a revolution which never was: from state socialism to multinational capitalism

by Tamás Krausz

Towards a historical interpretation of the change of regimes in Eastern Europe

The title summarizes the main argument that I will develop in my presentation. Eastern European mainstream literature sacrificed the historical approach in order to shamelessly glorify the events of 1989-1991. In the theoretical, historical, economic and political literature on the history and consequences of the change of regimes, there is a fierce struggle among the different schools (labeled as discourses and narratives) for the “right” terminology. Nonetheless, the free competition of ideas seems to me illusory. The mainstream literature dismissed Marx’s theory of social formation as an unverifiable “grand narrative”, and excluded it from the set of competing paradigms. This exclusion can be closely linked with a previous development.


In the 1980s, Marxist theory was equated with the legitimating ideology of the state socialist system, which was widely criticized at the time by Eastern European dissident intellectuals. After the change of regimes this criticism developed into a new legitimizing ideology, which was used to justify the rule of the new elite. The real aim of the attempts to discredit Marxist theory in general in Eastern Europe was to divert attention from the crucial issue of the transformation of property relations. The distribution of state property, which in the old times was called the property of the people, was inseparable from the issue of power relations. Therefore, the issue of the distribution of state property had a decisive role in the formation of the new nation states as well.

In line with the ideological considerations that I outlined above, the mainstream approach sought to explain the change of regimes in terms of simple categories of dichotomy such as democracy versus dictatorship, and market economy versus state economy. I can mention here a third thesis, which shows strong resemblance with this manicheistic way of thinking: namely that in reality the system has not changed. We can only speak of the change of elite. In my view, the historical approach and the social formation theory can offer a better explanation for the change of regimes than the mainstream narratives that dominate the present Eastern European political and intellectual sphere. If we really want to understand the transition from state socialism to multinational capitalism, we need to take a long durée approach on the history of the change of regimes.

1. Under the spell of “catching-up”

In Eastern Europe (needless to say, not only there) even twenty years after the events it is still political rather than academic interests that dominate the study of systemic change in nearly all of the fields of social sciences.[1] On the 20th anniversary of the collapse of state socialism, we witnessed an unscrupulous and tasteless self-celebration of the local ruling elite in the media, on posters in the street and the underground stations, in scientific journals, and even at the Academy of Sciences. This “scientific” self-celebration highlights only partial events and heroic speeches while it essentially fails to grasp the totality of the phenomenon. In this way we are presented with an ahistorical picture of the change of regimes. No-one speaks of the contradictions, which have emerged in the new system. The stress on the political sphere overshadows the social and economic consequences of the collapse of state socialism. The Eastern (and also the Western) European mainstream literature rendered small groups of opposition, dissident intellectuals and homo politicus the main and only actors of history. It passes unnoticed that the Communist propaganda had created and widely propagated a similar myth of the Russian revolution back in the old times.

In this mainstream narrative of the change of regimes, the negative social phenomena such as the rise of new poverty, the cultural deprivation of many people and rapidly increasing social inequality, appear to be secondary problems, which can be “administered” by the relevant social institutions. The optimists, however, forget that the solution of the negative social phenomena requires a deeper understanding of the “specific” Eastern European development. This specificity did not originate in the establishment of Communist rule. The process of systemic change was determined by the contemporary trends of the world economy and the unequal structural positions. Thus, the emergent negative social phenomena cannot be interpreted adequately without speaking of the problem of the peripheral integration of the Eastern European region in the world economy. The neoliberal elite conveniently forget this connection because the whole problem of peripheral development would be in direct contradiction to their interpretation of 1989 as “liberation” and “revolution”.

