What Was Socialism, and Why Did It Fall?*
Katherine Verdery
The startling disintegration of Communist Party rule in Eastern Europe in 1989, and its somewhat lengthier
unraveling in the Soviet Union between 1985 and 1991, rank among the century’s most momentous occurrences.
Especially because neither policy-makers nor area specialists predicted them, these events will yield much analysis
after the fact, as scholars develop the hindsight necessary for understanding what they failed to grasp before. In
this chapter, I aim to stimulate discussion about why Soviet-style socialism fell. Because I believe answers to the
question require understanding how socialism “worked,” I begin with an analysis of this and then suggest how it
intersected fatefully with certain features of its world-system context.
What Was Socialism?
The socialist societies of Eastern Europe and the Soviet Union differed from one another in significant
respects – for instance, in the intensity, span, and effectiveness of central control, in the extent of popular
support or resistance, and in the degree and timing of efforts at reform. Notwithstanding these differences
within “formerly existing socialism,” I follow theorists such as Kornai in opting for a single analytical model of
it. The family resemblances among socialist countries were more important than their variety, for analytic
purposes, much as we can best comprehend French, Japanese, West German, and North American societies as
variants of a single capitalist system. Acknowledging, then, that my description applies more fully to certain
countries and time periods than to others, I treat them all under one umbrella.
For several decades, the analysis of socialism has been an international industry, employing both Western
political scientists and Eastern dissidents. Since 1989 this industry has received a massive infusion of new raw
materials, as once-secret files are opened and translations appear of research by local scholars (especially Polish
and Hungarian) into their own declining socialist systems. My taste in such theories is “indigenist”: I have found
most useful the analyses of East Europeans concerning the world in which they lived. The following summary
owes much to that work, and it is subject to refinement and revision as new research appears. Given temporal
and spatial constraints, I will compress elements of a longer discussion, emphasizing how production was
organized and the consequences of this for consumption and for markets. I believe these themes afford the best
entry into why Party rule crumbled much faster than anyone expected.
Production
From the earliest days of the “totalitarian” model, Americans’ image of “Communism” was of an autocratic,
all-powerful state inexorably imposing its harsh will on its subjects. Even after most area specialists ceased to use
the term “totalitarian” in their writing, the image of totalitarian autocracy persisted with both the broader public
and many politicians; indeed, it underpinned Ronald Reagan’s view of the “evil empire” as late as the 1980s. Yet
the image was by and large wrong. Communist Party states were not all-powerful: they were comparatively weak.
Because socialism’s leaders managed only partially and fitfully to win a positive and supporting attitude from
their citizens – that is, to be seen as legitimate – the regimes were constantly undermined by internal resistance
and hidden forms of sabotage at all system levels. This contributed much to their final collapse. I will describe
briefly some of the elements of socialist nontotalitarianism and signal a few places where resistance lay.
Socialism’s fragility begins with the system of “centralized planning,” which the center neither adequately
planned nor controlled. Central planners would draw up a plan with quantities of everything they wanted to see
produced, known as targets. They would disaggregate the plan into pieces appropriate for execution and estimate
how much investment and how many raw materials were needed if managers of firms were to fill their targets.
Managers learned early on, however, that not only did the targets increase annually but the materials required
often did not arrive on time or in the right amounts. So they would respond by bargaining their plan: demanding
*
This chapter was originally entitled “What Was Socialism, and What Comes Next?” and was delivered as a lecture for the
Center for Comparative Research in History, Society and Culture, at the University of California, Davis, in January 1993. I am
grateful to those who invited me – William Hagen, G. William Skinner, and Carol A. Smith-as well as to members of the Center's
seminar, for a very stimulating discussion. I also received helpful advice from Ashraf Ghani.
Earlier forms of the argument appeared in “Theorizing Socialism” and in my book National Ideology under Socialism: Identity
and Cultural Politics in Ceauşescu's Romania (Berkeley and Los Angeles: University of California Press, 1991). The underlying
conceptualization was developed in 1988; after 1989 I added some thoughts on how the model might illuminate the system's
collapse. Reprinted from Contention: Debates in Society, Culture, and Science 1, no. 3 (1993), by permission of Indiana University
Press.
more investments and raw materials than the amounts actually necessary for their targets. Every manager, and
every level of the bureaucracy, padded budgets and requests in hopes of having enough, in the actual moment of
production. (A result of the bargaining process, of course, was that central planners always had faulty
information about what was really required for production, and this impeded their ability to plan.) Then, if
managers somehow ended up with more of some material than they needed, they hoarded it. Hoarded material
had two uses: it could be kept for the next production cycle, or it could be exchanged with some other firm for
something one’s own firm lacked. These exchanges or barters of material were a crucial component of behavior
within centralized planning.
A result of all the padding of budgets and hoarding of materials was widespread shortages, for which reason
socialist economies are called economies of shortage. Shortages were sometimes relative, as when sufficient
quantities of materials and labor for a given level of output actually existed, but not where and when they were
needed. Sometimes shortages were absolute, since relative shortage often resulted in lowered production, or – as
in Romania – since items required for production or consumption were being exported. The causes of shortage
were primarily that people lower down in the planning process were asking for more materials than they required
and then hoarding whatever they got. Underlying their behavior was what economists call soft budget constraints
– that is, if a firm was losing money, the center would bail it out. In our own economy, with certain exceptions
(such as Chrysler and the savings and loan industry), budget constraints are hard: if you cannot make ends meet,
you go under. But in socialist economies, it did not matter if firms asked for extra investment or hoarded raw
materials; they paid no penalty for it.
