Austerities and Aspirations: A Comparative History of Growth, Consumption, and Quality of Life in East Central Europe since 1945 9789633863527

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Central European University Press Budapest–New York

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© 2020 Béla Tomka Published in 2020 by Central European University Press Nádor utca 11, H-1051 Budapest, Hungary 224 W 57th St, New York, NY 10019, USA Tel: +36-1-327-3138 or 327-3000 E-mail: [email protected] Website: www.ceupress.com All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the permission of the Publisher. The translation of this volume was funded by the Laszlo Tetmajer Fund of the Hungarian Studies Program, Department of Central Eurasian Studies, Indiana University Bloomington. The research was supported by the Hungarian National Research, Development and Innovation Office (K119671) and the Office for Research Groups Attached to Universities (0322107). ISBN 978-963-386-351-0 (hardback) ISBN 978-963-386-352-7 (ebook) Library of Congress Cataloging-in-Publication Data Names: Tomka, Béla, author. Title: Austerities and aspirations : a comparative history of growth, consumption, and quality of life in East Central Europe since 1945 / Béla Tomka. Description: New York : Central European University Press, 2020. | Includes bibliographical references and index. Identifiers: LCCN 2019058315 (print) | LCCN 2019058316 (ebook) | ISBN 9789633863510 (cloth) | ISBN 9789633863527 (adobe pdf) Subjects: LCSH: Europe, Eastern—Economic conditions—1945– | Economic development—Europe, Eastern—History—20th century. | Quality of life—Europe, Eastern—History—20th century. | Europe, Eastern—Politics and government—1945– | Post-communism—Europe, Eastern—History—20th century. | Europe, Eastern—History—20th century. Classification: LCC HC244 .T64546 2020 (print) | LCC HC244 (ebook) | DDC 338.9437—dc23 LC record available at https://lccn.loc.gov/2019058315 LC ebook record available at https://lccn.loc.gov/2019058316

Printed in Hungary

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Contents

Foreword 

 vii

1 Introduction: Comparisons and the Triple Approach to Well-Being 



1

1.1 Economic Growth, Consumption, and Quality of Life in Comparative Research 



4

1.2 The Aims and Scope of Research 



16

1.3 Methods and Sources 



17

1.4 The Structure of the Volume 



21

2 Economic Growth: Catching Up and Falling Behind 



23

2.1 Measuring Economic Output 



24

2.2 Trends and Stages of Growth in Western Europe 



41

2.3 Trajectories of Growth in East Central Europe 



66

3 Consumption: Structures, Practices, and Policies 

 89

3.1 Changing Consumption Patterns in Western Europe 



3.2 Consumption in Communist East Central Europe 

 147

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Contents

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4 Quality of Life: Towards a More Comprehensive Understanding of Well-Being   203 4.1 Conceptual and Methodological Issues 

 203

4.2 Trajectories of Well-Being in Western Europe 

 207

4.3 The Quality of Life in East Central Europe 

 222

5 Determinants of Change: Accounting for Growth and Beyond 

 227

5.1 Factors of Economic Growth 

 227

5.2 Determinants of the Quality of Life 

 238

5.3 Causes of Convergence and Divergence 

 242

6 Passages to the New Millennium: The Evolving Order of Divisions 

 253

6.1 Economic Growth in Western Europe at the Turn of the Millennium: Changes in the Quality of Life 

 254

6.2 East Central Europe after the Regime Change: Economic Transformation, Consumer Aspirations, and the Pursuit of Well-Being 

 267

7 Conclusions: Lessons of the Triple Approach 

 289

Appendix 

 301

Notes 

 319

Bibliography 

 377

Index 

 431

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Foreword

Robert Lucas, the American Nobel-prize-winning economist, is c­ redited

with the oft-cited quip, “Once one starts to think about economic growth, it is hard to think about anything else.”1 Given its ambiguity and broad implications, Lucas’s remark might serve as an epigraph to the present volume. On the one hand, the subject of economic growth has, in the last few decades, become one of the most significant and intensely debated issues not only in economics and economic history, but in the social sciences generally. Even more importantly, economic growth has also come to play a central role in politics, the media, and wider public discourse. Here at the beginning of the twenty-first century, discussions of factors that influence—or might be expected to influence—economic growth have become regular features of mainstream news coverage. Leading stories might include growth indicators for a given country or region, for the eurozone, or for a particular economic sector—with numbers calculated on a quarterly or annual basis, compared by purchasing-power or not, based on various kinds of data, and taking into account specific determinants or neglecting them. All this is a relatively new development. Although various sorts of production data have been collected for some time now, the systems of national accounting that make comprehensive measurements of economic growth possible became widespread only after World War II. Thus, the evolution of concepts and measurements of economic growth is itself a complex historical problem, as estimates of growth are intimately connected not only to the economic development of modern industrial societies, but

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also to their social and cultural transformation. And this brings us back to Lucas’s motto, which also reflects the contemporary narrowing of perspectives on economy and society. Economic growth is, without a doubt, a fundamentally important phenomenon worthy of thorough examination. Still, even if it is hard to think about other aspects and determinants of prosperity, it is necessary to go beyond economic growth. If one intends to broaden the perspective, the study of consumption patterns seems to be indispensable to the analysis. This is not merely because, despite every long-term correlation, a  certain measure of economic growth does not necessarily produce a similarly proportioned increase in consumption. It is also because a better understanding of the peculiarities of consumption will help improve our comprehension of the connections between economies and cultures, and between economies and political systems. In the last decades of the twentieth century, it became obvious that it can be problematic for governments to focus on increased growth rates as their ultimate goal. Within the social sciences, too, it became necessary to re-evaluate certain tenets of economic thought and to transcend the growth paradigm, or at least to broaden its purview. At the same time, the concept of the quality of life emerged. Adherents to this approach seek to judge the success of social and economic development according to more complex criteria than simple increases in production. These include considerations like sustainability, the valuation of goods and services in relation to the actual social welfare and well-being they produce (sometimes conceptualized as subjective well-being), as well as other, similar notions, with which we will deal in greater detail in the course of this book. It is not an exaggeration to assert that over the last two or three decades, critics of the economic growth paradigm have coalesced into an ever-growing camp. Nonetheless, it is easier to formulate criticisms than to establish a viable alternative to the economic growth paradigm. This is particularly true in historical research, where the scholar who employs the concept of the quality of life is confronted not only by the usual problems associated with the increasing prevalence of value judgments, but also collides with other stark limitations, namely the lack of historical sources related to developments in the factors that contribute to quality of life. It is not by chance that we rarely encounter historical examinations of the quality of life, especially in the context of East Central Europe. This book, however, attempts to explore these phenomena: economic growth, consumption, and

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Foreword

ix

quality of life, from a long-term perspective and, where possible, to examine their relationships with one another. At the same time, I argue that a parallel analysis of these three topics, which I call the triple perspective, will be most productive if we seek to characterize the twentieth-century evolution of living conditions in East Central Europe in an international context. In the course of this research and in the preparation of the draft manuscripts, I have enjoyed the support of several institutions and the helpful suggestions of numerous colleagues. The tranquility provided by the Institute for Advanced Study at the Central European University in Budapest made it possible for me to complete this book. I am also indebted to those who took part in the workshops organized by the Imre Kertész Kolleg in Jena, especially to Stanislav Holubec, Włodzimierz Borodziej, and Joachim von Puttkamer, whose advice helped me to prepare a  manuscript on the history of consumption, which I utilized for this volume. I would also like to mention the seminar participants at the Institut für Ost- und Südosteuropaforschung in Regensburg, and especially Richard Frensch. László Csaba, Tamás Faragó, Éva Fodor, György Kövér, István Orosz, Ágnes Pogány, and Ignác Romsics responded to earlier versions of my manuscript with useful suggestions, for which I am grateful. Together, they helped me to correct several—though certainly not all—of my mistakes. I also owe a debt of gratitude to László Borhi, who made great efforts to organize the translation, and the translator, Jason George Anthony Vincz, as well as the other institutions and organizations that have helped me with my work in numerous ways over the last few years. In the course of the research for and writing of this book, they have supported a number of other research projects in social, economic, and comparative history, the lessons of which I  have tried to make use of here. Among these, I  would especially like to mention the University of Szeged and the Alexander von Humboldt-Stiftung in Bonn. Finally, I wish to express my gratitude to the anonymous reviewers for their useful comments on the manuscript. Szeged, June 2018

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1 Introduction: Comparisons and the Triple Approach to Well-Being

Over the course of the twentieth century, social scientists introduced

numerous concepts to approach the well-being of societies and the living conditions of individuals. These include gross domestic product (GDP), national income, standard of living, quality of life, and subjective wellbeing, terms that cover a range of competing notions. In applying any of these concepts, a  researcher will encounter advantages and drawbacks of various magnitudes, which we will discuss in detail later. At the same time, it is beyond dispute that there has been an observable shift in the way these notions are employed: moving from simpler conceptions that foreground economic performance and material consumption toward more nuanced analyses that attempt to involve numerous other aspects of living conditions beyond the merely material. Up to the 1960s, the well-being of a  society was described primarily in terms of material and economic factors, and accordingly, economic output was considered the chief indicator of welfare. Since then, however, the idea that measurements of economic output, whether in the form of national income, gross domestic product, or something else, do not adequately describe a  society’s well-being has gained more and more ground, as has the notion that economic growth is not unconditionally beneficial, in that it is often accompanied by social and environmental costs. These alternative conceptions, along with efforts to develop new indicators of well-being, have produced significant results, but the conceptual problems associated with them continue to appear on the research agenda of the social sciences.

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In analyzing the history of these phenomena and processes, significant gaps and regional disparities can be encountered. Concerning the Western European and North American countries, a great amount of historical and economic research has been devoted to the process and sources of economic development and economic growth, and in such works, international comparisons have proven to be important tools. However, in the case of East Central Europe, as in the case of several other regions of the world, research has not adequately clarified the dynamics of economic growth in the twentieth century. In assessing living standards or the history of consumption, we encounter even more significant problems, while questions about the “quality of life” have barely been formulated, though in fairness, historical explorations of the latter are, almost everywhere, still in their infancy. Accordingly, the chief goal of the present work is to provide an account of the economic development, consumption, and quality of life in East Central Europe in the period between 1945 and the turn of the millennium with a focus on Hungary. The peculiarities of East Central Europe in this period will be mapped out by outlining the broader European context, and by making use of more systematic comparisons than have prior analyses. In the course of the study, a  special emphasis has been placed on examinations of economic convergences and divergences as part of an attempt to determine which time periods widened or diminished the disparities between East Central European and other European (especially Western European) societies in terms of output, consumption, and quality of life. This approach is motivated by several factors. Above all, research into convergences and divergences is one of the most important approaches of comparative-historical scholarship because it deals with temporal variations in differences and similarities, and thus tends to conform noticeably to the research interests of historians. There is also another set of incentives for raising such questions. Convergence was one of the key concepts in European political and economic discourse in the 1990s. The European Union always considered one of its central tasks to be helping less developed regions and countries of Europe catch up to more advanced ones, a process often referred to as the strengthening of cohesion. When the idea of a monetary union appeared on its agenda, the European Union set certain common goals to be achieved and quantitative targets to be hit by countries that wished to implement the common currency; that is, in certain areas, for example, government deficit, gov-

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ernment debt, and price stability, it prescribed a policy of convergence for its members. The enlargement of the European Union implemented after 2004 further broadened the use of the concept of convergence. Insofar as the majority of the recently joined, formerly communist countries were significantly less developed than previous members, this strengthening of cohesion through catching up—that is, closing of the gap between the older and newer member states—has become a fundamental issue for the functioning of the EU, and will continue to be for the foreseeable future. The developments of the last few years, including the economic crisis that has unfolded since 2008 and the subsequent difficulties within the eurozone, have further intensified this problem. The uptick in research into convergence and divergence, which began around the turn of the millennium, also resulted from developments within economics itself. That is to say, if there has been any observable convergence between the less developed and more developed economies, it should serve as confirmation of the neoclassical hypotheses that came to dominate the field of economics toward the end of the twentieth century. Neoclassical theory presupposes the existence of convergence, in that the factors of production are cheaper in less developed economies, and thus the return on investments there is greater, and consequently capital must flow in that direction. These investments, in turn, result in productivity growth, which leads to convergence. Thus, if we observe any attenuation in these differences in development, we may regard it as empirical justification for this theory and as an argument for facilitating the free and unobstructed play of market forces. Conversely, if we observe economic divergence between the richer and poorer countries, it will serve as a serious argument for market interference by governments and international actors, which might help close these gaps in development. After briefly sketching the historical context of this topic, the introductory chapter will be structured as follows. First, the most important features of comparative research conducted on twentieth-century European trends in economic growth, consumption, and quality of life, including investigations of economic convergence, will be reviewed. Thereafter, a detailed outline of the goals and plan of this research will be offered along with the most important sources on which it was based, the methodologies employed, the limits of such analyses, the most relevant methodological problems inherent in comparative research, and, finally, the organization of the rest of the volume.

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1.1 Economic Growth, Consumption, and Quality of Life in Comparative Research The first attempts to measure economic development and economic growth are found in the writings of seventeenth- and eighteenth-century thinkers.1 These authors, like the British scholars Sir William Petty and Gregory King, compiled datasets with the intention of illustrating levels of economic prosperity, though they were insufficiently systematic and rigorous, if only because wide-ranging collections of economic statistics were still lacking at that time.2 Such databases were first assembled starting in the latter half of the nineteenth century, and were improved at the behest of governments that wanted to be able to monitor and influence economic processes in the course of World War I, and later during the Great Depression.3 Though it had several important but, by contemporary standards, methodologically fairly primitive precursors in the late nineteenth century, the work Simon Kuznets did between the world wars is generally regarded as the starting point for the actual measurement of economic development and growth.4 In 1932, a resolution in the United States Senate proposed to assess the country’s national income in the prior three years, a work that Kuznets was to supervise. This endeavor soon inspired imitators in Europe, where the theoretical and practical problems associated with determining national production levels had also attracted attention in the 1930s, and in 1941, James Meade and Richard Stone in Great Britain developed a system of national accounting to help steer their country’s war economy.5 The idea of international comparison appears at a relatively early stage of these calculations, and has since become one of the most important motives for measuring economic output. Among the pioneers of the systematic use of comparisons in that area, Colin Clark distinguished himself by implementing several methodological innovations in the 1930s. For instance, he introduced the concept of the “international unit” as a  way to compare the real value of various nations’ national incomes given the problems caused by variations in the purchasing power of their different currencies.6 Comparative analyses of growth processes gained even more steam after World War II, especially as a consequence of the formation of the two divergent systems of political economy. The United Nations’ effort to systematize the methodology for measuring national product was genuinely significant. The System of National Accounts (SNA), which was intro-

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duced by the UN in 1949 and updated several times since, made it possible to apply related concepts and methods of measurement more consistently than before.7 In the decades following World War II, growth theory evolved into several important branches and schools, which sought, above all, to investigate the determinants of economic growth and to refine the theoretical foundations on which definitions of economic development would be constructed. The aforementioned Simon Kuznets completed surveys of the historical output of numerous developed and less developed countries, and on this empirical foundation, he attempted to explain the factors that produced growth.8 The theoretical and empirical works were mutually enriching; on the one hand, theory-oriented experts made use of empirical studies that assessed the level of economic development, while on the other, researchers concerned with measurements of economic growth took the achievements of growth theory into consideration as they refined their methodologies. This effort was aided in the wake of World War II by an increase in the demand for data related to economic growth and development. Governments dedicated more and more resources to the expansion of their statistical bureaucracies. They made efforts to gather information about households, businesses, and specific sectors of the economy. They set up enormous longitudinal databases, prepared statistics on input and output, and produced representative income studies. Further improvements in comparative methodologies continued to appear on the agendas of international organizations. The International Comparison Project (latter Programme), launched by the UN in the 1970s, was perhaps the most ambitious undertaking of its kind; one of its chief goals was to rectify the distorting effects that different price levels in national currencies were having on comparative analyses.9 A close relationship was formed between economics and economic history after 1945, and thus it is not surprising that representatives of the latter also began to participate in investigations of economic growth. While economists tended to compile and analyze indicators of present activity or those related to the recent past, economic historians often produced estimates for considerably longer time periods, while also paying particular attention to international comparisons. At the same time, they utilized the theoretical results of modern economic research as well as econometric and statistical methodologies. Among historical GDP estimates, several have been truly ambitious: looking back, in some cases over several hundred

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years, they have retroactively tabulated the gross domestic product of certain industrialized nations. In this same period, two economic historians were particularly influential in the fields of historical and comparative research on economic growth. Angus Maddison published his first works on the subject toward the end of the 1950s, and in the succeeding decades he continued to enlarge and refine his previously compiled datasets.10 In one of his works from 1995, he published long-term GDP data for sixty-four countries including almost all of Europe; then, a few years later, he further expanded the time series.11 Maddison explored various aspects of growth theory such as the determinants of economic growth and the causes of economic convergence and divergence. Moreover, he established the Groningen Growth and Development Center (GGDC), a research institute at the University of Groningen in the Netherlands, through which he intended to spur internationally comparative historical analyses of economic output and other macroeconomic investigations.12 Remarkably, Maddison’s intensive research and networking notwithstanding, Paul Bairoch’s historical analysis of GDP was for a  long time equally prevalent among historians. His work essentially consisted of a single study that appeared in 1976.13 One probable cause of its popularity was that Bairoch’s scholarly apparatus was kept short and his work lacked the specialized terms and detailed information that characterized Maddison’s publications. We will return to Bairoch’s series, but for now it should suffice to say that the data in his early work were not only incomplete, but in several respects fairly unreliable. Today, researchers of international economic history unequivocally prefer Maddison’s most recent calculations.14 Concerning the region covered in the present volume, numerous explicitly comparative analyses of twentieth-century economic growth in East Central Europe have also been published, though these works have often arrived at divergent conclusions.15 Scholars like Doreen Warriner, Michael C. Kaser, and Derek H. Aldcroft, among others, have used fairly dark tones to depict the region’s economic growth in the period between the two world wars. However, as David F. Good has pointed out, such observations are rarely based on methodologically sound comparative analysis.16 The chief problem with the period following World War II, as noted by Thad P. Alton, Frederic L. Pryor, and Paul Marer, was to find a method for correcting distorted official statistics.17 David F. Good and Angus Maddison have also prepared accounts of the development of East Central

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Europe over the entire course of the twentieth century.18 These works and the methodological problems of the calculations of economic output will be covered in the relevant chapter. A number of economists and economic historians have, in recent decades, studied economic growth in East Central Europe in the latter half of the twentieth century, several of whom have attempted to describe this region’s development as part of a  wider international context. The most influential among these efforts is the scholarship of Iván T. Berend and György Ránki, which appeared in the 1970s and 1980s.19 In their early studies of economic output, however, they based their observations on calculations—principally on Paul Bairoch’s 1976 datasets, mentioned above— that were substantially less reliable than the ones that have since become accessible.20 Berend’s later works on the subject supplement Bairoch’s calculations with other, more consistent data.21 At the same time, a narrative approach continues to predominate, and East Central Europe is considered a single, peripheral entity.22 Using a distinctive methodology, Éva Ehrlich attempted to assess the levels of economic development in Eastern European countries and to describe the place they occupied in the international arena, or as she calls it, the contest between countries. By using the so-called physical indicator method (PIM), Ehrlich intended to substitute GDP data, but in the logic of her calculations she did not really depart from it: by means of a single indicator based on production data in natural quantities, she hoped to describe trends in economic output, primarily with the interest of evaluating the performance of socialist economies that operated with artificial prices.23 Economic output and the various methods by which economic growth might be assessed will be dealt with in greater detail below. For now, it will only be stated that the physical indicator method, employed by others as well, did not prove effective, and thus produced some misleading interpretations of twentieth-century growth trends in East Central Europe. Several other historical works have also examined trends in economic growth in the region, though as a rule, they tend to rely on one or another of Berend’s and Ránki’s studies. This is the reason Bairoch’s obsolete data continued to find its way into even more recent historical literature on East Central Europe. For example, in Hungarian research, there was a  prevailing notion that, over the course of the twentieth century, Hungary’s level of economic development came closest to that of Western Europe by the beginning of the 1970s.24

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It is not possible to review the relevant economic literature in East Central Europe here. Nevertheless, it could be argued that historians often find it difficult to rely on the results of economic analysis, since most of the studies produced on this subject up to 1989 were, in general, heavily ideological even if in the 1970s and 1980s academic freedom in Poland and Hungary clearly diverged from that of the less permissive Czechoslovakia.25 After the regime changes, there was a  proliferation of studies conducted with a higher degree of technical expertise, though with some exceptions, these economic analyses tended to deal with the final decades, or even just the final decade of the twentieth century.26 Though investigations of trends in economic growth and development have represented the mainstream of economic history in recent decades, standard of living and patterns of consumption have also long been important topics of research.27 This is illustrated by the fact that for decades after World War II, British historians engaged in an intense debate about changes in the living conditions of the populace, especially the working class, during the initial phase of the Industrial Revolution. They wanted to determine whether those changes should be described as absolute pauperization or just relative impoverishment, or whether they, in fact, signified a rise in standard of living.28 Researchers use the term standard of living primarily to denote the material dimensions of living conditions, usually measured by income and the consumption of goods and services. In recent decades, social science and historical research into living standard has moved beyond simple quantifications of consumption to discuss other characteristics such as structural transformations of consumption and changes in attitudes toward consumption. As a result of this shift, historical research into standard of living currently appears primarily as the history of consumption.29 Nevertheless, investigations of consumption have a relatively long history, in that, even if we disregard narrowly defined, economic approaches, the origins of such studies can be traced to the middle of the nineteenth century, when data concerning household expenditures was gathered in various European countries with the goal of determining the subsistence minimum.30 These surveys focused on the consumption of foodstuffs and lacked any serious methodological foundations.31 Theoretical considerations of consumption would soon appear, for example, in the works of Karl Marx. But for most nineteenth-century thinkers, consumption remained a  secondary phenomenon in compari-

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son to production. Thus scholars began to treat consumption as a separate field of inquiry only around the dawn of the twentieth century. Among the canonical sociologists, several, such as Max Weber and Werner Sombart, treated consumption as an important aspect of modern society. The consumption of fashion and luxury goods emerged as a decisively important theme, which was a significant development as it represented a departure from the outlook of classical economists. Classical economic theory had given birth to the concept of consumer rationality, the notion that consumers spend their money in strict accordance with the principle of utility maximization. This view would continue to be dominant in economics over the course of the twentieth century, but already Georg Simmel suggested that money served considerably more complex social functions and that several phenomena connected to consumption, such as fashion, did not simply evolve as a result of individual deliberations over costs and benefits.32 Research done between the two world wars led to further advances in the analysis of the social role played by consumption, as illustrated by the work of Thorstein Veblen, who considered consumption to be driven by competition and imitation, and who formulated the concept of “conspicuous consumption,” the chief goal of which was the maintenance or improvement of social status.33 The formation of the Annales School was an important development within social history proper, as its manifest interest in material culture proved to be a significant source of inspiration for historians of consumption.34 Following World War II, the analysis of consumption was enriched by new themes, like gift-giving and phenomena related to mass consumption.35 It was also the case that depictions of processes related to consumption provided space for representations of broader social interactions, as David Riesman demonstrated in his work about “other-directed people” in whose lives consumption plays a  particularly important role.36 The most significant development, however, was the appearance of vigorous critiques of consumption. Though such interpretations had already long existed, members of the Frankfurt School, and then others, began to offer much more comprehensive criticism of consumer culture than had ever been produced before.37 From the late 1970s, consumption research became a separate, independent field of inquiry within both sociology and social history.38 The number of studies published on the subject grew significantly; consumption often seemed to hold a central position among the changes taking place in mod-

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ern society. A series of publications demonstrated that consumption could be a  truly important factor in social stratification. This school of thought featured names like Pierre Bourdieu, who assigned particular significance to the role “fine distinctions” in consumption played in the reproduction of class distinctions in French society.39 Another milestone in consumption history was the work of Neil McKendrick, John Brewer, and J. H. Plumb, which traced the origins of consumer society back to the eighteenth century. 40 Colin Campbell’s book shifted attention to new areas, as he did not root the dynamics of consumption in competition between social groups or in imitation, but instead traced them back to a kind of romantic pursuit of desire.41 Representations of the significance of consumption that dated back to its old traditions were an important subject for research at the end of the twentieth century as well. Researchers did not regard fashion, habits of dress, and consumption of luxury goods simply as messages to other members of society; instead, following postmodern schools of thought, they interpreted them as decisive factors in the formation of social identities.42 Empirical research continued to devote great attention to patterns of consumption, in particular habits of food consumption. In addition, a host of new themes and approaches appeared in consumption research, such as the production and handling of garbage, and consumer protection, the results of which can be difficult to fit together with the findings of earlier research.43 Consumption history’s quick diffusion was the result of several factors working in concert. On the one hand, its practitioners regarded it as an alternative capable of counter-balancing the traditional themes of sociology and social history, including social class, the division of labor, and bureaucracy, which had been dominant since the nineteenth century. These phenomena were characteristic of early industrial societies, and their discussion emphasized production as a crucial determinant of social systems, conflicts, and interpersonal relationships in general; thus, moving the focus onto consumption appeared to be an innovation. This shift was also spurred by critics who could not accept certain suppositions of the dominant neoclassical economic theories, such as the notion that consumer behavior was simply defined by demand curves based on supplies and prices. Moreover, rising interest in postmodernist social theory and cultural studies at the end of the twentieth century, which laid the groundwork for research into fields like identity studies and symbolic meanings, also influenced the development of the field. The fall of communism was another factor insofar as that system’s inability to satisfy its citizens’ consumer

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demands played a decisive role in its demise. The failure of those regimes further strengthened the conviction, already prevalent among specialists, that consumption and consumer culture could exercise considerable influence over the course of history.44 Nevertheless, historical research into consumption is a diverse field of inquiry with an equally eclectic range of themes and methodologies. One of the most serious obstacles to the writing of a comprehensive introductory work about the history of consumption in the latter half of the twentieth century in Europe, or even just a region of that continent, is that studies related to consumption do not fit neatly into a central paradigm or set of paradigms. While in most fields of social research we come across consistent approaches accepted by a majority of scholars, the methodologies and thematic concerns of consumption research are still fairly divergent.45 One of the field’s leading authorities, Colin Campbell, suggested that the cause of this diversity is the rather “pre-paradigmatic” state of the field. 46 This proposition was made several years ago, but the divergences in the research area have persisted until now. It can be argued that the high degree of variability is not a characteristic of a specific developmental stage of the field; rather, it results primarily from the nature of the subject. There are very few social phenomena that cannot be conceptualized as some form of consumption. The number of studies concerned with consumption history has multiplied enormously in recent decades, and a large portion of them have involved a rethinking of phenomena that had traditionally been investigated by other branches of history and social science but are now being interpreted more and more often as instances of consumption.47 As a result of these factors, any account of this field of inquiry will necessarily be fragmented, and the problems associated with the consumption history of East Central Europe would appear to be even more complicated. This complexity is rooted not only in the significant social disparities within the region and the historical ruptures that shaped the region over the last century, but also in the fact that research only fairly recently began to focus on the region’s consumption history. Moreover, it did so in the period during which cultural history dominated the field, and cultural history itself can be considered a particularly non-paradigmatic discipline, further facilitating an increasingly diffuse narrative. For these reasons, themes have to be identified that will allow us to incorporate the most significant directions of research into the analysis,

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which will make it possible to produce a comprehensive and coherent representation of the consumption history of East Central Europe in the latter half of the twentieth century. At the same time, the distinctiveness of East Central Europe in this respect, as well as the ways its development was related to general European trends, should be determined over the course of the century. As Gábor Gyáni has shown, consumption could never have become a  significant field of inquiry in Marxist historiography because Marxist views of history and society were so deeply focused on production.48 Consequently, it is not surprising that the most significant studies of this subject were to appear in East Central Europe only after the fall of communism.49 The Hungarian case demonstrates that we are much more familiar with the developments of the final decades of the century because sociology, economics, and statistics were already effectively integrated into consumption research by that time.50 Even so, such research was largely disconnected from international scholarly discourse. One important sign of this disengagement is that comparative investigations of consumption, with the exception of a few statistical studies, were rarely conducted in the region.51 The turn of the millennium brought a change; social historians and sociologists in Poland, Hungary, and the Czech Republic discovered this field for themselves. Taking the Hungarian example again, Tibor Valuch wrote a history of fashion in Hungary in the second half of the twentieth century and explored the history of everyday life there in several other studies, extensively analyzing various aspects of consumption during the period.52 Another, possibly even more influential factor was that just as the popularity of consumption history was starting to grow in East Central Europe, researchers from Western countries began to more intensively study living standards and consumption in the communist period.53 Though East Central Europe was not fully neglected by such works, most of these studies focused on conditions in the Soviet Union and East Germany.54 The investigations mainly analyzed communist society in accordance with the everyday life research paradigm. The dominance of cultural approaches here is palpable, with the research interests of economic history pushed almost completely into the background. These investigations often resembled case studies in their approaches, and though their results include numerous important observations, they produced a fairly fragmented body of knowledge about the region, both thematically and geographically. Hardly anyone conceived of the sort of comprehensive studies that would have employed