Jürgen Habermas was presumably the first important thinker who argued that the Eastern European changes classify as revolutionary transfigurations when he spoke of the Eastern European “correctional”, “rectifying” or “catching-up” revolutions.[2] The German philosopher did nothing else but reformulated the old theory of catch-up development, which was by the way also the dream of the old Communist elite.[3] What actually took place in Eastern Europe during the last twenty years had, however, nothing to do with dreams of any kind. What the revolution of thinking achieved in this field – similarly to Fukuyama’s unimaginative hypothesis about the end of history – was to connect catching-up with the uncritical adoption of the institutions and values of the core capitalist countries. Thus, while in the mainstream narrative the idea of a catching-up revolution became the main goal of the change of regimes, in fact, a peripheral integration took place, which renders it unlikely that the region would any time soon catch up with the capitalist centres.

Today we can observe all over the region that “returning to Europe” (even within the framework of the European Union) means a return to the intellectual, political and social structures of the interwar period. The old capitalist and surviving feudal structures coexist with the modern global institutions of capitalism. The expectation of 1989 was that Hungary (or any other Eastern European country) would soon catch up with Austria, Japan or Finland.[4] Some even dreamt of Switzerland. The chosen country of destination as a “model” depended only on the local media’s taste and preference. But the actual facts clearly – and from the perspective of the Eastern European countries sadly – disproved this theory. Twenty years after the fall of state socialism the great masses of the Eastern European peoples still live at the same level – and in many places worse – than they did under the “evil Communist” regimes.

The Eastern European political elite use the theory of catching-up as a justification of its own existence. Well, it would be hard for any political elite to admit that its main source of legitimacy was built on lies and falsifications from the very beginning. In Hungary, certain factions of the ruling elite (the coalition of the socialist-socialist democratic and liberal political forces) fabricated the following alternative: we can choose between a modern, neoliberal capitalism that will help us catch up with the West and a feudal, pseudo-romantic conservative-authoritarian model associated with the nationalist-conservative political elite. This intellectual-political sphere leaves no room for an authentic leftist, anticapitalist, critical discourse.

The leaders of the Eastern European national movements of the 19th century believed in the possibility of catching-up and so did the state socialist elites together with their leaders from Stalin to Gorbachev. In the new system it again became an “official” doctrine as a political legitimating ideology. The social-liberal government stresses the importance of “global values” (free market, multi-culturalism etc.) while the nationalist-conservative political elite put their stress on “national values” and, in case of their electoral victory, they will add some new “spice” (i.e. racism and extreme rightist-revisionist sentiments) to this mix. Nonetheless, both remain under the spell of catching-up just like the old state socialist elites.

Neoliberal thinkers advertise the same catchwords of “freedom”, “democracy”, “Western culture” and last but not least, “catching up” all over the world. They tell us the story of the change of regimes as the outcome of an inevitable evolutionary process. Nonetheless, they cannot even explain why state socialism collapsed at the end of the 1980s, and how it could survive its historically most difficult periods: the civil war of 1918-1920, the great famine of 1932-1933, and the attack of Nazi Germany in 1941.

In the liberal narrative, the fall of state socialism is explained through doctrinal, ideological reasons as if the collapse of the system had been encoded in the communal ideals and theories of socialism, as if these ideas had been realized during the Stalinist or Brezhnevist eras. All the essentially different phases of state socialism disappear under the cover of Stalinism, dictatorship and totalitarianism each of them loaded with Cold War ideology. By using an ideological trick, neototalitarianism squeezes Nazism and state socialism into the same category of “socialism”, which stands in direct opposition to democracy and market economy. Mainstream writers explain the degeneration of socialism into “state socialism” directly through Marx’s theory on socialism while they fail to take into account the limited historical conditions and the specific development of the countries where Communists got to power.[5] This specificity, I repeat, existed historically well before the establishment of Communist rule. The main reason for this approach is to discredit any communitarian alternative to capitalism as utopian.

