Saturday, September 16, 2017

How I lost my past

In almost all recent literature that analyzes Br-exit and Trump-entry, there is a constant theme of a fall from the heady days at the end of the Cold War, of pining for a time when unstoppable victory of democracy and neoliberal economics was a certainty and liberal capitalism stood at the pinnacle of human achievement.  

Such narratives always filled me with discomfort. It is in part because I never believed in them and because my personal experience was quite different. Rather than believing in the end of history, I saw the end of the Cold War as an ambivalent event: good for many people because it brought them national liberation and the promise of better living standards, but traumatic for others because it brought them the rise of vicious nationalism, wars, unemployment and disastrous declines in income.

I know that I was influenced in that by a very clear realization that, once the Berlin Wall fell, the civil war in Yugoslavia was inevitable (I still remember a rather somber dinner that I shared with my mother on that day in November) and by the first hand experience of sudden misery that befell Russia in the early 1990s when I travelled there working for the World Bank. So, I was aware that my discomfort with triumphalism could be explained by these two, rarely found together, circumstances. It was perhaps an idiosyncratic discomfort.

But reading other books, and especially the highly acclaimed Tony Judt, I realized that the discomfort went further. In a deluge of literature that was written or published after the end of the Cold War, I just could not find almost anything that mirrored my own experiences from the Yugoslavia of the 1960s and 1970s. However hard I tried I just could not see anything in my memories that had to deal with collectivization, killings, political trials, endless bread lines, imprisoned free thinkers and other stories that are currently published in literary magazines. It is even stranger because I was very politically precocious; without exaggeration I think I was more politically-minded than 99% of my peers in the then Yugoslavia.

But my memories of the 1960s and the 1970s are different. I remember long dinners discussing politics, women and nations, long Summer vacations, foreign travel, languid sunsets, whole-night concerts, epic soccer games, girls in mini-skirts, the smell of the new apartment in which my family moved, excitement of new books and of buying my favorite weekly on the evening before the day when it would hit the stands…. I cannot find any of that in Judt, Svetlana Alexeevich or any other writer. I know that some of the memories may be influenced by nostalgia, but as hard as I try I still find them as my dominant memories. I remember many details of each of them to believe that my nostalgia somehow “fabricated” them. I just cannot say they did not happen.

Thus I came to realize that all these other memories from Eastern Europe and Communism that pop-up on today’s screens and “populate” the literature, have almost nothing in common with me. And yet I lived under such a regime for thirty years! I know that my story may not be representative, not the least because the 1970s were the years of prosperity in Yugoslavia and because that peripheral part of Europe then played, thanks to Tito’s non-alignment, a world political role that it never had in 2,000 years—but still, after I adjust for all of that, I believe that some other, non-preordained, stories of “underdevelopment” and Communism have the right to be told too. Or should we willfully destroy our memories?

Yet it is very difficult to tell these other stories. History is written, we are told, by the victors and stories that do not fit the pattern narrative are rejected. This is especially the case, I have come to believe, in the United States that has created during the Cold War a formidable machinery of open and concealed propaganda. That machinery cannot be easily turned off. It cannot produce narratives that do not agree with the dominant one because no one would believe them or buy such books.  There is an almost daily and active rewriting of history to which many people from Eastern Europe participate: some because they do have such memories, some because they force themselves (often successfully) to believe that they do  have such memories. Others can remain with their individual memories which, at their passing, will be lost. The victory shall  be complete.

When I was in 2006 in Leipzig to watch a World Cup game, I was struck to see, displayed in a modest store window, a picture of the East German soccer team that in 1974, in the then World Cup played in West Germany, unexpectedly beat the West German team by 1-0. None of the players in that East German squad went to become rich and famous. They were just home boys. It was I thought a small, poignant, even in some ways pathetic, attempt to save the memories and say: “We also did something in these forty years; we existed; it was not all meaningless, “nasty and brutish”.

Thinking of those years in political terms, one moment now, perhaps strangely, stands out for me. It was the Summer of 1975. The Helsinki conference on peace and stability in Europe was just taking place. It was closing a chapter on the World War II. It came just months after the liberation of Saigon. And I recall being on a beach, reading about the Helsinki conference and thinking, linking the two events: there will be no wars in Europe in my lifetime, and imperialism has been defeated. How wrong was I on both accounts.

Monday, September 4, 2017

How China became a market economy--Review of Julian Gewirtz’s “Unlikely Partners”

Perhaps the most momentous set of economic decisions in the world in the past half-century occurred in the period 1976-1989 when after Mao’s death Chinese leadership decided to change course and to focus on economic development of China rather than on “class struggle”. The change in focus led to the creation  of a market economy in China, phenomenal reduction in China’s (and thus global) poverty, almost 20 times increased GDP per capita (no, “20” is not a typo), and finally around 2015 made China’s the largest economy in the world (in purchasing power terms).

But none of that would have occurred had Chinese leaders not made key decisions in the decade after Mao’s death. Julian Gewirtrz’s “Unlikely Partners” charts, with an extraordinary attention to detail, these world-historic decisions and focuses on the role that foreign economists played in the early stages of China’s transformation. But while the declared focus of the book is on the foreign-to-Chinese interaction and cooperation, with the high point (extremely well described) being a week-long cruise-seminar in August 1985 along the Yangtze river on a luxury boat with about a hundred Chinese and foreign economists participating, among whom the most important for Chinese later reforms proved to be Janos Kornai, Wlodimierz Brus and James Tobin, the book is more than that. It documents almost 15 years (from Mao’s death to 1992) of discussions and policy decisions about the “goal model” of Chinese economy: relations between the government and enterprises, role of the plan and the market, ownership structure, macroeconomic policies and the like. Practically, the entire “new” Chinese economy, from the Central Bank to the Special Economic Zones to state conglomerates was “invented” then.