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comparative perspectives, nor did they ask how generalizable their particular results might be. A survey of the literature shows that present-day historical research into consumption has become significantly more comprehensive than simply defining past levels of consumption.55 Besides structural and quantitative trends in consumption, other important areas of analysis have opened up, which—for lack of a  better term—can be called qualitative aspects. Among these are the autonomy of the individual as a  consumer and the evolving significance and function of consumption and leisure in the lives of individuals and societies.56 Consumer practices and social differentiation through consumption, along with the involvement of the state—that is to say, consumer politics—are also important aspects of the structure and functioning of consumer societies, and thus of consumer research as well. These are the perspectives that will be discussed in the course of this study. As we have observed, social scientists have made noteworthy efforts to measure and compare economic performance, track changes in living standards, and identify various consumption patterns in Western countries since at least the end of the nineteenth century. In contrast, quality of life research is a relatively new development.57 As the use of economic output indicators diffused in the second half of the twentieth century, a conceptual change took place: GDP was no longer employed as a  simple indicator of production levels, but as a measure of general well-being. In this way, any growth observed in the production of goods and services was assumed to signify a rise in well-being. As we will see in more detail later, starting in the 1970s, the connection between physical production and well-being began to seem rather doubtful. It was argued that on the whole, economic growth in the most developed countries was doing less and less to improve well-being and the quality of life, or possibly doing nothing at all; that is, the traditionally narrow understanding of economic growth was not sufficient to assess living conditions. The criticism suggested that indicators of economic growth fail to account for the depletion of natural resources or damage done to them, for example, as a  result of pollution in the water, soil, or air, even though such problems are likely to undermine future growth. It was also problematic that expenditures aimed at ameliorating the social and environmental damage created by economic expansion are themselves direct contributions to GDP growth. Similarly, another array of processes in modern societies, urbanization, for example, generate the kind of costs that serve only to nullify their negative effects. These, too, show

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up as GDP growth, though they tend to be counted as costs rather than as final products. Scholars have also criticized the methods by which economic output is calculated because they do not take into account non-market economic activities in private households or in the black market or informal economy, even though these phenomena can be especially significant in less developed economies.58 It is, therefore, not surprising that new conceptualizations of wellbeing, most notably quality of life, and the demand for new indicators of well-being have emerged. Many researchers have made efforts to improve their quantifications of economic output, primarily with regard to goods and services that do not reach the market, and in some cases take quantities of leisure time into account. Others estimate the components of GDP that do not actually increase public welfare (for example, the so-called regrettable necessities like military spending and police expenditures or the costs of commuting), and exclude them from their output data.59 There have been other experiments in which scholars have not concerned themselves so much with GDP—by attempting to filter out those items that do not improve well-being, or incorporating other elements into their output figures—but have instead approached the problem from a different angle, attempting to supplement their output calculations by including other, non-material elements.60 This other type of effort at improvement starts with the proposition that evaluations of well-being must take into account components that are not, or are not completely, economic in character, including healthy life expectancy, average life expectancy, environmental quality, levels of crime and poverty, educational standards and accessibility, and even civil rights, such as freedoms of speech, the press, and assembly. The common element among these efforts is the desire to compress several indicators of well-being into a single numerical measurement so as to facilitate direct international comparisons. Scholars have not reached a consensus about the factors to be taken into account, however, especially with regard to their relative weight, and thus there is still no generally accepted indicator of quality of life. Even though the backlash against the dominance of purely economic measures began as far back as the 1960s, and while the so-called indicator movement, which sought to devise more nuanced gauges that would reflect the diversity of social reality, has by now lost much of its initial momentum, the intellectual foundations of such reactions have withstood the test of time. As the Stiglitz-Sen-Fitoussi report, conceived a  few years ago, demonstrates, the debate continues

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about the sorts of yardsticks that should be used in characterizing and comparing well-being in various countries.61 While the investigations described above tend to regard the quality of life as an objective phenomenon, there has also been an expansion of research into subjective well-being. The chief goal of this approach is to describe the ways in which individuals evaluate their own lives, their levels of satisfaction (that is, how satisfied or happy they feel themselves to be), and the factors that stand behind such assessments. This line of questioning, however, is obviously not applicable to investigations of a historical nature, in that it is not possible to conduct surveys among the people of bygone eras, and for this reason, such an approach will be omitted from the present analysis.62 Even though quality of life research began at a relatively early date, in the 1970s, in East Central Europe, it was fairly fragmentary for a considerable period. Additionally, it remained mainly isolated from similar lines of research in other regions of the world, for example, the aforementioned indicator movement.63 Researchers in the region began to explore specific aspects of the issue such as the relationship between values and quality of life, but faced a  paucity of the long-term empirical results that might be useful in an historical analysis.64 Other studies have incorporated elements of subjective well-being, and thus lie beyond the boundaries of the research strategy applied here.65 In summary, investigations of growth, consumption, and quality of life will all play a  part in any study of well-being in twentieth-century East Central Europe, and Europe in general. At the same time, each of these approaches has its own advantages and disadvantages for historical research. For this reason, a simultaneous exploration of these three areas permits the characterization of the evolution of well-being in these societies more accurately than it has been done by previous scholarship.66 As far as postwar East Central Europe is concerned, the comparative approach has been only employed to study economic growth, and research dealt with problems related to trends in consumption and standards of living solely from this perspective. Quality of life has been omitted from such investigations and this study remedies this void. Over the last few decades, socio-economic convergence and divergence in Europe emerged as significant problems for international comparative research, and professional interest in this field appears to have intensified after the turn of the millennium. The historical dimensions of such phe-

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nomena are so important precisely because convergence or divergence can be studied properly only over long periods. Yet, this historical context has, up to now, never been studied systematically in East Central Europe. Economic growth appeared to be the exception, as a fair number of historical analyses have dealt with its evolution. These, however, have shown shortcomings in several respects, not merely due to the sources they have used, but in their analytic methods as well. A more systematic comparison including constant units of comparison could produce numerous new results concerning the postwar social and economic history of East Central Europe.

1.2 The Aims and Scope of Research Among the most important lessons to be gleaned from the reviewed literature is that comparative research on quality of life—alongside studies of economic output and consumption—is desirable because it provides the most accurate information on the evolution of living conditions. Measures of quality of life, however, are not sufficiently developed, do not extend back far enough historically, or are simply unavailable. In addition, serious methodological difficulties crop up in the course of such research. The farther we get from analyses of economic output in our investigations of more complex phenomena related to quality of life, the greater the chance we will produce more relevant observations about well-being. However, the research problems produced by value judgments will grow. There will be less and less consensus about the factors we should explore and about their relative weight in our analyses. In conducting research into standards of living and consumption, value judgments are obviously also unavoidable, but they are even more problematic in analyses of quality of life. These considerations have led us to employ the “triple approach.” First, we investigate the development of economic output, followed by a look at historical trends in consumption, and finally these approaches will be supplemented by analyzing several aspects of quality of life. This triple perspective will offer the most complete assessment of the evolution of well-being in postwar Europe. Beyond the general lessons of the related scholarship, research that focuses more narrowly on East Central Europe—briefly surveyed above— will also allow us to draw some important conclusions. Among these is the fact that there have been relatively few long-term investigations of East Central European economic growth over the second half of the twentieth cen-

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tury, and that their observations have not always been based on the most up-to-date methodologies and data. In addition, such research has, up to now, moderately made use of the potential of systematic international comparison. With few exceptions, the comparative work that does exist has dealt with limited periods of economic history, and long-term comparisons that would establish connections between them were heretofore hardly available. Research into consumption and standards of living in East Central Europe has been even less systematic, and analysts of these subjects have not even clarified the most elemental processes in this regard. There has been almost no effort to discuss East Central European societies’ levels and patterns of consumption in a wider European context, and the concept of quality of life has hardly appeared in historical analyses of East Central Europe. As indicated above, the book investigates how East Central European societies’ levels of economic development and consumption were related to socio-economic processes in Western Europe in the decades after World War II. In the course of this work, we hope to find answers to the following questions, stated in their most general form: did the levels and patterns of economic development, consumption, and quality of life in East Central Europe (or any part of it) approach those of Western Europe in the second half of the twentieth century, or did they lag behind? In which periods and in which areas of development were there signs of convergence or divergence? It is the book’s intention to approach this investigation in a way that will reflect the most important frames of reference devised by prior analysts of European societies and economies, and, at the same time, elaborate on the kind of historical analysis that will facilitate measurements of the dynamics of change. In addition, the goal is to avoid biasing the discussion in favor of any particular socio-economic system, and instead, help pinpoint the idiosyncrasies of every system, not just those of postwar Western Europe, but also those of East Central Europe.

1.3 Methods and Sources At this point, it seems necessary to offer a few observations about the strategy of comparison chosen here, as well as the other methods of investigation, the limits of such research, and the sources.67 There exist a variety of comparative research strategies, each of which has its own methodological consequences.68 One possibility is to choose a  small number of societies

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and to analyze their development over a short period—a few years, possibly a decade or two. We also, however, often encounter the kind of research that attempts to compare a large number of countries over a relatively long period, sometimes comprising several decades. Both of these options have their advantages and disadvantages. The former strategy, generally favored by historians, allows for more thorough consideration of circumstances and factors that might be more difficult to quantify. This approach, however, is obviously not capable of responding to the kind of questions that are important to the present investigation, which require the study of several cases over a relatively long period of time. Then again, those researchers who utilize the second of the approaches mentioned above generally analyze quantitative factors, looking for general trends. With this research strategy—used fairly extensively by sociologists and other social scientists—it is possible to test the validity of hypotheses and theories and to determine more precisely the significance of various factors. However, this quantitative research strategy makes it less possible to account for the context that is essential in historical studies. In order to respond to the questions posed earlier about economic and social convergence and divergence in twentieth-century Europe, it will obviously be necessary to study a number of countries over a significant period of time. For this reason, this work will apply quantitative methods fairly extensively, though not exclusively. Consequently, given the nature of this study, this will require more significant methodological compromises than would a less comprehensive investigation, and its comparative dimensions will have limits beyond simple thematic constraints. It is also true that the research interest of this book itself functions as a kind of constraint: insofar as its chief investigative foci isolate East Central Europe’s socio-economic characteristics and describe convergences and divergences between that region and Western Europe, other approaches will have to be relegated to the background. Beyond that, and above all, there are the practical difficulties resulting from deficiencies in the sources available (primarily on East Central Europe), and thus such irregularities will be reflected in this work. Another important methodological problem, which appears in every comparative study, is deciding on units of comparison. East Central Europe, or the societies that compose it, will serve as our primary units of analysis, and thus as our points of comparison as well. Comparing them with the countries of Southern Europe could provide us with important lessons insofar as the development of these countries in the course of the twenti-

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eth century in many ways paralleled that of East Central Europe. However, these very similarities make it difficult to engage in a so-called contrasting or individualizing comparison, which is also a  useful research strategy.69 In this way, we can make comparisons only when the differences between the units of comparison are sufficiently significant. This consideration also speaks to the fact that we can choose societies that exhibit patterns and trajectories of development that diverge considerably from those of East Central Europe—such as those of the societies of Western Europe—as further units of comparison. Beyond that, a comparison of the societies of East Central and Southern Europe will obviously require an analytical approach that diverges from my own. As noted earlier, the process of economic convergence became especially conspicuous in the relationship between the more industrialized regions of the European Union and the less advanced member states, including the countries of East Central Europe. In contrast, arguments over the existence and degree of convergence between East Central European countries and other groups of nations have yet to attract significant attention. And here the use of the concept “East Central Europe” will also require some explanation, because researchers often define this region in disparate ways. It is sometimes understood as the zone that stretches from the Baltic states to Bulgaria, between Germany and Russia. The concept of East Central Europe applied in this book is narrower, and includes only Poland, Czechoslovakia (and the two successor states), and Hungary. For practical reasons, within this region, the main focus lies on Hungary. It is even less obvious which countries should be considered part of “Western Europe.” In choosing Western Europe for this comparative work, it was my intention to group together countries that had achieved similar levels of socio-economic and political development over the course of the twentieth century. Thus, the thirteen countries studied in the book include the EU–15 states, with the exception of Luxembourg, Greece, Spain, and Portugal but including Norway and Switzerland. Nevertheless, the inclusion of other countries would not be unwarranted; in some cases, such additions were impeded simply by practical concerns like the lack of accessible sources. Many of the comparative studies published in recent decades have documented in various ways the fact that Western Europe’s economic development was not uniform over the course of the twentieth century; that is, to treat this region as a single unit for the purposes of comparison is some-

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what problematic. We hope to compensate for this methodological difficulty by providing a differentiated assessment of specific paths within Western Europe. Moreover, the undeniable differences between certain societies should not obscure the fact that modern industrialized states, especially those of twentieth-century Western Europe, have exhibited considerable similarities in their economic, social structures, and policies. In addition to the discussion of the variations within the region, these similarities can also provide us with the basis of a comparison between Western Europe— taken in the sense above—and East Central Europe. Besides, the statistical methods employed here measure not only the processes of convergence and divergence within the western half of the continent, but also, as we will see later, make it possible to compare the societies of East Central Europe with those of Western Europe, even if the variations in the latter region are significant, and even if there has been observable divergence between certain societies within it. Nevertheless, it is obvious that our comparison will be “asymmetrical,” and will exhibit all of the methodological consequences of being so: we will not be able to describe the economic and social patterns of specific Western European countries in as much detail as those of East Central Europe.70 This study comprises a  time period stretching from World War II to the end of the twentieth century. We do not regard this period to be anything like a  uniform historical era: several important dividing lines could be drawn through this span of more than half a century. At the same time, it is precisely the relatively long time span that will allow us to mark off various phases and contrast them. Nonetheless, the emphasis will unquestionably fall on the interval between 1950 and 1990, in essence, the communist era in East Central Europe. The end of World War II and the collapse of the communist regimes were obviously crucial historical turning points for Europe and for the world. It is arguable that the severe internal confrontation within Europe gave a kind of inner uniformity to this period. Nevertheless, these great political changes did not necessarily signify economic changes. Thus, if it proves necessary, the book will deal with developments from the period before World War II as well. With regard to research methods, statistical means will be used to investigate how the processes at work in East Central Europe corresponded to trends in Western Europe, and thus the existence of convergence or divergence, though the comparability of the available data will often create obvious difficulties, and the formal (measurable) similarities and differ-

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ences can often be misleading in the way that they function. The details of these statistical methods can be found in the Appendix. There exist several studies and statistical time series containing data related to the twentieth-century economic development of various countries as well as the levels and patterns of consumption and quality of life.71 None of that collection, however, completely covers the themes, time period, or all of the countries that figure into this study. For this reason, a variety of sources have been used to compile a database containing a variety of indicators of economic performance, consumption, and aspects of quality of life. At the same time, this compilation has limits of its own. For certain periods and in certain aspects of consumption and quality of life, data is difficult to come by, and, in some cases, the quality of the available information is uncertain. The project constitutes, from several standpoints, a  difficult task: its time frame is relatively long, and even though the focus is primarily on East Central Europe, it will analyze a relatively high number of societies. These circumstances make it necessary to engage in a certain degree of simplification with regard to the depth of analysis and the number of areas of economic performance, consumption, and quality of life examined.

1.4 The Structure of the Volume The approaches laid out above essentially define the organization of the rest of this study. In the following chapter, the process of economic growth in two major European regions—Western Europe and East Central Europe—in the latter half of the twentieth century will be explored. Thereafter, in the third chapter, the way people consumed will be traced, along with themes like working hours and trends in consumption patterns. Chapter four examines changes in quality of life. The structure of these three chapters is similar. First, twentieth-century processes in Western Europe will be described with a particular emphasis on tendencies toward convergence or divergence; then, developments in East Central Europe will be studied using the same analytical tools wherever possible, while also detailing the similarities to and deviations from trends exhibited by Western European economies. At the end of this section, trends that suggest that East Central European economic development has converged with or diverged from that of Western Europe will be highlighted. The fifth chapter examines the determinants of

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long-term economic growth and the chief factors behind the narrowing or widening of the gaps between these economies. And though the focus of this work is an investigation of the convergences and divergences between the economies of East Central and Western Europe in the period stretching from World War II to 1990, after a  comparative analysis of the most important variables, economic developments in East Central and Western Europe around the turn of the millennium will be discussed in chapter six. Finally, chapter seven summarizes the observations and reviews the lessons derived from the use of the triple perspective. In the Appendix, relevant time series are presented and some methodological issues are outlined, the technical nature of which might have unnecessarily encumbered the text, but which nonetheless need to be discussed in the interest of ensuring the comprehensibility and verifiability of the data and methods.

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2 Economic Growth: Catching Up and Falling Behind

Analysis of economic growth has played an important role in economics

and economic history in recent decades. One might even say it has become the dominant paradigm.1 Such research starts from the assumption that economic activity can be characterized most comprehensively by economic output and relevant indicators, such as gross domestic product (GDP). There are, of course, other important aspects of economic development, such as structural change and technological transformation, but growth is the most important manifestation of the development of the economy as a  whole.2 The measurement and international comparison of economic output is undoubtedly important, both in its academic and practical applications. Growth theory is a classical research field of economics concerned with the determinants and process of economic growth, the results of which would be impossible to check or even formulate without the concept and measurement of economic output. Data that indicates the dynamics of growth is an important source of feedback for policy; it is now customary to assess the success of nations and governments according to the dynamics of such indicators. Moreover, after World War II, the state of the competition between entire social orders—capitalism versus socialism or communism—has been judged by comparing trends in economic output and levels of growth. Levels of economic output are even used to determine a country’s contribution to the budget of international organizations as well as its access to the various kinds of support, assistance, and preferential loans offered by financial and other institutions.

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As mentioned in the introduction, measurements and analyses of economic output merit attention because they are often used in the scholarly literature, in politics, and in public discourse as indicators not only of economic activity, but also—simplistically—standard of living and well-being. And while a correlation between these phenomena is generally observable, such a connection does not always exist, and consequently it can be misleading to regard the two as identical. It is likewise possible to draw a line between the concepts of economic growth and economic development, but this distinction also regularly disappears in practice. While growth refers to an increase in the quantity of output, economic development involves both increases in production and qualitative changes in economic conditions, especially structural transformations and changes in distribution. In this way, development is related to the standard of living and to the determinants of quality of life, which will be dealt with in a separate chapter.3

2.1 Measuring Economic Output 2.1.1 Calculation methods and historical records Works dealing with long-term comparative analyses of economic output recurrently run into significant methodological and practical difficulties. On the one hand, the quality of data related to economic growth is often uneven or unsuitable, while the period covered by the international databases that make comparisons possible is, in some cases, too short. A large share of the research problems leads back to the fact that there is not now, nor has there ever been, a  consensus about the procedure for measuring levels of or temporal changes in output. In 1949, as a  result of a  UN initiative, the System of National Accounts (SNA) was introduced for calculating economic output. The SNA has since come to be widely used, and though it has undergone certain modifications, its essence has remained unchanged. Traditionally, it has employed two alternative but only slightly differing indicators: Gross Domestic Product (GDP) and Gross National Product (GNP), though more recently these have been accompanied by Gross National Income (GNI), which is almost identical to GNP. Each of these includes the value of all

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the final goods and services produced over the course of a specified time period (usually a year) in a given country, region, or other economic unit.4 The difference between these indicators is that GNP—like GNI—takes into account the net sum of factor income that originates abroad or is transferred abroad. In practice, the disparity between these indicators is generally small. The exceptions are countries that import or export large volumes of capital, in which case the value of their GDP and their GNP/GNI may differ significantly.5 Though one of the most important motivations for creating the SNA was to facilitate international comparisons, attempting to do so by using indicators based on SNA engenders methodological difficulties. The most serious aspect of these problems is that even if the calculations of GDP are based on the appropriate methodology and carried out properly, they will produce a value denominated in the national currency.6 In the interest of comparability, then, the data for the various countries will have to be converted into common units of measure, that is, into a  particular currency. This is not by any means an unproblematic process, as the purchasing power of each national currency is different, and these differences are not necessarily reflected in their exchange rates. Several distinct processes have been developed for overcoming this difficulty. Among the methods for calculating gross domestic product that aim to facilitate international comparisons, the following are considered to be the most important (Table 1.1):7

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MAIN FEATURES OF THE METHOD

• calculations are based on the added value by industry and agriculture and the directly related services (transport), taking into account the depreciation of means of production

• national GDP data is converted into a common currency based on the official foreign-exchange rate (sometimes commercial or black-market rate)

• the value of goods and services is transformed into internationally comparable values, that is, repriced by using the price ratios of participating countries

METHOD

National income

GDP estimates based on current price or current exchange rate

GDP estimates based on purchasing power parity (PPP)

APPLICABILITY, COMPARABILITY

• hardly suitable for international comparisons • correction based on SNA is difficult because of the lack of meaningful prices in centrally planned economies • practically unsuitable for comparisons

• good comparability of data

ADVANTAGES (+) AND DISADVANTAGES (–)

• not representative because most services are neglected (–) • the neglect of services caused increasing distortions with the expansion of the tertiary sector during the 20th century (–)

• simple procedure (+) • exchange rates do not necessary reflect the purchasing power (–) • exchange rates are volatile, thus the value of the GDP can be erratic as well (–)

• it accounts for the distortions caused by the exchange rates (+) and the volatility of the exchange rates (+) • extremely labor-intensive procedure (–) • necessary data are often unavailable (–) • time series are only available for a narrow time span and a limited number of countries (–)

Table 1.1 Calculations of economic output: The main characteristics

• International Comparison Programme (ICP) • European Comparison Programme (ECP)

• statistics of centrally planned economies

EXAMPLES

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• usually applied for centrally planned economies

• compensates for the most severe shortcomings of the data of the communist countries (+) • the principles of the re-evaluation during the first stage often proved to be false, and correction was needed (–) • the methodological problems related to currency conversions remain (–) • highly labor-intensive procedure (–)

• the first stage uses various strategies for reevaluating existing output calculations (e.g. official output data of the communist countries) so that they conform to the SNA, then the second stage involves converting the data into internationally comparable common currency (usually, US dollars)

“Two-stage” calculation process (reevaluation of existing GDP estimates)

• hardly suitable for comparative purposes; in particular, distortions of data occur in the case of centrally planned economies

• computation requires relatively moderate resources (+) • assumes that price ratios, etc., are the same in different countries (–) • underestimates the significance of quality differences (–)

• the relationship between the production of specific goods/services measured in physical quantities and GDP is determined in market economies by reliable GDP data; this way, researchers then estimate the GDP of the countries where only production data are available

Physical indicators method (PIM)

APPLICABILITY, COMPARABILITY

ADVANTAGES (+) AND DISADVANTAGES (–)

MAIN FEATURES OF THE METHOD

METHOD

• Paul Marer (1985) • CIA (1990) • Thad P. Alton (1981) • World Bank (1993)

• Peter Havlik (1991) • Éva Ehrlich (1991)

EXAMPLES

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• advantages of computations based on purchasing power parity prevail (+) • enables the compilation of long-term time series (+) • correction procedures are sometimes nontransparent (–) • shortcomings of national data can lead to distortions (–)

• varying procedures • usually depart from the calculations of the ICP based on purchasing power parity • data for years missing in the ICP are often gained by extrapolation • one of the approaches completes extrapolations by using national deflators

Hybrid methods: Calculations based on a combination of methods

Source: Compilation by the author.

ADVANTAGES (+) AND DISADVANTAGES (–)

MAIN FEATURES OF THE METHOD

METHOD

• good comparability • suitable for long-term examinations

APPLICABILITY, COMPARABILITY

• Penn World Table • Angus Maddison (2003)

EXAMPLES

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1. The “current price” or “current exchange rate” method. This kind of calculation employs the simplest methodology. On the basis of the prevailing official foreign-exchange rate, and sometimes using the commercial or black market rate, all national GDP data is converted into a common currency, usually US dollars. This process, however, produces final results of dubious value. Establishing a conversion rate is not always a simple process, since the exchange rates of various currencies can fluctuate significantly, for instance, as a consequence of capital flows. In addition, currencies can be under- or overvalued as a result of market processes or governmental intervention. Incomes are lower in poorer countries, and thus goods and services that are not traded internationally (transportation, governmental activities, or education, for example) are generally cheaper there than in countries with higher incomes—that is, converting incomes simply on the basis of current exchange rates will underestimate their purchasing power.8 One example of governmental influence on currency-exchange rates would be the dual exchange-rate regime in the communist countries after World War II. Both of these sorts of factors can influence GDP data and hamper its ability to reflect changes that occur in the real economy. Consequently, it is possible to imagine a situation in which a country’s economic output is growing, but, for whatever reason, its currency is declining relative to the US dollar, for instance, and, therefore, GDP statistics calculated on the basis of the current exchange-rate method would indicate an economic downturn. Output statistics prepared according to this methodology are, thus, hardly suitable for international comparisons. Their most important practical use might be that they indicate the potential size of the various countries’ markets, or rather their demand for imports. 2. The purchasing power parity method. The basic principle of this sort of calculation is to establish the value of the goods and services produced in a  given country in a  common currency, that is, it actually re-prices them. The working method of the International Comparison Project (ICP), which has been operating within the framework of a UN program since the 1970s in several waves, makes the logic of this procedure clear. In the interest of calculating purchasing power parity (PPP), production is first divided into a number of homogeneous baskets of goods in each participating country. By the end of 1980s, these calculations included roughly three hundred such groups. Then the prices of the selected goods are recorded for each of these baskets, and the average price differences between individual countries are established. In the next step, by using the established price ratios, the value

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of the production in the groups of goods and services in the individual countries is transformed into internationally comparable values. The sum of the production values of the individual baskets of goods and services adds up to the total GDP, which is expressed in a so-called international currency, usually the “international dollar.”9 Nevertheless, methodological problems present themselves here too, because of differences in the quality of goods, for instance, or because certain goods and services are not traded commercially, in which case statisticians have to rely on assumptions about the effectiveness of the government sector or that of education—that is, about the value of such services. As a  consequence of highly variable patterns of consumption, difficulties also arise in assembling similar baskets of consumer goods. On the whole, however, these calculations are generally regarded as the most reliable and most appropriate as a  basis for international comparisons. The method based on purchasing power parity provides a  solution to problems arising from currency conversion, and more precisely from fluctuations in exchange rates as well as under- and overvaluations of currencies. At the same time, these sorts of calculations require the mobilization of vast resources, as they necessitate the acquisition and processing of enormous volumes of data. Thus, the involvement of national statistical offices is indispensable to such work. The organizational complexity of these tasks was largely responsible for the fact that even though the UN recommended the creation of the aforementioned ICP, the program for calculating international economic output on the basis of purchasing power parity, in 1968, it was launched only a decade later. Within the framework of the ICP, the first European Comparison Programme (ECP), which covered seventeen European countries including only Hungary from East Central Europe, provided its first data for the year 1980. It later supplied data for four other years: 1985, 1990, 1993, and 1996. Thus, the period covered by such data is relatively short. Moreover, actual calculations were performed only for selected “benchmark years”; the values for the intervening years were interpolated.10 3. The Physical Indicators Method (PIM). Because the processes involved in making calculations based on PPP—establishing prices and converting currencies—require significant resources and create considerable practical difficulties, numerous researchers have used the Physical Indicators Method (PIM) for calculating GDP data suitable for international comparisons.11 The PIM was primarily applied to centrally planned economies as a way to rectify problems caused by the artificial, non-market prices.

