1989: Ruling Class Political Bankruptcy

From Uncivil Society: 1989 and the Implosion of the Communist Establishment, by Stephen Kotkin (Modern Library Chronicles Series Book 32; Random House, 2009), Kindle pp. 12-14:

In the popular imagination, communism’s demise in Eastern Europe has given rise to two opposing grand narratives. The first tells of a breakthrough to freedom; the second, of a revolution stolen by the old establishment. Both are partly true. Freedom, meaning the messiness of democracy as well as the rewards and risks of the market in an age of globalization, came in varying degrees to the countries of Eastern Europe, albeit with great assistance from the 1990s process of European Union accession. At the same time, much of the old Communist establishment in the East bloc survived and prospered, even in Poland (though not East Germany). Still, outcomes do not mean causation. The 1989 revolutions did not happen because of a broad freedom drive or an establishment self-enrichment grab. The cave-in was unintended, precipitated by Gorbachev’s unilateral removal of the Soviet backstop, a move that had been intended to goad socialist-bloc countries to reform themselves. In other words, Gorbachev was looking to galvanize the reform-minded Gorbachevs of Eastern Europe. There was only one flaw in this approach: there were no East European Gorbachevs. True, inside the establishments there was some ferment even before 1985 (Romania excepted), but party types inspired by Gorbachev’s Prague-Spring-style socialist revival were not numerous around the bloc. Romania’s Communist party had no reform wing whatsoever. In Poland, which was run by a military man, the party reform wing was concentrated in a periodical (Krytyka). In East Germany, proponents of a socialist renewal were found mostly among dreamy intellectuals, not officialdom. Instead of galvanizing socialist reformers in Eastern Europe, Gorbachev’s stunning repeal of the Brezhnev doctrine caught out the bloc’s uncivil societies, exposing how they had long engaged in breathtaking mismanagement. Above all, they had clung to anticapitalism in the face of an ever-flourishing capitalist Western Europe—from which the uncivil societies had borrowed to avoid making hard choices, running up self-destructive debts in hard currency, as we shall see. Then they borrowed some more. What Gorbachev did was to lay bare how socialism in the bloc had been crushed by competition with capitalism and by loans that could be repaid only by ever-new loans, Ponzi-scheme style.

We offer, then, a third narrative of global political economy and a bankrupt political class in a system that was largely bereft of corrective mechanisms. It may seem a depressing tale, yet perhaps it is not as disheartening as that of ruinous elites in a market democracy. In the 1990s and 2000s, American elites colluded in the United States’ descent into a sinkhole of debt to foreign lenders, enabling besotted consumers to indulge in profligate consumption of imported goods. America’s unwitting policy emulation of irresponsible uncivil societies was facilitated by communism’s implosion in Eastern Europe, which opened the bloc economies to global integration, and by the rise of savings-rich Asia. It was in such an environment that the spectacular incomprehension, lucrative recklessness, and not infrequent fraud of elites—bankers, fund managers, enabling politicians—booby-trapped the entire world’s financial system. After the meltdown that commenced in fall 2008, we can only hope that the market and democracy prove their resiliency and good governance and accountability return. In the meantime, if Eastern Europe’s experience is any guide, those responsible will largely escape any reckoning.