Communism is dead, but there's life yet in socialism - The Centre for Independent Studies
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Communism is dead, but there’s life yet in socialism

Ten years ago I accepted as the title of The John Bonython Lecture I was to give in Sydney, ‘Dismantling Socialism: A Preliminary Report’.  I did not protest against the word socialism, either because I was not careful enough or because—in 1991—I really believed in the possibility of the worldwide dismantling of socialism.  Instead of the worldwide dismantling of socialism we have got something else, we have a world wide web. It probably would have been more appropriate to speak about the dismantling of communism.

Communism is over—politically as well as economically.  Our experience tells us that it was relatively easy to change the political structure. The main reason was that communism collapsed, it was not defeated. It was, therefore, not necessary to violently stop or prohibit anything. It was sufficient to liberalise entry into the political market. New political parties were established rapidly and spontaneously and we had a political plurality relatively soon without constructing (or designing) it.

It was much more difficult to change the economic system. The starting point was price liberalisation (after 40 years of frozen and administered prices), along with foreign trade liberalisation and the freeing-up of entry into the market for all types of enterprises.

To realise these measures represented the first stage of transition. It was a crucial move. It changed the whole society, interrupting some of the old, deeply built-in behavioural patterns.

‘To realise changes of that type was socially difficult, politically brave, but technically relatively easy’

Most of the changes needed just had to be announced.  The second stage of transition required more positive activity from the government. It was necessary to build and establish new, and transform old, institutions and organisations.

The main issue in this respect was privatisation. It was impossible to wait for the slow emergence of hundreds or thousands of private enterprises and for the slow
disappearance of state-owned firms. It was necessary to privatise state-owned firms on a massive scale, on a wholesale basis.

Privatisation is difficult both politically and technically. Whatever the government does, the politicians are accused either of favouritism and selection of inappropriate new owners; or of not receiving the best price.

Most of the people at home and abroad live in a very strange mental state, if not schizophrenic. They consider communism to be an absolute evil and total disaster but, at the same time, they more or less assume that to get rid of it should be free, without tensions.

Because of that, they assume, or perhaps assumed, that because of the undisputed efficiency of the private market economy every firm and every economic activity has to succeed. You know very well from your own experience that this is not true even in a developed market economy, but it is much less true in an economy in transition.

Transition (and privatisation) were, therefore, connected with many business failures and the one who was blamed was the government, not the individuals owning and managing those firms. It became fashionable to argue that the failures were caused by wrong privatisation and an insufficient legislative and institutional framework.

There is no doubt that both the legislation and the accompanying institutions were imperfect (without a long process of evolution, without slow learning by doing, without incremental changes, it could not have been different), but the main problem was that the citizens were not prepared to accept the phenomenon of business failure.

Our critics probably assumed that we were still a totalitarian state where the appropriate legislation could have simply been introduced. It is not true.

We live already in a totally different world. We live in a world of incremental changes, of standard political processes, of many imperfections.

‘Perfect society is far away, communism is even further’

Today, we do not see the end of socialism—either in my country or elsewhere. We may be, however, even closer to it now than 10 years ago.  There is no doubt that because of their structural similarities the fall of communism and the overall attack on its irrationalities temporarily weakened socialism. The dominant or at least offensive and self-assured ideology then was liberalism, free markets, individual responsibility, freedom and classical democracy.

Unfortunately, the last decade did not bring us that. The decade of the 1990s can be described as a victory of social democratism, of various alternatives of third ways—of communitarianism, of environmentalism, of the dictate of political correctness, of human rightism, of corporativism, of NGOism. To aggregate, we can say that we see a victory of new collectivism.

At the beginning of the 21st century the transition societies (and economies) operate in such an environment and mental climate, whereas the situation 10 years ago was much more favourable. Ten years ago the dominant slogan was: deregulate, liberalise, privatise. Now the slogan is: regulate, adjust to all kinds of standards of the most developed and richest countries (regardless of your stage of economic development), listen to the partial interests of the NGOs and follow them, get rid of your sovereignty and put it into the hands of international institutions and organisations.

Transition societies are more vulnerable than Australia and similar countries because their political, economic and social structures are more shallow, which gives them less defensive mechanisms.

As I said, communism is over, socialism is still here and not only in our part of the world.

About the Author:
Václav Klaus was Prime Minister of the Czech Republic from 1992 to 1997. This is an edited version of a speech he delivered for The Centre for Independent Studies in Sydney this week.