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This method rests on the assumption that there is a close relationship between the level of economic output and that of the production of certain goods. Thus, the level of GDP is estimated with the help of production data measured in physical quantities of goods (in tons, hectoliters, cubic meters, meters, pieces, etc.), the numbers of which are then pegged to the more reliable GDP data of market economies with similar levels of production. First, researchers establish the relationship between the produced quantity of an individual good and the GDP level in various market economies; then they estimate the same relationships for the other countries under analysis. With the help of the relationships established in this way, they then extrapolate the GDP of countries that do not figure in their sample. It is a  fundamental assumption that the distortions that develop in financial data as a result of pricing idiosyncrasies will not appear in the production data for the goods under analysis. However, even if this were true, in the case of the communist countries, the PIM systematically overestimates output values. This problem has several causes. Most importantly, it does not account for quality differences, which were quite considerable. It operates on the implicit assumption that productive efficiency in market economies and centrally planned economies are the same (namely, it applies statistical coefficients derived from market economies’ data to determine the GDP levels of the centrally planned economies); it also assumes that price structures are the same.12 Essentially, researchers who use the PIM approach cannot get around the most important problem of comparisons in this field: their indicators are incapable of reflecting the real nature of the goods that are expressed in physical quantities, which is especially important in evaluating the quality and selection of the available products and services. It is also problematic to assume that a model based on conditions in developed market economies (that is, on the relationship between production levels and GDP) would be equally valid outside of that group of countries. East Central European researchers were among the original developers of this method, and it continued to be used in the region even after the 1989 system change.13 The UN Economic Commission for Europe and the Wiener Institut für Internationale Wirtschaftsvergleiche also applied this method for some time.14 Recognizing the serious disadvantages of physical economic indicators, one well-known former adherent of this method has acknowledged that only the significant costs of calculating purchasing power parity made the PIM approach competitive.15

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4. The “two-stage” calculation method. The starting point of this approach is to implement adjustments directly into the existing national accounts data.16 Above all, this method is an attempt to use command economies’ official data in such a way as to overcome its inherent contradictions. For instance, national income statistics that record only physical industrial output are converted in accordance with the SNA used in market economies, or by using an appropriate price deflator, that is, a different price structure. Even so, the GDP data produced by this method is still denominated in the national currency. The second stage of this calculation, then, involves converting this data into some sort of internationally comparable common currency (usually US dollars), and so the problems related to such conversions remain. In any case, the exchange rates for these currencies are configured so as to reflect the actual ratio of prices in the US and the given country; they do not use exchange rates determined by international currency trade. Paul Marer published what is probably the best-known work that uses this method for analyzing the countries of East Central Europe. His data, however, applies only to 1980.17 The CIA also used this process in tabulating its own datasets for the region,18 which made use of research conducted by Thad P. Alton and his group.19 Used consistently, this method can be as labor-intensive as the calculation of purchasing power parity. As a  result of insufficient coordination, oversimplifications, and other similar factors, many calculations that employ this method have failed to produce datasets that will stand the test of time. For example, the World Bank, using a Net Material Product (NMPto-GDP) multiplier computed for developed market economies, converted East European countries’ official NMP indicators into GDP numbers for the period from 1977 to 1980. Discrepancies in the statistics for various sectors of the economy rendered this procedure indefensible, which the World Bank itself soon realized. Later, however, at the end of the 1980s, the World Bank used official exchange rates to create a common denominator for GDP data, which—in light of the foregoing explanation, it need not be stressed— resulted in GDP levels for most Eastern European countries which were extraordinarily low in comparison with earlier calculations. Later, researchers attempting to recalculate these numbers made an effort to account in some way for purchasing power parity. These attempts, for lack of a broader statistical context, were of limited value. Thus, for example, the aforementioned Paul Marer tried once again to assess discrepancies in purchasing power parity by estimating discrepancies in exchange rates.20

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It is typical of this method’s shortcomings that in 1991, the CIA, without any substantive explanation, retroactively (for the year 1989, for example) downgraded its own statistics for the countries of East Central Europe: for Hungary, for example, this meant a 27 percent reduction in its GNP. The Plan Econ research institute did the same in 1990, and the decline in the Hungarian GNP was even greater, 32.3 percent (Table 1.2).21 Table 1.2 Comparison of GDP calculations for Hungary, 1950–1990 (gross domestic product per capita; Maddison=100) 1950

1955

1960

1965

1970

1975

1980

1985

Exchange rate

50.9

European Comparison Programme

111.7

103.1

ECP ’96 Physical Indicators Method

108.8

102.5

102.4

116.8

116.3

120.9

133.3

135.6 183.9

Penn World Tables

135.1

132.9

134.0

133.3

137.2

140.0

141.2

142.4

Angus Maddison

100

100

100

100

100

100

100

100

95.6

96.4

112.9

Plan Econ

95.9

96.6

133.0

139.6

Thad P. Alton

127.2

130.6

100

107.6

Paul Marer

CIA

98.2 131.9

Peter Havlik

World Bank

1990

99.7

95.4

98.2

Notes: Author’s own computations based on the sources specified below. Sources: Economic Commission for Europe, Economic Survey of Europe, 2000 (New York and Geneva: European Commission for Europe, 2000), 186. (For sources, see page 187.)

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Exchange rate: Estimates of the Wiener Institut für Internationale Wirtschaftsvergleiche (WIIW) as cited by Peter Havlik, “East–West GDP Comparisons: Problems, Methods and Results; Wiener Institut für Internationale Wirtschaftsvergleiche,” Forschungsberichte no. 174 (Vienna: WIIW, 1991), 37. European Comparison Programme: Economic Commission for Europe, Economic Bulletin for Europe, vol. 31, no. 2 (New York: United Nations, 1980); International Comparison of Gross Domestic Product in Europe, 1985, 1990 (New York: United Nations, 1990). ECP ’96: International Comparison of Gross Domestic Product in Europe, 1996 (New York: United Nations, 1999). Physical Indicators Method: United Nations/Economic Commission for Europe, Economic Bulletin for Europe vol. 31, no. 2 (New York: United Nations, 1980); Israel Borenstein, Comparative GDP Levels: Physical Indicators, Phase III (New York: United Nations: 1993). Peter Havlik: Havlik, “East–West GDP Comparisons,” 35–37. Penn World Tables: Robert Summers and Alan Heston, “Improved International Comparisons of Real Product and Its Composition: 1950–80,” Review of Income and Wealth 30, no. 2 (1984): 207– 262; Robert Summers and Alan Heston, “A New Set of International Comparisons of Real Product and Price Levels: Estimates for 130 Countries, 1950–1985,” Review of Income and Wealth 34, no. 1 (1988): 1–25; Robert Summers and Alan Heston, “The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988,” Quarterly Journal of Economics 106, no. 2 (1991): 327–368. Angus Maddison: Angus Maddison, Monitoring the World Economy, 1820–1992 (Paris: OECD, 1995). World Bank: Elio Lancieri, “Dollar GNP Estimates for Central and Eastern Europe, 1970–90: A Survey and a Comparison with Western Countries,” World Development 21, no. 1 (1993): 161–175; M. de Melo et al., “Circumstances and Choice: The Role of Initial Conditions and Policies in Transition Economies,” World Bank Policy Research, Working Paper no. 1866 (Washington, DC: World Bank, 1997), as cited by Economic Commission for Europe, Economic Survey of Europe, 2000, 187. Paul Marer: Paul Marer, Dollar GNPs of the USSR and Eastern Europe (Baltimore, MD: John Hopkins University Press, 1986), as cited by Economic Commission for Europe, Economic Survey of Europe, 2000, 187. Plan Econ: J. Vanous, ed., “How Big Are the Soviet and East European Economies?” Plan Econ Report, vol. 6 no. 52 (New York: Plan Econ, 1990), as cited by Economic Commission for Europe, Economic Survey of Europe, 2000, 187. CIA: Handbook of Economic Statistics, as cited by Borenstein, Comparative GDP Levels, 60. Thad P. Alton: As cited by Economic Commission for Europe, Economic Survey of Europe, 2000, 187.

5. Hybrid approaches: calculations based on a combination of methods. Among the most important methodologies is an approach that makes use of a variety of methods and is thereby capable of providing data for time periods and countries that are beyond the scope of works that employ the purchasing power parity method. This group includes the Penn World Table and several of the datasets developed by Angus Maddison.22 Robert Summers and Alan Heston’s Penn World Table (PWT) contains GDP and other types of economic indicators for 130 countries. Some of the time series stretch back to 1950, while other statistics start at later points in time.23 The previously described calculations of the ICP, which were based on purchasing power parity data for the years 1970, 1975, 1980, and 1985, provide the starting point for the fifth edition of the PWT. Summers

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and Heston then use UN and World Bank time series to interpolate data for the intervening years and to extrapolate data for earlier periods. They also employ statistical procedures to overcome the inconsistencies in their various sources. They then extend their investigation to countries that do not take part in the ICP, and to earlier decades not covered by the ICP. The researchers proceed by determining the relationship between the PPP and the exchange rate for a control group of countries in order to calculate the correlation between the PPP of a  specific country and its exchange rate. This relation is then used to estimate GDP values for countries where the available data is deficient. On the basis of the foregoing, it need not to be stressed that the latter elements of this method of estimating GDP are critical points. Yet in other respects, the process followed here does not appear to be particularly reliable. For example, the UN, an American government agency, and the living expenses of the employees of a private firm operating in various capital cities all constitute the basis for calculating purchasing power parity, which might include all sorts of eventualities.24 This is the reason that—even if we are dealing with extensive and regularly augmented databases—many international scholars regard the PWT as unreliable on the whole. This is especially true with respect to the economies of communist countries. In certain periods, China, Hungary, Poland, and Yugoslavia all supplied data in accordance with SNA principles, and thus in these cases, the authors consider the data to be of better quality than the others.25 Even so, the PWT also overestimates the economic performance of the communist countries.26 In several respects, Angus Maddison and his colleagues have worked according to a procedure similar to Summers and Heston’s. They have also used ICP calculations based on purchasing power parity, and obtained data for missing years primarily by means of extrapolation. However, there are several notable methodological and statistical differences between Maddison’s calculations and the PWT. For instance, Maddison objects to the procedure Summers and Heston employ for harmonizing or “consistentizing” data—statistically filtering out contradictions in the annual data provided by the ICP—because doing so reduces transparency and increases inconsistencies in measurement goals. Summers and Heston’s method includes a modification of growth rates calculated with national prices, which Maddison rejects on the grounds that data based on national prices contain

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fewer flaws than the data of successive ICPs. Maddison also criticizes Summers and Heston’s procedure for its asymmetry: they modify growth rates only in the case of those countries for which several ICP benchmark calculations have been prepared.27 Maddison, on the other hand, accepts the ICP benchmark numbers without exception and completes his extrapolations by using national deflators. Maddison and his colleagues use a procedure—devised by R. S. Geary in 1958 and modified by S. H. Khamis—starting in 1970 (the Geary-Khamis method). It is based on the simultaneous use of the purchasing power parity of currencies and the international prices of goods. Another important characteristic of this method is that it allows comparisons to be conducted in a multilateral rather than a binary manner. This means that while other methods tend to require the selection of a base country, usually the US, against which to measure other states’ data, users of this method can perform their calculations using multiple frames of reference.28 Maddison works with a  longer timeframe than that of the PWT.29 Investigations that stretch back over a long period of time have made it possible for them to avoid some of the inconsistencies that plague other estimates. It is also to Maddison’s credit that several less comprehensive studies focusing on shorter periods and fewer countries improved his data by determining the proper ratio of these states’ GDPs.30 Maddison has also demonstrated the quality of his database with a series of analytic studies.31 Finally, there are research methodologies about which our knowledge is insufficient. As noted above, Paul Bairoch published GNP time series for an interval stretching from the sixteenth century to the middle of the 1970s. His data, particularly for the pre-nineteenth-century period in the world outside Europe, diverge significantly from the estimates provided by Maddison. Bairoch suggests that the levels of economic development in the countries of Asia, Africa, and Latin America were essentially equal to or greater than those of Western Europe in that era. With regard to twentieth-century Europe, critics pointed out that Bairoch’s calculations exhibit several inconsistencies.32 An example is the arguably low quality of his data for the communist countries of Eastern Europe: according to his numbers for 1973, Hungary’s per capita GNP was greater than Italy’s, Romania had considerably overtaken Spain, and East Germany had surpassed the Netherlands.33 Bairoch is also known for his regular allusions to “personal estimates,” and the sources and methods he used for his calculations remain

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largely murky. For this reason, Bairoch’s estimates can be regarded as outdated and less reliable than other available datasets.

2.1.2 The characteristics of East Central European sources In addition to the general problems of output calculations described above, research related to East Central Europe presents difficulties of its own. Scholars of the subject are in universal agreement that information about the historical economic performance of the countries of East Central Europe is lower in quality and smaller in quantity than the available data pertaining to the national economies of Western Europe. The individual countries of East Central Europe differ considerably in this respect. Data concerning Hungary are arguably the most reliable in the region, but the comparability of this data is often problematic for this country as well. The use of official statistics related to economic output in the period after World War II in East Central Europe is hindered by the fact that statistics in the communist countries regularly inflated economic performance and growth.34 The simplest explanation—that production data was consciously falsified—cannot be dismissed. Enterprise managers obviously had an interest in embellishing the performance of their companies, and the central economic and party bureaucracy also strove to depict the economic situation in a favorable light. Even so, this sort of problem might be relatively insignificant, and comes up primarily in the early phase of the command economies.35 More important are the obstacles arising from the peculiarities of the methods used by the central statistical offices and of the economic system itself, which make it especially difficult to correct official data, and thus to perform comparative work. As to these latter impediments, the system of measuring economic output in communist countries—which was referred to in the international literature as the Material Product System (MPS)—diverged fundamentally from the System of National Accounts (SNA) commonly used in market economies. As has been shown, methods based on the SNA regard all market-priced goods and services as well as various unmarketed services (such as police work and public administration) as components of output. This is how the two most commonly used indicators, GDP and GNP, are calculated. In contrast, the indicator based on the MPS, Net Material Product (NMP)— also known as national income—includes only the values of goods and those services considered “productive” (transportation, commerce) while

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omitting a  broad range of other services (for example, healthcare, education, and public administration). Another peculiarity of national income is that it takes into account the depreciation of the means of production.36 The selectivity of this method is a  consequence of Marxist economic philosophy, which regards certain activities or sectors (industry, agriculture, services directly related to physical output) as productive, while regarding other activities and branches of the economy (healthcare, education) as unproductive, and ultimately as less valuable. Insofar as certain components of the GDP—or GNP and GNI, which do not differ from it in this respect—and the NMP or national income overlap (for example, through the material consumption of the “unproductive sector”), the conversion of NMP to GDP is not simply a  question of adding the value of these non-material, “unproductive” services.37 Moreover, the disparity between GDP and NMP is of variable magnitude: the difference between the two values will obviously be greater in countries with larger service sectors. And insofar as the service sector tends to expand as an economy develops, the discrepancy between these two indicators will grow as time passes and an economy’s level of development increases.38 Calculations of the value of NMP also changed somewhat over time as a  consequence of modifications to the rules for recording depreciation.39 Hungary’s Central Statistical Office was the first in the East Central European region to publish official GDP data, which contained retrospective calculations for years back to 1960. The validity and, in particular, international comparability of this data, however, remains suspect for several reasons. Other attempts at retroactive, SNA-based reconstructions of East Central European economic output data for the decades after World War II raise similar questions, if only because they also rely on official numbers.40 In addition to the general methodological difficulties with calculations of gross domestic product already discussed above, the following factors cause specific problems concerning communist East Central Europe: 1. Centrally planned economies lack meaningful prices that make it possible to engage in direct comparisons between the quantities of goods and services they produce and those of market economies. Command economy prices are formed as a result of bureaucratic processes, unlike those of market economies. Given the lack of suitable prices, the performance of centrally planned economies is generally assessed by using physical indicators to measure

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production. Consequently, goods are usually priced with an initial or baseyear value, and then growth rates are obtained by deflating the national income according to the official price index. These prices are still distorted, however, especially in the case of new products and products that have undergone changes, because producers want their prices to rise more extensively than the real improvement in the value or quality of products would justify it. A similar mechanism is also at work as product quality deteriorates, in which case there is no standard by which to judge an appropriate markdown, and thus producers can easily resist reductions in price. As a result of all this, prices artificially inflate production data.41 In order to avoid such problems, comparisons between centrally planned and market economies are often carried out by tabulating the output of the former according to the prices of the latter, usually expressed in US dollars. Once again, however, such calculations are necessarily biased in favor of command economies. A cause of this distortion is the so-called index problem or Gerschenkron effect, which results in overestimations of these substitute prices.42 Nor is the use of global-market prices for command-economy products a  suitable solution, in that the quality of their exported commodities was usually significantly better than that of the goods intended for their domestic markets.43 2. This all points to the following problem, touched upon earlier: there were fundamental differences in the quality of the goods and services produced by centrally planned and market economies. It is obvious that average product quality in the communist countries was lower than in the market economies. However, up to this point, there has been no proper method of accounting for such discrepancies, and it is not sufficiently documented whether such quality contrasts were similarly sharp across the whole range of industrial products and services. Among the few relevant comparisons, the work of Bart van Ark attempted to quantify disparities in the quality of Czechoslovakian, East German, and West German cars. The results show that these factors could substantially influence output calculations.44 3. The differences between the concept of output in market and centrally planned economies underwent significant changes. As has been seen, the centrally planned economies generally calculated their output on the basis of the MPS; that is, they took into account only physical production and

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those services directly related to it, and termed the value derived in this manner “national income.” Over time, however, they expanded the number of goods and services to be included in their calculus, which in itself drove up the rate of economic growth. Monitoring and explaining such changes can also present a researcher with serious challenges.45 4. Comparisons can be carried out on a gross output or on a value-added basis. Intermediate inputs make up the difference between the two output indicators. In measuring them, planned economies, in accordance with their traditional methods for calculating national income, took into account only material inputs. Here, however, the share of material inputs was substantially greater in gross output than in market economies. The causes of this imbalance include the inefficient use of resources, more raw materialintensive production, and the stockpiling of materials and semi-finished products, some of which would later become unmarketable. From this it follows that growth numbers reflect the performance of the command economies more accurately if they are calculated on value-added basis rather than by measuring gross output.46 Nevertheless, retrospective investigations of this sort are exceedingly difficult to conduct. 5. Finally, other factors including the one known as overgrown cooperation, that is, producer relationships that simply fulfilled planning targets without any regard for economic rationality, also artificially inflated these statistics. Assessing the scale of this distortion, however, also presents a problem for research.47 These observations should make clear that it is not possible to make direct use of the official statistics from the era of centralized economic planning, and that, despite efforts to correct such data, caution is also warranted in dealing with the results of expert analysts. At the same time, because of the myriad methodological problems associated with measures of economic output and the volume of labor required to collect such data, setting up datasets based on new calculations is beyond the scope of this work. Rather, a critical use of already existing data will constitute the empirical basis of the study. Due to the analysis of the methodological idiosyncrasies of the available time series, it might be fair to assert that the methodologies of output estimates show serious discrepancies that will have a serious effect on

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the results. The majority of these calculations deal with specific years, or a short period, which is one of the causes of their frequent inconsistencies. For several reasons, the most useful of these datasets are those devised by Maddison and the group he led at the Groningen Growth and Development Center (GGDC), which later continued his work.48 On the one hand, they encompass a considerably longer time span than have similar datasets: in the case of industrialized countries, they include information on the evolution of GDP from the first half of the nineteenth century to the turn of the millennium, though recently, in some cases, they have stretched back to even earlier periods. In addition, Maddison’s calculations can be regarded much more reliable than other time series, especially in the case of Eastern and East Central European countries. Maddison not only takes into account the effects of the methodological problems described above, but corrects his datasets by checking them against binary and multilateral comparisons, case studies, and other analyses, labor in which he was helped by the aforementioned research group. Accordingly, scholars of economics and economic history have, in recent years, clearly favored the work of Maddison and his colleagues over similar compilations of historical data related to economic output.49 For these reasons, the comparisons over the following chapters will depend primarily on the most recent data by Maddison and the GGDC. Where it is necessary and possible, this data set will be supplemented with other kinds of sources in hopes of presenting a more reliable account of the growth process.

2.2 Trends and Stages of Growth in Western Europe This section establishes the major trends of economic growth in postwar Western Europe. Both the aggregate performance of the region will be outlined and an analysis of convergence versus divergence across countries will be offered. This is necessary in order to be able to analyze the economic growth of East Central Europe in a broader comparative perspective. In so doing, the major phases of the growth process in postwar Western Europe will be distinguished. The first of these periods was postwar reconstruction; the second was the boom or golden age from 1950 to 1973; and finally, the roughly two decades after the 1973 oil crisis will be discussed. The period around the turn of the millennium will be covered later, in a  separate chapter.50

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2.2.1 Postwar reconstruction and the great boom World War II inflicted substantially greater damage on Western Europe than did World War I. Considerable economic losses were caused not only by the German invasion and the land battles in France, Germany, the Netherlands, and Italy, but also by air and naval forces that attacked a much wider range of targets than merely military supplies. The Allies dropped two million tons of bombs on the continent, largely on Germany, destroying not only productive capacity and infrastructure but human capital as well.51 The level of investment in most countries during the war was low from the start. The former major international creditor, Great Britain, was forced to borrow more than the outstanding debts on which it was collecting; France’s credit balance was also zeroed out. The primary source of funds was the United States. From the outset of the war, the US’s extraordinarily dynamic economic growth would completely transform the international financial and economic balance of power to the detriment of Western Europe. Nevertheless, World War II affected the Western European economies in diverging ways. Between 1938 and 1944, the most serious declines in gross domestic product were seen in France (–49.7 percent), the Netherlands (–46.7 percent), Belgium (–15.7 percent), and Norway (–12.7 percent). In this same period, however, the economy grew significantly in Germany (24.2 percent), the United Kingdom (22.0 percent), Sweden (20.9 percent, and Austria (18.0 percent).52 The last phase of the war, though, reduced the GDP of most of the belligerent and invaded nations to levels they had not seen in decades. In 1945, the national product of Austria corresponded to its level in 1886; France’s to that of 1891; Germany’s to 1908; Italy’s to 1909; and the Netherlands’ to 1912. Only the United Kingdom escaped a serious decline, though it was unable to avoid the postwar depression entirely. More surprising—for contemporary observers as well—was the rapid pace of reconstruction across the region. The years directly following the war were a period of intense and successful rebuilding, a result of which was that even the countries that were most devastated by the fighting quickly returned to their prewar levels of development. This period ended around 1950; among the countries mentioned above, the following returned to or surpassed their highest prewar levels of production within a few years—the Netherlands in 1947, France in 1949, Italy in 1950, and Austria and West Germany in 1951.53

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43

The end of the reconstruction phase can be considered an important watershed. In fact, there are important arguments for considering the period of reconstruction from 1945 to 1950 as the final years of an earlier period that began in 1914 in Western Europe insofar as the deep political and economic shocks that occurred in that era give the entire epoch an inner consistency.54 In most Western European countries, the two world wars caused enormous damage to the factors of growth—both to capital and to the size and quality of the labor force—while the Great Depression resulted in previously unknown economic disturbances. In examining the entire period between 1913 and 1950, one can see the effect of the wars most clearly in the fact that the neutral countries—like Sweden and Switzerland—enjoyed substantially greater average rates of growth than the belligerent powers.55 Thus, the pace of economic growth in Western Europe, as in Europe as a whole, dropped in comparison with the decades before World War I. If, however, we take into account that the population also grew at a slower pace, then despite conventional wisdom, we cannot say that the economic performance of the decades of the world wars was, on the whole, significantly weaker than in earlier periods. While the average annual growth rate of per capita GDP in Western Europe from 1870 to 1913 was 1.3 percent, it dropped off only minimally from 1913 to 1950, when it amounted to 1.2 percent. In the narrower period between the wars, 1920 to 1939, the average annual growth rate was 2.2 percent (Tables 2.1 and 2.2). If we examine productivity, that is, the value of output per labor hour, the picture is even more favorable. Even though unemployment grew, those who did have jobs produced more goods and services in a given unit of time: from 1890 to 1913, the average annual productivity gain was 1.7 percent, while from 1913 to 1929, it came to 2.2 percent; moreover, even from 1929 to 1950, it barely dropped off, with a value of 1.5 percent in that period.56

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2376

3186

3428

2225

2539

2443

4830

1635

2523

1709

1381

1690

1624

France

Netherlands

Belgium

Ireland

Germany/FRG

Austria

Switzerland

Sweden

Denmark

Norway

Finland

Italy

Spain

Estonia

4009

UK

1890

1786

1855

1668

1877

3017

2083

5899

2882

3134

2495

3731

3329

2876

4492

1900

1895

2176

1906

2186

3705

2543

6885

3290

3527

2736

4064

3783

2965

4611

1910

2056

2305

2111

2447

3912

2874

7093

3465

3833

2736

4220

4049

3485

4921

1913

2177

2153

1846

2739

3992

3004

6568

2412

2986

2533

3962

4220

3227

4548

1920

2739

2778

2717

3787

5075

4063

8636

3699

4335

2824

5054

5689

4710

5503

1929

2620

2631

2666

3627

5341

4238

8492

3586

4049

2897

4979

5603

4532

5441

1930

1915

2981

3408

4441

5993

5251

8092

4096

5549

3052

5150

5544

4793

6262

1939

2189

3172

4253

5430

6943

6739

9064

3706

4281

3453

5462

5996

5186

6939

1950

3072

5456

6230

7204

8812

8688

12457

6519

8463

4282

6952

8287

7398

8645

1960

6319

9367

9577

10027

12686

12716

16904

9747

11933

6199

10611

11967

11410

10767

1970

8657

7661

10414

11085

11324

13945

13494

18204

11235

13152

6867

12170

13081

12824

12025

1973

9203

12927

12949

15076

15227

14937

18779

13759

15370

8541

14467

14705

14766

12931

1980

11582

15597

16946

18157

18261

17524

20935

16360

18015

10880

16744

16695

17300

16414

1989

10820

12055

16313

16866

18466

18452

17609

21487

16895

18685

11818

17197

17262

17647

16430

1990

Table 2.1 GDP per capita in European countries, 1890–2005 (1990 Geary–Khamis international dollar)

12610

15269

18761

19951

25088

22966

20871

22521

20962

18944

21027

20809

22148

20392

21046

2000

18443

17145

19284

22479

27358

24017

23627

23481

22583

19417

24349

22305

23114

21450

23810

2005

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598

Albania

685

986

830

780

1137

973

1660

811

…

973

1741

1000

949

1709

926

1227

1256

1152

2476

1274

1214

1212

2404

2926

1676

1300

1242

2838

2882

1001

1651

1428

1182

2480

3501

1451

2912

2370

1844

3649

5108

2004

4773

3945

2853

5028

6466

4428

2273

5284

4533

3477

5596

7041

2347

6044

6297

4135

6306

7982

5740

1980

2477

6216

6203

3941

6903

8768

5684

1989

2499

5597

5646

3511

6459

8513

5113

8663

9916

1990

2962

5483

4744

3047

4117

7513

6181

4069

8379

11421/ 10344

9320/ 8188 6772

8529

10307

11925

2005

7309

6973

7742

2000

Notes: Germany 1890–1990: 1949 territory of the FRG; Germany 2000–2005: unified Germany; Czechoslovakia 2000–2005: Czech Republic/Slovakia; Different dates: Ireland 1913, 1921; Poland 1938; Czechoslovakia 1937; Romania 1938; Yugoslavia 2000: Serbia-Montenegro; Bulgaria 1892, 1899, 1911, 1921. Sources: The Maddison-Project, 2013 version (all countries unless indicated otherwise), retrieved October 10, 2015, http://www.ggdc.net/maddison/maddison-project/home.htm; Angus Maddison, Monitoring the World Economy, 1820–1992 (Paris: OECD, 1995), 194–95 (Germany 1890–1990); 198 (Ireland 1890–1900); Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), 67–69 (Ireland 1921; Poland 1938; Romania 1938; Bulgaria 1892, 1898, 1911, 1921).

1132

776

Bulgaria

Yugoslavia/ SerbiaMontenegro

1415

2098

3042

3215

1246

2000

1933

2447

Romania

1682

2096

2182

1973

1473

1991

1994

1970

Hungary

1729

2117

1960

1505

1739

1950

Czechoslovakia

1690

1939

5340

1536

1930

1284

1929

Poland

1920

7593

1913

Lithuania

1910

7846

1900

Latvia

1890

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50.7

59.4

Poland/Western European mean x100

Czechoslovakia/ Western European mean x100 60.3

50.1

8.0

2535 2910 3269 3474 3247 4336 4301 4667 4867 5467 7693 11117 12327 14235 16979 17359 21232 22867

7.2

Western European mean

4.8

70.2

48.8

13.0

13.2

59.2

44.8

11.4

64.0

44.8

16.4

66.4

41.8

18.7

58.2

39.8

14.6

5307

11.7

5992

56.1

40.3

13.0

6676

51.6

33.5

15.4

7118

49.0

29.5

18.1

6695

6459

43.9/ 38.6

34.4

10.8

7800/ 7897

6772

49.9/ 45.2

37.3

12.6

9443/ 9668

8379

9320/ 11421/ 8188 10344

8529

6.4

2634 2809 3991

6903

8513

7309

East Central European average distance from mean (%)

2545 2441

6306

8768

5113

1420 1646 1894 1978

5596

7982

5684

2005

East Central European mean

5028

7041

5740

2000

1473 1682 2000 2098 1709 2476 2404 2655 2838 2480 3649

6466

5340

1990

Hungary

2882 3501 5108

4428

1989

1505 1729 1991 2096 1933 3042 2926

2182 2447 3215

1980

Czechoslovakia

2117 1994

1973

1284 1526 1690 1739

1970

Poland

1890 1900 1910 1913 1920 1929 1930 1938 1939 1950 1960

Table 2.2 GDP per capita in East Central Europe and Western Europe, 1890–2005 (1990 Geary–Khamis international dollar)

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60.3

Hungary/Austria x100

58.4

57.8

60.8

61.2

60.5

60.4

70.9

52.6

66.9

57.1

67.0

55.9

74.6

56.9

69.3

58.3

66.9

45.4

56.0

47.4

51.6

45.2

1970

49.8

45.4

1973

45.8

44.3

1980

42.2

40.7

1989

38.2

37.2

1990

32.3

31.9

2000

37.1

36.6

2005

Notes: Western Europe: UK, France, Netherlands, Belgium, Ireland, Germany, Austria, Switzerland, Sweden, Denmark, Norway, Finland, Italy; Czechoslovakia 2000–2005: Czech Republic/Slovakia. Different years: Ireland 1910, 1913, 1921. Sources: Author’s own computations based on the following sources: Angus Maddison, Monitoring the World Economy, 1820–1992 (Paris: OECD, 1995), 194–95 (Germany 1890–1990); 198 (Ireland 1890–1900); Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), 60–61 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, United Kingdom 1890–1913); 62–63 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, United Kingdom 1920–1960); 64–65 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, United Kingdom 1970–1990); 67–69 (Ireland 1913–1990); 100–101 (Poland, Czechoslovakia, Hungary 1890–1990); and The Maddison-Project, retrieved October 10, 2015, http://www.ggdc.net/maddison/maddison-project/home.htm, 2013 version (Western Europe, Poland, Czechoslovakia, Hungary 2000–2005).

