Private Enterprise in Eastern Europe

One of the fundamental tenets of Marxism-Leninism is the abolition of the exploitation of man by man through the elimination of private ownership of the means of production. Under Stalin this was a major objective of all communist governments. The private sector dwindled rapidly and what was left was generally believed to be a temporary remnant. However, the private sector has not disappeared. In the mid-1950s, mid-1960s, and again in recent years, several East European governments have made attempts to revive private enterprise, despite their expressed adherence to the socialisation of all means of production.¹ A recent Polish textbook on political economy notes that the chief task of the transitional period from capitalism to socialism is ‘the liquidation of the capitalist sector and the gradual transformation of the petty commodity sector, in particular the individual peasant economy’.² The existence of private enterprise remains ideologically undesirable. Two major questions emerge:

The two following accounts of the development of the private sector in Poland and the GDR, respectively, focus on policy aims, policy implementation, and the effects and interaction among these three elements. Practical policy has been the prime factor in the fate of the private sector, and is therefore the basis for periodisation. From an early stage, economic forces played only a marginal role in determining the scale of the private sector, so the volume of private employment indicates actual policy. Official periodisations differ from our own.

A glance at a chart of steadily-declining private employment in the GDR suggests a periodisation which the study of events confirms. The most conspicuous phenomena are three periods of rapid socialisation — termed socialist offensives in this book — which were separated by phases of less radical reductions in private enterprise.

We can now return to our introductory questions in search of general conclusions. First, a static analysis is needed to establish the characteristics of the functioning of a small private sector in a Soviet-type economy. Second, by examining the dynamic features, cycles and trends, we shall attempt to answer why private enterprise has survived. Since our aim is to find out what is typical of a Soviet-type economy, we shall investigate what the private sectors have in common, wherein and why they differ.