How Capitalism came to Eastern Europe

After the Second World War communist regimes were established in Eastern Europe each with their own Communist Party. They were puppets of the Soviet Union and followed the Soviet economic and social policy for the next 40 years. The communist economy characterized with total state control of the all means of production – land, capital and labor. Farmland was divided into state controlled cooperatives which were supposed to regulate the proceeds from the production. Giant industrial complexes were built throughout Eastern Europe supporting the Soviet heavy industry. Chemical plants, nuclear power plants, automotive works and a large military industrial complex sprang like mushrooms. Such large enterprises were built with the goal of providing full employment and were often not profitable.

 

Then ‘End’ of the Communist Party Elite.

 

The management of such a large industrial and agricultural complexes led to the emergence of a vastly swollen bureaucracy. A rise in the working hierarchy depended on being a member of the Communist Party. This bureaucracy intermingled with the political elite at the higher social levels to create a powerful Nomenklatura. This Nomenklatura enjoyed vastly better living standards than most other people. The communist party elite lived in large mansions, instead of ugly panel apartment blocks. They enjoyed deficit goods, such as western state-of-the-art technology. They could travel and study abroad – something nearly impossible for the common folk.

 

 

The communist regime was founded not only on sheer police force, but to a large extent relied on constant and cunning propaganda. Nationalism was one of the pillars of this propaganda. The communists invested large resource into promoting national culture (especially the older culture, not related to any current political changes/movements, etc). Sport was also used as a means to distract the attention of the masses and again boost the nationalistic feeling. Sport clubs and academies were abundantly funded and produced a lot of quality sportspeople. Eastern European teams competed successfully in prestigious international tournaments. Almost in every athletic discipline, the countries from the communist block produced world class players. This was especially true for disciplines such as heavyweight lifting, wrestling and martial arts. A lot of people trained in such disciplines which created a genuine army of martial artists and strongmen, wholly dependent on the system for their livelihood and career.

 

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Due to the stagnating economy and the general resentment for the dictatorial communist party regime and its myriad restrictions on individual freedom, the red elite lost political power at the end of the 1980s. In some Eastern European countries, as in the former Soviet Union, this elite made everything possible to retain its real, economic power over society. These people turned into the new ultra-capitalists – the oligarchs. They embraced the political and economic thinking of their sworn enemies – the capitalist West and extracted the maximum profit from the chaotic and often bloody transition from a state-run to free-market economy. There was never a genuine revolution to topple them. They utilized their connections, knowledge of the social system and the enormous resources available at their disposal to ensure that they continued ruling society under a different guise. This article examines in detail how it was done in a country that is often cited as a brilliant example of this type of corruption – Bulgaria.

 

 

The fall of the communist regime in USSR triggered a wave of revolutions throughout Eastern Europe, which culminated with the tearing down of the Berlin Wall. In Bulgaria, the fall of the regime was accompanied with mass protests – over one million people took to the streets in the capital city of Sofia. A democratic government was elected (although composed of members of the former communist, now socialist party). Everybody hoped that the country would soon be westernized and would enjoy much higher living standards and opportunities. However the former elite had plans about how to appropriate the huge public funds accumulated during the previous forty years.

 

Former Communist Party Thugs

 

The army of strongmen, wrestlers, boxers and other martial artists were suddenly left on the streets to their own devices. The collapsing system could no longer guarantee them work, training and competitions. These people were then organized by former party members into bands of thugs. They started racketeering every small or middle business that was in their local area. They charged extraordinary amounts for security and insurance services. Many of those who disagreed were physically abused, had their business premises vandalized or were merely eliminated. This allowed the thugs and their puppet-masters to take control of the most lucrative pieces of business – finance, tourism and energy. Many small businesses were simply taken over by those thugs by compelling the owners to sell at laughably low prices.

 

 

They also controlled one of the most successful business endeavors of the former Party – the facilitation of the drug trade form the Orient to Western Europe. Ideologically backed up as a social weapon against capitalism, the drug trade brought large profits to the party and the country. Now the drug channels were in the hands of the emerging mafia to operate. Full-scale mafia wars soon erupted throughout the country. These wars soon wiped out those thugs who couldn’t turn into legal businessmen and paved the way for the emergence of the new elite which shamelessly showed off their unbelievable wealth to the common folk.