58.1

Hungary/Western European mean x100

1890 1900 1910 1913 1920 1929 1930 1938 1939 1950 1960

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AUSTERITIES AND ASPIRATIONS

Concealed in the background of such improvements in productivity is the fact that the first part of the century was rich in technological advances and innovations in labor-force organization, and the increasing education levels of the population also created the conditions for taking advantage of such developments. At the same time, in the period between the wars, Western Europe accumulated significant growth capacity in the form of underutilized technological potential. This arose primarily as a consequence of the fact that technological development was advancing in the United States at a much more vigorous pace than before, while as a result of the joint effect of several other factors—such as drops in the United States’ levels of international trade and foreign investment during the Depression, slackening demand resulting from the disruptions of the world economy, wars, etc.—the rate at which new technologies had spread through Western Europe was not even close to optimal. The economic boom that took place in Western Europe in the 1950s was based not least on the utilization of the growth capacity that had accumulated in this way.57 After the postwar reconstruction, the next phase of the growth process in Western Europe was the period stretching from approximately 1950 to the 1973 oil crisis, which was characterized above all by the following: a) economic growth in Western Europe was exceptionally fast and sustained; b) the spectacular dynamism was accompanied by a rapid equalization of the levels of development across the region; and c) this process also allowed Western Europe to catch up significantly to the world’s leading economy, the United States. In the economic history of industrialized nations, it is customary to regard the decades that followed the postwar reconstruction as a  kind of golden age; these years are also described as “the boom,” or the trente glorieuses (glorious thirty).58 This period was characterized by rates of growth not seen before or since, with relatively minor cyclical fluctuations and auspicious developments in other important macroeconomic indicators, above all the unemployment rate. As the title of a  book suggested, even if just for a short time, it seemed possible to contemporary observers that such prosperity might last forever.59 In Western Europe as a whole, GDP per capita grew at an average annual rate of 4 percent from 1950 to 1960 and at 3.8 percent from 1960 to 1973.60 The outstanding economic performance of that period is demonstrated by rates of productivity growth. Between 1950 and 1973, GDP per labor hour rose at an average of twice the rate

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2 Economic Growth: Catching Up and Falling Behind

at which it grew in the previous or succeeding decades. In an unweighted average of eight major Western European countries, this rate was 4.4 percent per year in that period, while from 1922 to 1937 it amounted to 2.4 percent and from 1979 to 1988 it was 2.3 percent. And the contrast would be even greater if we were to use the period from 1973 to 1998 as the basis for this comparison.61 As a result, GDP per capita in the countries of Western Europe increased by two to three times between 1950 and 1973. Economic growth in Southern Europe was even more rapid: per capita growth there rose by three to four times in this period. While this prosperity spread through all the countries of Western Europe, their economic performance was not uniform. Germany produced the highest growth rates in this period, averaging 5 percent annually, though Austria was not far behind at 4.9 percent. The group of nations exhibiting more moderate growth (between 3.4 and 4.3 percent) included France, Finland, the Netherlands, and Belgium. Norway, Switzerland, Denmark, and Ireland achieved relatively uniform rates of 3.1 or 3.2 percent. At the bottom of the list, substantially behind the others, was the United Kingdom, with an average rate of 2.5 percent (Table 2.1).62 The unemployment rate sank to its historical low during the boom. The average rate across twelve Western European countries reached a nadir of about 2 percent at the beginning of the 1960s, then rose to about 2.9 percent by 1973. By way of comparison, the average level of unemployment amounted to 4 percent in 1929 and 5 percent in 1938 in the region, and, in both cases, these rates were calculated according to a narrower definition that underestimated the actual rate; it would rise again to 7.4 percent by 1989 (Table 2.3).63 Table 2.3 Unemployment rate in European countries, 1920–2004 (percent)

UK

1920– 1928

1929– 1938

11.1

11.1

1950– 1959

1.6

France

1960– 1972

1973– 1979

1980– 1987

1988– 1999

2000– 2004

2.9

4.8

10.5

7.9

5.0

1.9

4.3

8.9

11.2

9.1

Netherlands

8.3

8.0

2.0

1.3

4.7

10.0

6.0

3.2

Belgium

3.4

8.0

6.9

2.3

5.8

11.2

8.8

7.3

Germany/FRG

8.1

8.5

6.1

0.8

2.9

6.1

6.4

8.3

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50

AUSTERITIES AND ASPIRATIONS 1920– 1928

1929– 1938

1950– 1959

1960– 1972

1973– 1979

1980– 1987

1988– 1999

8.2

5.2

7.3

13.8

11.8

4.3

12.0

6.1

1.5

1.4

3.1

4.0

4.1

2.7

2.8

1.3

0.1

0.8

1.8

3.3

3.4

Sweden

11.5

5.3

2.2

1.4

1.6

2.3

6.9

5.5

Denmark

16.1

10.6

9.5

2.0

4.1

7.0

6.7

4.9

Norway

15.3

7.8

8.4

2.0

1.8

2.4

4.6

4.0

1.9

4.1

5.1

11.1

9.2

3.9

4.5

6.7

9.0

8.8

Ireland Austria Switzerland

Finland Italy

3.9

2000– 2004

Poland

18.5

Czechoslovakia

7.9/ 18.6

Hungary

7.0

5.8

Notes: Yearly averages; Czechoslovakia 2000–2004: Czech Republic/Slovakia. UK 1920–1928: Great Britain; Due to diverging definitions the comparability of data referring to the interwar period is limited; different dates: Belgium 1921–1928, Sweden 1925–1928, Switzerland 1950– 1951, Poland 2000–2003, Czech Republic 2000–2003, Slovakia 2000–2003, Hungary 1989–1999, 2000–2003. Sources: Nicholas Crafts, “The Great Boom: 1950–73,” in Western Europe: Economic and Social Change since 1945, edited by Max-Stephan Schulze (London: Longman, 1999), 49 (Germany, UK, Netherlands, Belgium, Austria, Switzerland, Sweden, Denmark, Finland, Norway 1929–1938); Barry Eichengreen, The European Economy since 1945 (Princeton: Princeton University Press, 2004), 264 (Western Europe 1960–2004); Brian R. Mitchell, European Historical Statistics, 1750–1975 (London: Macmillan, 1980), 174 (Belgium 1921–1928, Denmark 1920–1928); 175 (Germany 1920–1928, Netherlands 1920–1928); 196 (Norway 1920–1928, Sweden 1925–1928, Switzerland 1926–1928, Great Britain 1920–1928); 177 (Austria 1950–1959, Belgium 1950–1959, Denmark 1950–1959); 178 (Germany 1950–1959, Ireland 1950–1959, Italy 1950–1959, Netherlands 1950–1959, Norway 1950–1959); 179 (Sweden 1950–1959, Switzerland 1950–1951, Great Britain 1950–1959); László Csaba, A fölemelkedő Európa [Europe rising] (Budapest: Akadémiai, 2006), 92 (Hungary 1989–2003).

With regard to inflation, the change was less straightforward. Price growth had been substantially lower at the end of the nineteenth century, while in the 1930s, outright deflation was observable in most Western European countries. By the end of the twentieth century, rates of depreciation had again slowed down in Western Europe. Moreover, the first phase of the Golden Age clearly differed from the end of the 1960s, when inflationary pressures had already begun to grow (Table 2.4).

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Table 2.4 Inflation rate in European countries, 1900–1993 (annual average) 1900–1913

1929–1938

1955–1973

1973–1983

UK

0.9

–0.7

7.5

13.5

5.2

France

0.9

1.4

6.7

11.2

3.7

Netherlands

1.1

–1.8

5.8

6.5

1.8

Belgium

0.9

–0.7

4.5

8.1

3.1

Germany/FRG

1.3

–1.9

4.0

4.9

2.4

Austria

1.8

–0.7

4.6

6.0

3.1

Switzerland

1.8

–1.6

4.2

4.3

3.2

Sweden

1.1

–0.2

6.0

10.2

6.4

Denmark

0.6

0.6

6.9

10.7

3.7

Finland

1.1

–1.3

7.8

10.5

4.6

Norway

1.4

0.4

5.5

9.7

5.1

Italy

1.4

–0.2

7.5

16.7

6.4

Poland

110.5

Czechoslovakia Hungary

1983–1993

8.5 0.9

5.3

15.6

Notes: Different dates: Poland 1983–1992, Czechoslovakia 1983–1992, Hungary 1983–1992. Sources: Angus Maddison, Dynamic Forces in Capitalist Development: A Long-Run Comparative View (Oxford: Oxford University Press, 1994), 300–303 (Western Europe 1929–1938); 304–7 (Western Europe 1955–1973); Statisztikai Évkönyv 1982 [Statistical yearbook 1982] (Budapest: KSH, 1983), 17 (Hungary 1955–1973); Albert Carreras, “The Twentieth Century—From Break with the Past to Prosperity: The Great Stages,” in An Economic History of Europe: From Expansion to Development, edited by Antonio Di Vittorio (Oxford: Oxford University Press, 2006), 349 (Western Europe 1900–1913, 1973–1983, 1983–1993); Mária Barát et al., A magyar gazdaság vargabetűje [The circuitous path of the Hungarian economy] (Budapest: Aula, 1994), 367 (Poland, Czechoslovakia 1983– 1992, Hungary 1973–1992).

The impressive growth rates observed in Western Europe in the period after World War II can be characterized as the joint effect of several mutually reinforcing factors, a survey of which can only be outlined here (Table 2.5). Without a doubt, the most notable element is a significant increase in capital accumulation—particularly in investments in machinery and equipment. As will be later discussed in detail, investment as a  share of GDP

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AUSTERITIES AND ASPIRATIONS

(excluding housing construction) rose significantly everywhere, surpassing 20 percent—in several countries, doubling the ratios of the 1930s.64 This was an important source of growth because it enabled taking advantage of the possibilities opened up by technological change (Table 2.6). Table 2.5 Sources of economic growth in Western European countries, 1913–1992 (average annual contribution to economic growth in percentage points) FRANCE

GERMANY/ FRG

NETHERLANDS

UK

1913–1950 (1 ) GDP

1.15

1.28

2.43

1.29

(2) Augmented factor inputs = (3)+(4)+(5)

0.48

1.00

2.09

0.94

0.67

0.28

0.34

0.35

(8) Catch-up effect

0.00

0.00

0.00

0.00

(9) Foreign trade effect

0.03

–0.13

0.15

0.01

(10) Structural effect

0.04

0.20

n.a.

–0.04

(11) Economies of scale

0.03

0.04

0.07

0.04

(12) Explained growth = (2) + (7)

0.58

1.11

2.31

0.95

(13) Unexplained growth = (1) – (12)

0.57

0.17

0.12

0.35

(1 ) GDP

5.02

5.99

4.74

2.96

(2) Augmented factor inputs = (3)+(4)+(5)

1.96

2.71

1.88

1.66

(3) Labor inputs

0.01

0.32

–0.05

–0.11

(4) Human capital

0.36

0.19

0.43

0.13

(5) Non-residential capital

1.59

2.20

1.50

1.64

(6) Total factor productivity = (1) – (2)

3.06

3.28

2.86

1.30

(3) Labor inputs (4) Human capital (5) Non-residential capital (6) Total factor productivity = (1) – (2) (7) Other explanatory items = (8)+(9)+(10)+(11)

1950–1973

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2 Economic Growth: Catching Up and Falling Behind FRANCE

GERMANY/ FRG

NETHERLANDS

UK

(7) Other explanatory items = (8)+(9)+(10)+(11)

1.34

1.64

1.80

0.59

(8) Catch-up effect

0.37

0.62

0.41

0.08

(9) Foreign trade effect

0.37

0.48

1.32

0.32

(10) Structural effect

0.36

0.36

–0.07

0.10

(11) Economies of scale

0.15

0.18

0.14

0.09

(12) Explained growth = (2) + (7)

3.30

4.35

3.68

2.25

(13) Unexplained growth = (1) – (12)

1.72

1.64

1.06

0.71

(1 ) GDP

2.26

2.30

2.14

1.59

(2) Augmented factor inputs = (3)+(4)+(5)

1.63

0.78

1.34

0.95

–0.32

–0.27

–0.05

–0.40

(4) Human capital

0.69

0.12

0.57

0.42

(5) Non-residential capital

1.26

0.93

0.82

0.93

(6) Total factor productivity = (1) – (2)

0.63

1.52

0.80

0.64

(7) Other explanatory items = (8)+(9)+(10)+(11)

0.65

0.70

0.50

0.31

(8) Catch-up effect

0.31

0.31

0.24

0.20

(9) Foreign trade effect

0.12

0.15

0.32

0.15

(10) Structural effect

0.15

0.17

–0.12

–0.09

(11) Economies of scale

0.07

0.07

0.06

0.05

(12) Explained growth = (2) + (7)

2.28

1.48

1.84

1.26

–0.02

0.82

0.30

0.33

1973–1992

(3) Labor inputs

(13) Unexplained growth = (1) – (12)

Notes: Author’s own computation based on the sources specified below. Labor inputs: working hours; human capital: schooling years; catch-up effect: technological diffusion. Sources: Angus Maddison, Dynamic Forces in Capitalist Development: A Long-Run Comparative View (Oxford: Oxford University Press, 1991), 158–59 (1913–1950); Bart van Ark and Nicholas Crafts, “Catch-up, Convergence and the Sources of Post-War European Growth: Introduction and Overview,” in Quantitative Aspects of Post-War European Economic Growth, eds. Bart van Ark and Nicholas Crafts (Cambridge: Cambridge University Press, 1996), 5 (1950–1973, 1973–1992); Angus Maddison, “Macroeconomic Accounts for European Countries,” 59 (other factors 1950–1973, 1973–1992).

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Table 2.6 Investments ratios in European countries, 1930–1993 (non-residential investments as a percentage of GDP; annual average) 1930–1938

1960–1973

1980–1993

6.0

14.6

13.7

France

12.1

16.3

14.8

Netherlands

14.0

19.8

14.8

16.5

14.2

19.6

16.2

Austria

21.1

18.8

Sweden

16.8

14.0

Denmark

16.5

13.4

Finland

20.0

17.4

Italy

16.6

14.8

United Kingdom

Belgium Germany/FRG

9.8

Sources: OECD, Historical Statistics, 1960–1993 (Paris: OECD, 1994); Nicholas Crafts, “The Great Boom: 1950–73,” in Western Europe: Economic and Social Change since 1945, ed. Max-Stephan Schulze (London: Longman, 1999), 52.

Technology transfers accompanied this intensification of investment activity from the United States, the world leader in technological innovation. As mentioned earlier, the technological gap between the US and Western Europe in the first half of the twentieth century was fairly wide. In 1950, the output per employee in American manufacturing surpassed that of their Western European competitors by larger margins than ever: their output was 2.5 times that of British employees, and 3.1 times that of the French.65 In Western Europe, all this created an opportunity for rapid growth based on technology transfer. The process by which these innovations spread was composed of numerous elements: capital investments by technologically advanced American firms, visits to the US organized by Western European experts, the adoption of new patterns of consumption, etc.66 The significance of this overseas influence inspired some researchers to speak of the Americanization of Western Europe in this period.67 Western European nations were able to take advantage of these opportunities, however, because the transfers of technology and capital were met by a  high level of human capital, and the broader legal and institutional

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frameworks were largely adequate as well.68 To use the concept developed by M. Abramovitz, social capabilities were advanced in the region and could accommodate the transfer of modern technology.69 Other factors of economic growth include structural changes in the economy. The resources—especially labor—that were utilized by less efficient sectors tended to move to sectors capable of producing greater value added. In practice, this meant that agricultural labor was redeployed in manufacturing and the service industry, or labor moved from manufacturing to the service sector.70 The relatively successful regulation of social conflicts was among the important institutional arrangements that delivered the growth miracle in postwar Western Europe. In typifying the “Golden Age,” scholars tend to emphasize the institutionalized cooperation of the major economic players in most Western European countries and the broad compromise between the interests of workers and employers, that is, labor and capital, which included both wage moderation and the expansion of the welfare state. This political stability created a favorable environment for investments, which then led to a kind of positive feedback loop with beneficial consequences for economic growth, real wages, and social conditions.71 It is customary to describe such cooperation as the “social contract,” or, to put it into a more general framework, “social compromise”; it is also possible to understand it as part of “corporatist arrangements.”72 Differences between Western European societies in terms of industrial relations may not be underplayed. Corporatist arrangements functioned most effectively in Austria, the Benelux countries, Switzerland, West Germany, and the Scandinavian countries. The governments of France and Italy intervened directly in wage negotiations, while in the United Kingdom and Ireland, collective bargaining was fully decentralized.73 Cooperation between employers and labor would not have been possible without the commitment of governments to social welfare. The state played a major role in generating market demand, and, over the long term, it also involved itself in supply-side management: on the one hand, the more equal distributions of income brought about by state intervention increased the demand for mass-produced goods; on the other hand, greater social security and the widening of access to education helped develop greater levels of human capital—that is, a higher-quality labor force.74 Economic policy is often characterized as playing a fundamental role in the creation of favorable expectations, especially by analysts in the Keynesian tradition, even though at the beginning of this era, Keynesianism did

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not typify Germany and Italy, for example, as much as it did other countries.75 The significant disparity in the growth performance of West Germany and the United Kingdom cannot be explained simply by noting that the Germans had higher levels of human capital, higher rates of capital accumulation, and less conflictual industrial relations; they also placed greater emphasis on competition policy, a tool of which was their early liberalization of foreign trade.76 In addition to domestic institutions, a large number of institutions and organizations were established to foster international economic cooperation and integration. The US offered financial support through the Marshall Plan, though its direct effect on growth was not significant.77 In indirect ways, though, the Marshall Plan had a more vital positive impact: it strengthened the commitment to a market economy and free trade on the part of recipient governments.78 International economic cooperation was also facilitated by the creation of a series of agreements and supranational organizations including the European Payments Union, the European Coal and Steel Community, the European Free Trade Association, the Organization for European Economic Cooperation, the General Agreement on Trade and Tariffs, and the European Economic Community. In contrast to the wave of protectionism between the two world wars, these agreements increased the size and openness of European markets, increased the level of interaction between national economies, and thus made possible not only the rapid diffusion of technology, but also the exploitation of both comparative advantage and economies of scale.79 The openness of the most developed countries is clearly demonstrated by the reductions in tariffs in the postwar decades (Table 2.7). The firm foundation for national economic policies was further solidified by the return to fixed foreign-exchange rates, which was made possible by the Bretton Woods system. This move helped avoid the sorts of shocks that proved so damaging to international trade during the interwar period. The result was a rapid increase in the volume of exports, which then had a  positive effect on demand. The average annual increase in exports between 1950 and 1973 surpassed the rate of GDP growth in Western Europe, approaching double digits, and in some cases—Austria, Germany, Italy, and the Netherlands—topped 10 percent.80 According to H. Badinger’s calculations, the process of European economic integration in itself increased the income of participating countries significantly, especially in the period between 1950 and 1970, when it increased their growth rates by a percentage point every year, and during the entire second half of the century, it raised incomes by 26 percent.81

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Table 2.7 Tariffs on manufactured goods in European countries, 1902–2000 (ad valorem equivalents, percent) 1913

1925

1950

EARLY 1960s

1976

MID1980s

1990

2000

0

0

5

23.3

18.2

9.1

7

8.4

4.3

(34)

20

21

17.9

13.1

9.1

7

8.4

4.3

(3)

4

6

11.2

13.1

9.1

7

8.4

4.3

Belgium

(13)

9

15

13

11.2

13.1

9.1

7

8.4

4.3

Germany/FRG

(25)

13

20

18.3

26.4

13.1

9.1

7

8.4

4.3

Austria

(35)

18

16

27.7

18

11.7

9

4.3

(7)

9

14

22

Sweden

(23)

20

16

23.5

4.3

Denmark

(18)

14

10

1902

United Kingdom France Netherlands

Switzerland

Finland

29

3.8 8.5

6.0

5

3.4

9.1

7

22.7

Norway

(12)

Italy

(27)

18

22

41.8

32

52

Czechoslovakia

18

27

36.5

(35)

18

27

42.6

8.4

13.3 10.8

Poland

Hungary

1931

25.3

4.3

8.6 13.1

9.1

4.3

7

6.8

2.5

8.4

4.3

12.0

10.5 4.6

11.7

7.1

Notes: Simple unweighted averages except for the 1902 data in brackets, which are weighted by UK exports; tariffs for 1950 and 1976 are for industrial goods; Czechoslovakia 2000: Czech Republic. Source: Ronald Findlay and Kevin H. O’Rourke, Power and Plenty: Trade, War, and the World Economy in the Second Millenium (Princeton: Princeton University Press, 2007), 494.

It was also suggested that the main cause of the rapid growth in Western Europe after World War II was a reversion to pre–World War I trends. As Ferenc Jánossy argued in the mid-1960s, in the period bounded by the world wars, growth lagged behind potential as indicated by long-term trends. He maintained that while economies were catching back up to their trend lines, growth rates were accelerating, but once they reached the trend

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lines, growth rates would again subside.82 Later, however, calculations demonstrated that the GDP per capita of every Western European country reached a higher level by the end of the boom years than pre-1914 trends would have predicted.83

2.2.2 Stagflation and structural change after 1973 In several Western European economies, growth slightly slowed down starting in the late 1950s, and by the end of the 1960s, there were already numerous other signs of a  change in the economic climate, including increasing inflation. Still, 1973, the beginning of the first oil crisis, can be considered the most important turning point in the economic history of postwar Western Europe.84 Three important characteristics of the growth trends stand out in the two decades after 1973: a) growth rates decelerated in Western Europe, which in certain economies and periods fell into outright economic recession, with serious social consequences including unemployment and increasing income inequality; b) the region’s role in the world economy shrank, and not merely because its performance was more modest than that of several leading countries, but primarily as a consequence of the dynamism of the newly industrializing Asian nations; and c) though the economic integration of Western Europe continued to move forward, convergence in the levels of development of its constituent nations proceeded at a slower pace than before. This period has lasted up to the present day in Western Europe, or at least up to the 2008 economic crisis. Even though the “New Economy” began to pick up momentum in the mid-1990s, and it is this point in time that constitutes a dividing line in the economic history of Western Europe after 1973, the following section will cover the period from 1973 to 1990, so as to facilitate the comparison with East Central Europe. The growth rate of per capita GDP in this era was roughly half of what had been seen in the previous decades: between 1973 and 1990, the GDP for the entire region grew at an average annual rate of 1.9 percent.85 Over the course of this roughly two-decade span, the gross domestic product of the countries analyzed for this study increased by an average of only 40.8 percent (Table 2.1). At the same time, there was a  greater degree of improvement in labor productivity, an area in which Western Europe continued to catch up to the US. The main reason for this gap was that the average number of hours worked in the post-golden-age period in Western Europe declined in comparison with the US.

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The line between the countries with the best performance and those with slower rates of growth shifted somewhat. Whereas the United Kingdom and Ireland had previously exhibited the lowest growth rates in Western Europe, they were now improving their relative economic performance—the latter would even earn the moniker Celtic Tiger in the 1980s. Thus, it was Ireland that produced the fastest growth over the course of this period (72.1 percent), though Norway, which had become a significant producer of oil and natural gas, did not lag far behind (64.2 percent). The performance of Italy and Austria was also well above average, with West Germany and Belgium slightly above average. Growth in the other countries fell into the 30 to 40 percent range, with a single exception: Switzerland, which at the beginning of this period had by far the greatest per capita output, but saw its per capita GDP rise only 18 percent and consequently witnessed the erosion of most of its earlier advantage by the turn of the millennium (Table 2.1). Even though annual growth rates dropped in every case except that of Ireland, growth in the period after 1973 was weak only when contrasted with that of the prior decades. Judged over the long term, the economic achievements of this period should not be disparaged: the average increase in per capita GDP in Western Europe over that span matches the data recorded from 1890 to 1913, and it is considerably greater than in the period preceding 1890. Moreover, the improvement in productivity was of a substantially greater magnitude than in the decades prior to World War II. Besides this slackening of growth—and related to it—other macroeconomic problems arose in Western Europe in this period. The immediate cause of these economic troubles was the explosion of oil prices first in 1973 and then again in 1979. In the period from the 1950s to the beginning of the 1970s, supplies of energy and raw materials were flexible, and their prices remained relatively low. Over the course of the two oil crises, however, the world-market price of crude oil jumped to fifteen times its previous value, which was a  genuine shock to the economies of Western Europe. Inflation, which had been advancing since the late 1960s, accelerated. Almost as important was the collapse of the Bretton Woods system of fixed exchange rates in March of 1973—before the beginning of the oil crisis—which led to fluctuations in currency markets.86 Governments’ financial discipline began to weaken, and several began to pursue aggressively expansionary monetary policies, a consequence of which was that significant disparities in rates of depreciation started to develop in West-

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ern Europe in the 1970s. In addition, European exchange rates began to exhibit large swings. Insofar as exchange rates were not always connected to changes in relative prices, they also caused large fluctuations in competitiveness, which led to significant complications in economic policy as well.87 These factors lowered the expectations of consumers and entrepreneurs, reduced demand, dampened the mood of investors, and negatively affected the willingness of unions to compromise.88 Price increases on raw-material imports created significant trade deficits, which could be balanced only by export growth; over the long term, however, this would have an adverse effect on consumption. In and of itself, the growth in the price of oil made significant structural changes necessary: on the one hand, the accompanying cutbacks increased unemployment; on the other hand, dealing with them would require considerable investments. In contrast to the favorable labor-market conditions of the previous decades—in some places, this meant almost full employment—unemployment now became a  mass phenomenon in most of Western Europe. And though the expression “stagflation”—widely used to describe the economic situation at the time—was an exaggeration insofar as there was no stagnation but only a reduction in the rate of growth, its use nevertheless indicates that contemporary observers connected the deceleration in growth to this surge in inflation, and that these two phenomena taken together signified a “shock” (Tables 2.4 and 2.6).89 All this made the task of formulating economic policy considerably more complicated. Simultaneously reducing unemployment, ameliorating inflation, and improving the trade balance was hardly possible, and thus individual countries pursued their various priorities. The second oil crisis affected the economies of Western Europe less seriously, and the 1980–81 recession was followed by a  period of growth that continued up to the end of that decade. In part, the nature of problems had changed: in Western Europe as a whole, increases in productivity were smaller than in the previous decade, the high level of unemployment persisted or even rose, but with the spread of conservative monetary policy, inflation was largely contained. The reduction in Western European growth rates after 1973 can be traced back to not only higher oil prices, but to several factors that operated over a  longer time frame. The process of catching up to the United States technologically was already well advanced in Western Europe, and thus the adoption of innovations could no longer create the sort of spikes

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in labor productivity growth it had before. The same is also valid for capital intensity, which had reached such a degree that the law of diminishing returns began to prevail. Similarly, the possibilities for quick, potent structural changes had been exhausted because by then, the relative economic weight of less efficient sectors—agriculture in particular—was already quite small. And insofar as barriers to international trade had already been largely eliminated, in the industrialized countries, at least, the exploitation of comparative advantage also failed to produce the sorts of results it had in previous decades.90 Competition from the rapidly growing emerging economies of Asia was increasingly noticeable, especially starting in the 1980s, by which time we were already in what might be considered a new era of globalization.91 Furthermore, levels of investment dropped as a result of the fact that workers and their unions abandoned their earlier restraint; there was a sort of wage explosion at the end of the 1960s, which resulted from the rise of union militancy and union power. Investment rates declined and the growth of international trade clearly moderated.92 The corporatist model was less effective in this period, when the source of growth was not so much imitation as innovation.93 Though the factors outlined here definitely contributed to the postgolden age slowdown, other scholars contend that the deceleration is more convincingly interpreted from a  broader perspective. As noted earlier, Ferenc Jánossy came up with the well-known hypothesis that the spectacular growth performance in Western Europe after World War II can best be interpreted as a catch-up to the pre–World War I trend line.94 However, more recent calculations suggest that by the end of the boom, the GDP per capita in all Western European countries was higher than the pre-1914 trends would have suggested.95 Still, the Jánossy hypothesis helps explain why catching up to the long-term trend line reduced the pace of growth.96

2.2.3 Convergence and divergence in Western Europe As we have seen, the national economies of Western Europe followed a fairly wide range of growth paths over the course of the twentieth century, and thus the ranking of these countries often underwent changes. Traditionally, the catching up of less wealthy nations to leaders has been treated as a central theme in economics and economic history, since—as already discussed—it has provided important lessons for growth theory and economic policy as well. Another area of interest is whether the developmental differ-

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ences in Western Europe—or within individual groups of countries—have grown or diminished, that is, whether any economic convergence or divergence has been observed. As also indicated earlier, this is a fundamentally important question for the process of European integration, but it will also provide us with a number of perspectives, some of which help to evaluate similar processes in East Central Europe. Thus, in the following section, the growth trends within Western Europe will be studied. When examining trends in the relative performance of national economies, scholars differentiate what they call beta-convergence and sigma-convergence. Beta-convergence signifies that less developed countries’ economies are growing more rapidly than others. Sigma-convergence, on the other hand, refers to the relative reduction of the dispersion of output levels (as measured by GDP per capita) within a group of countries. Beta-convergence is essentially catching up, while sigma-convergence means homogenization. The primary subject of this study is the latter insofar as it is central to positioning the East Central European economies—and for this purpose, the standardized ratios will be calculated (see Appendix). Nevertheless, betaconvergence and sigma-convergence generally appear together.97 As is demonstrated by per capita GDP data, there were significant differences in the levels of economic development in Western European countries in the last decades of the nineteenth century, disparities which had scarcely changed between 1880 and 1900. The distances between them shrank somewhat in the first decade of the twentieth century, as indicated by the fact that the value of their coefficient of variation fell from 0.28 to 0.24. This tendency lapsed after World War I, and the level of disparity stayed the same throughout the 1920s. Remarkably, in the following decade dominated by the Depression, the Western European economies again converged, and thus we see substantially smaller differences in Western Europe just before World War II than were seen fifty years before: the coefficient of variation in the data for the 13 countries covered here had dropped to 0.22 by 1938. The relevant calculations are explained in greater detail in the Appendix (Appendix: Tables IIa, IIb, IIc).98 World War II affected the countries of Western Europe in varying measures; some states suffered serious economic damage, and some avoided the conflict entirely. Consequently, differences within the region grew significantly, and even though reconstruction efforts ameliorated these disparities, levels of per capita GDP at the beginning of the 1950s still varied widely in the countries of Western Europe. However, convergence acceler-

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ated again during the years of the boom. By 1973, the value of the coefficient of variation for the region’s per capita GDP was only 0.20. In addition to sigma-convergence, beta-convergence emerged as well. A strong inverse relationship was observable between a country’s initial level of output and the speed of its economic growth, that is, the less advanced the country, the higher its growth and vice versa. There were exceptions on both sides of the ledger, however: growth was lower in the United Kingdom and Ireland, and higher in France and Germany than would have been predicted on the basis of this correlation.99 This negative correlation between growth rates and levels of economic output was otherwise not observable in the interwar period, and was only weakly indicated after 1973. As the calculations presented in the Appendix demonstrate, the rate of convergence dropped after 1973, but the process certainly did not stop, and by the end of the twentieth century, the countries of Western Europe displayed differences in per capita economic output that were only fractions of those observed during the interwar period or the era before World War I.100 By 1990, the coefficient of variation had dropped to 0.12. As far as the rankings of individual national economies are concerned, France, Germany, and Norway were in better relative positions than they had been after World War II, while on the other hand, the positions of Switzerland, Sweden, and the United Kingdom declined significantly in the decades after the war (Appendix: Table IIa). Economic convergence and divergence in twentieth century Western Europe have been assessed by a number of other researchers.101 Even though these studies usually applied different methodologies and data and covered other groups of countries, the results are broadly consistent with the calculations presented above. Having examined a considerably smaller cohort of national economies (the founding members of the EEC), the Economic Commission for Europe determined that convergence was already taking place in the decade and a  half or so before World War I.102 This, however, turned into divergence in roughly the decade and a half after the war, a reflection of the fact that the Great Depression affected these countries differently. Altogether, however, even including the development of the 1930s, the period between 1913 and 1938 showed a slight decrease in the levels of disparity in this narrower group of Western European countries. There was significant divergence again in the course of World War II, though this is not surprising considering that the states included in this study experienced the war in a variety of ways.