A fictitious example will help to illustrate – say, a shoe factory that makes women’s shoes and boots. Central
planners set the factory’s targets for the year at one hundred thousand pairs of shoes and twenty thousand pairs
of boots, for which they think management will need ten tons of leather, a half ton of nails, and one thousand
pounds of glue. The manager calculates what he would need under ideal conditions, if his workers worked
consistently during three eight-hour shifts. He adds some for wastage, knowing the workers are lazy and the
machines cut badly; some for theft, since workers are always stealing nails and glue; some to trade with other
firms in case he comes up short on a crucial material at a crucial moment; and some more for the fact that the
tannery always delivers less than requested. The manager thus refuses the plan assigned him, saying he cannot
produce that number of shoes and boots unless he gets thirteen rather than ten tons of leather, a ton rather than
a half-ton of nails, and two thousand rather than one thousand pounds of glue. Moreover, he says he needs two
new power stitchers from Germany, without which he can produce nothing. In short, he has bargained his plan.
Then when he gets some part of these goods; he stockpiles them or trades excess glue to the manager of a coat
factory in exchange for some extra pigskin. If leather supplies still prove insufficient, he will make fewer boots
and more shoes, or more footwear of small size, so as to use less leather; never mind if women’s feet get cold in
winter, or women with big feet can find nothing to wear.
With all this padding and hoarding, it is clear why shortage was endemic to socialist systems, and why the
main problem for firms was not whether they could meet (or generate) demand but whether they could procure
adequate supplies. So whereas the chief problem of economic actors in Western economies is to get profits by
selling things, the chief problem for socialism’s economic actors was to procure things. Capitalist firms compete
with each other for markets in which they will make a profit; socialist firms competed to maximize their
bargaining power with suppliers higher up. In our society, the problem is other sellers, and to outcompete them
you have to befriend the buyer. Thus our clerks and shop owners smile and give the customer friendly service
because they want business; customers can be grouchy, but it will only make the clerk try harder. In socialism,
the locus of competition was elsewhere: your competitor was other buyers, other procurers; and to outcompete
them you needed to befriend those higher up who supplied you. Thus in socialism it was not the clerk – the
provider, or “seller” – who was friendly (they were usually grouchy) but the procurers, the customers, who
sought to ingratiate themselves with smiles, bribes, or favors. The work of procuring generated whole networks
of cozy relations among economic managers and their bureaucrats, clerks and their customers. We would call
this corruption, but that is because getting supplies is not a problem for capitalists: the problem is getting sales.
In a word, for capitalists salesman-ship is at a premium; for socialist managers, the premium was on
acquisitionsmanship, or procurement.
So far I have been describing the clientelism and bargaining that undercut the Party center’s effective control.
A similar weakness in vertical power relations emerges from the way socialist production and shortage bred
workers’ oppositional consciousness and resistance. Among the many things in short supply in socialist systems
was labor. Managers hoarded labor, just like any other raw material, because they never knew how many workers
they would need. Fifty workers working three eight-hour shifts six days a week might be enough to meet a firm’s
targets – if all the materials were on hand all month long. But this never happened. Many of those workers would
stand idle for part of the month, and in the last ten days when most of the materials were finally on hand the
firm would need 75 workers working overtime to complete the plan. The manager therefore kept 75 workers on
the books, even though most of the time he needed fewer; and since all other managers were doing the same,
labor was scarce. This provided a convenient if unplanned support for the regimes’ guaranteed employment.
An important result of labor’s scarcity was that managers of firms had relatively little leverage over their
workers. Furthermore, because supply shortages caused so much uncertainty in the production process,
managers had to turn over to workers much control over this process, lest work come to a standstill. That is,
structurally speaking, workers under socialism had a somewhat more powerful position relative to management
than do workers in capitalism, just as managers’ bargaining with bureaucrats undercut central power, so labor’s
position in production undercut that of management.
More than this, the very organization of the workplace bred opposition to Party rule. Through the Partycontrolled
trade union and the frequent merger of Party and management functions, Party directives were
continually felt in the production process – and, from workers’ viewpoint, they were felt as unnecessary and
disruptive. Union officials either meddled unhelpfully or contributed nothing, only to claim credit for production
results that workers knew were their own. Workers participated disdainfully – as sociologist Michael Burawoy
found in his studies of Hungarian factories – in party – organized production rituals, such as work-unit
competitions, voluntary workdays, and production campaigns; they resented these coerced expressions of their
supposed commitment to a wonderful socialism. Thus instead of securing workers’ consent, workplace rituals
sharpened their consciousness and resistance. Against an official “cult of work” used to motivate cadres and
workers toward fulfilling the plan, many workers developed an oppositional cult of nonwork, imitating the Party
bosses and trying to do as little as possible for their paycheck. Cadres often found no way around this internal
sabotage, which by reducing productivity deepened the problems of socialist economies to the point of crisis.
The very forms of Party rule in the workplace, then, tended to focus, politicize, and turn against it the popular
discontent that capitalist societies more successfully disperse, depoliticize, and deflect. In this way, socialism
produced a split between “us” and “them,” workers and Party leaders, founded on a lively consciousness that
“they” are exploiting “us.” This consciousness was yet another thing that undermined socialist regimes. To
phrase it in Gramscian terms, the lived experience of people in socialism precluded its utopian discourse from
becoming hegemonic-precluded, that is, the softening of coercion with consent.
Ruling Communist Parties developed a variety of mechanisms to try to obscure this fact of their nature from
their subjects, mechanisms designed to produce docile subject dispositions and to ensure that discontent did not
become outright opposition. I will briefly discuss two of these mechanisms: the apparatus of surveillance, and
redistribution of the social product.