This ideological approach was an outcome of the change of regimes, and it reached its climax in equating free market with political freedom. The notions of freedom, democracy were “dissolved” into political-legal terms, while their economic and social aspects were forgotten. Consequently, the neoliberal narrative celebrates the overthrow of the one-party system as “the victory of freedom”. In reality, in Eastern Europe bourgeois democracy as a slogan and an institutional import was nothing else but a technique to acquire property and power, and it never became the reincarnation of the Western European bourgeois democracies, though it is fashionable to present the story like that. The newly formed institutional system was appropriate for solving the crucial issue of the change of regimes, and this was the transformation of state property into private property.

2. State property in Eastern Europe

In contrast to superficial theories of “modernization”, the Eastern European region always lacked the structural forms that we know from the history of the Western countries. Compared to the Western core countries, the Eastern European historical region had many specific, distinctive features. There is an extensive literature on the specificity of the Eastern European region that I cannot introduce here. [6] I will only give a brief historical outline.

The theoretical analysis of the semi-periphery (Arrighi) defines the position of Eastern Europe in the world system. Thus, it shows that the century-long national and regional dream of catching-up is nothing else but a utopia. The last twenty years likewise proved that the change of the semi-peripheral status in the global system does not depend on a political or ideological will. It is also shown by the fact that both the capitalism before the Second World War and state socialism (“actually existing” socialism) had to cope with similar structural problems. The Western part of the Eastern European region – the Czech Republic and Slovenia – had the best historical conditions for a bourgeois development in comparison with the other Eastern European sub-regions. Consequently, this sub-region had the best chance for catching up with the Western core countries. Nevertheless, the geopolitical power relations were never favorable for this outcome. Still, I have to point out that not even in this region could bourgeois democracy be firmly embedded thanks to the weak social and material basis of capitalism and the unfavorable international conditions. In the Central-Eastern European area (the Baltic countries, Poland, Hungary and Croatia) the bourgeoisie was not only weak but it also differed ethnically and nationally from the great masses of the local populations. These countries were characterized by an authoritarian rule and the survival of certain “feudal” elements. The Russian-Ukrainian-Belarus region was characterized by a traditional society until the end of the 19th century. Finally, in the countries of the Balkan – and from this aspect Slovakia also belongs to this category – we can observe the formation of an “incomplete” society (see Zoltán Tóth), that is, a kind of society which had no power elite of its own and also lacked other characteristics of the bourgeois societies. The regional historical characteristics, which are well-known for historians and which have specific features in each sub-region, can be summed up as follows: the decisive role of the state in the economy; the importance of the state property and the omnipotence of the state; the general weakness of civil society; the lack of a democratic bourgeoisie capable of governance. All these characteristics helped the turn to state socialism after 1945 and also played an important part in its fall in 1989, since these historical features supported the transmission of the semi-peripheral forms of the multinational, supra-national capitalist rule. State socialism as a special kind of “incomplete society” had no ruling elite, so at the end of the 1980s, during the neoliberal re-structuring, the high-ranking party bureaucracy and the elite could easily find themselves in the position of the new propertied class, although for a while it seemed that they could find their historical role as representatives of the working class.

Still, in spite of all the specific historical features in the four sub-regions of Eastern Europe, the absolute dominance of state property is indisputable. This was the result of a historical process and it was further strengthened by the Eastern European export of Stalinism. This form of property is considered as something historically brand new and original because this kind of state property was not rooted in the capitalist property relations. Before 1989 state property in Eastern Europe could not be sold or bought, nor inherited, even though there was a hierarchy of the beneficiaries from the unskilled workers to the first secretary of the party. The change of regime was necessary to get rid of state property, since neoliberalism could not carry out privatization in its “classical” form – in contrast to Thatcher’s Great-Britain or any other traditional capitalist countries where state property had originated in private property and it could be privatized without changing the whole system.[7] According to the words of the Constitution, state property was controlled by the laboring classes. In practice, however, state property never became direct social property. Moreover, all the experiments to put this idea into practice were defeated. This was the fate of the workers’ councils in Hungary both in 1919 and in 1956, while the leftist wing of the Polish Solidarity was shamelessly deserted by the new liberals, who favored the restoration of private property over experimenting with workers’ self-governance.