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After the end of that conflict, reconstruction was especially intense in those places where war damage had been greatest, and thus the large differences observed in 1945 were reduced to pre–World War II levels after roughly half a decade. During the boom, convergence in per capita GDP was noticeably, or even substantially faster in this group than it had been in the previous era. In these five countries, convergence proceeded with uniform speed throughout the 1950s and 1960s, up to 1973. And here, too, the rate at which the gaps between these countries closed slackened significantly after the oil crisis.103 This same study found convergence not only in this cohort of five nations but also in a  larger group consisting of sixteen Western and Southern European countries.104 On the whole, it demonstrates that the founding members of the EEC—which include three of the four largest national economies in Europe—did not constitute a  “convergence club” within Western Europe, that is, it was not the case that this wider group of economies diverged while the differences in this narrower cohort diminished. On the contrary, it can be argued that Western European countries—joined by the Southern European countries—were all part of the “convergence club” among the world’s most advanced industrialized nations after World War II.105 And this was the case despite the fact that growth paths diverged significantly. While West Germany underwent a rapid economic recovery which has often been called the Wirtschaftswunder (“economic miracle”), Great Britain’s disappointing development in the two or three decades after World War II prompted discussions of the “British disease.” Naturally, it would be possible to sort out a subgroup in which there was an even greater degree of convergence by the early 1990s. Nine Western European countries achieved very similar levels of economic development, with per capita GDP levels that diverged only +/– 8 percent from the median, while in 1950 there were only two countries within that margin.106 Bart van Ark and Nicholas Craft’s regression analyses for the whole of Western Europe also clearly indicate economic convergence, especially in the period between 1950 and 1973. In this timeframe, both beta- and sigma-convergence are observable: those economies with smaller per capita incomes developed more rapidly than the others, while the coefficient of variation for the per capita GDP levels of all these countries shrank.107 Nicholas Crafts and Gianni Toniolo’s calculations for sixteen Western and

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Southern European countries produced similar results. Beta-convergence is evident between 1950 and 1973, though it slowed down after the oil crisis: in the earlier period, the annual rate of convergence among these countries was just over 2 percent, while this pace dropped to 1.5 percent over the course of the following three decades or so.108 And just to cite one further analysis, Philip Epstein and his colleagues’ study of seventeen OECD countries reinforced the scholarly consensus that has formed around economic convergences in Western Europe. At the same time, he does de-emphasize these processes somewhat, especially in the decades before World War I, during which he finds hardly any evidence of convergence; during the era bounded by the world wars, he does not infer any distinct tendency.109 The preceding material makes it clear that over the course of the twentieth century, Western European economies converged most rapidly when the growth process was not interrupted by external shocks. Accordingly, jolts to the economy—wars and crises—seem to offer a convincing explanation for the emergence of the divergent trends of the first half of the century. Similarly, among the causes of the post-1950 convergence, we must include the roughly two-and-a-half-decade span of uninterrupted prosperity that spread across the whole of Western Europe, during which, as Moses Abramovitz has noted, a  kind of mutually reinforcing interaction developed among the factors that fostered convergence. In particular, the less developed national economies were able to take advantage of sustained access to foreign markets and capital flows, both of which made it easier for them to borrow technology from more advanced nations—especially the United States.110 Angus Maddison attributes a  similar role to external shocks, and comes to the conclusion that the chief causes of the convergence between the US and Western Europe were the more rapid growth of European capital stock, foreign trade, and the accelerated diffusion of technological innovations. The convergence slowed down after 1973, by which time the power of the facilitating factors was decreasing. This phenomenon was the result of repeated economic shocks, like increases in the price of oil, which harmed growth and negatively influenced long-term growth expectations. In turn, these changes reduced investment activity, the major vehicle of technological progress.111 While the growth rate of per capita income in Western Europe between 1973 and 1995 was hardly higher than in the US, the productivity gap between them continued to narrow.112

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2.3 Trajectories of Growth in East Central Europe In economic history, a  number of major processes—such as institutional change, which will be discussed later—cannot be bound to a specific year, and often not even to a specific decade. If, however, we attempt a periodization of the economic history of East Central Europe, especially in dealing with its growth dynamics and the conditions that framed and defined them, then the twentieth century can be divided into four main intervals: first, the decade and a  half prior to the outbreak of World War I, which might be better considered as the end of an earlier era; second, the period of the world wars, from 1914 to the middle of the century; third, the postwar era, including the first four decades of the second half of the century; and finally, the phase that began with the system change of 1989, the endpoint of which will become clear only in retrospect.113 It is obvious that the middle of the century was a crucial turning point in the economic history of East Central Europe, though the precise dividing line might nonetheless be subject to debate. It is an open question whether the boundary was the end of World War II, the communist seizure of power, or possibly the point at which the countries of East Central Europe returned to prewar levels of production. In addition, this latter development took place at different times in the various economies of the region. The year 1945 might be the best answer considering that the war was an extraordinary shock in both social terms and economic terms as well: the end of the war resulted in a break in the growth process, and its beginning meant a radical transformation of the economic system. At the same time, especially in Poland, the disruption and disorganization of production had already reached enormous proportions years earlier, already during the war. The three countries examined here took differing amounts of time to return to their prewar, 1938 levels of per capita output, and thus “reconstruction” ended in Hungary only in 1951. The other two countries reached this plateau much earlier, in the years immediately following the war, given that the effects of the Great Depression were much more noticeable in Czechoslovakia and Poland by 1938. For this reason, it is practical to take 1948, the year of the communist takeover, as the dividing line, primarily because that was when the command economy replaced earlier systems, which were still based on the principles of market economics. The mechanisms of economic coordination

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changed fundamentally at that point, which had a powerful effect on the growth process everywhere. The date of the next great turning point in the economic history of East Central Europe is less debatable. It is true that the 1989 system change was accompanied by a recession, often called the transformational crisis, during which GDP fell for several years. Growth was seen again in Poland in 1992 and in the other two countries—or more precisely three, including the nowseparated Czech Republic and Slovakia—in 1994. Though this growth was initially slow, it did for a time reach such speeds that the process of catching up to Europe’s most developed regions began again. Thus, looking at the countries of East Central Europe from an international perspective, these two years were the turning point. However, Poland got back to its highest previous level of per capita GDP in 1996, while the other three nations crossed this threshold only in the year 2000. For this reason, these years, too, might serve as dividing lines insofar as we could argue with some justification that it took from 1989/1990 to 1996 (or until the turn of the millennium) to clean up the fallout from the centrally planned economic systems, and thus these years might actually more appropriately belong to the previous era. On the whole, however, the most serious arguments suggest the use of 1990, the year of the system change, which everywhere and all at once brought radical transformation to the system of economic coordination. From then on, market mechanisms assumed most of the roles formerly played by bureaucratic institutions, and thus, for the purposes of this study, 1990 will serve as the major dividing line. Deciding where to draw lines separating the various sub-phases of economic development in the countries of East Central Europe between 1948 and 1990 is also problematic. In his classic work, Włodzimierz Brus differentiates several smaller periods of communist economic history such as peak Stalinism (1950 to 1953), the “thaw” and the “New Course” (1953 to 1956), the era of more balanced development (1957 to 1965), and the period characterized by normalization and conflict (1966 to 1975). On the whole, however, he regards the middle of the 1970s as the most important turning point.114 Iván T. Berend considers 1973 to be the most significant inner dividing line in the period between 1950 and 1989.115 Derek Aldcroft likewise places this marker at the beginning of the 1970s, just as he does for the Western European national economies.116 This study draws two equally stark inner dividing lines: the first is the middle of the 1960s, by which time the growth factors that made exten-

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sive growth possible were largely exhausted, the effects of which ushered in economic reforms in East Central Europe. The second dividing line might be placed at the end of the 1970s, when the effects of the economic crisis became obvious in the region. Nevertheless, this periodization is not uniformly appropriate to the economic history of all three of the countries under investigation here. In the latter half of the 1960s, reformist impulses were strongest in Czechoslovakia and Hungary and much less obvious in Poland, but in Czechoslovakia, the radical reformers’ ideas were never implemented according to plan. At the beginning of the 1980s, the crisis manifested itself openly in Poland, and signs were also clearly visible in Hungary, but it broke out in less dramatic fashion in Czechoslovakia, where it was perhaps more perceptible in the macro-economic data and less in the everyday lives of the populace. The demarcation of these phases is very much dependent on the viewpoint or viewpoints we consider important in economic and historical analysis. Periodization is not merely a constituent part of every comprehensive outline; it is also simultaneously among the most difficult tasks involved in historical study. However, although much the focus on one or another of the factors under analysis—in this case, economic growth—is justified, we cannot ignore other factors, which, in turn, might render our interpretation less coherent. Above all, an awareness of this problem and the presentation of economic growth in a wider context may help us avoid this pitfall.

2.3.1 The postwar recovery Among the chief characteristics of pre-1945 economic growth in East Central Europe was that the world wars and the Great Depression interrupted the growth process, and yet recovery periods featuring strong growth were wedged in between these events. In addition, trends in the countries of East Central Europe tended to correspond to processes observed in other parts of Europe for the most part. The pace of growth slowed somewhat in comparison with the years before World War I, though it was essentially congruent with the dynamics seen in Western Europe. The growth path of the economies of East Central Europe in the years directly following World War II was determined by the damage the war had caused, but also by the transformation to a Soviet-style economy, or at least the initial stages of centralized planning.

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The losses incurred during World War II by the three countries under discussion varied, though. They were the worst by far in Poland, and Hungary’s were also considerable even by European standards, though the direct war damage to Czechoslovakia can be described as relatively moderate. The level of destruction is illustrated by the fact that Poland lost almost fifth of its population in the course of the war, while in Czechoslovakia and Hungary the proportion was around 5 to 8 percent, though that number was then augmented by postwar population transfers. The damage done to capital stocks was also significant: roughly 20 percent of Poland’s housing stock was destroyed, though this proportion was smaller in Hungary, and significantly so in Czechoslovakia. Losses of industrial and agricultural capital stocks were even larger, everywhere surpassing the losses suffered during World War I.117 Almost half of Hungary’s industrial capacity, along with roughly two-thirds of its vehicles and transportation infrastructure, was damaged or destroyed as well as almost half its livestock. This wartime destruction amounted—in 1938 prices—to 22 billion pengős. By way of comparison, this came to 40 percent of its national wealth, 194 percent of its 1938 GDP, or sixteen times its annual state budget expenditures for 1937–38.118 The drop in production, however, was even larger than these physical losses of human capital and assets indicate. The war resulted in serious dislocation of resources into military production, and a general lack of raw materials and fuel hampered the resumption of production. Serious bottlenecks developed in the transportation system, for instance, as a result of the destruction of a large portion of the bridges and rail stations in Poland and Hungary and often because crucially important personnel had been lost in the war. Serious food shortages also limited the labor capacity of the surviving workforce.119 Rough estimates suggest that the drop in total national income between 1938 and 1946—that is, even after the beginning of the reconstruction—was 50 percent in Poland, 40 percent in Hungary, and 25 percent in Czechoslovakia.120 It is difficult to determine the shortterm growth consequences of economic centralization in the aftermath of the war. In any case, it is a fact that the first institutions of centralized economic administration sprang up quickly everywhere in East Central Europe.121 In Hungary, the centralized distribution of raw materials and semi-finished goods was introduced, and mines were nationalized by the end of 1945. At the time, these measures were motivated by the damage the war had done and the demands of reconstruction, but it is also clear

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that they concealed political motives. The communist party and its allies also took over key positions in the administration of the economy at an early stage and used them to implement their own economic ideas.122 In Hungary, war-reparation obligations exacerbated a credit shortage, which hampered imports of the raw materials, parts, and equipment necessary to restart production. Besides objective circumstances, mistakes in the administration of the economy also contributed to a huge public deficit, which in turn led to ever-accelerating inflation, the extraordinary rate of which is still the highest ever recorded in world history. Depreciation was reined in only with the introduction of a new currency, the forint, in the summer of 1946.123 All in all, rebuilding efforts proceeded slower in East Central Europe than in Western Europe, and there were significant internal differences in the region. By 1950, after only half a decade, Czechoslovakia became the first of the three to return to its prewar production levels, while Poland and Hungary needed almost a decade to cross that threshold, doing so only in 1953 and 1954 respectively. If, however, we take into account the proportions of their populations that were lost during the war, then Czechoslovakia and Poland completed this process much more quickly (Appendix: Table I). The positive change in their per capita production rates was partly a  result of the fact that there were significant population transfers out of these countries, while much of the means of production stayed where they were.

2.3.2 Centrally planned economies: Boom, reconstruction, or relative decline? Economic growth in East Central Europe in the second half of the century (1948 to 1990) is characterized by the following key features: a) there was a relatively long period of peace during which the political systems and economic institutions, not external shocks, were the major limiting factors for growth; b) in terms of the dynamics of growth, the differences between East Central Europe and the leading economies in Europe were striking; c) the gap between Western European levels of economic output and those of East Central Europe grew almost continuously in this period; and d) in terms of economic performance, the countries of East Central Europe converged with one another in this period, even though disparities resulting from their different economic institutions began to grow again by the end of the 1960s.124

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The dynamics of growth and the changes in the institutional framework of the East Central European economies were not uniform, but they showed the following broad patterns: 1. The period of forced growth (1948 to 1956). During this phase, forced industrialization took place within an economic framework of centralized planning that resulted in variable GDP growth rates. 2. The phase of more flexible planning (1957 to 1964). Less rigid economic planning, more decentralized administration, and relatively significant growth rates were seen for a time, though growth would slacken by the middle of the 1960s. 3. The era of reforms and slowing growth (1965 to 1978). Despite reforms in economic administration, growth slowed in accordance with the tendencies of the world economy (or declined even more steeply); moreover, in certain years, relatively serious manifestations of economic crisis appeared in the region. 4. The crisis years (1979 to 1989). Over the course of slightly more than a decade, the economic crises phenomena intensified throughout East Central Europe. With the exception of a  year or two, growth rates were low, while in several years, per capita economic output stagnated or showed outright decline, particularly in Poland.

Centralization and forced growth Already during the war, but especially during the years of reconstruction, centralization intensified in these economies. Governments were able to control industrial enterprises by means of state purchasing and centralized credit, agriculture by means of delivery quotas, and consumption by the rationing system. These measures in themselves constituted a  significant departure from market economics, but the adoption of the Soviet social and economic model would also soon become part of the political agenda in East Central Europe. Above all, this meant nationalization, rapid industrialization, and a centrally directed economic system.125 Ownership was utterly transformed. Even before the communists took power, land reforms radically altered the system of agricultural ownership, and then, after they seized power, they set their sights on the nationalization of the land. However, because of peasant opposition, this idea would re-emerge in the form of the agricultural cooperatives, though its implementation proceeded slowly as well, and thus private property continued

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to dominate for some time. Mass collectivization was initiated in the late 1950s, and in Poland, not even then.126 Changes in ownership were substantially more radical in several sectors, especially in finance, manufacturing, and mining. In Poland and Czechoslovakia, there were particularly favorable opportunities for authorities to expropriate properties that had fallen into German hands after they had invaded those countries. The Hungarian government took control of industrial enterprises with more than one hundred employees in 1948, and those with more than ten in 1949, so the nationalization of industry was practically complete in all three countries by that date. State ownership was also becoming an increasingly defining characteristic of commerce. In their relationships with foreign economies, the Soviet-style transformation was signified by state monopolies on foreign trade and increasing isolation from the Western countries, both in exchanges of goods and in capital flows. The 1949 formation of the Council for Mutual Economic Assistance (Comecon), which all three of these countries joined, was another sign of this reorientation.127 The dominance of state ownership made central planning possible, which was not an indicative planning steering enterprises with target indicators, but it relied on commands. In this way, centralized economic administrators fixed not only the most important macro-economic variables, but also dictated which resources would be available to enterprises as well as the quantities and important characteristics of the goods and services to be produced all through the use of plan targets. Though the establishment of the institutions of centrally planned economies took place practically everywhere in the region by 1948, it took several more years to work out the final details of each system. The first half of the 1950s was characterized by forced industrialization conducted within the framework of centralized command economies.128 The resulting growth process showed huge sectoral and other imbalances. The balance between consumption and accumulation shifted heavily toward the latter. Moreover, heavy industry consumed a  particularly large share of resources, not only financial investment, but above all, labor; thus, the growth of this sector was substantially above average. The development of light industry was relegated to the background, while infrastructure and agriculture were allocated even fewer resources (Appendix: Table I).129 Reacting to the tensions forming in the economy, central planners executed several sharp turns in this period. In this respect, Hungary is char-

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acteristic, since the already unrealistic goals of the first five-year plan were increased in 1951: for instance, the target for industrial output was set at an annual growth rate of 25.4 percent, which intensified imbalances to an enormous degree. Realizing this, and with the influence of the new Soviet leadership, they softened production targets by introducing a new government program in 1953,130 which proposed significant reductions in investment and increases in consumption, thereby slackening the pace at which industrial output was growing. The proportion of investment that reached the various sectors was modified to the advantage of agriculture; people were allowed to leave collective farms, the kulak list was eliminated, and compulsory-delivery quotas were relaxed. The prices of numerous manufactured goods were lowered, and small-scale workshops were allowed to be established in larger numbers. The populace experienced all this as the end of the period of austerity and the most serious injustices. For that reason, the subsequent change of direction in economic policy in 1955, which was largely a return to earlier economic goals such as the development of heavy industry, was unexpected.131 Growth in this period was relatively rapid, but it also fluctuated considerably. In Hungary, growth rates were high in two particular years (1950: 5.4 percent, 1951: 8.7 percent), while at other times they were very low (1953: 0.1 percent). In Poland, per capita output exhibited similar fluctuations, though with a lower average amplitude (1951: 2.6 percent, 1952: 0.4 percent, 1953: 3.8 percent, 1954: 3.7 percent). In Czechoslovakia, these swings were also significant (1950: 7.4 percent, 1951: 0.6 percent, 1953: –1.6 percent, 1955: 7.4 percent) (Appendix: Table I). The extremely centralized economic administration and its zigzags in East Central Europe resulted in a great deal of wasted resources, which had a  negative effect on long-term growth. From the beginning, this growth was extensive in character, meaning it was based primarily on large-scale increases in accumulation and investment to be achieved by reining in consumption, and by expanding the size of the workforce. The major sources of the growth of the latter were the laborers streaming out of agriculture and moving into industry and women who had previously worked in the household.132 Economic problems contributed substantially to the outbreak of the 1956 revolutions, in June in Poland and in October in Hungary, which, in turn, negatively impacted output. In this year, Hungary’s domestic production per capita dropped 5.3 percent (Appendix: Table I).133

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Toward less unbalanced growth In the (almost entire) decade following 1957, rates of economic growth continued to be relatively high in East Central Europe, though significant fluctuations in these rates were persistent: Poland fell into a  significant recession in 1962, as did Czechoslovakia in 1963. On the whole, Poland’s per capita GDP grew 27.8 percent between 1957 and 1965, while Czechoslovakia’s grew by 28 percent and Hungary’s by 39.2 percent over the same span. Though these governments maintained the framework of a centrally planned economy, they modified the means by which they steered the economy in numerous ways, which had a beneficial effect on the operation of the system.134 They reduced the number of centrally determined plan targets for specific enterprises, which allowed them a  greater degree of autonomy. Thus, for example, one new method of motivation was allowing enterprises to keep a portion of their profits—the amount by which they had exceeded the plan—to be used to expand their operations and motivate their workers.135 This cautious change was also reflected by shifting plan objectives, which expected lower growth and reduced rates of capital accumulation. The latter objective was only partly achieved; the proportion of GDP dedicated to investment was still 22.8 percent in Czechoslovakia, 24.7 percent in Hungary, and 24.2 percent in Poland in 1960.136 The relatively modest growth was achieved by means of rates of accumulation that were high not only in comparison with that of the interwar period; they were very high even in comparison with those of Western Europe (Table 2.8). In any case, it was a significant structural change that agriculture—especially in Hungary—was receiving a greater share of investment.137 The key explanation for this might be that without adequate investments in agriculture, the region’s collectivization campaigns, which began again in Hungary and Czechoslovakia at end of the 1950s and were essentially complete by 1961, would have been predestined to fail. In the period after 1956, Poland and Hungary were able to access external resources in the form of credit and aid offered by other communist countries, including the Soviet Union and China, which contributed significantly to their growth and the increase in their standards of living. Hungary’s trade deficit was significant throughout the period from 1956 to 1965.138

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Table 2.8 Distribution of gross domestic product in European countries, 1921–1980 (percentage of GDP/NNP) 1921– 1930

1931– 1940

1951– 1960

1961– 1970

1971– 1980

Germany/FRG Private consumption

72.6

67.5

58.6

56.1

56.3

Public consumption

11.2

17.3

13.7

15.4

19.7

Capital accumulation

17.0

14.8

24.7

26.4

20.8

Foreign trade balance

–0.8

0.5

3.0

2.1

3.2

United Kingdom Private consumption

80.8

78.4

67.2

64.1

60.4

Public consumption

8.8

14.1

16.7

17.2

20.6

Capital accumulation

8.6

9.6

15.8

19.1

19.4

Foreign trade balance

1.7

–2.1

0.3

–0.3

–0.4

Private consumption

63.4

61.4

61.9

Public consumption

13.7

13.2

14.5

Capital accumulation

22.7

24.9

22.7

Foreign trade balance

0.2

0.4

0.9

France

Netherlands Private consumption

91.1

92.8

60.6

58.2

59.2

Public consumption

12.2

14.1

14.1

15.5

17.3

Capital accumulation

5.6

24.2

27.1

21.0

Foreign trade balance

–8.9

1.1

–0.8

2.5

Private consumption

69.9

64.4

61.4

Public consumption

12.2

13.3

16.6

Capital accumulation

18.1

22.4

21.9

Foreign trade balance

–0.2

–0.1

0.1

–5.3

Belgium

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1931– 1940

1951– 1960

1961– 1970

1971– 1980

Austria Private consumption

81.8

83.9

62.6

58.9

55.8

Public consumption

10.2

13.2

13.2

13.8

17.4

Capital accumulation

15.4

5.3

24.6

27.7

26.4

Foreign trade balance

–7.4

–2.3

–0.3

–0.4

0.4

Private consumption

66.4

60.2

62.3

Public consumption

9.8

10.3

12.7

Capital accumulation

23.5

30.7

22.7

0.3

–1.2

2.3

Private consumption

78.3

72.0

65.0

Public consumption

12.4

13.3

17.7

Capital accumulation

16.3

21.5

25.9

Foreign trade balance

–0.7

–6.7

–8.6

Switzerland

Foreign trade balance Ireland

Sweden Private consumption

77.6

75.0

62.6

56.8

53.2

Public consumption

8.2

9.4

15.2

18.6

25.9

Capital accumulation

13.2

16.1

22.1

24.7

20.6

Foreign trade balance

0.9

–0.5

0.1

–0.1

0.3

Denmark Private consumption

79.6

77.1

68.8

63.4

56.0

Public consumption

9.4

9.2

12.3

15.9

24.2

Capital accumulation

10.5

11.9

18.6

22.3

22.1

Foreign trade balance

0.4

1.8

0.3

–1.6

–2.3

Private consumption

60.8

56.6

55.0

Public consumption

12.0

14.9

17.5

Capital accumulation

26.1

29.3

27.2

Foreign trade balance

1.2

–0.8

0.3

Finland

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1931– 1940

1951– 1960

1961– 1970

1971– 1980

Norway Private consumption

74.6

72.9

60.6

57.4

52.0

Public consumption

8.9

10.2

11.6

14.4

19.6

Capital accumulation

18.8

14.9

30.1

29.4

32.9

Foreign trade balance

–2.3

2.0

–2.3

–1.2

–4.5

Italy Private consumption

74.4

68.8

67.9

63.6

62.5

Public consumption

11.0

15.6

11.8

13.3

15.4

Capital accumulation

16.8

16.4

21.4

22.2

20.0

–2.2

–0.7

–1.1

0.9

2.1

Foreign trade balance

Western European average Private consumption

79.1

77.1

65.2

61.0

58.5

Public consumption

11.0

12.9

13.0

14.5

18.4

Capital accumulation

13.2

10.4

22.2

25.2

23.4

Foreign trade balance

–2.3

–0.8

–0.3

–0.7

–0.3

Hungary Private consumption Public consumption Capital accumulation Foreign trade balance

88.8

92.2

80.2

71.9

68.4

11.2

7.8

20.3

29.0

35.2

–0.5

–0.8

–3.6

Notes: Western Europe: author’s own calculations; GDP: current prices (Western Europe 1921– 1970, Hungary 1961–1970); Hungary 1925–1940: percent of Net National Product; Hungary 1951–1960: percent of national income; different dates: Hungary 1925–1931; Western Europe 1974–1979; Germany 1925–1930, 1931–1938; United Kingdom 1921–1929, 1930–1939, 1950– 1958; France 1952–1960; Netherlands 1931–1938; Belgium 1953–1960; Austria 1924–1930, 1931–1937; Ireland 1952–1960; Sweden 1950–1959; Denmark 1921–1930, 1931–1939; Norway 1931–1939, 1950–1959; Italy 1950–1959; Denmark 1921–1930: accumulation without inventory; Sweden 1921–1940: accumulation without inventory; foreign trade balance in Western Europe 1974–1979: author’s own computation based on the other data. Sources: Alexander Eckstein, “National Income and Capital Formation in Hungary, 1900–1950,” in Income and Wealth: Series V, ed. Simon Kuznets (London: Bowes and Bowes, 1955), 219 (Hungary 1925–1940); Magyarország nemzeti számlái 1991 [Hungarian national accounts 1991] (Budapest: KSH, 1992); Magyar Statisztikai Évkönyv 1992 [Hungarian statistical yearbook] (Budapest: KSH, 1993); A. S. Deaton, “The Structure of Demand, 1920–1970,” in The Fontana Economic History of Europe, vol. 5, ed. Carlo M. Cipolla (Glasgow: Fontana, 1976), 93–94 (United Kingdom, Austria, Sweden, Denmark, Norway, Italy 1920–1970, Germany 1950–1970); Peter Flora, ed., State, Economy, and Society in Western Europe, 1815–1975, vol. 2 (Frankfurt am Main: Campus, 1987), 415–16

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(Germany 1925–1938); OECD, Historical Statistics, 1960–1984 (Paris: OECD, 1986), 62 (Germany, Netherlands 1973–1980, Netherlands 1960–1980); 65 (Netherlands accumulation 1973–1980); Gerold Ambrosius and William G. Hubbard, A Social and Economic History of Twentieth-Century Europe (Cambridge, MA: Harvard University Press, 1989) (United Kingdom, Austria, Sweden, Denmark, Norway, Italy 1971–1980).