Surveillance and Paternalistic Redistribution
In each country, some equivalent of the KGB was instrumental in maintaining surveillance, with varying
degrees of intensity and success, particularly effective were the Secret Police in the Soviet Union, East Germany,
and Romania, but networks of informers and collaborators operated to some extent in all. These formed a highly
elaborate “production” system parallel to the system for producing goods–a system producing paper, which
contained real and falsified histories of the people over whom the Party ruled. Let us call the immediate product
“dossiers,” or “files,” though the ultimate product was political subjects and subject dispositions useful to the
regime. This parallel production system was at least as important as the system for producing goods, for
producers of files were much better paid than producers of goods. My image of this parallel production system
comes from the memoirs of Romanian political prisoner Herbert Zilber:
The first great socialist industry was that of the production of files. This new industry has an army of workers:
the informers. It works with ultramodern electronic equipment (microphones, tape recorders, etc.), plus an
army of typists with their typewriters. Without all this, socialism could not have survived. . . . In the socialist
bloc, people and things exist only through their files. All our existence is in the hands of him who possesses
files and is constituted by him who constructs them. Real people are but the reflection of their files.
The work of producing files (and thereby political subjects) created an atmosphere of distrust and suspicion
dividing people from one another. One never knew whom one could trust, who might be informing on one to
the police about one’s attitudes toward the regime or one’s having an American to dinner. Declarations might
also be false. Informers with a denunciation against someone else were never asked what might be their motive
for informing; their perhaps – envious words entered directly into constituting another person’s file – thus
another person’s sociopolitical being. Moreover, like all other parts of the bureaucracy, the police too padded
their “production” figures, for the fact of an entry into the file was often more important than its veracity. The
existence of this shadowy system of production could have grave effects on the people “processed” through it,
and the assumption that it was omnipresent contributed much to its success, in some countries, in suppressing
unwanted opposition.
If surveillance was the negative face of these regimes’ problematic legitimation, its positive face was their
promises of social redistribution and welfare. At the center of both the Party’s official ideology and its efforts to
secure popular support was “socialist paternalism,” which justified Party rule with the claim that the Party would
take care of everyone’s needs by collecting the total social product and then making available whatever people
needed – cheap food, jobs, medical care, affordable housing, education, and so on. Party authorities claimed, as
well, that they were better able to assess and fill these needs than were individuals or families, who would always
tend to want more than their share. Herein lay the Party’s paternalism: it acted like a father who gives handouts
to the children as he sees fit. The Benevolent Father Party educated people to express needs it would then fill,
and discouraged them from taking the initiative that would enable them to fill these needs on their own. The
promises – socialism’s basic social contract – did not go unnoticed, and as long as economic conditions
permitted their partial fulfillment, certain socialist regimes gained legitimacy as a result. But this proved
impossible to sustain.
Beyond its effects on people’s attitudes, paternalism had important consequences for the entire system of
production discussed previously and for consumption; here I shift to the question of why consumption was so
central in the resistance to socialism. A Party that pretends to meet its citizens’ needs through redistribution and
that insists on doing so exclusively – that is, without enlisting their independent efforts – must control a
tremendous fund of resources to redistribute. Nationalizing the means of production helped provide this, and so
did a relentlessly “productionist” orientation, with ever-increased production plans and exhortations to greater
effort.
The promise of redistribution was an additional reason, besides my earlier argument about shortages, why
socialism worked differently from capitalism. Socialism’s inner drive was to accumulate not profits, like capitalist
ones, but distributable resources. This is more than simply a drive for autarchy, reducing dependency on the
outside: it aims to increase dependency of those within. Striving to accumulate resources for redistribution
involves things for which profit is totally irrelevant. In capitalism, those who run lemonade stands endeavor to
serve thirsty customers in ways that make a profit and outcompete other lemonade stand owners. In socialism,
the point was not profit but the relationship between thirsty persons and the one with the lemonade – the Party
center, which appropriated from producers the various ingredients (lemons, sugar, water) and then mixed the
lemonade to reward them with, as it saw fit. Whether someone made a profit was irrelevant: the transaction
underscored the center’s paternalistic superiority over its citizens – that is, its capacity to decide who got more
lemonade and who got less.
Controlling the ingredients fortified the center’s capacity to redistribute things. But this capacity would be
even greater if the center controlled not only the lemons, sugar, and water but the things they come from: the
lemon trees, the ground for growing sugar beets and the factories that process them, the wells and the welldigging
machinery. That is, most valuable of all to the socialist bureaucracy was to get its hands not just on
resources but on resources that generated other usable resources, resources that were themselves further
productive. Socialist regimes wanted not just eggs but the goose that lays them. Thus if capitalism’s inner logic
rests on accumulating surplus value, the inner logic of socialism was to accumulate means of production.
The emphasis on keeping resources at the center for redistribution is one reason why items produced in
socialist countries so often proved uncompetitive on the world market. Basically, most of these goods were not
being made to be sold competitively: they were being either centrally accumulated or redistributed at low prices –
effectively given away. Thus whether a dress was pretty and well made or ugly and missewn was irrelevant, since
profit was not at issue: the dress would be “given away” at a subsidized price, not sold. In fact, the whole point
was not to sell things: the center wanted to keep as much as possible under its control, because that was how it
had redistributive power; and it wanted to give away the rest, because that was how it confirmed its legitimacy
with the public. Selling things competitively was therefore beside the point. So too were ideas of “efficient”
production, which for a capitalist would enhance profits by wasting less material or reducing wages. But
whatever goes into calculating a profit – costs of material or labor inputs, or sales of goods – was unimportant in
socialism until very late in the game. Instead, “efficiency” was understood to mean “the full use of existing
resources,” “the maximization of given capacities” rather than of results, all so as to redirect resources to a goal
greater than satisfying the population’s needs. In other words, what was rational in socialism differed from
capitalist rationality. Both are stupid in their own way, but differently so.
