The Power of Freedom. Mart Laar

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      It was not actually difficult to reach such optimistic conclusions on the health of the Soviet economy from looking at the impressive figures in Soviet statistics. After the wobbles of the early 1960s, the Communist bloc countries’ five-year GDP growth targets for the years 1966-1975 were achieved, ranging from East Germany’s 5.4 % to Romania’s 11.3 %, annually. How are decades of such high growth figures to be reconciled with the low per capita living standards? Firstly, the Communist gross figures included the double counting of input materials as well as the finished products. The figures were also often deliberately massaged to disguise the embarrassing gap between the USSR and the West. Above all, much Communist growth went into the production of items like steel that were then used to make more of the same at the expense of consumption and personal income.110 Unfortunately, such factors were often not taken into account when assessing the Communist countries’ GDP.

      Of course, it cannot be said that no development or achievements were made during the fifty years under Communism. With improved healthcare, the mortality rate dropped, then the fall in the birth rate reduced population growth to a modest 1 %, quite near to Western standards. Infant mortality fell, but was still too high compared to Western levels. While mass primary education had largely come about before 1939, mass secondary education only came under Communism. The levelling of differences, which was one of Communism’s declared aims, operated most clearly in income policy where pay differentials were narrowed, thus laying the basis for fuller social integration. At the same time, we might question whether all of this would not have happened anyway as part of overall modernisation. Several Central and Eastern European countries already demonstrated rapid development in the 1930s, might they not have been better off if they had been allowed to continue on their own path? To answer these questions, we must compare the development levels of European countries in the 1930s with their development levels in the 1970s and at the end of the 1980s, during the last years of Communism.

      Shop door opens in Skaryszew, Poland, 1989

      During the 19th century, the average income per capita in Central and Eastern Europe was half that of Western Europe. By 1913, it had fallen to 46 % and 32 % of the rest of the Western world (US, Canada). During the years of independence between 1920 and 1939, the countries of Central and Eastern Europe developed well and even after the massive destruction of the Second World War, by 1950, the difference between Central and Eastern Europe and Western Europe had decreased. This trend continued into the 1960s and 1970s, but then a new decline began. By 1990, the per capita income in Central and Eastern Europe had fallen to 32 % of the level of the Western world. The failure to reach the economic levels that prevailed in Western Europe was especially painful as it was during this period that other less developed countries in the Mediterranean and on the Northern periphery of Europe broke free from backwardness. By the 1930s, most Central and Eastern European countries had achieved better living standards than Spain, Portugal, Greece or even Italy and competed with countries like Austria or Finland. Even in the 1950s, the average level of income in Spain, Portugal and Greece stood at only 39 % of West European levels, less than that in Central and Eastern Europe. But by 1973, the per capita income in Southern Europe soon slightly exceeded that of Central and Eastern Europe. By 1987, the difference had become very СКАЧАТЬ