Year 501 (16 page)

Exaggeration of the enemy's power is a characteristic feature of the North-South conflict; at the outer limits, one hears that Sandinistas were about to march on Texas, even that
Grenada
was a menace, “strategically located” to threaten US oil supplies, as “the Cubans surely appreciate” (Robert Leiken). The procedure was not invented with the Cold War. “A review of alarmist scenarios from the past might well begin with the threat from Chile posited in the 1880s by advocates of a new navy,” John Thompson observes, reviewing the “tradition” of “exaggeration of American vulnerability.” Recall as well the “mingled hordes of lawless Indians and negroes” who compelled us to conquer Florida in self-defense, and on back to colonial days.
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The purpose is transparent. The cultural managers must have at hand the tools to do their work. And apart from the most cynical, planners must convince themselves of the justice of the actions, often monstrous, that they plan and implement. There are only two pretexts: self-defense and benevolence. It need not be assumed that use of the tools is mere deception or careerism, though sometimes it is. Nothing is easier than to convince oneself of the merits of actions and policies that serve self-interest. Expressions of benevolent intent, in particular, must be regarded with much caution: they can be taken seriously when the policies advocated happen to be harmful to self-interest, a historical category that is vanishingly small.

In the Cold War case, there is another factor that may have helped extend the delusional system beyond its normal practitioners: the Russians had their own reasons for depicting themselves as an awesome superpower marching on towards a still grander future. When the world's two major propaganda systems agree on some doctrine, however fanciful, it is not easy to escape its grip.

A striking example is the delusion that the Cold War was a struggle between socialism and capitalism. The Soviet Union, from 1917, has been even more remote from socialism than the US and its allies have been from capitalism, but again, both major propaganda systems have had a longstanding interest in claiming otherwise: the West, so as to defame socialism by associating it with Leninist tyranny, and the USSR, so as to gain what prestige it could by associating itself with socialist ideals—ideals whose force was powerful and wide-ranging. “I believe that socialism is the grandest theory ever presented, and I am sure some day it will rule the world,” Andrew Carnegie told the
New York Times
, and when it does, “we will have attained the millennium.” To this day, almost half the population find the phrase “from each according to his ability, to each according to his need” to be such an obvious truth that they attribute it to the US Constitution, a text largely unknown but taken to be akin to Holy Writ. The absurd association of Bolshevik tyranny with socialist freedom was doubtless reinforced by the accord between the two major doctrinal systems, though for intellectuals, the appeal of Lenin's authoritarian deviation from the socialist tradition has deeper roots.
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By the early 1980s it was becoming impossible to sustain the illusion of Soviet power, and a few years later, it was laid to rest.

3. Return to Normalcy

If early modern Eastern Europe was “a testing ground for bankers and financiers to practice what they would later perfect in more distant lands” (Feffer), then by the 1980s the shoe was on the other foot: it was to be a “testing ground” for the doctrines of laissez-faire economic development that had been avoided by every successful developed country, and applied under Western tutelage in the South with destructive effects. A symbolic illustration of the reversal is the role of Harvard economist Jeffrey Sachs, who “in the 1980s had devastated the Bolivian economy in the name of monetary stability,” Feffer accurately observes, and then moved on to Poland to offer the harsh medicine conventionally prescribed for the service areas.

Following the rules, Poland has seen “the creation of many profitable private businesses,” the knowledgeable analyst Abraham Bromberg observes, along with “a drop of nearly 40 percent in production, enormous hardships and social turmoil,” and “the collapse of two governments.” In 1991, gross domestic product (GDP) declined 8-10 percent with an 8 percent fall in investment and a near doubling of unemployment, reaching 11 percent of the workforce in early 1992, after an official GDP decline of 20 percent in two years. A 1992 World Bank report on the Polish economy, discussed by Anthony Robinson in the
Financial Times
, concluded that “The fiscal situation has worsened to the point where hyperinflation is an immediate danger. Unemployment has reached a level that cannot be tolerated for long. Investment in infrastructure and human resource development has shrunk to levels that, if maintained, will undermine the prospects for sustained growth.” It warned that “None of the long-term supply side reforms” that the Bank advocates “stands any chance of success if Poland slides back into hyperinflation, or if its economy continues to decline as dramatically as it has in the last two years.” “Private savings were virtually eliminated by hyperinflation and the 1990 economic stabilisation programme,” Robinson adds, while problems were exacerbated by capital flight of several tens of millions of dollars a month. While the decline will “bottom out,” prospects appear dim for much of the population.