Consumption
Socialism’s redistributive emphasis leads to one of the great paradoxes of a paternalist regime claiming to
satisfy needs. Having constantly to amass means of production so as to enhance redistributive power caused
Party leaders to prefer heavy industry (steel mills, machine construction) at the expense of consumer industry
(processed foods, or shoes). After all, once a consumer got hold of something, the center no longer controlled it;
central power was less served by giving things away than by producing things it could continue to control. The
central fund derived more from setting up a factory to make construction equipment than from a shoe factory or
a chocolate works. In short, these systems had a basic tension between what was necessary to legitimate them –
redistributing things to the masses – and what was necessary to their power – accumulating things at the center.
The tension was mitigated where people took pride in their economy’s development (that is, building heavy
industry might also bring legitimacy), but my experience is that the legitimating effects of redistribution were
more important by far.
Each country addressed this tension in its own way. For example, Hungary after 1968 and Poland in the 1970s
gave things away more, while Romania and Czechoslovakia accumulated things more; but the basic tension
existed everywhere. The socialist social contract guaranteed people food and clothing but did not promise (as
capitalist systems do) quality, ready availability, and choice. Thus the system’s mode of operation tended to
sacrifice consumption, in favor of production and controlling the products. This paradoxical neglect of
consumption contributed to the long lines about which we heard so much (and we heard about them, of course,
because we live in a system to which consumption is crucial).
In emphasizing this neglect of consumption as against building up the central resource base, I have so far
been speaking of the formally organized economy of socialism – some call it the “first” or “official” economy. But
this is not the whole story. Since the center would not supply what people needed, they struggled to do so
themselves, developing in the process a huge repertoire of strategies for obtaining consumer goods and services.
These strategies, called the “second” or “informal” economy, spanned a wide range from the quasi-legal to the
definitely illegal. In most socialist countries it was not illegal to moonlight for extra pay – by doing carpentry, say
– but people doing so often stole materials or illegally used tools from their workplace; or they might manipulate
state goods to sell on the side. Clerks in stores might earn favors or extra money, for example, by saving scarce
goods to sell to special customers, who tipped them or did some important favor in return. Also part of the
second economy was the so-called “private plot” of collective farm peasants, who held it legally and in theory
could do what they wanted with it – grow food for their own table or to sell in the market at state-controlled
prices. But although the plot itself was legal, people obtained high outputs from it not just by virtue of hard work
but also by stealing from the collective farm: fertilizer and herbicides, fodder for their pigs or cows, work time
for their own weeding or harvesting, tractor time and fuel for plowing their plot, and so on. The second
economy, then, which provisioned a large part of consumer needs, was parasitic upon the state economy and
inseparable from it. It developed precisely because the state economy tended to ignore consumption. To grasp
the interconnection of the two economies is crucial, lest one think that simply dismantling the state sector will
automatically enable entrepreneurship – ready present in embryo – to flourish. On the contrary: parts of the
second economy will wither and die if deprived of the support of the official, state economy.
It is clear from what I have said that whereas consumption in our own society is considered primarily a
socioeconomic question, the relative neglect of consumer interests in socialism made consumption deeply
political. In Romania in the 1980s (an extreme case), to kill and eat your own calf was a political act, because the
government prohibited killing calves: you were supposed to sell them cheap to the state farm, for export.
Romanian villagers who fed me veal (having assured themselves of my complicity) did so with special
satisfaction. It was also illegal for urbanites to go and buy forty kilograms of potatoes directly from the villagers
who grew potatoes on their private plot, because the authorities suspected that villagers would charge more than
the state-set price, thus enriching themselves. So Romanian policemen routinely stopped cars riding low on the
chassis and confiscated produce they found inside.
Consumption became politicized in yet another way: the very definition of “needs” became a matter for
resistance and dispute. “Needs,” as we should know from our own experience, are not given: they are created,
developed, expanded – the work especially of the advertising business. It is advertising’s job to convince us that
we need things we didn’t know we needed, or that if we feel unhappy, it’s because we need something (a shrink,
or a beer, or a Marlboro, or a man). Our need requires only a name, and it can be satisfied with a product or
service. Naming troubled states, labeling them as needs, and finding commodities to fill them is at the heart of
our economy. Socialism, by contrast, which rested not on devising infinite kinds of things to sell people but on
claiming to satisfy people’s basic needs, had a very unadorned definition of them – in keeping with socialist
egalitarianism. Indeed, some Hungarian dissidents wrote of socialism’s relationship to needs as a “dictatorship.”
As long as the food offered was edible or the clothes available covered you and kept you warm, that should be
sufficient. If you had trouble finding even these, that just meant you were not looking hard enough. No planner
presumed to investigate what kinds of goods people wanted, or worked to name new needs for newly created
products and newly developed markets.
At the same time, however, regime policies paradoxically made consumption a problem. Even as the regimes
prevented people from consuming by not making goods available, they insisted that under socialism, the
standard of living would constantly improve. This stimulated consumer appetites, perhaps with an eye to
fostering increased effort and tying people into the system. Moreover, socialist ideology presented consumption
as a “right.” The system’s organization exacerbated consumer desire further by frustrating it and thereby making
it the focus of effort, resistance, and discontent. Anthropologist John Borneman sees in the relation between
desire and goods a major contrast between capitalism and socialism. Capitalism, he says, repeatedly renders
desire concrete and specific, and offers specific – if ever-changing – goods to satisfy it. Socialism, in contrast,
aroused desire without focalizing it, and kept it alive by deprivation.
