The Collapse of State Socialism: The Case of Poland

by Bartolomiej Kaminski

Overview

Does the abrupt collapse of communist regimes in Eastern Europe arise only from errors in implementing the policy of state socialism, leaving the concept itself still a potentially valid one? Bartlomiej Kaminski argues to the contrary: state socialism is a fundamentally defective idea that was well carried out, enabling it to exist until its accumulated shortcomings made its survival extremely difficult. How did the flawed state-socialist system endure for so long? Why is it failing now? In answering these questions, Kaminski, who is both an economist and a political analyst, proposes a general theory and then applies it to the case of Poland. Contending that the breakdown of state socialism results from symbiosis of the state and the economy, the book describes how communist governments searched for tools that would replace the market mechanism and the rule of law. Doomed in advance by the absence of autonomy and competition, this search generated new crises by undermining the state's capacity to suppress individual interests and to direct the economy.

Originally published in 1991.

The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

Product Details

ISBN-13:	9780691609010
Publisher:	Princeton University Press
Publication date:	07/14/2014
Series:	Princeton Legacy Library , #1187
Pages:	280
Product dimensions:	6.00(w) x 9.10(h) x 0.80(d)

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The Collapse of State Socialism

The Case of Poland

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By Bartlomiej Kamínski

PRINCETON UNIVERSITY PRESS

Copyright © 1991 Princeton University Press
All rights reserved.
ISBN: 978-0-691-07880-9

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CHAPTER 1

The Institutional Sources of Crisis-Generating Tendencies

The state socialist world today is collapsing. The root of its disintegration is the institutional structure of state socialism. The collapse of state socialism is of its own making. Its institutional structures are inadequate to cope with external and internal challenges. The promise and threat of the crisis is that it cannot be solved without overhauling the basic institutions of a socialist society.

State socialism is set apart from other politico-economic systems by its institutional framework based on the fusion of the state and the economy as well as of the state and society. As such, it is a continuation of earlier political systems dominated by patrimonial bureaucracies and traditional hierarchies. This fusion defies economic and political rationality in the contemporary external environment characterized by rapid change. The design assumes away self-interest as a driving force of social change and puts the burden of responsibility for virtually everything on the state. The crisis is a failure of the state to respond to demands of society and the external environment. In other words, given the institutional constraints, a viable politico-economic order cannot be born without eradicating state socialism.

Many analysts of the institutional underpinnings of state socialism have directly transplanted Western political and economic concepts. This approach to the analysis of development is a mistake. The focus on apparent similarities has accounted for flaws and weaknesses in many of these analyses. Charles Lindblom (1977, ix), for instance, has sought to analyze all existing contemporary politico-economic systems in terms of varying proportions of state and market. He writes, "The greatest distinction between one government and another is the degree to which market replaces government or government replaces market" The existing continuum is marked at one end by a laissez faire competitive system; but at the other end one cannot place state socialism, as Lindblom and many others, explicitly or implicitly, do.

Politico-economic systems differ not just in how much of state and market they put into their mixtures but also in the extent to which these elements can be separated at all. State socialism is not characterized by a dominant share of government and a miniscule share of the market. Instead, it is characterized by a qualitatively different interaction between the state and the economy. Lev Trotsky criticized Stalinist central planning for "freeing itself from monetary (tsennostnyi) control, just as bureaucratic arbitrariness frees itself from political control." What Trotsky failed to note is that the economy has become part of the state. This is not a question of different proportions of government and market but of a qualitatively different arrangement.

The institutional arrangement of state socialism is the outcome of a fusion of state and economy. Neither the state nor the economy can be separated. Economic, political, and social components are blended. The weakness of Lindblom's analysis of communism stems from a failure to recognize that the symbiotic relationship between economy and state gives rise to a different set of characteristics and calls for different theoretical concepts. This does not necessarily imply that they do not share some common social phenomena and pathologies (Kaminski 1989a).

The fact that in spite of frequent reform attempts the institutional design of state socialism survived almost intact is often regarded as a proof of the built-in bias against any change or of state socialism's nonreformability (Tatu 1987). As Poland's former prime minister Mieczyslaw F. Rakowski noted:

For almost forty years, the factors determining the party's position in the system, and indirectly in the society, have been rooted in the sphere of the economy. The party, in fact, or rather to be precise its leadership was in charge of means of production and exercised control over their utilization. Every government and Planning Commission played to a great extent the role of an official distributor of the above mentioned means. (Rakowski 1987, 50)

This citation suggests that direct controls over the economy were crucial for the party-state apparatus to defend its privileged position.

