The Rush to Capitalism

That the past months have been marked by the greatest changes of our times is a matter on which I need not dwell. What has been only moderately less evident is the flow of economic advice which has crossed national frontiers in these months. In the common reference communism having failed, capitalism is triumphant. And from this the conclusion: from the high priesthood of capitalism must now come the guidance, indeed the writ, on what the previously afflicted countries should do and have. Who could be qualified better to offer advice and guidance than the most relentless exponents of the successful system?

Much of this advice has flowed from our own country. We, not surprisingly, harbor and give voice to a considerable number of the archexponents of free enterprise. It has helped that this advice emanating from our shores is wonderfully inexpensive as compared with the more substantive help that many of us have urged as a way of easing this great transition.

In my view, some, and perhaps much, of the advice now being offered the Central and Eastern European states proceeds from a view of the so-called capitalist or free-enterprise economies that bears no relation to their reality. Nor would these economies have survived if it had. What is offered is an ideological construct that exists all but entirely in the minds and notably in the hopes of the donor. It bears no relation to reality; it is what I have elsewhere called the primitive ideology.

This advice has two features. Some comes from people who have long regretted the concessions that Western economies have accorded to social action—to the welfare state and public support to the impoverished; to the essential and growing role of the public services; to trade unions; to measures designed to achieve greater equality in income distribution; and to the larger post-Keynesian responsibility for the effective performance of the economic system as a whole. They don’t like what they see at home, so it naturally forms no part of their recommendations for countries now emerging from communism. And, it is clear, they are not without audience there: in economics and politics, as in religion, the new convert is often the most ardent in belief.

The second and related feature of the flow of advice currently reaching the countries that are now in transition is its casual acceptance of—even commitment to—human deprivation, to unemployment, inflation, and disastrously reduced living standards. This is even seen as essential therapy: out of the experience of unemployment and hunger will come a new and revitalized work ethic, a working force eager for the discipline of free enterprise. To each according to his ability, from each according to his need. In one ardently expressed view, which I heard just a few days ago from a business adviser recently returned from Poland, such deprivation—unemployment, low wages—will cause foreign investors and entrepreneurs in years ahead to come in for the rescue. Only a few years of suffering and all will then…

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