As people became increasingly alienated from socialism and critical of its achievements, then, the politicization
of consumption also made them challenge official definitions of their needs. They did so not just by creating a
second economy to grow food or make clothes or work after hours but also, sometimes, by public protest.
Poland’s Communist leaders fell to such protest at least twice, in 1970 and in 1980, when Polish workers insisted
on having more food than government price increases would permit them. Less immediately disruptive were
forms of protest in which people used consumption styles to forge resistant social identities. The black markets
in Western goods that sprang up everywhere enabled alienated consumers to express their contempt for their
governments through the kinds of things they chose to buy. You could spend an entire month’s salary on a pair
of blue jeans, for instance, but it was worth it: wearing them signified that you could get something the system
said you didn’t need and shouldn’t have. Thus consumption goods and objects conferred an identity that set you
off from socialism, enabling you to differentiate yourself as an individual in the face of relentless pressures to
homogenize everyone’s capacities and tastes into an undifferentiated collectivity. Acquiring objects became a way
of constituting your selfhood against a deeply unpopular regime.
Bureaucratic Factionalism and Markets
Before turning to why these systems fell, I wish to address one more issue: politicking in the Party
bureaucracy. Although this took different and specific forms in the different countries, it is important to mention
the issue, for socialism’s collapse owed much to shifts in the balance among factions that emerged within the
Party apparatus. Even before 1989, researchers were pointing to several forms of intra-Party division. Polish
sociologist Jadwiga Staniszkis, writing specifically of the moment of transition, speaks of three factions – the
globalists, the populists, and the middle-level bureaucracy; others, writing more generally, distinguish between
“strategic” and “operative” elites, the state bureaucracy and the “global monopoly:’ the bureaucracy and the
Party elite, “in-house” and “out-of-house” Party workers, and so forth. One way of thinking about these various
divisions is that they distinguish ownership from management, or the people who oversaw the paper-work of
administration from those “out in the field,” intervening in actual social life. We might then look for conflicting
tendencies based in the different interests of these groups – such as conflicts between the central “owners” or
paper workers, on one hand, who might persist in policies that accumulated means of production without
concern for things like productivity and output, and the bureaucratic managers of the allocative process or its
fieldworkers, on the other, who had to be concerned with such things. Although the power of the system itself
rested on continued accumulation, such tendencies if unchecked could obstruct the work of those who had
actually to deliver resources or redistribute them. Without actual investments and hard material resources, lowerlevel
units could not produce the means of production upon which both bureaucracy and center relied. If
productive activity were so stifled by “overadministration” that nothing got produced, this would jeopardize the
redistributive bureaucracy’s power and prestige.
Thus when central accumulation of means of production began to threaten the capacity of lower-level units to
produce; when persistent imbalances between investment in heavy industry and in light industry, between
allocations for investment and for consumption, and so on, diminished the stock of distributable goods; and
when the center’s attempts to keep enterprises from meddling with surplus appropriation obstructed the process
of production itself-this is when pressure arose for a shift of emphasis. The pressure was partly from those in the
wider society to whom not enough was being allocated and partly from bureaucrats themselves whose prestige
and, increasingly, prospects of retaining power depended on having more goods to allocate. One then heard of
decentralization, of the rate of growth, of productivity-in a word, of matters of output, rather than the inputs
that lay at the core of bureaucratic performance. This is generally referred to as the language of “reform.”
For those groups who became concerned with questions of output and productivity, the solutions almost
always involved introducing mechanisms such as profitability criteria and freer markets. This meant, however,
introducing a subordinate rationality discrepant with the system’s inner logic and thereby threatening continued
Party rule. Market forces create problems for socialism in part for reasons treated implicitly or explicitly above in
contrasting capitalism’s demand-constrained economies with socialism’s economy of shortage (its lack of
interest, for example, in the salability of its products). But more broadly, markets create problems because they
move goods horizontally rather than vertically toward the center, as all redistributive systems require. Markets
also presuppose that individual interest and the “invisible hand,” rather than the guiding hand of the Party,
secure the common good. Because these horizontal movements and individualizing premises subverted
socialism’s hierarchical organization, market mechanisms had been suppressed. Reformers introducing them
were opening Pandora’s box.
Why Did It Fall?
My discussion of socialism’s workings already points to several reasons for its collapse; I might now address
the question more comprehensively. To do this requires, in my view, linking the properties of its internal
organization (discussed above) with properties of its external environment, as well as with shorter-term “event
history.” This means examining the specific conjuncture of two systems – “capitalist” and “socialist,” to use ideal
types – one encompassing the other.
In event-history terms, the proximate cause of the fall of East European and Soviet socialism was an act of
the Hungarian government: its dismantling of the barbed wire between Hungary and Austria, on the eve of a
visit by President George Bush, and its later renouncing the treaty with the GDR that would have prevented
East German emigration through Hungary. This culmination of Hungary’s long-term strategy of opening up to
the West gave an unexpected opportunity for some East German tourists to extend their Hungarian vacations
into West Germany; the end result, given that Gorbachev refused to bolster the East German government with
Soviet troops in this crisis, was to bring down the Berlin Wall. To understand the conjuncture in which Hungary
could open its borders and Gorbachev could refuse Honecker his troops requires setting in motion the static
model I have given above and placing it in its international context. This includes asking how socialism’s
encounter with a changing world capitalism produced or aggravated factional divisions within Communist
Parties.
