Neoliberalism Led to Populism in Eastern Europe

By Henry Srebrnik, [Summerside, PEI] Journal Pioneer

The term “neoliberalism” has come to describe laissez-faire ideas in economic thought. It refers to the anti-tax, anti-government, and anti-labour union agenda that arose in western democracies in the 1980s.

It led to the global market economy that now dominates the world. Our politics and culture serve the needs of a global capitalism requiring the free flow of capital, goods, mobile labour, and market-friendly state policies.

Under this new international regime, as policed by the World Bank, International Monetary Fund, and global banks, getting the economy in order through deep cuts in public spending, elimination of state-owned economic enterprises, and open access for trade and capital became an inescapable necessity.

Today’s politics concerns itself less with justice than with growth rates, credit ratings, and investment climates, while equality dissolves into market competition.

So contends Wendy Brown, professor of political science at the University of California, Berkeley, and author of the 2015 book Undoing the Demos: Neoliberalism’s Stealth Revolution. 

This type of alienation among citizens has led to a “revolt of the masses,” bringing to power Donald Trump in the United States and resulting in the Brexit vote  in Britain to leave the European Union in 2016. Voters are losing faith in democratic institutions and norms.

The effects of neoliberalism in Eastern Europe, which only emerged from a Communist “command economy” less than three decades ago, has been even more severe.

As they emerged from Soviet domination, these countries were promised a “transition” to become prosperous free societies like Western Europe within a decade or two. Favouring anything less than open borders, they were told, was xenophobic and racist.

Instead they are now divided between the cosmopolitan and the national, between those who have benefited from economic globalization and those who haven’t, and between political elites and the citizenries who rage against them.

The “sudden rise and ignominious fall” of the liberal project is a central theme of a 2017 book by John Feffer, director of Foreign Policy in Focus at the Institute for Policy Studies in Washington.

“The elite of eastern Europe now lives at the level of their western European counterparts. But the problem of underdevelopment in the region stems from the failure of the elite to pull the mass of people into prosperity,” he writes in Aftershock: A Journey into Eastern Europe’s Broken Dreams. 

Such economic disparities have disrupted, Feffer notes, “the conventional narrative of eastern Europe proceeding smoothly in one direction toward some steady state of market liberalism.”

Entire classes of people in the region -- pensioners, industrial workers, collective farmers – “were simply incapable of accommodating the profound shifts taking place in their society.”

After its post-communist transition, Poland cleaved into two parts that Poles refer to as “Poland A” and “Poland B.” It’s a term I heard when I visited Poland last summer.

After 1989 and the implementation of a series of economic reforms that many called “shock therapy,” Poland A, mainly urban, took off economically. 

But Poland B, encompassing the poorer, older parts of the population, many clustered in the countryside, fell further behind, unable to compete economically.

This was evident when I spent time in cities: Warsaw and Krakow seemed wealthy and youthful, and smaller cities like Czestochowa, my birthplace, seemed fine. 

Further east, though, this is not the case: Hence the rise of the Polish right-wing Law and Justice Party, which came to power in 2014. Jaroslaw Kaczynski, its leader, has called Poland’s entry into the European Union “self-annihilation.”

PiS Prime Minister Beata Szydlo contended in 2015 that the liberal elites criticizing PiS for its actions were doing so for “the defense of bank lobbies and foreign corporations” which “got rich at the expense of Poles.”

In Hungary we see Victor Orban, who became the country’s leader in 2010, transforming his once-liberal Fidecz-Hungarian Civil Alliance into a populist movement, in response to the failed promise of transition. To his right is Jobbik, an even more nationalistic party.

He has created an “illiberal democracy” of competitive authoritarianism. He rails against perceived threats such as the European Union, migrants, international economic institutions, and transnational NGOs.

Even in the Czech Republic, traditionally a model democracy, populists are in the ascendency. Recent parliamentary and presidential elections saw major gains by the right-wing politicians Andrej Babis and Milos Zeman.

Poland and Hungary are already considered to be on their way out of the democratic camp; now the Czechs will join them.

These fault lines seem to run through much of the region.