The first consequence of the change of regimes was that the Constitution banned the socialization of state property, thus it put an end to any communitarian experiment. In other words, since privatization was not possible under state socialism, the power elite had to change the whole system in order to preserve their privileges and political-economic power. It is not accidental that the so called “expert committees” and the financial-political power groups of the West and mainly of the United States rejected all collective forms of ownership, arguing that “the powers of world market” and the capitalist multinational firms could play a positive role in restructuring, while the working classes lack the necessary abilities to control this historical process.[8]

In the mainstream liberal historical and economic narrative, state property became an obstacle to technological development because it was unable to compete with the market economies based on private property, and it led to dictatorship. Nonetheless, the Eastern European semi-periphery could never compete with the Western capitalist countries! In fact, state socialism was relatively successful for some decades in comparison with the capitalist periphery. State socialism became a “dead end” because the bureaucratic elite prevented the socialization of state property in the name of a socialist catching-up development, and in the defense of their own privileges. In the historical moment when they felt that these privileges were threatened, various groups of the elite appropriated state property with the assistance of supranational and multinational capital. They used the liberal ideology to present the apotheosis of private interest and privatization as a common national interest. They stressed publicly that privatization was a secondary issue in the great process of the change of regimes while in fact all parties fought a life-and-death struggle for the appropriation of state property.

At the time of the collapse of state socialism the alliance of the nationalistic and neoliberal intellectuals and the oppositional Marxists was built on the socialization and democratic control of state property almost all over Eastern Europe. In the course of the power struggles these social groups got gradually converted to the ideology of the market, which was the internationally widely propagated panacea for the economic problems of the region. The alliance of the liberal and nationalistic elite learnt three things in the second half of the 1980s. 1. They understood that the idea of workers’ self-management and direct social control won’t get the support of the West. They started to argue that property, after all, was not such a crucial issue as they had thought before. They pretended to overlook that the distribution of state property was a decisive issue in the struggle for political power. 2. They understood that privatization helps them to get rid of the bureaucratic rule of the party apparatuses, and they can occupy the elite positions as capitalists or the representatives of the multinational capital. 3. Thereafter, they used the slogans of “freedom” and “democracy” in their fight for a capitalist restoration. In many countries they even declared this fight as a revolutionary struggle, which, in effect, led to the massive economic and social dispossession of the Eastern European peoples.

3. The change of regimes and the newly formed nation-states

The newly formed nation-states played a decisive role in the eventual dispossession of the peoples all over Eastern Europe. These nation-states were created on the ruins of the federal state-formations, which were established during the state socialist period. These new states were appropriate means for the local and global capital to organize their control over the local societies.

So, the birth of the new nation-states cannot be separated from the crucial issue of the distribution of state property. I have stressed above that the economic power of the old and new local elites in the whole region (including the Soviet Union) was based on the appropriation of state property, which was central to the process of systemic change. This was reflected in the disintegration of the great federal units and the birth of the small states, the political use of the ethnical, national differences and the conscious sharpening of the national conflicts. These new, weak states satisfy the needs of global capital: nations or more exactly nation-states ceased to exist in the economic sense, and the “nation” survives only as a cultural and political entity.

The disintegration of the state socialist federations can be seen everywhere as a natural consequence of the global geopolitical interests and the expansion of global capital. The historical background described above and the nationalistic ideologies of the new power elites should be, of course, analyzed together with the specific, local conditions.[9] There were national variants of the same historical problem: that behind a bourgeois democratic facade there was no democratic bourgeoisie. The weaker the civil traditions, the greater is the danger of the establishment of a new, authoritarian rule, which ruthlessly oppresses the anti-systemic leftist movements while it readily serves the interest of the supranational firms and institutions. The nation-states are thus becoming loyal tax-collectors in the hands of these institutions.