International Solutions to Internal Problems
My discussion of socialism indicated several points of tension in its workings that affected the system’s
capacity for extended reproduction. Throughout their existence, these regimes sought to manage such tensions
in different ways, ranging from Hungary’s major market reforms in the 1960s to Romania’s rejection of reform
and its heightened coercive extraction. In all cases, managing these tensions involved decisions that to a greater
or lesser degree opened socialist political economies to Western capital. The impetus for this opening – critical to
socialism’s demise – came chiefly from within, as Party leaders attempted to solve their structural problems
without major structural reform. Their attitude in doing so was reminiscent of a “plunder mentality” that sees the
external environment as a source of booty to be used as needed in maintaining one’s own system, without
thought for the cost. This attitude was visible in the tendency of socialist governments to treat foreign trade as a
residual sector, used to supplement budgets without being made an integral part of them. Because of how this
opportunistic recourse to the external environment brought socialism into tighter relationship with capitalism, it
had fateful consequences.
The critical intersection occurred not in 1989 or 1987 but in the late 1960s and early 1970s, when global
capitalism entered the cyclical crisis from which it is still struggling to extricate itself. Among capitalists’ possible
responses to the crisis (devaluation, structural reorganization, etc.), an early one was to lend abroad; facilitating
this option were the massive quantities of petrodollars that were invested in Western banks, following changes in
OPEC policy in 1973. By lending, Western countries enabled the recipients to purchase capital equipment or to
build long-term infrastructure, thereby expanding the overseas markets for Western products.
The loans became available just at the moment when all across the socialist bloc, the first significant round of
structural reforms had been proposed, halfheartedly implemented, and, because profitability and market criteria
fit so poorly with the rationale of socialism, largely abandoned. Reluctance to proceed with reforms owed much,
as well, to Czechoslovakia’s Prague Spring, from which the Party apparatus all across the region had been able to
see the dangers that reform posed for its monopoly on power. Instead of reforming the system from within,
then, most Party leaderships opted to meet their problems by a greater articulation with the surrounding
economy: importing Western capital and using it to buy advanced technology (or, as in Poland, to subsidize
consumption), in hopes of improving economic performance. Borrowing thus became a substitute for extensive
internal changes that would have jeopardized the Party’s monopoly over society and subverted the inner
mechanisms of socialism. In this way, the internal cycles of two contrasting systems suddenly meshed.
The intent, as with all the international borrowing of the period, was to payoff the loans by exporting
manufactured goods into the world market. By the mid-1970s it was clear, however, that the world market could
not absorb sufficient amounts of socialism’s products to enable repayment, and at the same time, rising interest
rates added staggeringly to the debt service. With the 1979-80 decision of the Western banking establishment not
to lend more money to socialist countries, the latter were thrown into complete disarray. I have already
mentioned several features that made socialist economies inapt competitors in the international export market.
The “plunder” stance toward external economies, the system’s fundamental organization against notions of
salability of its products, the shortage economy’s premium on acquisitionsmanship rather than on salesmanship,
the neglect of consumption and of producing to satisfy consumer needs with diverse high-quality products – all
this meant that an adequate response to the hard-currency crisis would have catastrophic effects on socialism’s
inner mechanisms. To this was added the fact that socialist economies were “outdated”: as Jowitt put it, “After
70 years of murderous effort, the Soviet Union had created a German industry of the 1880s in the 1980s.”
In these circumstances, the balance of power tilted toward the faction within the Communist Party of the
Soviet Union that had long argued for structural reforms, the introduction of market mechanisms, and profit
incentives, even at the cost of the Party’s “leading role.” The choice, as Gorbachev and his faction saw it, was to
try to preserve either the Soviet Union and its empire (by reforms that would increase its economic performance
and political legitimacy) or collective property and the Party monopoly. Gorbachev was ready to sacrifice the
latter to save the former but ended by losing both.
While Western attention was riveted on the speeches of policy-makers in the Kremlin, the more significant
aspects of reform, however, were in the often-unauthorized behavior of bureaucrats who were busily creating
new property forms on their own. Staniszkis describes the growth of what she calls “political capitalism,” as
bureaucrats spontaneously created their own profit-based companies from within the state economic
bureaucracy. Significantly for my argument that socialism’s articulation with world capitalism was crucial to its
fall, the examples she singles out to illustrate these trends are all at the interface of socialist economies with the
outside world – in particular, new companies mediating the export trade and state procurement of Western
computers. In fact, she sees as critical the factional split between the groups who managed socialism’s interface
with the outside world (such as those in foreign policy, counterintelligence, and foreign trade) and those who
managed it internally (such as the Party’s middle-level executive apparatus and the KGB). Forms of privatization
already taking place as early as 1987 in Poland and similar processes as early as 1984 in Hungary show the
emerging contours of what Staniszkis sees as the reformists’ goal: a dual economy. One part of this economy was
to be centrally administered, as before, and the other part was to be reformed through market/profit
mechanisms and selective privatization of state property. The two were to coexist symbiotically.
These forms of “political capitalism” arose in part by economic managers’ exploiting the shortages endemic to
socialism – shortages now aggravated to crisis proportions. In the new hope of making a profit, “political
capitalists” (I call them “entrepratchiks”) were willing to put into circulation reserves known only to them –
which they would otherwise have hoarded – thus alleviating shortages, to their own gain. As a result, even
antireformist Soviet and Polish bureaucrats found themselves acquiescing in entrepratchiks’ activities, without
which, in Staniszkis’s words, “the official structure of the economic administration was absolutely unsteerable.”