Yet state socialism has clearly changed, although the evolution circumvented the design granting the party-state institutional omnipotence. It has become softer, leakier, and less oppressive. An extreme centralization has given way to deconcentration of power: managers of large state-owned enterprises and local party-state officials have acquired a certain level of autonomy. But those deconcentrated "smaller units" have remained organized around the fusion of the state and the economy, and their interactions have been more or less strongly subject to the center of power. All the modifications have been moving the party-state closer to the very concept of social order that its founders rejected. In its decay, state socialism has become a caricature of democracy and of the market economy because the emerging pluralism was not matched by institutional changes that recognized the autonomy of self-interested behavior.

The objective in this chapter is to identify and assess the impact of the institutional arrangement of state socialism on its political and economic dynamics. I address two major themes here: first, the institutional framework of state socialism, and, second, its inherent limitations in controlling economic performance and sustaining political stability. The common denominator is the link between institutional design and the increasingly limited capacity of the socialist state to adapt to societal aspirations and exigencies of the international political economy. The first theme, the original institutional design of state socialism, as it emerged in the Soviet Union under Stalin in the 1930s, has continuing relevance for the study of contemporary state socialism. In spite of substantial changes, its essential features have survived sturdily. Although the economic system has become a caricature of command planning, and its polity has become a caricature of totalitarianism, the mechanisms have remained essentially intact, particularly in the economic system.

The second theme that I address is the impact of the institutional arrangements on the capacity of the socialist state to adapt to domestic and external challenges. The ability of the state to collect information about economic opportunities, to enforce its preferences, and to adjust its structure is strongly curtailed by ideological and political constraints. Those constraints are the product of a social fabric created by the institutional design of state socialism.

This substance that locks together the rulers and the ruled has not been resistant to change. The modes of governance have evolved since Stalin's death. Brutal, random, and indiscriminate repression has given way to more sophisticated methods of control. Repression has become more selective. Society has regained some autonomy. In the economic system, planning procedures have been vastly improved. Yet, this fabric, combined with the dominant Soviet position in Eastern Europe, has not provided a fertile ground for inventing and implementing institutional changes that would reverse the process of decay. This chapter sets a theoretical framework for the analysis of the disintegration of state socialism.

The Institutional Design of State Socialism: The End of Politics and Economics?

The institutional design of state socialism resulted from a Marxist vision of a Communist social order adapted to the conditions prevailing in a relatively backward country, Russia. Preoccupied with the theoretical account of processes that would lead to the fall of capitalism, neither Marx nor Engels devoted much attention to specific features of a transition to communism. They highlighted the modus operandi of communism only by showing how the contradictions of capitalism could be removed. The task of designing the intermediate order "until the higher phase of communism arrives" was left to Lenin and his followers.

Marx's and Engels's vision was predicated upon a total rejection of capitalism once it had fulfilled its "historic mission" of developing the forces of production. A revolutionary eradication of all its institutions was to put an end to all social problems. The source of evil was private ownership. As they stated in The Communist Manifesto, "The theory of the communists may be summed up in the single sentence: abolition of private property" (Nove and Nuti 1972, 19). This has been the core of Communist ideology.

Viewed against a broader background of Marxism, the abolition of private property was thought to have several important implications for the "new society." First, private ownership was regarded as the only source of antagonistic social relations. It gave rise to exploitation and, together with the development of productive forces, was responsible for the growing alienation of workers. As Engels wrote in Anti-Dühring, the abolition of private property would amount to "the genuine resolution of the conflict between man and nature and between man and man" (Nove and Nuti, 1972, 24). Engel's analysis suggests that in communism there would be no room for politics.

Second, the disappearance of private property was to put an end to civil society. Economic relations (civil society) would wither away for "the producers do not exchange their products." The state, as the instrument of class repression, would also disappear in the absence of classes. The pervasive view expressed in Marx's, Engels's, and Lenin's writing was that the state was the "executive committee" acting on behalf of the capitalists to ensure the reproduction of the relations of production based on private ownership and, therefore, exploitation.

By the same token, money was to be abolished, and then the economy would become demonetized. When everything became everyone's property and allocation was according to one's needs, then direct exchange would replace the use of money. As a result, economics would also disappear because resources would be allocated not by markets and prices but by the conscious decisions of the society. Thus the abolition of private property in the conditions of material abundance would produce a harmonious society in which there would be no room for either politics and the state or the economy and the market.

Although Russia after the Revolution was a long way from material abundance, the intermediate order that was founded for the "lower phase" of communism has retained some major elements of the vision of communism. The underlying assumption was that capitalism could contribute little to economic modernization. This task was to be undertaken by the Communist party. True to their ideology, the Communists adopted an institutional design that totally rejected democracy and the market. In addition, they also repulsed the rule of law. Lenin, discussing Marx's comments on "parliamentary cretinism," argued that the dictatorship of the proletariat should be a system of rule "unrestricted by any laws" (Parkin, 1979, 180).

The abolition of the market mechanism liberated state socialism from the control of the "invisible hand," whereas rejection of democracy put it beyond social control and direct accountability for the actions of its elites. A market, in its obfuscated form, was allowed to operate only during a short period of the New Economic Policy (NEP). The state, which assumed direct control over the economy, also assumed full responsibility for effecting change. Democracy was replaced by hierarchical subordination; all activities were to be controlled from above.