4. The ideological legitimization of the new nation states

Systemic change (i. e. the management of the global expansion of capital) took place in Eastern Europe in the name of the most extremist forms of nationalistic and/or liberal ideologies. In order to gain a new legitimacy, the Eastern European power elites replaced all forms of Communist ideology with religious-spiritual and nationalistic doctrines.

Though in various forms and degrees, the new power groups all over Eastern Europe (with the exception of Russia) based their intellectual-ideological legitimacy on the conservative-reactionary traditions of the interwar period and the myth of an anticommunist “national resistance” (in collaboration with the Nazis) during the Second World War. In order to achieve this goal, the elite had to construct a new national history as a constant fight for national liberation. (As an example see the “new” trends in the Ukraine: the apotheosis of Bandera, who participated in the Holocaust and the SS and Wehrmacht officer Roman Suhevits, who was honored posthumously by president Yushchenko, and intended to name a military school after this “hero”.) These trends confirm that there was a rehabilitation of an ethnic way of thinking in the new EU countries with a strong support of Western Europe. But the local elites do not turn to traditional nationalism. They use the rebirth of ethnicity for the construction of a racist national myth. This essentially ahistorical myth is presented as a defense of the interests of the local national population against the expansion of global capital, namely the consequences of the change of regimes… Lenin argued that capitalist development had two contradictory trends: integration and disintegration. The new political classes constructed their official national ideology in terms of ethnicized categories. This ideology partly reflects and partly disguises the social and economic interests, which are determined by the global and local conditions. Driven by the fierce competition for ever higher profit, the local representatives of global capital (“national bourgeoisie”) are the main generators of the most extremist forms of racism.

In short, while the bombing of Yugoslavia put a symbolic end to the social and economic dispossession of the Eastern European peoples, they could consol themselves with the free development of an ethnicized discourse under the banner of democracy and freedom. Thus, capitalist restoration has been completed even in an ideological sense. Leftist ideologists of the old, democratic opposition speak of the failure of the change of regimes, albeit in my view it was only the illusions of a “good, liberal capitalism” that have failed. Capitalism always showed anti-humanistic tendencies in the region similarly to any other semi-periphery or periphery. In this sense the change of regimes has not failed but on the contrary, it has achieved its goal with the restoration of the semi-peripheral forms of capitalist rule. The core countries can produce and extract the profit from the region in a practically uncontrolled way under the banner of democracy and freedom. This is all that I wanted to tell about the Eastern European “revolutions”, whose ideological function is to legitimize the new forms of power.

[1] I have to point out that Eastern European intellectuals also developed a leftist critique of the change of regimes. See for example László Andor, “Capitalism in Eastern Europe”, Links. International Journal of Socialist Renewal, No. 4. 1995, 54-62; Tamás Krausz, “The East European Systemic changes”, ibid., 63-69. For a critical review of the main paradigms see: Eszter Bartha, “Transition, transformation, ’postsocialism’. Theorizing systemic change in Eastern Europe”, After Twenty Years. Reasons and Consequences of the Transformation in Central and Eastern Europe. Ed. by Krisztián Csaplár-Degovics, Miklós Mitrovits, Csaba Zahorán. Berlin: Ost-Europa Zentrum, 2009.

[2] Jürgen Habermas, „What Does Socialism Mean Today? The Rectifying Revolution and the Need for New Thinking on the Left”, New Left Review, No. 4. Sept.-Oct. 1990.

[3] It is worth stressing that it was Stalin who strongly propagated an “authentic” catching-up development with the West. On the intellectual roots of the Stalinist turn see: Tamás Krausz, Szovjet thermidor: A sztálini fordulat szellemi előzményei 1917-1928. Budapest: Napvilág Kiadó, 1996.

