liberalization - they concentrate on the mechanisms of control, on manipulating the worn levers of power. They are the dishonest brokers of corrupted politicians and their businessmen cronies. They are heavily involved - oft times the initiators - of suppression and repression, especially of the mind and of the spirit. The black crows of nationalism perched upon their beleaguered ivory towers.
The intellectuals of the Balkans failed miserably. Terrified by the sights and sounds of their threatened territory - they succumbed to obscurantism, resorted to the nostalgic, the abstract and the fantastic, rather than to the pragmatic. This choice is evident even in their speech. Marred by centuries of cruel outside domination - it is all but meaningless. No one can understand what a Balkanian has to say. Both syntax and grammar are tortured into incomprehensibility. Evasion dominates, a profusion of obscuring verbal veils, twists and turns hiding a vacuous deposition.
The Balkan intellectuals chose narcissistic self absorption and navel gazing over "other-orientation". Instead of seeking integration (as distinct from assimilation) - they preach and practice isolation. They aim to differentiate themselves not in a pluralistic, benign manner - but in vicious, raging defiance of "mondialism" (a Serbian propaganda term). To define themselves AGAINST all others - rather than to compare and learn from the comparison. Their love affair with a (mostly concocted) past, their future-phobia, the ensuing culture shock - all follow naturally from the premises of their disconsolate uniqueness. Balkan intellectuals are all paranoids. Scratch the surface, the thin, bow tied, veneer of "kultur" - and you will find an atavistic poet, fighting against the very evil wrought by him and by his actions. This is the Greek tragedy of this breathtaking region. Nature here is cleverer than humans. It is exactly their conspiracies that bring about the very things they have to conspire against in the first place.
All over the world, intellectuals are the vanguard, the fifth column of new ideas, the resistance movement against the occupation of the old and the banal. Here intellectuals preach conformity, doing things the old, proven way, protectionism against the trade of liberal minds. All intellectuals here - fed by the long arm of the state - are collaborators. True, all hideous regimes had their figleaf intellectuals and with a few exceptions, the regimes in the Balkans are not hideous. But the principle is the same, only the price varies. Prostituting their unique position in semi-literate, village-tribal societies - intellectuals in the Balkans sold out en masse. They are the inertial power - rather than the counterfist of reform. They are involved in politics of the wrong and doomed kind. The Balkan would have been better off had they decided to remain aloof, detached in their archipelago of universities.
There is no real fire in Balkan intellectuals. Oh, they get excited and they shout and blush and wave their hands ever so vigorously. But they are empty. It is full gas in neutral. They get nowhere because they are going nowhere. They are rational and conservative and some are emotional and "leftist". But it is all listless and lifeless, like the paces of a very old mechanism, set in motion 80 years ago and never unwound.
All that day of the eclipse of the last millennium, even the intellectuals stayed in their cellars and in their offices and did not dare venture out. They emerged when night fell, accustomed to the darkness, unable to confront their own eclipse, hiding from the evil influence of a re-emerging sun."