Contributing to their tolerance was rampant bureaucratic anarchy, a loss of control by those higher up, rooted in
the “inability of superiors to supply their subordinates (managers of lower level) with the means to construct a
strategy of survival.” Because superiors could no longer guarantee deliveries and investments, they were forced
to accept whatever solutions enterprising subordinates could devise – even at the cost of illicit profits from state
reserves. Entrepratchiks soon began to regard the state’s accumulations much as Preobrazhensky had once urged
Soviet leaders to regard agriculture: as a source of primitive accumulation. They came to find increasingly
attractive the idea of further “privatization,” so important to Western lenders.
It is possible (though unlikely) that socialist regimes would not have collapsed if their hard-currency crisis and
the consequent intersection with capitalism had occurred at a different point in capitalism’s cyclicity. The
specifics of capitalism’s own crisis management, however, proved unmanageable for socialist systems. Without
wanting to present recent capitalism’s “flexible specialization” as either unitary or fully dominant (its forms differ
from place to place, and it coexists with other socioeconomic forms), I find in the literature about it a number of
characteristics even more inimical to socialism than was the earlier Fordist” variant, which Soviet production
partly imitated. These characteristics include: small-batch production; just-in-time inventory; an accelerated pace
of innovation; tremendous reductions in the turnover time of capital via automation and electronics; a muchincreased
turnover time in consumption, as well, with a concomitant rise in techniques of need-creation and an
increased emphasis on the production of events rather than goods; coordination of the economy by finance
capital; instantaneous access to accurate information and analysis; and an overall decentralization that increases
managerial control (at the expense of higher-level bodies) over labor.
How is socialism to mesh with this? – socialism with its emphasis on large-scale heroic production of means
of production, its resources frozen by hoarding-no just-in-time here! – its lack of a systemic impetus toward innovation,
the irrelevance to it of notions like “turnover time,” its neglect of consumption and its flat-footed
definition of “needs,” its constipated and secretive flows of information (except for rumors!) in which the center
could have no confidence, and the perpetual struggle to retain central control over all phases of the production
process? Thus; I submit, it is not simply socialism’s embrace with capitalism that brought about its fall but the
fact that it happened to embrace a capitalism of a newly “flexible” sort. David Harvey’s schematic comparison of
“Fordist modernity” with “flexible post-modernity” clarifies things further: socialist systems have much more in
common with his “Fordist” column than with his “flexible” one.
Let me add one more thought linking the era of flexible specialization with socialism’s collapse. Increasing
numbers of scholars note that accompanying the change in capitalism is a change in the nature of state power:
specifically, a number of the state’s functions are being undermined. The international weapons trade has made a
mockery of the state’s monopoly on the means of violence. The extraordinary mobility of capital means that as it
moves from areas of higher to areas of lower taxation, many states lose some of their revenue and industrial
base, and this constrains their ability to attract capital or shape its flows. Capital flight can now discipline all
nation-state governments. The coordination of global capitalism by finance capital places a premium on capital
mobility, to which rigid state boundaries are an obstacle. And the new computerized possibilities for speculative
trading have generated strong pressures to release the capital immobilized in state structures and institutions by
diminishing their extent.
This has two consequences for the collapse of socialism. First, groups inside socialist countries whose
structural situation facilitated their fuller participation in the global economy now had reasons to expand their
state’s receptivity to capital – that is, to promote reform. Second, the control that socialist states exerted over
capital flows into their countries may have made them special targets for international financial interests, eager to
increase their opportunities by undermining socialist states. These internal and international groups each found
their chance in the interest of the other. It is in any case clear from the politics of international lending agencies
that they aim to reduce the power of socialist states, for they insist upon privatization of state property-the basis
of these states’ power and revenue. Privatization is pushed even in the face of some economists’ objections that
“too much effort is being invested in privatization, and too little in creating and fostering the development of
new private firms” – whose entry privatization may actually impede.
No Time for Socialism
Rather than explore further how flexible specialization compelled changes in socialism, I wish to summarize
my argument by linking it to notions of time. Time, as anthropologists have shown, is a fundamental dimension
of human affairs, taking different forms in different kinds of society. The Western notion of a linear, irreversible
time consisting of equivalent and divisible units, for instance, is but one possible way of conceptualizing time and
living it. A given cultural construction of time ramifies throughout its social order. Its calendars, schedules, and
rhythms establish the very grounds of daily life (which is why elites, especially revolutionary ones, often
manipulate them), undergird power and inequality and affect how people make themselves as social beings.
Capitalism exists only as a function of time-and of a specific conception of it. Efforts to increase profits by
increasing the velocity of capital circulation are at its very heart. Thus each major reorganization of capitalism has
entailed, in Harvey’s terms, “time-space compression”: a shrinking of the time horizons of private and public
decision-making, whose consequences encompass ever-wider spaces owing to changed communications and
transport technology. The basic logic of socialism, by contrast, placed no premium on increasing turnover time
and capital circulation. Although the rhetoric of Stalinism emphasized socialism as a highly dynamic system, for
the most part Soviet leaders acted as if time were on their side. (When Khrushchev said, “We will bury you,” he
was not too specific about the date.) Indeed, I have argued that in 1980s Romania, far from being speeded up,
time was being gradually slowed down, flattened, immobilized, and rendered nonlinear.