[4] It can be documented that the members of the leftist Eszmélet-circle including the author had no such illusions, and we gave a correct prognosis of the Hungarian situation. See as an example László Tütő, Eszmélet No 83; Tamás Krausz, Megélt rendszerváltás, Budapest, Cégér, 1994.

[5] A “classical” example of this ahistorical approach is János Kornai’s extensive analysis on the political economy of socialism, see on this Tamás Krausz, “Ahistorical Political Economics”, Social Scientist (New Delhi), vol. 24. No 1-3, Jan-March 1996. pp. 111-127.

[6] During the last fifty years in Hungary alone the most important historians published dozens of books on the subject: Emil Niederhauser, Endre Arató, Jenő Szűcs, Péter Gunst Péter and György Ránki to mention only the most well-known authors.

[7] While in Chile a neoliberal turn could only be achieved with a coup d’etat and political mass murders, the state socialist elite voluntarily gave up their position.

[8] I gave a detailed description of the role of the international capitalist institutional system in the change of regimes in the Soviet Union: Tamás Krausz, ‘Perestroika and redistribution of property in the Soviet Union: political perspectives and historical evidence’, Contemporary Politics (London, South Bank University) Vol. 13. No. 1, March 2007, 3-36.

[9] For the specific case-studies see for example: Az új nemzetállamok és az etnikai tisztogatások Kelet-Európában 1989 után. Ed. by József Juhász and Tamás Krausz. Budapest, L’Harmattan Kiadó, 2009.

5 thoughts on “a revolution which never was: from state socialism to multinational capitalism

  1. The corrupting world wide, private enterprise, of the “Narcotics Trade, the “Prostitution Rings,” the corrupting influence of government politicians, on the take, being bought off, and treated like a valuable commodity, by the “Merchants of world wide “Private Capital.” These “Free enterprise merchants of death, that starts world wars, so that they can make “Blood Money” on the backs of the ordinary citizen soldiers.
This powerful capitalist oligarchy, that has power that is all consuming and is of global proportion, dwarfs our government, and every government on the planet. This insidious, global private sector, causes more damage, then governments, because it has bought off most of the politicians and corrupted them, and infiltrated governments on the entire planet. It is this conglomeration of world wide capitalist rule, that rules the people of the world, with an iron hand.
Those that are a part of our PRIVATE SECTOR, …for the sake of making a profit, has and had, … made a “Pact, With The Devil,” …and the “PUBLIC BE DAMNED!”
    By pretending that the “GOVERNMENT is the ENEMY,” those that can’t see too well, are distracted from the real enemy, and that enemy is the global oligarchy, of “Capitalist Blood Suckers,” that are intent on continuing their bloody war, on the average, ordinary citizen.
    These criminal, PRIVATE ENTERPRISE, world wide syndicates, are fighting this criminal murderous war, all over our capitalist planet.
    Only a planned “Socialist Economy,” can rid our planet of the corrupting influence of the private enterprise of criminal gang activity, that is organized to compete, kill, rape, and murder, …for profit and power!


  2. You contend that the problem is the private sector, not the state, yet also write that those who run the state are the agents of private capitalists.

    However, the problem is not that politicians have been “bought off” and thus do what their paymasters tell them: the state apparatus itself is not ‘class neutral’, it is part and parcel of the ruling class.

    The police, the army, the management of nationalised companies, the law courts, the BBC etc are not empty bottles you can fill with socialist wine.

    Statified economies and societies with a very small “private sector” are nonetheless based on one class having to sell their capacity to work to another, and submitting to its political rule, laws etc.

    The state is not “public”, the state is the “private” property of the ruling class.


  3. can I ask where you got this paper from? Did Prof Krausz write this for your website, or was it published elsewhere too?


  4. at the Debatte conference recently in London? (excuse me for the interrogation, I’m only asking because if this was the speech he delivered at the conference he might have a Hungarian version of it and then I’ll try to get that, so that I wouldn’t have to translate it as I’m Hungarian too)


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