Though economic regulations were often transformed in this period—for example, plan indicators were revised and price reforms implemented— stated economic goals were only partly achieved. In Hungary, productivity improvement in industry contributed only half of the observed growth in production instead of the two-thirds that was called for by the second fiveyear plan (1958 to 1960).139 The recessions in Poland in 1962 and Czechoslovakia in 1963, along with the stagnation in Hungary in 1965, demonstrated that the labor reserves that had made extensive growth possible were dwindling.140

Reforms and decelerating growth In the latter half of the 1960s, economic growth accelerated in the region, though this was merely a transitory phenomenon. Hungary stagnated again in 1968, while Poland fell into recession in 1969. In the 1970s, these countries alternated between periods of stagnation and slow growth; only in a few years did growth rates rise above 4 percent (Appendix: Table I). The Czechoslovakian economy grew somewhat unevenly up to the end of the 1970s.141 The unfavorable productivity indicators of the first half of the 1960s motivated decision makers to look for opportunities to improve productivity even if that meant more comprehensive transformations than they had attempted before.142 Economic reforms were launched in the region at the beginning of the 1960s and implemented up to 1968. The depths of these reforms varied from country to country, but they shared certain characteristics. The idea was to effect a  reconciliation between plan and market or bureaucratic and market coordination: enterprises were permitted more autonomy, while the effectiveness of the central administration and the system of incentives were to be improved.143 Detailed production targets were replaced with broader, more flexible plans that contained fewer compulsory plan indicators, or they were abolished altogether. Indicators expressed in value terms began to play a larger role than output measured in physical terms. Enterprise managers were allowed more independence and were more involved in the process of central planning than before. Managers were also given more tools for motivating their workers. Profit, within certain

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limits, became a measure of the success of an enterprise. In addition, decisions about investments by the planning authorities would now take into account rates of return and the satisfaction of consumer demand. Limits on the private sector were also relaxed somewhat, especially in agriculture. The most radical changes took place in Czechoslovakia though most of these reforms were rescinded after the Warsaw Pact invasion in 1968.144 Hungary launched its “new economic mechanism” that same year, and though it would also be tampered with over the following years, several of its important arrangements survived for longer periods. One of its outcomes was the complete abolition of the system of instruction-based economic plans for state enterprises and cooperatives. Production units were now able to autonomously make numerous decisions fundamentally important for their operations: for instance, they would decide what to produce and to whom they would sell it. They also enjoyed a certain amount of autonomy in terms of employee compensation and investments. At the same time, central administrators protected their fundamental rights to regulate prices, wages, and incomes, which they hoped would help reach full employment and stabilize consumer prices. Likewise, decisions about the most important investments remained within the purview of central administrators, and there was no change in the state monopoly on foreign transactions. The new price and wage systems stirred up several, often mutually contradictory expectations. Wage regulations were supposed to motivate performance, but, at the same time, they had to prevent the development of excessive income differentials. The transformed price mechanisms needed to reflect input costs, but also guarantee the stability of consumer prices. These regulations were supposed to be conveyed to enterprises by means of complicated economic indicators that would change frequently over the next two decades.145 The reforms, however, did not produce the expected results in Hungary. Politically influential interest groups played a large role in the formulation of the regulations and in their almost perpetual reformation. These groups had previously been able to influence production plans in their favor, and now they switched from bargaining over plans to bargaining over regulators. Moreover, in addition to receiving certain privileges, the largest industrial enterprises, unable to comply with the new conditions, were excluded altogether from the normative system of economic administration at the beginning of the 1970s, which further damaged the coherence of the system.146

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Important changes in the international economic environment took place in the early 1970s, often to the detriment of the economies of East Central Europe. Rapid growth in the global market prices of energy supplies and other raw materials resulted in significant declines in their terms of trade (Table 2.9). In the five years after 1973, East Central European countries’ terms of trade declined between 10 and 20 percent, a drop that grew to between 26 and 32 percent by 1985.147 The scale of the losses incurred in this way is demonstrated by the fact that in Hungary in 1974–1975, their value corresponded to half of annual investments.148 Table 2.9 Terms of trade in European countries, 1971–1990 (average annual change in percentage) 1971–1980

1981–1990

0.0

–0.2

France

–0.9

1.5

Netherlands

–0.9

0.4

Belgium

–0.8

0.3

Germany/FRG

–1.5

1.4

Austria

–0.9

0.7

Sweden

–0.8

1.1

Denmark

–1.7

0.9

Finland

–1.1

1.9

Italy

–3.0

1.9

United Kingdom

Poland

0.8

Czechoslovakia Hungary

–0.3 –2.2

–0.6

Sources: Külkereskedelmi Statisztikai Évkönyv, 1973 [Foreign trade statistical yearbook, 1973] (Budapest: KSH, 1974); Mária Barát et al., A magyar gazdaság vargabetűje [The circuitous path of the Hungarian economy] (Budapest: Aula, 1994), 343.

The continual, and by international standards, sizable, damage done by these declining terms of trade showed that the East Central European economies possessed a  limited capacity for innovation and adaptation. At the

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same time, the decision makers responsible for economic policy believed that these difficulties were merely temporary. Accordingly, they did little to modify their earlier goals or the mechanisms by which they managed the economy: in the early 1970s, Polish authorities launched an enormous investment program based on imports of Western technology, with which they had hoped to improve the competitiveness of their manufacturing. However, trapped within a barely altered institutional framework, this program did not produce the desired results; in fact, it merely set Poland on a path toward acute foreign indebtedness.149 In Hungary, the fifth five-year plan, launched in 1976, targeted dynamic growth in both investment and consumption, the result of which was that domestic use did exceed the level of GDP by a considerable margin. The foreign trade deficit grew significantly, which exacerbated the country’s indebtedness: while Hungary’s dollardenominated gross debt was 2.118 billion dollars in 1973, by 1978, it had already increased to 9.468 billion dollars.150 Both countries were approaching default. Thus, in both countries there were attempts to change the direction of economic policy by softening growth targets, drastically limiting imports, and keeping the standard of living in check.151 The lack of adaptive capacity was substantially deeper than this, however, rooted as it was in the contradictions of state ownership and the failures of bureaucratic coordination. For this reason, such efforts failed to produce any meaningful results.

Economic crisis Up to the end of the 1970s, the economies of East Central Europe increasingly lagged behind those of Western and Southern Europe, though at least in absolute terms they were still capable of significant growth. In the decade that followed, however, crisis phenomena intensified throughout East Central Europe. With the exception of a few years, the growth rate of per capita GDP in each of these countries was low or in outright decline. These three countries nevertheless diverged considerably in this period. Czechoslovakia, despite its slow growth—an annual average rate of 1 percent—was able to maintain the institutional system of a centrally planned economy, and, on the whole, experienced the greatest degree of consistency in the region.152 A  primary reason for this was the unwillingness of its political leadership to reform. Czechoslovakia’s low level of foreign indebtedness meant that the pressure to reform was not as intense there as in the other two countries. In the most indebted communist countries, Poland and Hungary, the second oil shock in 1979 further exacerbated the

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problems with their foreign trade balances. Another aggravating factor was the dramatic rise in interest rates on international credit markets at the end of the 1970s and beginning of the 1980s; the resulting debt crisis further hampered their ability to obtain credit. Hungary suffered a serious solvency crisis in 1981, and thus the preservation of balance of payments equilibrium was to become the priority of Hungarian economic policy in the 1980s. This end was served by Hungary’s becoming a  member of the International Monetary Fund (IMF) in 1982.153 As a  result of the efforts of economic policy-makers, especially their restraint in investment and the stimulation of exports, by the middle of the 1980s, the country’s export performance and balance of payments improved. The resultantly low level of growth, however, was difficult for the political leadership to accept, and thus it again decided in favor of economic acceleration and an increase in the standard of living. This uptick in investment and consumption substantially reduced exports and increased imports. The current account deficit increased again, and the gross debt almost doubled over a three-year period, standing at 19.584 billion US dollars by 1987. The economy policy cycle again entered a phase of deceleration; in 1988, investment dropped significantly, as did consumption. Inflation reached levels not seen since 1946: it was 15.5 percent in 1988 and 17 percent in 1989.154 Alongside these developments, there were further market-oriented changes in Hungary: the wage regulations were relaxed and the private sector was allowed more room to operate, especially in commerce and hospitality. From 1981 on, it was possible to establish foreign subsidiaries in Hungary, and the creation of a  two-tiered banking system was initiated in 1985. Bureaucrats in charge of domestic price formation were forced to observe global market tendencies.155 At the end of the 1980s, other important reforms were initiated, such as the partial liberalization of imports (1989), a general sales tax, and the introduction of the individual income tax system.156 Nonetheless, the incoherence of this partially reformed system is demonstrated by the fact that, though there were ever greater opportunities for private initiative, they were mostly still happening within the framework of the sector known as the second economy—activities including both the formal private sector consisting of officially permitted small family businesses and the informal private sector. Uncertainty about the long-term prospects of an operation, partial or complete avoidance of taxation, the use of public property for private profit, poor working conditions, and low levels of efficiency characterized this sector.157

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In the 1980s, Poland experienced the most serious economic crisis in the region, which was accompanied by a political crisis starting in 1981. Per capita GDP declined 4.3 percent from 1979 to 1989. The extent of the problems with Poland’s balance of payments is illustrated by the fact that the annual debt service on the outstanding loans, which amounted to 42 billion US dollars by the end of the decade, was five times the volume of the hard currency export income of the country.158 Problems with provisions became so grave that a ration-coupon system for basic foodstuffs was introduced. The level of economic disorganization is illustrated by the inflation rate, which reached 251 percent in 1989 and 586 percent the following year.159 In summary, the total growth in the period between 1950 and 1989 was 132 percent in Poland, 150.4 percent in Czechoslovakia, and 178.5 percent in Hungary. Within this period, the phases of economic growth differed considerably from those observed in Western Europe. The major inner dividing lines for this period in East Central Europe would seem to be the middle of the 1960s and the end of the 1970s. Nevertheless, even if we, for the purposes of comparison, choose the turning point most important to the western half of the continent—the beginning of the oil crisis—it is clear that the growth dynamics of the periods before and after this dividing line are also of a markedly different nature: the annual average growth rate between 1950 and 1973 was 3.5 percent in Poland, 3.1 percent in Czechoslovakia, and 3.6 percent in Hungary. Between 1973 and 1990, it dropped to 0.8 percent in Hungary, 1.1 in Czechoslovakia, and Poland even recorded negative growth (–0.3 percent) (Appendix: Table I).

2.3.3 Growth in East Central Europe and Western Europe: Fusions and fissures in the long run A survey of the twentieth-century growth paths of East Central Europe and the continent’s western half makes it possible to undertake a  longterm examination of the dynamics of economic convergence and divergence within and between these two regions. With regard to the precursors of these trends, the available economic output data for East Central Europe at the end of the nineteenth century is relatively fragmentary. The existing data does, however, demonstrate that per capita GDP in Hungary and Czechoslovakia—calculated on the basis of their post-war territory— was roughly 60 percent of the Western European average, while in Poland it was slightly less than half that average, numbers that lagged behind every

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Western European country with the exception of Finland. At the beginning of the twentieth century, East Central Europe converged slightly with Western Europe, a process that reached its peak in the years before World War I.160 If we take into account the disparities within Western Europe, however—and to that end, we work with standardized data for East Central European countries, the characteristics of which are discussed in the Appendix—the dynamics are slightly different from those presented previously. The countries of East Central Europe narrowed the gap with Western Europe mostly in the period around 1890, but this process subsequently reversed itself, and by 1913, these countries lagged further behind Western Europe than in 1890 (Appendix: Tables IIa, IIb, IIc). World War I  resulted in a  more serious downturn in East Central Europe than in most Western European countries. An upswing followed relatively quickly, however, especially in Czechoslovakia, which exhibited more rapid economic growth than any other country in Europe between 1920 and 1929 (57.1 percent). And while not of that magnitude, growth was also significant in Poland and Hungary; by 1929, per capita GDP in Poland had reached 48.8 percent of the Western European average, and in Hungary, 57.1 percent. By the start of World War II, Hungary had exceeded even that number: with a 1939 value of 58.3 percent, it had almost restored itself to its pre–World War I level of relative economic development. Poland and Czechoslovakia, however, were considerably slower in recovering from the Depression as evidenced by their deteriorating relative position in a  European context (Table 2.2). The standardized data suggest a  slightly different developmental path in this case as well, insofar as at the beginning of the period between 1920 and 1938 modest convergence took place between East Central and Western Europe. In the 1930s, the gap began to widen again as a result of increasing homogenization in Western Europe. Thus, between the beginning and end of this period, there was no substantial change in this regard (Appendix: Tables IIa, IIb, IIc). Employing a  two-country comparison is a  further research strategy for analyzing trends of convergences and divergences between Western Europe and East Central Europe. Obviously, the selection of the units of comparison is crucial in this case. Among the several possible options, the comparison of Austria and Hungary might be of particular interest because these two countries were, over a long historical period—though in changing forms and degrees—a single economic unit. Additionally, even after the dissolution of their close relationship, the two countries had to deal with

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very similar political and economic legacies in the interwar period. Moreover, the two countries are also similar in geographical position and size. Hungary’s level of economic output slowly approached Austria’s after 1870, reaching 60.3 percent of Austria’s per capita production by 1890, a  ratio that was largely stable until World War I. The differences between the two neighboring countries, however, shrank considerably during the interwar period, so by the beginning of World War II, Hungary’s per capita economic output had risen to 74.6 percent of Austria’s. Over the course of the twentieth century, this was the closest Hungary would ever get to Austria in this respect (Table 2.2). As to the more recent era under discussion here, the middle of the century might be regarded as the turning point in the relationship between East Central and Western European economic performance. In the decades before World War II, periods of convergence and divergence between Western and East Central Europe alternated, and the results of assessment are influenced significantly not only by the choice of the base year, but also by the methods of analysis. The trends during the second half of the twentieth century, however—whichever indicators we analyze, and whichever methods we apply—demonstrate that, in the 1950s and early 1960s, the centrally planned economies of East Central Europe produced growth rates similar to those of their Western European counterparts; subsequently, nevertheless, the relative position of East Central European economies deteriorated, and they lagged behind Western Europe in the final decades of the century.161 In the postwar era, looking at a relatively long time span in which wars did not disturb economic growth in Western or East Central Europe facilitates the study of convergences and divergences. Between 1950 and 1965, the per capita GDP in Czechoslovakia ranged between 64 and 66 percent of the Western European average; in Poland, it was between 42 and 45 percent; and in Hungary, between 45 and 48 percent; that is, in each case, these numbers were substantially lower relative to Western Europe than they had been during the interwar period. In Poland and Hungary, they were even lower than they had been nearly a century before. At the same time, there was no notable divergence from Western Europe in that period. This would change in the middle of the 1960s, at which point the standing of East Central Europe began to erode. This process evolved slowly. By the end of the 1970s, however, the decline gained momentum and then in the late 1980s and early 1990s, the collapse of the communist economic system

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resulted in the largest gap ever measured between the levels of economic output in Western and East Central Europe. Subsequently, starting in the middle of the 1990s, the countries of East Central Europe once again began to catch up slowly (Table 2.2). Standardized data for East Central Europe, which takes into account both per capita GDP relative to Western European levels and the magnitude of dispersion within Western Europe, also reflects the lagging behind of East Central Europe in the decades after World War II. Here, however, because of the significant reduction of variation within Western Europe, the divergence between the two regions accelerated beginning in the mid1970s, and this process continued up to the turn of the millennium, after which the economic recovery of East Central European countries began (Appendix: Tables IIa, IIb, IIc). If we finish the two-country comparison we began for the pre–World War II era—that is, if we look again at the levels of development in Austria and Hungary—then we see that the lagging behind of the latter accelerated starting in the middle of the century. In 1950, Hungary’s per capita GDP amounted to 66.9 percent of the Austrian level, while in 1970 it was 51.6 percent, and by the end of the 1980s it had dropped to 42.2 percent. The divergence between Hungary and Austria expanded the most during the 1950s. Over the course of this decade, the gap between the two countries’ relative levels of economic development widened by more than ten percentage points (Table 2.2). The evolution of the East Central European region’s inner uniformity is a subject related to the study of economic convergences and divergences in Europe. A possible approach to the understanding of this phenomenon is an examination of the average distance from the mean. On this basis, we see that the cohesion of the region diminished over the first decades of the century, then grew again during the Great Depression, a cause of which was Czechoslovakia’s outstanding growth in the 1920s, followed by its slower emergence from the crisis, which gave Hungary an opportunity to catch up. In the years following World War II, regional disparities increased significantly at first, which was again mainly due to Czechoslovakia’s performance, and because the other two countries’ sustained substantially greater damage during the war. In the 1960s, however, differences within the region slowly began to moderate, a trend that continued all the way into the 1980s, at which point the Polish economic crisis again reinforced the regional tendency to diverge. On the whole, the communist period, with

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the exception of its final decade, increased the region’s economic cohesion (Table 2.2). These results differ in several respects from observations offered by scholars of twentieth-century economic growth in East Central Europe. In one respect, the differences appear to be especially significant. The results contradict assessments of the decades following World War II that suggest that the countries of East Central Europe, together or separately, began to catch up to the industrialized Western European countries during this period—or at least for a  substantial part of it. On the contrary, after an initial phase characterized by relative stagnation, the gap between the two regions grew continuously and at an accelerating pace. The modes of economic performance during the communist period are corroborated by the study of growth in the first half of the twentieth century. The levels of development in the countries of this region stood considerably closer to Western European averages in the interwar period—Czechoslovakia’s and Poland’s in 1929 and Hungary’s in 1939—than they ever have since.

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3 Consumption: Structures, Practices, and Policies

For a long time, historians considered the study of consumption to be syn-

onymous with investigations into standards of living. The concept has generally referred to material well-being and, accordingly, has been determined by measuring the quantities of goods and services consumed. However, contemporary historical accounts of consumption are more diverse. In the following chapter, this subject will be dealt with not only by assessing levels of consumption, but also by means of a more comprehensive approach. While consumption levels rose spectacularly in industrialized societies in the twentieth century, this was not merely a quantitative transformation. There were significant shifts in the structure of consumption and in the inequalities concerning consumption. This transformation has also exhibited other important features that can be called qualitative aspects including, above all, changes in consumer choice. Alongside these trends, there has also been a transformation of the role and function of consumption in society, a process that is often described as the rise of the consumer—or mass consumer—society.1 This chapter will focus particular attention on changes in levels, patterns, stratification, and the qualitative aspects of consumption; similar dimensions related to the evolution of leisure will also be analyzed. Furthermore, the social role of consumption as well as the genesis of consumer societies and consumer cultures in Europe in the latter half of the twentieth century will be explored. Differentiating these aspects will make it possible to engage in comparisons, through which the idiosyncrasies of the con-

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sumer cultures of communist-era East Central Europe as well as variations within the region can be illustrated. For this exercise—like the previous analysis of economic growth—asymmetrical comparison will be pursued: first, the most important Western European trends will be presented, and then they will be used as points of reference in the analysis of changes in East Central European consumption. At this point, it will be necessary to clarify the conceptual question in connection with the subject of this investigation. “Consumer culture” and “consumer society” are the most common conceptual frameworks for dealing with the broader context of consumption. Of the two, consumer culture, that is, the individual’s relationship to consumer goods, is favored by most scholars of consumption history in East Central Europe.2 It allows scholars to combine various approaches and fields of research, and makes it possible to analyze societies that have not yet fully developed into consumer societies. Nevertheless, it is precisely for this reason that consumer culture is too holistic to serve as an exclusive, or even the main analytic and explanatory concept because, in one form or another, it appears everywhere and in every historical period. Thus, this approach cannot properly grasp the considerable differences in consumption in postwar East Central Europe and other European regions. This is a  significant drawback since postwar consumption history is unquestionably the field in which East–West comparisons are essential. Contemporaries in Europe, including everyday consumers, have extensively practiced East–West comparisons. Insofar as various consumption patterns have been the subjects of intensive discourse in East Central Europe, these comparisons have themselves become part of the consumer experience in the region. Moreover, they have become important impulses for social change and the transfer of consumption practices. For these reasons, and in the hope of providing more accurate descriptions of the qualitative differences between these various consumer cultures, the concept of consumer society alongside that of consumer culture will be used. Nevertheless, the concept of consumer society also generates dissent among scholars.3 Even the arrival of the consumer society is subject to debate. Some historians consider the eighteenth century to have been the era in which it emerged, while other researchers regard the late nineteenth century or even the beginning of the twentieth century as the period of radical transformation. Still other historians distinguish between the consumer society that developed in the late nineteenth century and the mass-consumption society that took shape in the late twentieth century.4

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The available literature on the concept and character of consumer society is enormous and rapidly growing, and yet it has not produced a definitive analytical framework. Even so, a number of characteristics associated with consumer society appear to be parts of its definition. Among the most important are increasing abundance and reduced working hours, which together made it possible for individuals to spend large portions of their time engaged in consumption rather than at work. And it is not merely goods and services, but aspects of everyday life that were becoming widely commercialized. Furthermore, the main source of identity was no longer work but consumption. While in the nineteenth century, social class and gender were still the most important bases of social differentiation, by the end of the twentieth century, differences in consumption had already become the most essential factors of this sort; alongside income and other social differentiators, consumption and lifestyle became important markers of social status in consumer societies.5 Thus, there is no uniformly accepted chronology for the development of consumer society, and scholars tend to include variable and often overlapping phenomena among its characteristics.

3.1 Changing Consumption Patterns in Western Europe 3.1.1 Level and structure: Elasticity of demand and saturation of markets The massive rise in consumption levels. Historical data directly related to levels of consumption, such as final household consumption expenditures, are largely unavailable, and not merely because the concepts and procedures that make such calculations possible, for instance, the system of national accounts, came into being only in the middle of the twentieth century. In fact, for numerous European countries, there is hardly any comprehensive information available about levels of consumption even for various stretches of the second half of the twentieth century. Without such data, real wages have been the most important gauges of consumption levels in the more distant past. By the later decades of the nineteenth century, several national statistical agencies in Europe were already gathering data related to trends in wages, and later in subsistence expenses. They could also measure shifts in living standards by using changes in living expenses

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to deflate wages. Supplying data for comparisons appeared among the goals of compilations. Between 1908 and 1912, the British Board of Trade completed a collection of data on wages, prices, and working class-household expenditures in several European countries. Between the two world wars, the International Labour Organization (ILO) gathered an even wider array of similar information.6 Later, more rigorous research dealt with income trends as a  way of analyzing material standards of living and levels of consumption.7 The East German scholar Jürgen Kuczynski produced the best known study of this sort, and the American economist Jeffrey Williamson later conducted a long-term survey of wage trends in a number of countries.8 These works, however, involved a relatively narrow group of countries and included only a portion of the wage earners in their populations. The physical indicators of consumption—such as the consumption of meat or sugar—are of similarly limited validity. Thus, the fragmentary and unrepresentative nature of the available databases places limits on the value of sources for wider historical comparisons. Because of the problems with source materials, the indicator of consumption levels most commonly used in research is the per capita unit of economic output, generally gross domestic product, gross national product, or national income.9 Consequently, the use of GDP or, for that matter, GNP, is motivated by practical concerns. GDP is also considered the most accessible comprehensive economic indicator for interpreting the past. In addition, there are other important arguments for the use of GDP: its main components are different types of consumption, including private consumption—the most obvious indicator of consumption levels—and public consumption, which also contributes to individual well-being. Moreover, scholars have come to a much wider consensus about the use of GDP calculations than about other indicators that might serve to measure consumption and well-being. The use of GDP data is arguably an expedient method of studying material standards of living. Twentieth-century changes in Western European GDP-levels have been demonstrated in the previous chapter. However, it is advisable to take into account major sources of distortions as well. Gross domestic product and especially national income can misrepresent the material well-being derived from them. On the one hand, this is because they are not simply measures of consumption, but also include investments and inventory; on the other hand, it is because the balance of

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external economic relations can also affect consumption. In the following section, the above factors influencing consumption will be surveyed. 1. Capital formation can produce varying effects on consumption. The growth of capital accumulation—assuming that the foreign-trade balance does not change—obviously reduces the level of consumption, and vice versa. Investments, however, encourage economic growth, and thus the future increase of consumption, though this relationship does not necessarily exist. More precisely, future consumption does not necessarily increase in direct proportion to investments because the effect of investments depends, for example, on the structure and effectiveness of such activities. Though we lack data for all the countries of Western Europe, twentieth-century changes in their capital formation and consumption ratios are demonstrated clearly by Table 2.8. It shows that accumulation ratios in the interwar period barely surpassed pre–World War I  levels. Nevertheless, there were countries that invested heavily, such as Norway, which embarked on a vigorous military buildup during the 1930s. After World War II, especially in the 1950s and 1960s, capital formation ratios rose significantly: massive investments became the fundamental factors of growth for modern industry and the economy in general. Later, starting in the mid-1970s, this expansion decelerated, and in many cases, turned into contraction, yet, even so, accumulation ratios were generally still double their interwar levels.10 The paths of certain representative countries are as follows. In Austria in the 1920s, the average level of investment as a percentage of GDP was 14.4 percent; by the 1960s, it had risen to almost twice that, 27.6 percent, while the average for the following decade was 29 percent. In Sweden and Italy, we see growth in capital accumulation up to the 1960s, and then its level dropped a few percentage points at the beginning of the 1970s, followed by further smaller declines. Increases in capital accumulation ratios were accompanied by simultaneous declines in consumption shares. Thus, in the long term, consumption—both private and public consumption taken together—grew more slowly than did gross domestic product.11 2. The domestic use of a specific country is also affected by international financial relations, especially capital transfers. Levels of domestic use can be greater or smaller than the level of economic output, and this will show up in the foreign trade balance. Whenever a  national economy’s foreign trade balance is negative, the deficit is to be financed by using domestic

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savings or foreign financial transfers, such as loans. Should exports exceed imports, the situation is reversed, that is, the country consumes less than the output produced. In the decade after World War I, the average foreign trade deficit of the Western European countries under investigation was significant (2.3 percent of the GDP), while in the following decades, their foreign trade balances improved somewhat, to an average annual deficit of around 0.5 percent; thus, on the whole, these deficits had no profound effect on domestic use. Germany and Ireland stand at opposite ends of the spectrum: in the wake of World War II, the former was marked by a fairly significant foreign trade surplus, while the latter was characterized by large and chronic foreign trade deficits from the 1960s onward. Consequently, domestic use in Germany lagged behind output, and Ireland’s levels of consumption and capital accumulation significantly and persistently exceeded its GDP level (Table 2.8). As a  result of the two preceding factors, the differences that developed between the growth dynamics of gross domestic product and consumption in Western Europe over the course of the twentieth century were not dramatic, but neither can they be regarded insignificant. If we take the entire period from 1945 to 1990 as we did in the previous chapter, per capita GDP in Western Europe rose to an average of about three and a  half times its initial level. This fact might be a good starting point for an analysis of the changes in Western European consumption; however, we have to take into account that development was uneven. On the one hand, a significant portion of this growth took place in the roughly two and a half decades after 1950; on the other hand, the pace of this growth varied considerably from country to country. As the joint effect of the factors under discussion, changes in consumption levels deviated somewhat from the dynamics of economic growth. Increases in investment ratios meant that consumption grew at slightly lower rates than economic output over the course of the twentieth century. The foreign trade balance, or rather credit and other financial relationships, had a  less pronounced effect on standards of living. The magnitude of the difference varied from country to country. For example, from the middle of the 1920s to the middle of the 1970s, the value of the per capita GDP in Germany grew 245 percent, while consumption rose 213 percent. In the United Kingdom, the corresponding numbers are 130 percent and 108 percent. Over that same period, per capita GDP in the Western European countries under discussion increased by an aver-

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age of 225 percent, while their consumption levels rose an average of 177 percent.12 We have to keep in mind the disparities between individual countries, but as a rough estimate it can be said that in the period from 1945 to 1990, the pace of consumption growth in Western Europe as a whole was about one-fifth smaller than the pace at which gross domestic product grew. The growth in consumption levels is without a doubt the single most significant development in the consumption history of twentieth-century Western Europe; in and of itself, this growth transformed consumer culture there. Nevertheless, the nature of consumption changed in numerous other ways over the course of the century: the range of available goods and services expanded and was simultaneously transformed, while the number of hours spent at work dropped substantially. It is difficult to quantify the extent to which the factors dealt with below in detail counteracted the growing ratio of investment, but their positive effects on material standards of living may have been even larger than the negative effect of growing capital formation ratios. Structural patterns. In the period under discussion, it was not only the level of consumption that grew dynamically, but its structural patterns underwent a  transformation as well. The most significant change occurred in the relative shares of private and public consumption, the latter signifying consumption by local and central governments. In Western Europe in the 1920s, private consumption still generally accounted for 75 to 80 percent of domestic production. Half a century later, this proportion had dropped considerably, to roughly 55 to 65 percent of the GDP. Meanwhile, the share of public consumption grew significantly; while the Western European average was 12.9 percent in the 1930s and 13 percent in the 1950s, it rose to 14.5 percent of the GDP in the 1970s and jumped to 18.4 percent by the 1980s (Table 2.2).13 This surge was obviously the result of the expansion of government activity, especially social welfare programs. A significant portion of this growth in public consumption resulted from the fact that the price index for government activities grew more rapidly than the average price levels. Between 1950 and 1970, the price index of government expenditures rose at an average annual rate of 5.1 percent in the European countries of the OECD, compared to a rate of 3 percent for private consumption goods.14 This gap was primarily caused by the fact that public services are labor intensive, which results in a relatively high wage element in the cost of government activities, and by the compara-

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tively little space in that sector for improvements in labor productivity. In contrast, the more rapid productivity growth demonstrated by manufacturers of consumer goods had a favorable effect on the relative price levels. Thus, the share of public consumption in the GDP grew, but because of the changing price levels, its real growth in most countries was smaller than indicated by the expanding share of public expenditures.15 It is almost as important to note that a significant portion of the activities covered by the growing public expenditures had already been in existence but was previously conducted by private enterprises. Over the course of the twentieth century, a  number of economic activities were transferred from the private sector into the public sphere. Furthermore, the growth in public consumption was also the result of the increasing demand for such services. Education, healthcare, the construction and maintenance of transportation infrastructure—all kinds of activities of this sort became increasingly important over time and were more efficiently supplied with government involvement. The state’s growing administrative capacity also promoted the collection of a growing amount of tax revenue. Income taxes appeared at the beginning of the twentieth century and quickly became a  steady source of government revenue. The growing importance of public consumption resulted in a declining proportion of private consumption. Still, private consumption continued to dominate throughout the twentieth century, and the transformations in this type of consumption reflect improvements in living standards. Viewed over the long term, the most striking tendency among the structural trends in private consumption was the diminishing proportion of expenditures dedicated to food, clothing, and household appliances.16 Thus, as Europeans were paying less for everyday necessities, they were able to direct more of their income toward the satisfaction of more refined demands. This is best demonstrated by the growth in the income shares dedicated to transportation and communication as well as to education, culture, and leisure; this trend is also made manifest by increased spending on consumer durables. It is true, however, that housing-related expenses claimed an ever-larger proportion of household budgets, and that this, along with the sums spent on transportation, ate up most of the savings achieved in the areas of food and clothing (Table 3.1).17 In the following section, transformations in some of the most important areas of consumption will be examined, which illustrate both structural and quantitative changes in consumption.