Like the reorganization of capitalism at the end of the nineteenth century, the present reorganization entails a
time-space compression, which we all feel as a mammoth speedup. Yet the socialism with which it intersected
had no such time-compressing dynamic. In this light, the significance of Gorbachev’s perestroika was its
recognition that socialism’s temporality was unsustainable in a capitalist world. Perestroika reversed Soviet ideas
as to whose time-definition and rhythms were dominant and where dynamism lay: no longer within the socialist
system but outside it, in the West. Gorbachev’s rhetoric from the mid-1980s is full of words about time: the
Soviet Union needs to “catch up,” to “accelerate” its development, to shed its “sluggishness” and “inertia” and
leave behind the “era of stagnation.” For him, change has suddenly become an “urgent” necessity.
[By] the latter half of the seventies. . . the country began to lose momentum. . . . Elements of stagnation. . .
began to appear. . . . A kind of “braking mechanism” affect[ed] social and economic development. . . . The
inertia of extensive economic development was leading to an economic deadlock and stagnation.
These are the words of a man snatched by the compression of space and time.
Even as he spoke, new time/space-compressing technologies were wreaking havoc on the possible rhythms of
his and other leaders’ control of politics, as Radio Free Europe made their words at once domestic and
international. Soviet leaders could no longer create room for themselves by saying one thing for domestic
consumption and something else for the outside world: they were now prisoners of simultaneity. The role of
Western information technology in undermining socialism was evident in the spread of Solidarity’s strikes in
1980, news of which was telephoned out to the West and rebroadcast instantly into Poland via Radio Free
Europe and the BBC, mobilizing millions of Poles against their Party. The revolutions of 1989 were mediated
similarly.
I am suggesting, then, that the collapse of socialism came in part from the massive rupture produced by its
collision with capitalism’s speedup. If so, it would be especially useful to know something more about the lifeexperience
of those people who worked at the interface of these two temporal systems and could not help
realizing how different was capitalism’s time from their own. Bureaucrats under pressure to increase foreign
trade and foreign revenues, or importers of computer equipment, would have discovered that failure to adapt to
alien notions of increased turnover time could cost them hard currency. They would have directly experienced
time-annihilating Western technologies, which effected a banking transaction in milliseconds as opposed to the
paper-laden hours and days needed by their own financial system. Did the rise of “profitability” criteria in the
command economy owe something to such people’s dual placement? Did they come to experience differently
their sense of themselves as agents? My point, in short, is that the fall of socialism lies not simply in the
intersection of two systems’ temporal cycles but rather in the collision of two differently constituted temporal
orders, together with the notions of person and activity proper to them.
If socialist economies had not opened themselves to capital import and to debt servicing, perhaps their
collision with capitalist speedup would have been less jarring – or would at least have occurred on more equal
terms. But the capitalist definition of time prevailed, as socialist debtors bowed to its dictates (even while
postponing them), thereby aggravating factional conflicts within the elite. Because its leaders accepted Western
temporal hegemony, socialism’s messianic time proved apocalyptic. The irony is that had debtor regimes refused
the definitions imposed from without – had they united to default simultaneously on their Western loans (which
in 1981 stood at over $90 billion) – they might well have brought down the world financial system and realized
Khrushchev’s threatening prophecy overnight. That this did not happen shows how vital a thing was capitalists’
monopoly on the definition of social reality.
What Comes Next?
The outcome of the confluence between socialist and capitalist systemic crises is far more complicated than
“capitalism triumphant,” however. Ken Jowitt captures this with an unexpected metaphor, that of biological
extinction and its attendant erasure of formerly existing boundaries among forms of life. In his brilliant essay
“The Leninist Extinction,” he pursues the metaphor’s implications as follows:
[One feature] of mass extinctions. . . is that they typically affect more than one species. In this respect, the
collapse of European Leninism may be seen more as a political volcano than as an asteroid. A volcano’s
eruption initially affects a circumscribed area (in this case limited to Leninist regimes), but, depending on its
force, the effects gradually but dramatically become global. The Leninist volcano of 1989 will have a
comparable effect on liberal and “Third World” biota around the globe.
After describing the new regime “species” that have emerged with changed forms of government in Poland,
Hungary, Romania, and elsewhere, as well as other new forms of political life arising out of Yugoslavia and the
Soviet Union, he ponders the larger question of the end of the Cold War:
For half a century we have thought in terms of East and West, and now there is no East as such. The primary
axis of international politics has “disappeared.” Thermonuclear Russia hasn’t, but the Soviet Union/Empire
most certainly has. Its “extinction” radically revises the framework within which the West, the United States
itself, the Third World, and the countries of Eastern Europe, the former Russian Empire, and many nations in
Asia have bounded and defined themselves.
The Leninist Extinction will force the United States [not to mention all those others] to reexamine the
meaning of its national identity.
What the Leninist Extinction confronts us with, then, is a conceptual vacuum. Jowitt concludes by invoking the
biblical story of Genesis (“the world was without form, and void”), whose theme is bounding and naming new
entities, as the “narrative” most appropriate to the immediate future.
In my view, not only is Jowitt absolutely right but one could go even further. It is not just new political
identities, including our own, that we will have the task of bounding and naming – a task which, if the example
of Bosnia is any indication, is of awesome magnitude. It is also the entire conceptual arsenal through which
Western institutions and social science disciplines have been defined in this century. As one reads scholarship on
the postsocialist processes of “privatization,” the creation of “property rights,” the development of “democracy”
or “civil society” or “constitutions” – in short, the proposed building of a “liberal state” – profound confusion
sets in. One begins to see that these terms do not label useful concepts: they are elements in a massive political
and ideological upheaval that is by no means restricted to the “East.”
If this is true, then everything we know is up for grabs, and “what comes next” is anyone’s guess.
In: Verdery, Katherine. What Was Socialism and What Comes Next. Princeton University Press, 1996. 19-38