Russia has been going the same way. “On some estimates,” Michael Haynes observes, “capital flight from the USSR was somewhere between $14-19 billion in 1991,” some of it short-term, some for longer-term structural reasons. Production declined in 1991. Economic and finance minister Yegor Gaidar warned of a further drop of 20 percent in early 1992, with the “worst period” still ahead. Light industrial production fell by 15-30 percent in the first 19 days of January 1992 while deliveries of meat, cereals, and milk fell by a third or more. From early 1989 through mid-1992, according to IMF and World Bank statistics, industrial output fell by 45 percent and prices rose 40-fold in Poland and real wages were almost halved; figures for the rest of Eastern Europe were not much better.

Western ideologists are impressed with what has been achieved, but concerned that economic irrationality might impede further progress. Under the heading “Factory Dinosaurs Imperil Poland's Economic Gain,”
New York Times
correspondent Stephen Engelberg looks at “a worst-case instance of how the industrial legacies of the Communist system threaten to drag down economic reform plans in Poland and other Eastern European nations”: the city of Rzeszow, dependent on an aircraft manufacturer for employment, tax revenues, even heat from industrial by-products. The free market policies have “brought cities like Warsaw or Cracow alive with commerce,” Engelberg notes, doubling the number of private businesses (though the people too impoverished to buy even basic goods do not reach the threshold). But this welcome progress is threatened by calls for government intervention to meet minimal human needs and rescue enterprises suffering from loss of markets and supplies and unpaid debts after the collapse of the USSR.

No less ominous, Engelberg observes, is “social unrest from the workers,” who now have a measure of control in factories and even go on strike to prevent closure of plants that might be rescued by “Government-guaranteed loans to rebuild foundries.” The Solidarity Union calls on the Government “to forgive overdue taxes and place big new airplane orders for the Polish army.” A Solidarity leader says that “the Government has to make a decision whether or not it needs an aircraft industry or whether it has to be restructured or whether one-half should produce aviation and the rest something else.” But Western analysts understand that such decisions are not for the Poles to make: they are to be made by the “free market”—or more accurately, the powerful institutions that dominate it. And no embarrassing questions are raised about the fate of the US aircraft industry, or advanced industry in general, without the huge public subsidy to create and maintain it; and so on through the functioning parts of the economy. Or about the Chrysler bail-out or Reagan's rescue of Continental Illinois Bank; or the hundreds of billions of taxpayer dollars to pay off S&L managers and investors, freed from both regulation and risk by the genius of Reaganomics. We put aside the question of how “economic irrationality” of the kind denied to the Third World created an economy in which Americans no longer pursue their comparative advantage in exporting furs.

The problem of uppity workers is also noted by
Financial Times
correspondent Anthony Robinson. He writes that many communities depend upon “large plants where workers' councils exert strong influence on management unversed in the ways of the market.” This unwarranted influence of working people undermines the lessons of economic rationality and democracy that we are patiently trying to impart. Economic rationality requires that the tools of production overcome their reluctance to see their communities and families destroyed. “It is not for the commodity to decide where it should be offered for sale, to what purpose it should be used; at what price it should be allowed to change hands, and in what manner it should be consumed or destroyed,” as Karl Polanyi commented in his classic study of the laissez-faire experiment in 19th century England, quickly terminated as it came to be understood by the business classes that their interests would be harmed by the free market, which “could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness.”

As for democracy, in the approved sense it allows no room for any popular interference in the totalitarian structure of the corporate economy, with all that follows in other spheres of life. The role of the public is to follow orders, not to interfere.