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Table 3.1 Structure of private household expenditures in European countries, 1960–1990 (percentage of total household expenditures) 1960

1970

1980

1990

United Kingdom Food

40

26

22

22

Housing, household energy

14

16

17

18

12

10

8

11

14

15

17

2

1

1

2

8

8

9

Household appliances Transport and communication Health Leisure France Food

41

27

22

19

Housing, household energy

11

9

17

20

Household appliances

11

10

9

8

Transport and communication

8

12

14

16

Health

9

10

13

10

Leisure

7

6

6

8

Netherlands Food

37

Housing, household energy

14

18

18

Household appliances

14

9

7

Transport and communication

4

11

13

Health

6

Leisure

5

13 10

11

Belgium Food

34

31

24

19

Housing, household energy

17

15

19

17

Household appliances

13

15

11

11

Transport and communication

8

10

12

13

Health

6

6

9

11

Leisure

8

4

6

7

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1970

1980

1990

Germany Food

36

30

25

16

Housing, household energy

15

18

22

19

Household appliances

10

8

7

6

Transport and communication

8

14

15

17

Health

4

3

3

14

Leisure

7

9

10

10

42

32

24

20

9

11

16

18

Household appliances

11

9

7

8

Transport and communication

10

13

17

17

Austria Food Housing, household energy

Health

4

3

4

5

Leisure

8

6

6

7

Food

32

29

27

Housing, household energy

18

20

20

8

6

5

Switzerland

Household appliances

11

12

12

Health

Transport and communication

7

8

11

Leisure

9

10

10

Food

45

42

36

Housing, household energy

12

11

10

8

7

8

10

13

13

Health

3

3

4

Leisure

8

9

11

Ireland

Household appliances Transport and communication

Sweden Food

37

30

25

21

Housing, household energy

14

22

26

29

Household appliances

10

7

7

6

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Transport and communication

1960

1970

1980

1990

14

14

14

17

Health

4

2

2

3

Leisure

7

9

10

9

Denmark Food

33

30

25

21

Housing, household energy

11

19

28

28

Household appliances

10

9

7

6

Transport and communication

12

15

15

16

Health

2

2

2

Leisure

8

9

10

Finland Food

47

33

28

23

Housing, household energy

11

18

18

20

Household appliances

9

7

7

6

Transport and communication

7

15

17

17

Health

4

3

2

5

Leisure

6

6

8

11

Norway Food

36

33

27

26

Housing, household energy

12

14

16

20

Household appliances

12

9

Transport and communication

10

13

15

13

4

4

4

5

7

8

9

9

Food

50

38

31

20

Housing, household energy

10

13

13

15

7

6

8

10

10

11

13

12

Health

5

4

Leisure

7

Health Leisure

7

Italy

Household appliances Transport and communication

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7

7

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AUSTERITIES AND ASPIRATIONS 1960

1970

1980

1990

Hungary Food

50.7

48.7

44.9

37.1

6.7

6.7

7.5

8.8

14.8

12.0

9.2

6.5

Household appliances

7.3

8.0

8.0

7.0

Transport and communication

4.3

5.6

7.6

10.5

Housing, household energy Clothing

Health

5.2

5.2

5.9

7.8

Leisure

8.3

10.5

12.3

15.5

Notes: Hungary: private consumption including personal consumption and in-kind social benefits; Western Europe: consumption of private households; different dates: 1963, 1971, 1981, 1991; United Kingdom: Great Britain; Food: food, beverages, tobacco; Hungary, leisure: education, culture, sport, and holidays. Sources: Sabine Haustein, “Westeuropäische Annäherungen durch Konsum seit 1945,” in Gesellschaften im Vergleich, eds. Hartmut Kaelble and Jürgen Schriewer (Frankfurt am Main: Peter Lang, 1999), 375–380 (Western Europe); A lakosság jövedelme és fogyasztása, 1960–1979 [Income and consumption of the population, 1960–1979] (Budapest: KSH, 1981), 64–65 (Hungary 1960– 1970); A  lakosság jövedelme és fogyasztása, 1970–1986 (Budapest: KSH, 1987), 72–73 (Hungary 1980); A lakosság fogyasztása, 1970–1990 (Budapest: KSH, 1993), 24–25 (Hungary 1990).

Food. In the first decades of the twentieth century, the proportion of household expenditures dedicated to food, beverages, and luxuries like alcohol and tobacco exceeded 40 percent everywhere in Western Europe except for Norway; in Italy, these items made up two-thirds of the average family budget as late as the first half of the 1920s. The relative proportion of food expenditures began to decrease after World War I, though this process was interrupted by World War II. In the first years of peace after World War II, the percentage of income spent on food, beverages, and tobacco continued to be high and still represented close to 40 percent of an average Western European household’s budget even at the beginning of the 1960s. Thereafter, however, this proportion dropped rapidly in every country of the region and, by the end of the 1980s, slid to an average of around 20 percent, or roughly half its initial level. By the turn of the millennium, the average proportion of expenditures dedicated to comestibles in the fifteen member states of the European Union came to 16.5 percent (Table 3.1).18 The second half of the twentieth century in Western Europe, then, decisively confirms what is known as Engel’s law, according to which the budget share dedicated to food declines with rising income. In this period, the income elasticity of demand for food ranged from 0.5 to 0.7 percent

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in Western Europe, which means that a 1 percent increase in real income was accompanied by a  0.5 to 0.7 percent increase in food expenditures. Nevertheless, price levels and consumption practices can influence the relative importance of food in household budgets. In Ireland, for example, a large proportion of the family budget was traditionally dedicated to alcoholic beverages: the Irish allotted 12 percent of their income to alcohol in 1970, doubling the rate of the next two countries on the list, Finland and the United Kingdom.19 Relative declines in the price of food resulting from increases in agricultural efficiency and cheaper imports contributed significantly to the downward trend of food expenditure. It is also important to note that, over time, the price of food has come to include an ever greater proportion of costs related to non-agricultural activities (transportation, packaging). Without these factors, food and drink would have represented an even smaller share of expenditures by the end of the century. These transformations affected more than just the proportions of expenditures dedicated to foodstuffs. Over the course of the twentieth century, the most important change related to food consumption was the elimination of malnutrition.20 Insufficient caloric intake was still a  relatively common problem around the turn of the last century. Anthropometric research indicates that at the time of World War I, only 36 percent of Great Britain’s enlisted soldiers met the height requirement of 167 centimeters (5 feet 6 inches) and the weight requirement of 59 kilograms (130 pounds), problems that can be attributed above all to nutritional deficiencies. In the interwar period, despite serious unemployment and other economic difficulties, nutrition there improved significantly. In the 1930s, the island nation’s population reached an average daily energy intake of 2,500 kilocalories (10.5 megajoules), a  level at which most vitamin and mineral deficiencies disappear.21 World War II degraded the food supply, but in contrast to its experience of World War I, Great Britain, like Germany and most of the belligerent nations of Western Europe, largely succeeded in maintaining the level of provisions for its populace, at least as far as caloric intake was concerned. This was made possible by the introduction of a rationing system, which the United Kingdom maintained for sugar and certain other foodstuffs for years after the war; this program was abandoned only in 1953–54.22 In Western Europe, the structural transformation of food consumption continued throughout the second half of the century. The dietary importance of grains and potatoes diminished, while the consumption of meat, milk, and

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sugar increased. The selection of foods underwent an extraordinary expansion, and processed foods sustained a similar proliferation. The source of consumption was no longer one’s own production or a marketplace where producers sold their own wares; growing proportions of goods were now prepackaged and sold in large shops where most goods’ places of origin could no longer be determined. Workplace cafeterias, school dining halls, and other restaurants played an increasingly important role in consumers’ eating habits, and more and more often, the lunches and dinners served at home were being assembled from partially prepared or pre-cooked foods bought at a store. As a result of improving standards of living, it was no longer insufficient caloric intake, but rather the excessive consumption of sugar and fat that would threaten public health.23 In Western Europe, news reports about the harmful effects of modern eating habits such as childhood obesity and tooth decay along with coronary diseases in adults, were already appearing as early as the 1950s. This was accompanied by growth in the consumption of luxuries like alcohol and tobacco, and while smoking caused public-health problems everywhere, alcohol abuse was especially vexing in Northern Europe— and in the societies of East Central Europe, which will be discussed below. Alongside mechanization, the chief source of efficiency gains in the agricultural sector was the use of chemicals (fertilizers, herbicides, pesticides, and veterinary medicines). The widespread use of such compounds posed threats not only to the environment in the form of soil pollution, nitrate contamination of groundwater, and the adulteration of surface water, but also to the populations who consumed traces of these chemicals in their food. The food industry’s methods of preserving and marketing their fare, the goal of which was to produce eye-catching foods with long shelf lives, also led, in many cases, to deteriorating product quality. By the end of the century, these potential sources of danger were joined by the genetic manipulation of commercial crops. As a result of these problems, by the end of the century, nutrition had once again returned to the foreground of public consciousness. An array of scientific research has been dedicated to exposing the harmful substances found in food, and food-related controversies and (often mutually contradictory) information about proper eating habits have become constant themes in the popular media. Clothing. The proportion of income spent on apparel was already dropping in the interwar period, and this trend continued after World War II as well, especially in the wealthiest Western European countries. Nevertheless, the

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variation in the shares of expenditures dedicated to clothing was substantially greater than in the proportion dedicated to food. After World War II, there emerged a wide dispersion of shares of the household budget spent on clothing in Western European countries, ranging from 8 percent to 18 percent. This is partly the result of climactic factors: for instance, northern countries such as Norway and Sweden are among those that spend the most. In addition, it is also notable that while Western Europeans spent relatively smaller amounts on clothing over time, this decline was less marked than the drop in food-related expenditures, and it was the result of a reduction in price levels largely attributable the use of synthetic materials. At the beginning of the 1990s, the inhabitants of the EU countries spent an average of about 7 percent of their incomes on clothing.24 Clothing does not merely satisfy physical needs, it also plays a traditionally large role—perhaps more so than any other aspect of consumption—in expressing social status and social difference. This brings us to fashion, which has also played a large role in the history of apparel. In the footsteps of Simmel, changes in fashion are often attributed to the desire of lower social strata to mimic the attire of the upper classes. When, according to this argument, the style of the wealthy becomes widespread, they abandon it and adopt other practices in order to preserve their distinctive position. Fashion is, thus, a sort of imitation that performs the functions of both inclusion and segregation: it connects those individuals that follow a particular fashion and excludes those who do not. Fashion thereby creates similarities and a loose solidarity between the members of a group without their having had any conscious intention of doing so. However, the information expressed by clothing, and the manner in which it is expressed, has gone through a  significant transformation in recent centuries, and these changes continued in the twentieth century. Because strict rules determined which clothes one could wear in eighteenth-century Paris or London, the social status and, above all, the occupations of their inhabitants could be determined by their attire. The stratification of social groups according to their habits of dress—in public spaces, at least—did not allow for individual expression. Bourgeois culture and the spread of individualism, however, created new rules for apparel as well. Clothes no longer emphasized their wearers’ group affiliation so much as their individuality and unique character. In a peculiar way, in the nineteenth century, this came to mean that people—or at least the members of the middle class—began to dress in a fairly uniform manner. On the one

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hand, they were afraid that any deviation from customary habits of dress might cast them in a  bad light. On the other hand, this style of dressing actually operated in the service of bourgeois individualism: it required people who came into contact to investigate one another’s personality insofar as clothing did not reveal much about its wearer. Over the course of the twentieth century, individualism began to influence clothing choices in a much more direct way: although conventions did not disappear, they unquestionably eroded, and individual style became a  more and more important criterion in choosing clothing and accessories.25 This process of transformation was already noticeable in the first decades of the century. The style of clothes one wore on the street, especially their quality, demonstrated the owner’s belonging, if not to a narrow occupational circle, then to a class or social group. By the end of the century, however, it was no longer possible to identify a person’s class status unambiguously on the basis of his or her clothing. Because of rapid changes not just in clothing, but also in other kinds of commodities and symbolic goods, it became more and more difficult to link such items to social status, especially among young people. Demonstrating one’s social standing is not simply a public exhibition of income or status. Apparel can also express a range of other characteristics. In the formulation of the British sociologist, Fred Davis, one’s attire reveals where one places oneself along a range of continua: masculine-feminine, elitism-democracy, erotic-chaste, rich-poor, and young-old, among other similar pairs of opposites.26 Moreover, clothing provides information about how its wearer would like himself or herself to be seen, suggesting that clothing— like consumption in general—is a  source of identity. This is demonstrated by the diffusion of blue jeans. Originally an American article of clothing, they were generally regarded as an indication of relative poverty in Western Europe in the 1960s insofar as the well-off did not wear them at that time. At the same time, they bore a political message, representing egalitarian values and opposition to elitism. The relatively rapid changes in these sorts of associations are demonstrated by the fact that by 1987, Karl Lagerfeld of the fashion house Chanel used denim to design his exorbitantly expensive clothing, which motivated a  reconsideration of blue jeans as a  form of attire.27 Housing. The proportion of expenditures dedicated to housing in Western Europe grew over the course of the twentieth century, a  chief cause of which was that the growth of housing prices exceeded the increase in

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the general price index. Prices were also driven up by a persistent housing shortage throughout Western Europe, or at least in its more economically dynamic regions, during the twentieth century.28 The roots of this shortage stretch all the way back to the industrial revolution, when accelerating urbanization created a level of demand for housing in cities that could not be satisfied.29 In the twentieth century, public programs in most countries aimed at improving housing conditions. Governments offered a  variety of financial benefits to encourage home construction: for example, twothirds of the 1.5 million new dwellings built in the United Kingdom in the 1920s were constructed with government subsidies. The state also stepped directly into the marketplace as an outright customer, as for example the British government did after World War II. In addition, governments used other methods of centralized intervention into poorly functioning housing markets. They maximized rents, created legal frameworks for the formation of homebuilders’ associations, etc.30 State involvement also contributed to the fact that even though home construction had already assumed considerable proportions in many countries in the 1920s, the demand for newhome construction continued to grow in the aftermath of World War II and gained even more momentum in the 1970s and 1980s. The resources dedicated to this work often reached 6 to 7 percent of the GDP, with up to ten dwellings built annually for every thousand inhabitants.31 Over the course of the twentieth century, not only did housing stock expand, but also the quality of these dwellings and their furnishings also improved a  great deal, which in turn drove up spending. Certain aspects of this qualitative improvement such as aesthetics are difficult to address; other characteristics, however, are easier to track, like changes in square footage, indoor plumbing, and electrification (Table 3.2). Dwellings were becoming ever more spacious, and due to changes in family structures, more and more people were living alone. It was not just the improving standard of living that made this possible; families’ growing demands for intimacy and privacy were also important drivers of this development. Spending on housing and energy would grow for these reasons alone, and in addition, starting in the 1970s, energy prices also began to rise at a rate that exceeded the average inflation. In Austria, for example, the number of residents per room dropped from 1.9 to 0.9 between 1939 and 1970. Even though a similar process took place all over Europe at the end of the century, the living space per person in Germany, France, Sweden, and the United Kingdom continued to be substantially greater than in the South-

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ern or East Central European countries such as Poland or Hungary, which lagged behind in this respect. Table 3.2 Housing standards in European countries, 1950–1990 (items available in % of total households) AROUND 1950 PIPED WATER

AROUND 1970

BATH OR SHOWER

PIPED WATER

BATH OR SHOWER

AROUND 1990 PIPED WATER

BATH OR SHOWER

2000–2010 PIPED WATER 2000

BATH OR SHOWER 2010

United Kingdom

81.4

62.4

93.6

85.1

France

58.4

10.4

90.8

48.9

99.7

92.4

Netherlands

89.6

26.8

96.9

81.3

100.0

94.4

100.0

Belgium

48.5

8.4

88.0

48.5

99.6

87.7

96.8

99.2

66.8 90.4

Germany

99.5

99.0 97.8

Austria

34.2

10.6

86.0

52.9

98.7

Sweden

90.0

61.0

77.6

78.3

100.0

Denmark

63.7

39.6

98.7

76.8

97.5

90.0

96.0

Finland

25.2

24.8

72.1

39.1

95.3

87.7

99.1

Norway

65.3

16.2

Italy

35.9

10.7

Poland Czechoslovakia

29.9

Hungary

23.5

Romania Yugoslavia Bulgaria Albania

(28.8)

16.0

99.8

98.5

99.2 100.0

95.8 86.1

64.5

47.3

29.5

75.4

58.6

35.6

31.7

83.6

12.8

9.6

53.6

33.6

24.6

68.7

28.2

8.7

84.2

93.5

55.6

46.9

86.5

74.7

100.0

99.4

95.6

86.9

98.5/ 94.7

95.5/ 92.8

92.2

91.3

54.9

58.9

Notes: Different dates for piped water: United Kingdom 1951; England and Wales 1971; France 1954, 1968, 1999; Netherlands 1956, 1971, 1989; Belgium 1947, 1991; Germany 1968; Austria 1951, 1971, 2001; Sweden 1960, 1993; Denmark 1955, 1965, 1991; Italy 1951, 1971, 2001; Poland 1988, 2002; Czech Republic 2001; Slovakia 2001; Hungary 1960 (instead of 1950);

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2001; Romania 1966, 1992, 2002; Yugoslavia 1954, 1971, 1981; Bulgaria 1985, 2001; Albania 1989, 2001; Czechoslovakia 2000–2010: Czech Republic/Slovakia. Different dates for bath or shower: England 2001; England and Wales 1966; France 1954, 1968, 2006; Germany/FRG 1968; Netherlands 1956, 1971, 1989, 2009; Belgium 1947, 1991, 2009; Austria 1951, 1971, 2009; Sweden 1960, 1993, 2008; Denmark 1955, 1991, 2009; Finland 2009; Italy 1951, 1971, 2008; Poland 2008; Czech Republic 2001; Slovakia 2001; Hungary 1960 (instead of 1950), 2005; Romania 1966, 2008; Yugoslavia 1971; Bulgaria 1965. United Kingdom 1951: Great Britain; United Kingdom 1970: England and Wales; United Kingdom bath or shower 2001: England; Netherlands 1956 and Norway 1950: piped water in the house or ourside it; Denmark 1955: data of the rural parts for piped water; Finland 1950: piped water in the house or outside it; in a separate building with saunas, urban data; Norway 1950: rural flats; Germany 1968, England and Wales 1971, Czechoslovakia 1950, Albania 1989: piped water inside and outside but within 100 meters; Yugoslavia 1954: urban flats. Sources: UN, Annual Bulletin of Housing and Building Statistics for Europe. 1961, (Geneva: Economic Commission for Europe, 1962), 8–11. (Western Europe around 1950, Hungary 1960); United Nations, Annual Bulletin of Housing and Building Statistics for Europe and North America, 1996 (New York and Geneva: Economic Commission for Europe, 1997), 28–29 (Western Europe around 1990); Lakásstatisztikai Évkönyv (Budapest: KSH, 1991), 158 (Hungary 1990); United Nations, Compendium of Housing Statistics, 1971 (New York: UN Department of Economic and Social Affairs, 1974), 183 (piped water Czechoslovakia 1950, Yugoslavia 1954); United Nations, Compendium of Housing Statistics, 1975–1977 (New York: UN Department of International Economic and Social Affairs, 1980), 191 (piped water Austria 1971, Belgium 1970); 192 (piped water France 1970, Denmark 1970, Finland 1970, Czechoslovakia 1970); 193 (piped water Germany 1968, Hungary 1970); 194 (piped water Netherlands 1971, Italy 1970); 195 (piped water Norway 1970, Poland 1970, Romania 1966); 196 (piped water Sweden 1970, United Kingdom 1971); 197 (piped water Yugoslavia 1971); 214 (bath or shower Austria 1971, Bulgaria 1965); 215 (bath or shower Denmark 1970, Finland 1970, Czechoslovakia 1970); 216 (bath or shower France 1968, Germany/FRG 1968, Hungary 1970); 217 (bath or shower Italy 1971); 218 (bath or shower Netherlands 1971, Norway 1970, Poland 1970, Romania 1966); 219 (bath or shower Sweden 1970); 220 (bath or shower England and Wales 1966, Yugoslavia 1971); United Nations, Compendium of Human Settlements Statistics, 1995 (New York: UN Department for Economic and Social Information and Policy Analysis, 1995), 388 (piped water Bulgaria 1985, Albania 1989); 391 (piped water Poland 1988, Romania 1992); 393 (piped water Yugoslavia 1981); United Nations, retrieved March 18, 2015, http://unstats. un.org/unsd/demographic/sconcerns/housing/chs2011.htm, (piped water around 2000); Kees Dol and Marietta Haffner, eds., Housing Statistics in the European Union 2010 (The Hague: Ministry of the Interior and Kingdom Relations, 2010) (bath or shower around 2010).

All across interwar Europe, electrification was one of the priorities of housing policy, and in some countries, electricity had reached essentially everyone by the middle of the century: just after World War II, 98 percent of the housing in West Germany had been electrified; this number was 95 percent in Belgium and 94 percent in Sweden.32 The expansion of indoor plumbing, including drinking water and bathrooms, also illustrates the improving levels of comfort in Western European housing. Plumbing was already being installed at a rapid rate in the first half of the century in Sweden, the Netherlands, and the United Kingdom, and by the middle of the century had reached 80 to 90 percent of their inhabitants. Bathrooms, however, would become an essential element of housing only after World War II, even in these societies (Table 3.2).

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At the beginning of the century, rental residences provided by employers were an important form of housing, especially in those countries where industrial and agricultural wage work was the dominant type of employment. This type of housing continued to exist throughout the century, though its importance began to steeply decline even in the interwar period, and other forms of company-owned rental property also diminished. In contrast, state and communal housing became increasingly important, and the proportion of residents living in their own dwellings grew significantly in most countries after World War II.33 At the turn of the millennium, roughly two-thirds of the households in Western Europe owned their own dwellings. By that point, only in Germany did rental units make up a majority of the housing stock.34 The shift away from rental housing was generally a gradual process, although Great Britain did launch a comprehensive program aimed at privatizing public “council” housing in the 1980s. Wideranging tenants-rights regulations introduced after World War II improved housing security for those who continued to rent as well. Consumer durables. The category of durable goods is very diverse insofar as it includes radios, but also automobiles, which can cost a thousand times as much. In the consumption structure of the countries of Western Europe, the significance of these articles grew continually in the period under discussion, which can be attributed chiefly to the great elasticity of demand for these goods. At the same time, the elements of this category underwent serious changes: the range of commodities included here expanded, but we also see important structural shifts. Furniture, rugs, and heating and cooking appliances have been traditionally important budget items, and households still buy them to this day. At the same time, in the middle of the century, the aforementioned automobiles barely registered in calculations of expenditures, while by the end of the period under discussion, they had become the most important household budget items. Other important durable goods also diffused in the second half of the century, including televisions, washing machines, refrigerators, and personal computers. The distribution of these products often followed a particular pattern: after their appearance, they spread slowly for a  time until they become familiar, at which point relative price reductions resulting from technical developments and mass production allowed them to sweep through societies at an accelerated pace until the market for them reached saturation levels, when their

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diffusion again decelerated. The length of this process ­varies by product. It is largely dependent on the value of the particular consumer good, though it has also been observed that the interval of time between the appearance of a  new product and its saturation of the market keeps getting shorter. For radios and telephones, this process took four or five decades or even more (Tables 3.3 and 3.4); televisions needed only two or three decades; personal computers needed a decade or two to make it into a majority of households; and DVD-players and mobile phones ran this course in an even shorter period. Table 3.3 Number of radio sets in European countries, 1900–1970 (number of sets per 1000 inhabitants) 1930

1940

1950

1960

1970

United Kingdom

81

182

244

289

338

France

33

114

165

241

313

Netherlands

54

129

195

272

247

Belgium

74

135

179

289

352

Germany/FRG

50

172

180

287

324

Austria

76

101

190

279

290

Switzerland

26

131

221

270

295

Ireland

9

51

100

174

200

Sweden

78

196

307

367

366

Denmark

96

178

283

332

307

Norway

30

125

241

285

307

Finland

31

81

180

276

388

5

23

68

162

219

Poland

10

27

59

177

173

Czechoslovakia

21

52

196

226

221

Hungary

35

46

66

222

245

Italy

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AUSTERITIES AND ASPIRATIONS 1930

1940

1950

1960

1970

Romania

7

20

19

109

152

Yugoslavia

3

10

21

84

170

Bulgaria

2

9

31

182

270

7

33

Albania

Notes: Italy 1940: the number of licences; one licence might be valid for more than one set; Different dates: United Kingdom 1931; France 1933, 1968; Netherlands 1968; Belgium 1934; Austria 1933, 1971; Ireland 1971; Sweden 1969; Italy 1931, 1971; Poland 1931, 1937; Czechoslovakia 1938; Hungary 1938; Romania 1934, 1939; Yugoslavia 1939; Bulgaria 1934, 1939. Sources: Göran Therborn, European Modernity and Beyond (London: Sage, 1995), 141 (Western Europe 1938–1960; Albania 1950–1960); author’s own calculations: Brian R. Mitchell, European Historical Statistics, 1750–1975 (London: Macmillan, 1980), 700 (Austria 1933, 1971; Belgium 1934, 1970; Denmark 1930, 1970; Finland 1930, 1970; France 1933, 1968; Czechoslovakia 1930– 1970; Bulgaria 1934–1970); 701 (Germany 1930, 1970; Ireland 1930, 1970; Italy 1931, 1971); 702 (Netherlands 1930, 1968; Norway 1930, 1970; Poland 1931–1970; Romania 1934–1970); 703 (United Kingdom 1931, 1970; Sweden 1930, 1969; Switzerland 1930, 1970; Yugoslavia 1930– 1970); Rudolf Andorka and István Harcsa, Modernization in Hungary in the Long and Short Run Measured by Social Indicators (Budapest: University of Economics, 1988), 265 (Hungary 1930–1970).

Table 3.4 Number of televison sets in European countries, 1950–2000 (number of sets per 1000 inhabitants) 1950

1960

1965

1970

1980

1990

2000

105

211

248

293

404

434

652

France

6

41

131

201

279

402

623

Netherlands

7

69

172

223

296

485

600

Belgium

8

68

163

216

298

447

523

17

89

172

241

271

406

United Kingdom

11

1955

Ireland Germany/FRG

5

83

200

272

337

506

580

Austria

0.2

27

98

192

296

328

516

Switzerland

2

24

104

203

361

406

518

Sweden

1

156

270

312

381

471

531

Denmark

2

119

228

266

362

528

621

13

131

220

292

423

648

Norway

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3 Consumption: Structures, Practices, and Policies 1950

1955

1960

1965

1970

1980

1990

2000

Finland

0.02

21

159

221

322

488

643

Italy

4

43

117

181

234

423

488

Poland

0.01

14

66

129

224

292

387

Czechoslovakia

2

58

149

214

280

410

487/ 417

Hungary

0.05

10

82

171

258

409

448

Romania

0.01

3

26

73

167

194

312

Yugoslavia

1.4

30

88

192

197

273

Bulgaria

0.6

23

121

186

249

408

Notes: Czechoslovakia 2000: Czech Republic/Slovakia; Different dates: France 1969; Netherlands 1969; Ireland 1982; Western Europe 1989, 1999; Central and Eastern Europe 1989, 1999; 1980: the number of licences (the number of TV sets in Western Europe might be significantly higher), except for the United Kingdom and Switzerland (here the number of TV sets). Sources: A. S. Deaton, “The Structure of Demand in Europe, 1920–1970,” in The Fontana Economic History of Europe: The Twentieth Century: Part One, ed. Carlo M. Cipolla (Glasgow: Fontana, 1976), 125 (Western Europe 1950–1970); Eurostat, Basic Statistics of the Community (Luxembourg: Eurostat, 1992), 295 (Western Europe 1989); Rudolf Andorka and István Harcsa, Modernization in Hungary in the Long and Short Run Measured by Social Indicators (Budapest: University of Economics, 1988), 265 (Hungary 1960–1980); Albert Carreras, “The Twentieth Century—From Break with the Past to Prosperity: Growth and Transformation of the Economy,” in An Economic History of Europe: From Expansion to Development, ed. Antonio Di Vittorio (Oxford: Oxford University Press, 2006), 253 (Hungary and Western Europe 1999; Poland 1955–1970, 1999; Czechoslovakia 1955–1970; Czech Republic 1999; Slovakia 1999; Romania 1955–1970, 1999; Yugoslavia 1955–1970; Bulgaria 1955–1970, 1999); David Turnock, The Human Geography of Eastern Europe (London: Routledge, 1989) (Poland, Czechoslovakia, Yugoslavia, Bulgaria 1980); Göran Therborn, European Modernity and Beyond (London: Sage, 1995), 143 (Central and Eastern Europe 1989).

