The end of the cold war and the return to capitalism in Russia and eastern Europe has had a marked effect on the living standards of the people in these countries. New Internationalist magazine (1) published a significant amount of statistical data in its April 2004 edition. The information used here is primarily from this source.

The opening of the Berlin wall and the subsequent disintegration of the Soviet Union were events hailed by western politicians and the media as a victory for peace and stability in the world. Increased prosperity through private capitalist enterpreneurship and the levelling of living standards between west and east were promises that kept people hopeful of a better life than they had achieved under their communist governments.

So how have these countries fared since 1990 and how much better off are the people who live there?

To be sure, there are substantial differences between the various countries in eastern Europe. One economic indicator to compare is the GDP (Gross Domestic Product) of each country. This shows that only Poland had a greater GDP in 1999 than it had ten years earlier. The Czech republic, Hungary and Slovakia were marginally positive, while all the others showed a decline in GDP. The greatest declines were in Russia (-3.7%), Georgia (-5.6%), Ukraine (-7.9%), Moldova (-8.4%) and Tajikistan (-8.5%).

It should be noted however that GDP as an indicator of economic growth says nothing about the distribution of that wealth among the population. And in most of the transition countries incomes have become more unequal, with some people becoming very wealthy through the wholesale sell-off (give-away or theft may be a better word) of publicly owned enterprises, while the lower paid segments of society lost most of their income, savings and social security. The Gini index, a measure of inequality that is frequently used, shows Russia, Turkmenistan, Kyrgyzstan, Tajikistan, Azerbaijan, Armenia, Georgia, Moldova and Estonia as being 'very unequal', while Belarus, Czech republic, Slovakia, Hungary, Romania and Bulgaria are found to have more equal income distributions than in the past. Ukraine, Poland, Lithuania and Latvia are shown to be less equal, but not as much as Russia and the other 'very unequal' countries.

Russia must take the gold medal for privatizing state enterprises at give-away prices. Between 1993 and 1995, 20.000 out of a total of 27.000 public enterprises were sold to private interests for about 10 percent of their true value. Today, president Putin is attempting to regain control over some of these conglomerates, for instance the oil and gas industry, but the damage to society is irreversible and has resulted in a reduction of life expectancy of ten years for Russians and a steadily diminishing population, which now stands at 143.8 million. Between 1990 and 1999, the increase in the percentage of people in former communist countries who are living on less than one dollar a day is 3.7%, a greater increase than anywhere else in the world. Between 1987 and 1995 poverty levels in all the transition countries combined increased by a whopping 45% and 168 million people were considered to be living below the poverty line.

Some of the countries of eastern Europe now seek their fortune through joining the European Economic Community (EEC) and NATO, thereby aligning themselves with the aggressive policies of the United States for world hegemony and Europe's attempts to equal or surpass the American economic might in the world. Since both of them are on a path of further militarization, demanding ever greater expenditures for defense (or offense), the likelyhood of raising the living standards of the common people do not look very bright. In fact, all of the social services the people of western Europe have acquired over the years, as well as their individual income levels are under constant attack by the combined forces of goverments and corporations. As it always has been, total reliance on unbridled capitalism to ensure adequate living standards for all of the people is a sure path to lasting poverty and ever increasing income inequality.

(1) New Internationalist, www.newint.org

© Copyright 2003 by AxisofLogic.com

W. Vic Ratsma is a lifelong political activist. Now retired and living in Nova Scotia, Canada, he contributes articles and poetry in both English and Dutch to a number of progressive publications. He can be reached at vic@axisoflogic.com