Table 7
Source: Maddison, 2001: 186.
Table 8
a Reported in B. Balassa. “Growth Performance of Eastern European Economies and Comparable Western European Economies,“ American Economic Review, May 1970.
b Cement, pig iron, steel ingots, in thousands of tons.
c Steel, million metric tons; cement, million tons; electricity, million kilowatt-hours.
d Total exports are the sum of exports to the convertible currency area ($8.5 bl) and exports to the nonconvertible currency area ($4.3 bl). It is likely that the latter value overstates the market value of these exports if they were to be valued at world market prices.
Source: Economist (1990), World Bank (1990), national sources.
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 marked. Between 1973 and 1992, the average income in the Southern peripheries of Europe actually increased by 38 %, while in Central and Eastern Europe it declined by 19 % (Table 7). Countries such as Austria, Ireland and Finland also leaped forward and by the 1990s, actually surpassed the average Western living standards. Czechoslovakia had been on a par with Germany before the war and well ahead of Spain. In her growth spurt during the 1960s, Spain overtook Czechoslovakia, first, in private cars and phones per capita and then in GDP per capita. Portugal followed the trend during the 1980s.111 This clearly demonstrates that Communism perpetuated backwardness in Central and Eastern Europe by not allowing it to move forward at the same rate as other European countries with similar backgrounds. Indeed, this is not only visible in the figures for GDP per capita; the same trend can be seen if we compare the levels of social development. Consider life expectancy for example. In the 1930s, the position of Central and Eastern European countries was clearly better than a number of other European countries in this regard, but patently fell behind Western Europe during Communist rule. Average life expectancy, of course, increased everywhere, but people were healthier and lived longer when they were not living in Communist countries. It is true that healthcare was free in the Communist states, but this did not help people to stay healthy as the quality of the healthcare was, unfortunately, too low.
Table 9
Source: Lugus O & Vartia P, 1993
This picture becomes even clearer when we move away from statistics that are to a greater or lesser extent distorted – portraying the Communist economies in a more favourable light than was actually the case – to a more detailed study, namely, to a comparison of the Communist countries with some of the poorer countries in Western Europe such as Portugal or Spain, whose economies differed little from those of the less developed Central and Eastern European countries prior to the Second World War. Jeffrey Sachs, for example, compared Poland and Spain: two countries that in the 1950s were largely agricultural, Catholic, peripheral regions of Europe (Table 8). The sizes of the populations and per capita incomes were also quite similar. They had both had disastrous experiences just prior to the mid-century mark – Poland suffered some of the largest civilian casualties relative to population size in Europe during the Second World War and Spain suffered its Civil War – which not only crushed democracy but also stifled economic development. In the 1930s, Poland was ahead of Spain in terms of per capita income and the situation in 1950 had not changed greatly although by this time, the data for Poland was in all likelihood falsified. Nevertheless, it is clear that Poland was clearly a larger industrial power and a larger exporter of goods than Spain. By 1988, however, Spain’s per capita income was four times that of Poland. The enormous increase in income was also reflected in Spain’s greater ownership of consumer durables, where Poland had also been ahead of Spain before the Second World War.112
The difference between the two countries shows up most dramatically in their differing export performances. Even in the 1970s, Poland’s total dollar value of exports still exceeded Spain’s;