It is thus an indisputably necessary book for anyone who wants to learn more about China and about that extraordinary period of intellectual ferment. (It was not all rosy though: there were fights and imprisonments related to the “Fifth Modernization”, the home imprisonment of Zhao Ziyang and his becoming a  “non-person”, and most importantly the Tiananmen killings.) But to imitate Deng famous statement on Mao, it could be said that the period 1976-92 was 90% right and 10% wrong.

Gewirtz displays vast amount of knowledge of China (including speaking and reading Chinese and thus using numerous Chinese sources) and scholarship (there are more than 100 pages of detailed footnotes). He has spoken to most of the surviving participants of the then debates or gone through their archives. It is an immense work that deserves highest praise.

But it does have “problems”.

The book is mostly a chronology of meetings piled upon meetings, statements of the key actors and the like, and this “annals-like” approach often does not allow the reader to see forest from the trees. That is, to realize there are broader questions being debated. Although even as a chronicle, because the subject matter is riveting (at least for me), the book reads well, I had the feeling at its end that Gewirtz should next sit down and write a “histoire raisonnée” of what he just told us in a blow-by-blow fashion. I hope he would do that because I think that very few people in the world have this level of specific knowledge as Gewirtz.

Next, I have to mention perhaps small but annoying problem. The book is simply badly edited. This is of course a recurring problem in recent publications. But it does not seem that anyone has read the book as a whole, perhaps not even the author. Thus Zhao Renwei is about 5 or 6 times introduced identically as “mild-mannered”, another Chinese economist is in about equal number of times presented as “obsessed” with economics; quite extraordinary on page 199 the acronym CCP, up to that point probably used several hundred times, is, to the reader’s bemusement introduced—yes, it stands for the  Chinese Communist Party! Yay! (The same is then repeated on p. 237 when the acronym for the Chinese Academy of Social Sciences, CASS, similarly used throughout the book, is explained.) Perhaps that some chapters were written as independent papers and then stuck together but that still does not justify this degree of sloppiness.

Likewise, the “commodity” in “socialist commodity economy” , a term that clearly Gewirtz finds perplexing, is explained about a dozen of times—and unfortunately wrongly. Gewirtz believes that “commodity” is “a Soviet euphemism” or a “Soviet by-word” for “market” but it is not. It is not Soviet but Marxist, and actually it goes back to Adam Smith and to the distinction of value-in-use (good) and value-in-exchange (commodity). It is used in economics frequently today in terms such as “commodification of labor” or “petty commodity production”.

There are also mistakes. China did not rejoin the IMF in 1988 (p. 256) but in 1980 when it rejoined the World Bank as well. Moreover, it is not that China did not want to join these two institutions as Gewirtz implies on p. 74. It is rather that it was not allowed to be member because the United States, that did not recognize the People’s Republic until 1979 and held veto power in the World Bank and IMF, was blocking  China’s entry.  Also, the Polish Round Table talks did not “dissolve [?] the position of Communist Party general secretary” (p. 221).

Finally, let me move to two substantive issues.

Gewirtz is confused, or at least does not distinguish, between different reforms in socialist systems. To simplify, there were three: (1) the relationship between the center and the enterprises (are enterprises going to make autonomous decisions about production, hiring etc. or not), (2) prices and subsidies (is the budget constraint to remain soft or to be hardened?) and (3) who is the owner (enterprises as parts of the state, or as independent corporate entities but state-owned, or to be privatized). Almost all of East European discussion and reform up to around 1985-87 dealt with the first two issues. So these were discussions about the reform of socialism.

Gewirtz at times appears aware of that when he cites Brus, Ota Šik or Kornai. The same was true for Chinese reform—except that China, being in 1976-78 way back in terms of reforms compared to most East European countries, had to start from scratch, but caught up remarkably fast so that by the mid-1980s Chinese reforms were ahead of East European. But these were not reforms of “transition” (presumably to capitalism) as Gewirtz sometimes implies because they did not touch the ownership structure of the economy. Their objective was to make state owned (or in Yugoslavia, labor-managed) enterprises more efficient and more responsible for their profits and losses; and this required price reforms. Only when the reform discussion reached the third stage that logically implied questioning state ownership can we speak of “transition” to capitalism

By not discriminating between these different reforms, Gewirtz at times imputes to reformists who wanted to reduce state subsidies and allow market prices a belief (which most of them did not have) that they wished to reintroduce capitalism. This is of course driven by both ex post knowledge and by some teleology. In a paradoxical manner Gewirtz thus makes joint case with most dogmatic central planners who likewise argued that any introduction of market pricing will inevitably lead the country back to capitalism. This ex post imputation is in most cases, wrong, and especially so in a historian whose objective should be  to “seize the moment” and explain the motivation of the participants as they then were.

My final “problem”, somewhat related to the last one, is that the book is pretty light on the international political dimension. The fall of Communism in Poland is mentioned as one of the factors that might have led to the repression in June 1989, but the Chinese reforms unfolded in conditions of great turmoil, initiated  with Gorbachev’s advent to power in 1985, in other socialist countries. This, one would submit, must have had some influence on the thinking of Chinese economic and political elites.

Gewirtrz’s book is definitely worth reading and studying and could be one of the first stones in that yet to be built edifice of global socialist economic thought in the 20th century, an idea that Gewirtz credits to Barry Naughton. Any candidates?