The notion of democracy was rejected even within the party, as Lenin's ban on factions and his concept of "democratic centralism" demonstrate. This institutional design allocated the leading role in society to the party. The state was to be its instrument for mobilizing society to construct the material foundation for communism. Command planning based on accounting and control was to become a major tool of state control over the economy. As Lenin described it:

Accounting and control—that is mainly what is needed for the "smooth working," for the proper functioning, of the first phase of communist society. All citizens are transformed into hired employees of the state, which consists of the armed workers. All citizens become employees and workers of a single country-wide state "syndicate."

The assumption underlying Lenin's vision was that the state would be responsible for solving all problems related to coordination of activities throughout the whole economy. The market and money as devices for allocating resources and goods were regarded as inferior to the party and its administrative arm, the state.

The claim of the superiority of order based on state ownership, command planning, and the party's leading role has been at the heart of Communist ideology. Therefore, it is scarcely surprising that Communist takeovers have always resulted in the imposition of a one-party rule and the seizure of direct control of the economy. The nationalization of almost all capital assets including banks and trade organizations, the introduction of state monopoly over foreign trade, as well as the establishment of one-party control through a nomenklatura have been among the measures that completed the process of Communist takeovers. Even though a small private sector survived in some countries, the state's monopolistic position as a supplier, buyer, and rule generator gave it controlling powers. By owning most of the capital assets, the state has become, as Lenin suggested, the main employer, thus controlling who would be employed and promoted. By virtue of its aspiration to full control over the economy, that is, the rate of accumulation and production and the distribution of goods and services, the party-state has become the locus of decision making. And because it seeks legitimation in Communist ideology this system has earned the title of state socialism.

The idealized institutional features of state socialism compared with bourgeois democracy are presented in table 1.1. (The major organizing principles of state socialism discussed in this book are summarized in table 1.1.) By contrasting their institutional features, one may see that state socialism is a symmetrical negation of the Western order based on the rule of law (rechstaat), rulers' accountability (democracy), and autonomy of the economy (civil society). The contrast between the two orders is particularly visible in the markedly different ways the two designs suggest to organize the fundamental interactions between the state and society and between the state and the economy. Under state socialism, the socialist state aspires to assume all functions, whereas in a Western system the division of functions is clear cut.

The Western design, which leaves the future open and stresses personal freedoms, is rules oriented. The state socialist design determines the future and subordinates means to its attainment. It is tasks oriented. The former holds "means" invariant, whereas the latter subordinates means to a goal. The former is expected to create conditions for decentralized actions that will contribute to welfare maximization, whereas the latter assumes the task of doing so. The future social order orientation of Communist ideology legitimates the state's activity insofar as it is conducive to the construction of a Communist society; the ends justify the means.

The Western design seeks to control effects of freedom through the political system. Noting that factions (or interest groups) are the product of freedom, James Madison (1787) writes, "But it could not be a less folly to abolish liberty, which is essential to political life, because it nourishes faction than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency." The state socialist design destroys liberty for the sake of "genuine" liberty and a conflict-free society in the future.

Suppressing economic and political freedoms has several implications for the modus operandi of state socialism. With the declining appeal of the promise of a better future, economic performance becomes essential to state socialism's legitimacy. By becoming the direct organizer of economic activity, the state assumes the sole responsibility for economic performance. Given the fact that the institutional design is based on the assumption that rapid economic development will almost immediately generate an abundance of material goods, there is little institutional room for making adjustments unless the goal is achieved within a short time, as the Russian revolutionaries hoped would be the case.

(Continues...)

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Table of Contents

• FrontMatter, pg. i
• Contents, pg. vii
• List of Tables, pg. xi
• Preface, pg. xiii
• INTRODUCTION, pg. 3
• CHAPTER ONE. The Institutional Sources of Crisis-Generating Tendencies, pg. 17
• CHAPTER TWO. The Limited "Reformability" of State Socialism, pg. 45
• CHAPTER THREE. The Logic of a Closed System: The Vicious Cycle of Decline, pg. 77
• CHAPTER FOUR. Crisis Management: The Trap of Negative Legitimation, pg. 114
• CHAPTER FIVE. Determinants of Normalization: Why Has It Failed to "Normalize" State Socialism in Poland?, pg. 135
• CHAPTER SIX. The Institutional Decomposition of State Socialism: The Syndrome of Withdrawal, pg. 162
• CHAPTER SEVEN. Beyond State Socialism, pg. 194
• APPENDIX A. Stages of the "Post-Martial Law" Normalization: A Bird's Eye View of Major Political Developments, pg. 213
• APPENDIX Β. The Debt Trap, pg. 237
• Abbreviations, pg. 245
• Bibliography, pg. 247
• Index, pg. 263