Gabrielle Glaser reports one of the results of “Poland's opening to Western market forces” in the
New York Times
under the heading: “Booming Polish Market: Blond, Blue-Eyed Babies.” An “unexpected side effect” of the free market, she writes, is “a booming traffic” in this commodity, as “young mothers are being pressed to sign away the rights to their children.” The numbers may reach tens of thousands. “I hate to say it,” the director of a state adoption agency comments, “but it seems to me that Poland has one of the most serious markets of white babies.” Polish journals tend to shy away from the role of the Church, Glaser reports, but one inquiry reported that the Mother Superior of one adoption home receives $15,000 for each baby girl and up to $25,000 for each baby boy. Asked about the report, she replied: “I cannot give you any information. Good-bye.” She did, however, display her papal award for “defending life,” “an honor Pope John Paul II bestows on anti-abortion crusaders in his native Poland,” Glaser comments.

Why this side effect is “unexpected,” Glaser does not explain. Indeed, as she notes, such reports “are not new in Eastern Europe or the Third World: Romania became notorious for the practice after its 1989 revolution.” Post-1989 Romania is a curious choice. The phenomenon is a well-known concomitant of the integration of the South into the world order in the service role; reports of sale of children are, in fact, some of the more benign that are familiar to those who do not choose to shield themselves from the wrong kind of facts. The “side effects” of the subjection of the South to market forces are not in the least unexpected, except to the laser-like vision of the trained ideologue.

“Unexpected side effects” of the invisible hand have also been found in Russia, again eliciting much surprise. A front-page
New York Times
headline reads: “The Russians' New Code: If It Pays, Anything Goes.” “It is not just a matter of crime, corruption, prostitution, smuggling, and drug and alcohol abuse,” all on the rise: “There is also a widespread view that...people are out for themselves and anything goes”—unlike the United States, where pursuit of “the vile maxim of the masters” is unknown, or the Third World domains that have been subject to our helping hand. “Swindles and bribes are hardly a new phenomenon in Russia,” correspondent Celestine Bohlen observes, and were familiar in the “old Communist system”—again, unlike the US and its clients.

During the same days, the
Times
was reporting the saga of President Fernando Collor of Brazil, the fair-haired boy of Washington and the business community, who broke new records in corruption in a richly-endowed country that has been a “testing area” for US experts for half a century (see chapter 7). One may recall a few domestic examples of corruption as well, from the days of the Founding Fathers, no slouches in this game, and on to the Reaganites and Wall Street in the 1980s. Corruption is an intrinsic feature of “the old Communist system,” the ideological institutions (correctly) proclaim: under “capitalist democracy,” it is an aberration, quickly corrected.

The new “ostentatious wealth sets most citizens' nerves on edge,” Bohlen continues, describing the standard consequences of neoliberal remedies. “Crime has soared in Russia after the collapse of Communism, as it did in Eastern Europe,” including white-collar crimes, which have “taken off.” But “the levels of crime are still well below New York's standards.” There is still room for progress towards the capitalist ideal.

The economies of Eastern Europe stagnated or declined through the eighties, but went into free fall as the IMF regimen was adopted with the end of the Cold War in 1989. By the fourth quarter of 1990, Bulgaria's industrial output (which had previously remained steady) had dropped 17 percent, Hungary's 12 percent, Poland's over 23 percent, Romania's 30 percent. The UN Economic Commission for Europe reported in late 1991 that the region's output had declined 1 percent in 1989, 10 percent in 1990, and 15 percent in 1991, predicting a further decline of 20 percent for 1991, with the same or worse likely in 1992. One result has been a general disillusionment with the democratic opening, even some growing support for the former Communist parties. In Russia, the economic collapse has led to much suffering and deprivation, as well as “weariness, cynicism, and anger, directed at all politicians, from Yeltsin down,” Brumberg reports, and particularly at the ex-
Nomenklatura
who, as predicted, are coming to be the typical Third World elite serving the interests of the foreign masters. In public opinion polls, half the respondents considered the August 1991
Putsch
illegal, one-fourth approved, and the rest had no opinion.