The Postrevolutionary Hangover

The extraordinary events of the last two years in Central Europe have resulted in Himalayas of print, and it is hardly possible to add anything new or original. Nonetheless, I want to present a few thoughts concerning the postrevolutionary hangover in Central Europe. In fact, this hangover was unavoidable. There has never been a successful revolution (bloody or not) that has not produced massive disappointment almost at the very moment of its victory. This was inevitable because, in order to mobilize the amount of social energy necessary to overthrow a well-established order, people must have extremely inflated hopes—hopes that simply cannot be realized. The discrepancy between such expectations and the postrevolutionary reality is bound to be very large, yet prerevolutionary self-deceptions are a necessary condition of success.

It was predictable and predicted that in all the countries of Central Europe the unity of the democratic opposition, once cemented by a common adversary, would fall apart soon after the communist regime had been defeated. Distinct ideas, mentalities, and interests, which were previously more or less hidden, would come to the surface. There is nothing calamitous in this. Rather, it should be considered a return to what we may call normality in the Western sense. Alas, normality is still far away. In Poland, there are about 150 political parties, only a few of which have any electoral significance and none of which, it seems, has an impressive membership.

It was no less predictable and predicted that the obstacles in the path of economic reform would be immense, but how immense they would turn out to be could not have been predicted. The transition to a market economy with a substantial private sector is easier said than done. There has never been a historical precedent for this sort of transition, and everything had to be improvised on the spot. What was needed was no less than the rediscovery of money. The point was not simply to limit inflation, but to put into place mechanisms that would make it possible to know what things cost. Under the old command economies, prices were arbitrarily set by central planners; nobody knew the real cost of anything. Since the market is the only reliable source of information about prices, the freeing of prices was a fundamental condition of reform, but it had bad sides as well. The immediate results were a decline in most people's living standards and a rise in unemployment. Taxation measures designed to prevent an increase in wages provoked widespread discontent and strikes. Among Polish workers one may even hear voices claiming that things were better under the Communists, when there was no fear of unemployment. About politics they say, "We couldn't care less."

This does not mean, of course, that Poland or any other country in Central Europe is threatened by a mounting wave of communist sympathizers. The situation provides fertile ground, however, for all sorts of demagogues promising people that all social and economic problems can be solved in no time. Freeing prices was a necessary, but by no means sufficient condition of the transition. A great deal of national wealth, including large parts of industry and parts of agriculture, is still in the hands of the state. Ownership titles are often very unclear, as are legal rules dealing with business and privatization, which might frighten off foreign investors.

The denationalization process does not necessarily imply that everything must be privatized as a matter of rigid dogma. State-owned companies can coexist with a market economy, as the experience of Western Europe shows. The extent of state intervention is a contentious issue between movements with a more or less social democratic leaning and the die-hard Hayekians. It is certainly arguable that market forces themselves do not automatically solve all social problems.

The communist heritage survives not only in the economy and in political institutions, but in minds as well. The workers want to have shares in their companies' profits and to remove restrictions on profits, but they would also like to have guarantees against unemployment. The peasants want to have freedom of trade for their products, but...