 

The Former Communist Party Pulls a Fast One

 

During communist rule, the ordinary people had amassed a decent amount of savings. Most of the Bulgarians had their own immovable property – an apartment and often a villa near the city. Since there was no private initiative there were no opportunities for investment. Communist culture wasn’t a consumer culture either. People only bought the necessary. Since planned obsolescence was forbidden – expensive technologies such as cars, TV sets etc. weren’t as quickly replaced as they are nowadays. This meant that people had nothing else to do with their money but to save it.

 

 

In order to get those savings, the former elite managed to deregulate the financial markets under the guise of opening the market. A lot of Ponzi schemes emerged. People were heartily encouraged to invest in them. They sold investment bonds with guaranteed huge returns. Soon these bonds were devalued and the organizers simply disappeared. Meanwhile, those organizers managed to buy with those investment bonds, very lucrative pieces of state property in the privatization process.

 

 

The Bulgarian privatization can be described with only one word – criminal. Plants, machines, mines and aircraft were sold for pennies. Valuable assets were deliberately declared as scrap to be resold at great profit. Many state businesses were bought with special investment bonds, which soon lost a lot of their value. A lot of businesses were artificially bankrupted and their assets sold off for profit. At the end most of the economy was in the hands of the very same Nomenklatura who were “toppled” in 1989.

 

 

The politics of the Bulgarian Central Bank lead to the creation of many banks with dubious capital. The monitoring of the banking system was almost non-existent. Credit for millions of people were given with little or dubious indemnities provided. The monetary mass grew exponentially which lead to one of the most notorious cases of hyperinflation in the world. Many banks went bankrupt and the savings of millions were lost or severely devalued. The new credit based millionaires managed to quickly turn the borrowed capital into immovable assets, which after the hyperinflation subsided, guaranteed them enormous profits and value.

 

 

The dossiers of the former agents of Bulgarian National Security – the sinister and ubiquitous police force of the Party, were opened only some twenty years after the fall of the regime. Many have been destroyed meanwhile. It transpired that many former members of the secret services had taken active participation in Bulgarian political life during those years. They used the economic, political and social data, which had been accumulated for many years during the regime, to gain control over the emerging capitalist economy and democratic political life.

 

 

This was the story of how the former communist elite managed to stay in control in a seemingly radically different social system. The result was the creation of a rich oligarchy of capital owners, gaping inequality, poor living conditions for many of the common folk, the destruction of the industrial complex and the squashing of the middle and micro business.

 

 

Simon Vlahov writing for the Apollo Institute of Reason AIR Review©

One thought on “How Capitalism came to Eastern Europe

  • February 24, 2017 at 8:13 pm
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    The situation is similar in all the former socialist republics.
    All this horror was happened under the supervision of the USSR and with the blessing of the democratic West. Local Communist Party depended nothing-they just listen and obey the commands of the Central Committee of the CPSU. The collapse of the USSR was planned by the red elite few years before it happens this collapse. After Stalin’s death and after the Caribbean crisis began the process of warming relations with Western elites, when was fоunded some socialist trade agencies, companies, firms in the western capitals and vice versa- however, the ordinary people turning against each othe from the both sidesr. Democratic West turned a blind eye to repression and atrocities in the socialist bloc, or doing some PR on the tragedy of the victims. After the “change” namely the West recognized the proven aparatchiks and informants of the secret service of a prominent anti-communists, democrats, liberals, etc. Examples include Vaclav Havel in Czechoslovakia and Lech Walesa in Poland and Andrei Lukanov from Bulgaria. A true fighters against communism died in poverty and oblivion. However, the Soviet revolution was financed by western capitalist mafia and accompanied by western secret services. Marxism inherently remains a misanthropic ideology – do not forget it, because the thinking eastern european know well about that’s ideology from personal experience.

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