This book is conceived as a broad comparative study of ten countries whose political structure and dominant ideology justify the application of the ‘Marxist State’ label. However, while these countries are ruled by parties strongly influenced by Marxist ideology and vision, their acceptance of and adherence to the Soviet model of communism varies considerably as do their links to the Soviet Union. The levels of centralisation and nationalisation of their economies are also highly varied; nonetheless, the latter can be identified as important ideological ingredients in the party philosophy and policies within each country.
The Soviet economy is a model for many nations that have followed the socialist form of economic development. Many of these states adopted a centrally-controlled and state dominated economy. An examination of their economies reveals that many socialist nations have followed the same pattern as the USSR. A centralised planning process, a system of fixed wages, established price controls, and extensive regulations govern the official economy. But alongside the official economy, a large unofficial economy, popularly called the second economy,1 has arisen, adding much flexibility to the economic system.
In the period immediately following the Second World War and the imposition of the Soviet-backed communist government in Poland, only large and medium-scale plants were taken over by the new state (on 3 January 1946), while retail trade, services, crafts, and small-scale industrial industrial firms remained in private hands (Zieliñski, 1974; Åslund, 1984: 429). But the years 1947–8 witnessed an ideological battle over trade between the Communists and more moderate Socialists in which the latter were defeated (Kaliński, 1970). By the end of the 1940s all industries were effectively nationalised and private trade and craftsmanship liquidated. This was achieved by ‘a combination of ruthless, inconsistent laws, withdrawal of licences, prohibitive taxation, unprofitably low fixed prices, lawless persecution, etc.’, all of which was officially labelled as a ‘sharp class struggle’ (Åslund, 1984: 429, 430; also Åslund, 1985a: 25–33; Kaliński, 1970).
The Communist party has come to power twice in Hungary since the Second World War — on both occasions, courtesy of the Red Army. The first time was between 1945 and 1948. That power was swept away by the Hungarian Revolution of 1956. However, after the crushing defeat of that short-lived revolution in November 1956, Communist power was restored. But, as G. H. N. Seton-Watson has observed, ‘counter-revolutions in practice never succeed for long in restoring the previous order … Hungarians must with reluctant gratitude acknowledge that the regime of Janos Kadar differed from that of Ernö Gerö’ (Seton-Watson, 1978: 2). Thus, in tracing the origins of the second economy in modern Hungary, we must begin in 1956.
An analysis of Romania’s economic situation of the early 1980s, despite the poor and relatively unreliable statistical information available (Pissulla, 1984: 122; Jackson, 1986a: 512) reveals that the Romanian standard of living has been drastically declining and appears to be the lowest among the Eastern European CMEA countries. Unlike Poland, where the population has openly reacted against similar developments, the Romanians have chosen to remain passive and have sought to develop privatism instead (Sampson, 1986b: 2ff). Various explanations of this attitude have been put forward: competition and suspicion between Romania’s major ethnic groups; the lack of political collaboration between intellectuals and workers (unlike Poland); individualistic orientation and cultural influences on political consciousness (Kideckel, 1986: 3); and the existence of an omnipresent second economy. Of these explanations, the latter is the most important and logical one.
There is no special reason to suppose that Yugoslavs are more ingenious or imaginative than the citizens of any other country. Yet, certainly their extensive participation in the unofficial economy reflects a set of circumstances which has extended their creative capabilities in this sphere to the limits. The most important features contributing to the growth of the unofficial economy are: the underlying, long-term growth pattern of the economy and its present level of development; the nature and implementation of its associated labour paradigm; and, the impact of the economic crises of the 1980s.
He was in his early twenties. Relaxed and playful, he swapped cigarettes and chistes with the three ‘norteamericanos’ who had wandered into that rural town of muddy surf and rocky shoreline on Cuba’s leeward coast.1 He said he served with the Cuban air force in Angola, was proud of his country, and would not leave it for the United States. Yet, with a trace of wistfulness, he told us how fortunate everyone was in the United States to be able to have everything they wanted. He was sceptical of our comment that there were homeless people and people without adequate medical care in the United States.
The second economy in Nicaragua becomes empirically apparent to even the most casual visitor within a few days if not hours:
As I leave the library to walk to lunch, there is a well-dressed elderly lady on the way down the Avenida Simon Bolivar (the main street) who keeps asking every day if I want to sell American dollars to buy some [black market] cordobas (Field notes, 10 March 1985).
Conceptualising, explaining, and understanding this second economy, however, is enormously more difficult than becoming aware of it. Clarifying distinctions are needed, especially regarding the use by northern economists of the term ‘second economy’, connoting restrictions on free labour markets (see Thompson et al., 1980; Henry, 1979; Scraton and South, 1984), and the Third World ‘second economy’, occupied by the marginalised majority, but only occasionally analysed criminologically (Walker-Larrain, 1983: 20). Latin American criminologists now argue insistently that northern theories and concepts cannot be uncritically applied to the particularities of their continent (see, for example, Aniyar de Castro, 1979–80: 7–15; Del Olmo, 1981; Riera and Del Olmo, 1981).
China’s economic development has been the subject of much interest and scholarly attention in the West. However, rarely does research stumble on the subject of the so-called second economy or private economy, which takes on an extensive significance in the contemporary history of Chinese economic development. Since the Chinese Communist Party (CCP) started its ‘socialist transition’ in the pattern of relationships of production in the mid-1950s, the second economy has been officially viewed as being not only inconsistent with Marxist ideology, but also as a latent form of capitalism which is assumed to be detrimental to the communist society. However, the second economy has co-existed and survived in parallel fashion with the official, centrally planned economy for more than thirty years. The fluctuations of the second economy witnessed over this period reflect the results of various political struggles between the leftists and the rightists of the party.
Angola won its independence in 1975, after four centuries of Portuguese colonial rule and fifteen years of liberation struggle. Prior to the Berlin Conference in 1884–5, Portugal had confined Angola to the role of slave supplier for the plantations of Brazil and other colonial markets in the Americas. The Portuguese presence in Angola during this period was assured by the King’s armies, the Catholic Church, and the representatives of overseas companies involved in huge slavery transactions and small-scale trade.
The phenomenon variously referred to as the second economy, the underground economy, and the informal economy, is neither new nor peculiar to one world region only. However, its activities, mechanisms of operation, and magnitude of entrenchment within the dominant economy differ from country to country. As Tanzi states: ‘Incentives for growth of these activities increase with greater regulation of the economy, larger public sectors, and higher levels of taxation’ (Tanzi, 1983: 10).
This final comparative essay is designed to offer a theoretical synthesis of our present knowledge on the role of the second economy in the process of Marxist development. Throughout this chapter a use is made of the information provided in the national reports contained in this book, as well as of numerous other sources. While this essay is based on an overview of ten Marxist societies, five of them are grouped as ‘East European states’ (the Soviet Union, Poland, Hungary, Romania and Yugoslavia) and the remaining five are classified as ‘developing’ or Third World’ countries (Cuba, Nicaragua, China, Angola and Tanzania).