The automobile and the television are often considered the two most important consumer goods to have appeared in the twentieth century, primarily because both of them fundamentally transformed lifestyles and created demand for other products and services. As noted earlier, automobiles and the related expenditures would become one of the most important elements in the consumption structure of late twentieth century industrial societies, while the television and the products that have appeared in its wake have fundamentally influenced flows of information and leisure habits. The spread of these two products is reliably documented from the time of their introduction to the market (Tables 3.5 and 3.6). Though the automobile had appeared in Europe before World War I, even in France and Great Britain—which were early adopters of this new technology—

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there were only three motorized vehicles for every thousand inhabitants in 1914. In the 1920s, vehicle stocks quadrupled or quintupled, and the Great Depression merely slowed their proliferation. The mass adoption of the car happened after World War II in Western Europe, when real incomes rose significantly and the relative prices of automobiles dropped as a result of mass production. By 1970, many countries were already averaging one car per household, and by 1980, every Western European country, with the exception of Ireland, did. From then on, the expansion of car ownership decelerated but did not stop completely. Table 3.5 Number of telephone sets in European countries, 1910–2010 (number of sets per 1000 inhabitants) 1910 1920 1930

United Kingdom

1940

1950

1960

1970

1980

1990

2000

2010

16

22

41

67

102

149

251

477

434

533

550

France

7

12

26

39

56

91

172

459

482

580

550

Netherlands

4

22

36

52

69

132

260

581

462

623

230

Belgium

9

8

32

51

76

119

211

369

546

518

430

15

25

52

104

187

297

421

300

Ireland Germany/ FRG

20

29

50

53

43

104

225

464

671

611

590

6

19

22

42

56

93

193

401

589

480

320

Switzerland

17

36

68

110

184

298

482

727

905

570

600

Sweden

24

65

83

134

215

339

557

796

681

653

560

4

80

98

117

154

224

342

641

972

718

370

Norway

20

49

68

83

135

195

294

460

502

737

400

Finland

13

7

34

50

78

137

257

496

530

551

270

Italy

3

3

10

15

24

68

174

337

555

471

350

Poland

1

3

6

8

9

30

57

95

138

280

220

6

11

15

31

74

138

206

275

380/ 310

200/ 230

Austria

Denmark

Czechoslovakia

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Hungary

4

1940

1950

1960

1970

1980

1990

2000

2010

13

48

80

118

178

370

310

12

32

56

180

250

350

290

6

12

19

Romania

2

3

5

Yugoslavia

1

3

4

7

13

36

95

1

3

5

8

26

56

141

Bulgaria

1

Notes: Czechoslovakia 2000–2010: Czech Republic/Slovakia. United Kingdom, France, Netherlands, Sweden, Finland, Norway 1990: main lines; 2000–2009: number of main lines; different dates: Western Europe and Hungary 1914, 1929, 1969, 1949; Poland, Czechoslovakia, Bulgaria 1921, 1929, 1939, 1949; Romania, Yugoslavia 1929, 1939, 1949; Western Europe, Central and Eastern Europe 2009. Sources: Wolfram Fischer, ed., Handbuch der europäischen Wirtschafts- und Sozialgeschichte, Bd. 6 (Stuttgart: Klett–Cotta, 1987), 150 (1920–1970); United Nations, Statistical Yearbook 1990/1991 (New York: United Nations, 1993), 721 (1980–1990); Hartmut Kaelble, “Europäische Besonderheiten des Massenkonsums,” in Europäische Konsumgeschicht, eds. Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka (Frankfurt am Main: Campus, 1996), 199 (Western Europe and Poland, Czechoslovakia, Hungary, Bulgaria 1914); Brian R. Mitchell, International Historical Statistics: Europe, 1750–1993 (Basingstoke: Macmillan, 1998), 769 (Czechoslovakia 1990); 771 (Poland 1990); Eurostat, retrieved March 18, 2015, http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=isoc_tc_ac2&lang=en (Austria, Switzerland 2000; Western Europe 2009; Central and Eastern Europe 2000, 2009); Eurostat, Statistics in focus, Theme 4, 12/2003 (Luxembourg: Eurostat, 2003), 4 (Western Europe 2000); David Turnock, The Human Geography of Eastern Europe (London: Routledge, 1989) (Romania 1980).

Table 3.6 Number of passenger cars, 1910–2010 (number of cars per 1000 inhabitants) 1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

United Kingdom

3

7

21

43

42

105

209

268

353

418

451

France

3

5

23

46

37

121

252

345

416

564

480

Netherlands

3

8

11

11

45

192

292

368

427

464

Belgium

4

11

18

26

82

213

312

393

497

480

10

18

24

62

134

203

235

305

428

Ireland Germany/ FRG

1

1

7

20

7

81

227

369

436

529

517

Austria

0.4

1

3

5

6

57

162

285

394

536

528

Switzerland

1

2

14

19

27

95

221

340

457

527

518

4

16

29

28

160

285

346

419

478

460

Sweden

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1920

1930

1940

1950

1960

Denmark

1

5

20

31

26

Norway

0.4

1

7

19

1

7

1

4

Finland Italy

1

1970

1980

1990

2000

2010

89

218

278

320

411

468

18

63

193

292

354

505

469

8

6

41

152

246

380

462

535

7

6

40

192

309

456

591

619

3

9

50

190

317

472

475

Spain Poland

0.2

1

1

2

3

45

60

160

286

447

Czechoslovakia

0.4

1

6

10

12

49

130

212

363/ 260

429/ 310

Hungary

0.1

1

2

1

3

23

87

187

272

299

Romania

0.3

2

1

1

2

63

154

214

Yugoslavia/ Serbia

0.2

1

1

2

28

190

215

266

353

Bulgaria

0.4

102 158

Notes: Czechoslovakia 2000–2010: Czech Republic/Slovakia. Different dates: Western Europe and Hungary 1914, 1922, 1929, 1939, 1949, 1979, 1999; France 2008; Ireland 2011; Denmark 2008, around 1990; Spain, Poland, Czechoslovakia 1919, 1929, 1939, 1949, 1959, 1969, 1979, around 1990; Romania 1922, 1938, 1991, 1999; Bulgaria 1991, 1999; Yugoslavia 1929, 1939, 1949, 1959, 1969, 1979; Serbia 1999; Poland, Czechoslovakia 1999; other notes: Germany 2000–2010: unified Germany. Sources: Wolfram Fischer, ed., Handbuch der europäischen Wirtschafts- und Sozialgeschichte, Bd. 6 (Stuttgart: Klett–Cotta, 1987), 143 (Western Europe and Southern Europe, Hungary 1914, 1929, 1939, 1949; Western Europe 1979; Poland, Czechoslovakia 1919–1979; Austria, Switzerland, Norway, Finland 1919); Wolfram Fischer, ed., Lebensstandard und Wirtschaftssysteme (Frankfurt am Main: Fritz Knapp Verlag, 1995), 224 (around 1990); A. S. Deaton, “The Structure of Demand in Europe, 1920–1970,” in The Fontana Economic History of Europe: The Twentieth Century; Part One, ed. Carlo M. Cipolla (Glasgow: Collins/Fontana Books, 1976), 124 (Western Europe 1922, 1960, 1970); Rudolf Andorka and István Harcsa, Modernization in Hungary in the Long and Short Run Measured by Social Indicators (Budapest: University of Economics, 1988) (Hungary 1960–1980); Albert Carreras, “The Twentieth Century—From Break with the Past to Prosperity: Growth and Transformation of the Economy,” in An Economic History of Europe: From Expansion to Development, ed. Antonio Di Vittorio (Oxford: Oxford University Press, 2006), 251 (Western Europe 1999; Central and Eastern Europe 1999); Eurostat, retrieved October 10, 2017, http://appsso.eurostat.ec.europa.eu/nui/show. do?dataset=road_eqs_carhab&lang=en (Romania, Bulgaria 1991; Europe 2010).

The diffusion of the television and, before that, the radio followed a peculiar path insofar as the operation of the apparatus was strongly dependent on the development of broadcasting. In Western Europe, the first television broadcasts were transmitted before World War II in the United Kingdom and Germany, but the war interrupted the spread of television program-

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ming. Broadcasting started up again in 1946 in the United Kingdom, and by 1950, there was a television for every hundred Britons; by 1955, there was one for every ten.35 Regular broadcasts began in 1952 in the other Western European countries, and then television ownership exploded in the latter half of the 1950s. In Sweden, for example, there was only one television set for every 1000 residents in 1955; in 1960, there were already 156 per 1000. A few years later, the other countries followed the cutting-edge British and Scandinavians, and by the middle of the 1970s, almost every Western European household had a television (Tables 3.2 and 3.6). The spread of the television, as observed earlier, was an important development because it facilitated the introduction of other products and entertainment formats including video and DVD players.

3.1.2 Social differences: Layers and distinctions Income inequalities. Income is usually regarded as the most fundamental determinant of the level and patterns of consumption, lifestyle, and even life expectancy. For this reason, the most important and, at the same time, most obvious cause of stratification in consumption is the way in which income is distributed in a society. The recent trends in income distribution are often characterized with the help of the so-called Kuznets curve, which gets its name from the American economist who studied the phenomenon and determined its patterns.36 This inverted U-shaped curve indicates that over the course of the last two centuries or so, income differentials in the industrializing societies of Europe and America initially grew and then began to decline.37 During the Industrial Revolution, earners with the highest incomes claimed an ever-growing proportion of total income, while the shares of the lower strata decreased. In the twentieth century, however, the Kuznets curve began to dip, that is, income differentials in these societies diminished: the variation in personal incomes declined, the ratio of wages to capital income increased, and the income disparities between social classes began to fade.38 Though the existence of the Kuznets curve—and thus the notion that economic development first causes inequality to grow, and then diminish—has been confirmed in a range of industrial societies, these general trends have not manifested themselves everywhere and in every era in Europe, and definitely not with uniform intensity.39 It is also important to mention here

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that starting in the 1970s and 1980s, these leveling tendencies slowed to a  halt in most Western European countries, or even reversed themselves completely. With regard to trends in the distribution of personal income, the first decades of the twentieth century saw the richest 10 percent of the population of Western Europe take home an average of at least 35 to 40 percent of total income. The wealthy in Norway and Austria were below average in this respect, taking roughly 30 percent of the total; in Germany, Denmark, and Sweden, the distribution was in line with this average, while Finland and Great Britain were characterized by even greater income concentration. Up to the middle of the century, almost every country moved rapidly toward greater equality, especially in Scandinavia, where the proportion of income going to the richest decile dropped from 34 to 36 percent in 1935 to 27 to 29 percent in 1950.40 The relative proportion of income going to Great Britain’s upper strata declined almost as significantly in that same period. In relative terms, the wealthiest continued to lose ground after the middle of the century as well, though at a slower rate. At the beginning of the 1970s, the uppermost decile in West Germany, France, Italy, and the Netherlands continued to claim roughly 30 percent of all income. This concentration was less pronounced in Great Britain, and lowest in Austria and in some of the countries of Scandinavia.41 Many of these changes affected the top 5 percent of earners, while the lower half of the uppermost decile (the penultimate 5 percent) suffered only a small decline in their relative proportion of total income.42 According to the substantially less reliable data available on the social strata with the lowest income, their situation generally deteriorated over the course of the first third of the century: that is, the middle classes may be regarded as the chief beneficiaries of the changes during this period. By the end of the 1930s in Denmark and Norway, for instance, the proportion of income going to the upper middle classes—those between the richest 10 percent and the poorest 60 percent—was between 26 and 32 percent in 1910, an increase of 8 points. During World War II and the decade that followed it, the middle classes of Western Europe continued to gain ground, while the relative position of the more impoverished strata either stagnated or improved only slightly. Throughout a  two- or three-decade period starting in the late 1950s, the income situation of Western Europe’s poorest inhabitants generally improved, although the disparities between individual societies were larger in that period: in Great Britain, Norway,

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and Denmark, the position of the lower-income groups stagnated or deteriorated, while it improved in the other countries of Western Europe.43 It must be emphasized, however, that in the period of rapid economic growth after World War II, even stagnating relative incomes brought considerable improvements in standards of living. After the 1983 launch of the Luxembourg Income Study, which tracked a large number of countries, the amount of data on income distribution in European societies increased significantly, as did the comparability of this data. The methodologies and conclusions of these studies often differed in their details, but their results were largely in agreement that the most egalitarian income distributions in Western Europe in the 1980s were in Scandinavia and particularly in Finland. These outcomes were due, above all, to extensive welfare programs, that is, a large measure of redistribution.44 Relatively small income differentials also characterized Belgium, followed by the Netherlands and West Germany. Among the other countries examined by A. B. Atkinson, Portugal, the United Kingdom, France, and Italy made up the middle of the pack, while the most unequal societies were Spain, Switzerland, and Ireland.45 As noted earlier, the final decades of the twentieth century saw this reduction in income differentials slow down, stop, or even reverse itself in Western Europe and in other major industrialized countries. This phenomenon has been called “The Great U-Turn,” a  reference to the fact that the developmental tendency Kuznets had described seemed to have inverted itself.46 This turn was manifested in the income distribution trends of both the countries with the highest incomes and those with the lowest, as demonstrated by changes in their Gini coefficients, the comprehensive indicators of income inequality.47 Nevertheless, these increases in inequality were generally smaller in Western Europe and were largely limited to about half that region’s countries. In numerous countries such as France, Finland, and Italy, income equalization continued through the 1980s and 1990s.48 The most marked changes in Europe took place in the United Kingdom, where the relative position of the poorest deteriorated significantly while the situation of the best-remunerated earners continued to improve considerably. Between 1977 and 1990, Britain’s Gini coefficient grew by 10 percentage points, at first because of growing unemployment, and then as a  consequence of reductions in state-directed redistribution programs. The situation there improved marginally after 1990, demonstrating that this process is not irreversible.49

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Insofar as historians tend not to work with abstract statistical categories but rather to analyze the situations of particular social classes and groups, there has traditionally been substantial professional interest in these sorts of income differentials. At the same time, this approach makes international comparisons difficult, in that the available studies tend to analyze social categories made up of divergent groups of individuals. The most extensive and chronologically the deepest study involves the relative wage levels of British occupational groups. According to the information therein, the income disparities between these various occupational groups shrank significantly over the course of the twentieth century. In 1913–14, higher professionals earned 3.5 times the male average, but by 1978, only 1.7 times that average. Over that same period, higher professionals went from earning 5.2 times as much as unskilled laborers to earning only 2.4 times as much. In that time span, it was not just the income gap between white-collar, salaried employees and blue-collar workers that diminished; the differences within these two employment categories also narrowed. Before World War I, skilled laborers earned 68 percent more than unskilled laborers, while craftsmen earned 98 percent more; by the middle of the 1950s, these differentials had shrunk to 43 percent and 80 percent, and by the end of the 1970s, they had dwindled to 28 percent and 38 percent respectively. Among salaried employees, the differences were initially much larger, and the leveling process proceeded at a slower pace.50 Similar processes played out in the other European democracies from the end of World War II all the way through the 1980s. At that point, this leveling out of differences between occupational groups largely ceased, that is, trends in this area were substantially similar to those that affected personal income. Income differentials have had demonstrable effects on the evolution of consumption practices as well. To cite a few examples characteristic of a  wider range of societies, the upper, white-collar classes spent substantially more on household services, association fees, travel, “high-brow” culture, and dining out. Workers used much more of their income on food and tobacco. Skilled workers spent slightly more on culture than did unskilled laborers. Income inequalities are important factors in the formation of social class, though they are not its only determinants. Among many other factors—education, employment—consumption practices also contribute to the process of social stratification because people tend to emphasize their

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position in a society and signal those positions to others by adopting distinctive lifestyles. This signaling includes not only the cultural refinement they exhibit, but also the clothes they wear and the homes and cars they own. That is, consumption ranks high among the elements that reflect the social standing of people. In fact, as Bourdieu argued, consumption is a tool for class reproduction. The upper classes exclude the lower classes from the labor market and the marriage market by asserting the superiority of their own tastes. Symbolic goods are used as means in strategies of distinction.51 It has been argued that lifestyles and consumer preferences have become increasingly diverse in the age of mass consumption—the late twentieth century—in Western Europe. Thus, the association between social class and consumption has weakened: people tend to choose lifestyles that are no longer linked to traditional social positions. This process, however—though it is undoubtedly at work—does not mean that there has ceased to be a link between class position and consumption practices or between class and opportunity in post-industrial societies. Despite the advance of individualization in Western European societies, the effects of occupation and class have continued to be major determinants of consumption patterns and lifestyles in general.52 Gender. Throughout the latter half of the twentieth century, gender was a  more important determinant of income in Western Europe than class or occupational group. This means, for example, that while non-manual employees generally earned more than manual workers, the average incomes of female non-manual workers—except in a few countries—were lower than those of men who performed manual work. The disparity cannot be explained by differences in qualifications, either: on the one hand, differences in the qualification levels of male and female employees had disappeared in many countries (for example, West Germany) by the 1980s; on the other hand, even when women had identical qualifications, they faced a wage disadvantage in comparison to men. In this respect, there were no significant differences between the regions of Europe. The exceptions at the end of the century were the Scandinavian countries and the United Kingdom, where class affiliation—that is, membership in either the manual or non-manual occupational group—slightly outweighed the importance of gender among the factors that determine income.53 These income disparities affected consumption patterns as well. Women typically shopped for the whole family, with a  focus on cheaper

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everyday necessities like food and clothing, for example. Men, on the other hand, tended to take responsibility for purchases of more expensive items like cars and houses. In the case of personal consumption expenses, women spent more on clothing and health-related or hygienic products, while men bought more alcohol and tobacco, and spent more on travel and sports.54 Gender differentials were also on display in leisure activities. For example, one study showed that men spent more on entertainment, sports, dining out, and movies than did women.55 At the same time, women took more interest in “high-brow” culture like museums and the theater.56 One possible cause of this latter phenomenon is the fact that, by the end of the century, women in several Western European countries had attained higher average levels of education than men, especially in the younger generations. There were also observable gender differentials in travel: men took more business trips, while women tended to travel for leisure.57 Generation gaps. Individuals have different lifestyles and their consumption patterns generally change as they pass through specific stages of life. Households with children will obviously consume specific types of goods and services and seek other types of travel destinations than single adults or the elderly might. In addition, the consumption habits of certain age cohorts can change markedly, as happened in the decades after World War II. There was an especially vigorous rupture between the lifestyle of the younger generation of the 1960s and the generations that preceded it both in Western Europe and in the industrialized world in general. The evolution of post–World War II consumption patterns has been discussed earlier, so it is just necessary to mention here that during that period, the disintegration of the traditional working class, a  result of unprecedentedly robust economic growth and the structural changes that followed from it, made it possible for other fissures such as gender divides and generation gaps to appear in Western European societies. The increasingly sophisticated consumer goods produced for young people, the growing cultural industry, which effectively combined various media—cinema, television, records, radio, newspapers, magazines—with the growing purchasing power and autonomy of the youth all offered rising generation opportunities to express their values and identities through consumption.58 Accordingly, products that offered mobility or expressed a particular identity—like cars, motorcycles, clothing, and music—became crucial elements in the consumption patterns of the new generation. This is also

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an indication that the changing values of this younger age cohort cannot be described simply as the conquest of consumerism, but as part of a more complex process. In the decades after World War II, most Western European countries were witness to the spread of post-materialist (as opposed to materialist) values, a  development investigated most comprehensively by Ronald Inglehart, who referred to this process as “the silent revolution.”59 According to Inglehart, social changes after World War II—especially increasing economic prosperity, growing opportunities for education, widening access to information, and international stability—led to the widespread transformation of individuals’ value orientations in industrial societies. All these changes led many citizens to take their material well-being for granted and put greater emphasis on immaterial or post-materialist values. For this reason, growing proportions of citizens of industrialized nations began to guide themselves according to new value orientations, which generally emphasized individual freedom, self-realization, a renewed approach to public affairs, and quality of life. Religion was also a  major area of change. Arguably, increased secularization is itself highly related to individualization.60 Inglehart explains these value changes by relying on two hypotheses. The first says that value priorities are determined by scarcity. Human needs are arranged in a hierarchy, and the individual is always striving to satisfy the material needs linked to survival (food, shelter, etc.). Once these goals are achieved, the satisfaction of other, higher-order needs—such as social and cultural aspirations—will enter the foreground. For a  relatively long period after World War II, Western Europe was characterized by economic prosperity and material security, which made it possible for these already satisfied demands of material nature (materialist value orientations) to give way to non-material demands (or post-materialist values). By itself, this would not be a sufficient explanation of the long-term value changes that made it necessary for Inglehart to introduce the socialization hypothesis. According to this notion, individuals’ most important value orientations are formed when they are young—in the first two decades of their lives— and undergo relatively little change over the course of adulthood. These values, deeply rooted in childhood, go on to serve as the standards by which to judge social and political phenomena. Thus, those generations who were born and/or spent their childhoods during World War II and the period of deprivation and insecurity that immediately followed it would regard mate-

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rial values as being substantially more important than would those people born in later periods of relative material security, who are characterized by a respect for post-materialist values.61 Inglehart also introduced an indicator, the “post-materialist values index,” with which he assessed the changes in attitudes and values along with differences between individual societies.62 The shift from materialist to post-materialist values started in the 1960s and slowly gained momentum. In western countries, the proportion of respondents who preferred materialist values dropped from roughly 40 percent to 25 percent between 1970 and 1990, while those with post-materialist value systems went from an average of 10 percent to 20 percent. The remaining proportion of citizens cannot be categorized unequivocally insofar as their responses were not consistent in this respect. Looking more closely at the changes in these responses over time, there was a slight, temporary increase in the importance of materialist values in the mid-1970s, but by the end of that decade, these numbers had reverted to their diminishing trend line. By the mid-1980s, the proportions of people with materialist and post-materialist values stabilized at roughly equal levels in Western and Southern Europe as a whole. Thus, between 1970 and 1990, the proportion of Western Europeans with post-materialist views roughly doubled, though this is, of course, only an approximate time frame, and the direction of these changes diverged from the general trend in certain countries. Still, the proportion of inhabitants with non- or post-materialist views was particularly large in the Netherlands, West Germany, and Austria in this period. In addition to questionnaire-based research, there is also other evidence that values were changing. This includes the advance of secularization and social movements that espoused post-materialist values and manifestations of alternative cultures such as the spread of alternative clubs, organic shops, and vegetarian restaurants. Generational differences are clearly reflected in these transformations. The proportion of respondents with post-materialist values was substantially smaller among the oldest generations—those born between 1886 and 1905—than it was among younger respondents. At the same time, this growth was not linear. The most significant discontinuity, as observed above, appeared between the cohorts socialized during and immediately after World War II and the age groups that spent their child-

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hoods in the prosperous 1950s and 1960s. The rate of change decelerated thereafter. Inglehart’s concepts have attracted a fair amount of criticism. Scholars have objected to Inglehart’s equation of values and needs, and have pointed out that the variables he examined are strongly conditioned by respondents’ actual socio-economic situations. For example, one’s opinion of price stability—as a materialist value—might be completely different in a period of inflation than it would be at other times. Moreover, several scholars have questioned whether there is any direct relationship between socio-economic conditions and a population’s value orientations. They have also suggested that these value changes might be more dependent on the state of the economy (prosperity or stagnation) at the time these surveys were conducted than on the economic conditions during the period in which the individual respondent was socialized.63 If we agree with this argument, however, then the notion that generation gaps are the primary motivators of these value changes also loses credibility. According to yet another critique, this distinction between materialist and post-materialist value systems is overly simplistic as is any explanation of these changes built on just two hypotheses.64 Among other possible dimensions of these value changes, Inglehart’s critics have recommended an examination of authoritarian and liberal values, for example.65 Despite all these criticisms, however, Inglehart’s interpretation of value changes is an important tool for explaining generational differences in consumption patterns in postwar Western Europe. Urban and rural areas. Finally, regional differences in consumption were considerable in postwar Western Europe, and these were not just disparities between individual nations; there were also differences within these societies. In the middle of the century, the lifestyles and consumption habits of rural and urban populations of most Western European nations varied widely. At that time, there were still traces of the traditional peasant’s way of life, which was characterized by a significant measure of self-sufficiency. Except in a  few Southern European countries, however, agrarian populations were marginalized over the following decades, and even within the small groups that still made a living from agriculture, the traditional peasant’s way of life disappeared completely. This process was a  key factor in explaining why rural and urban consumption practices became increasingly similar over the second half of the twentieth century.66

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3.1.3 Qualitative factors: Dreams instead of needs An understanding of the levels, structural changes, and social differentiation of consumption is important to any study of twentieth-century consumption. In addition to these elements, however, we cannot neglect the qualitative features of consumption, which is determined above all by the availability of adequate choices for consumers.67 Consumer choice is guaranteed if the goods and services produced around the world are readily available, and consumers can choose among them without restriction. Insofar as people travel and shop abroad, mainly as tourists paying for services, the right to move freely and currency convertibility are necessary elements of consumer autonomy. John Brewer considers an abundant variety of goods to be one of the most important characteristics of consumer society, and this refers not just to the selection of goods that fulfill “needs,” but also to products that satisfy “desires.”68 The level of consumer freedom in Western Europe grew over the course of the twentieth century as a result of reductions in the amount of time spent at work and increases in quantities of leisure time, which will be discussed in the following section. Even before the period under investigation here, these qualitative requirements of consumer autonomy were largely met in the countries of Western Europe. Nevertheless, with the introduction of passports in the wake of World War I, travel became somewhat more complicated, and as a  result of the Great Depression, many countries implemented currency restrictions that reduced the range of consumers’ choices. The belligerent nations of World War II introduced ration-coupon systems that stayed in effect for years after the conflict, especially for basic foodstuffs. These sorts of economic restrictions were largely done away with in Western Europe by the beginning of the 1950s and no longer limited consumer autonomy. There is also no doubt that the enormous growth in purchasing power in postwar Western Europe significantly increased the range of goods and services available there from the 1960s onward. In this respect, however, it seems more appropriate—if we disregard the period of the wars—to emphasize the continuity Western Europe exhibited over the course of the century. Trends in public consumption have already been surveyed. It is obvious that in the countries of Western Europe, the state consumed an ever larger proportion of the gross national product over the course of the twentieth century, especially after the middle of the century. While redistribution limited consumer autonomy in certain ways, it is also clear that

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government activity in a  variety of areas—public administration, public security, education, environmental protection, social insurance, infrastructure, etc.—served consumer interests as well. Major components of public consumption, such as education and healthcare expenditures, for example, can be regarded as investments that determine long-term opportunities for growth, and thus for consumption as well. There is an even more direct connection between government activity and consumer autonomy, because personal consumption is partly dependent on a properly functioning infrastructure, which requires public investments, that is, public consumption. An obvious example of this is the automobile: individuals own these vehicles, but their use value is significant only if there is an extensive and well-maintained network of roads available. The optimal amount of public consumption is difficult to assess, but on the basis of the foregoing, the rise in public consumption in Western European societies does not appear to have undermined consumer autonomy. Mass production, commercialization, concentration. The spread of mass production, the advance of commercialization, and retail concentration all had a  considerable effect on the choices available to the consumers of Western Europe. Over the course of the twentieth century, a major element in the transformation of the markets for goods and services was the spread of products manufactured on a large scale.69 This was related to growth in the manufacturing industry, which began significantly earlier but was now putting the small workshops that used traditional craft techniques out of business. Dishes made by a  master potter or pieces of furniture made by a  woodworker were more or less unique articles often because they were prepared to a customer’s specifications and, therefore, bore traces of local technical and aesthetic traditions. The mass-produced goods coming out of ceramics plants and furniture factories, however, lacked these sorts of characteristics. Industrial fabrication was standardized often on a national scale, and thus only limited variations were possible. This process of standardization, which had already begun in the nineteenth century or even earlier, took over manufacturing as well as commerce and the service industry: for instance, banks, merchants, and hairdressers began to open and close their businesses at set times, whereas before they had often adjusted their schedules to accommodate individual customers’ demands. Thus, concerning mass production, the second half of the twentieth century saw the culmination of a number of processes that had been initiated earlier.70

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One tendency closely related to mass production was commercialization. Small family shops in which residents of nearby neighborhoods would shop for their daily necessities had traditionally dominated commerce. An important step in the transformation of commerce and consumer culture was the appearance of department stores in the mid-nineteenth century, though it was mostly in the twentieth century that they became widespread and reconfigured approaches to commerce. Department stores were not merely more efficient structures for organizing sales—that is, they made it possible to market more goods; as Michael B. Miller has shown in the case of the Bon Marché in Paris, they helped make shopping itself into an entirely new kind of activity.71 While shops were characterized by a  high degree of specialization in the traditional system of commerce, from the middle of the nineteenth century forward, department stores trafficked in a wide range of products. Prices were fixed, and thus there was no bargaining, which not only simplified management, it also made it easier for shoppers to plan their purchases. At the same time, they regularly publicized sales events for certain goods as part of their competition with other, similar shops, a contest that included price competition as well. Visitors were also under no obligation to purchase anything; they were free to look around. Several historians have claimed that the great department stores helped the middle class form its cultural identity: a  person became middle class by purchasing particular goods at particular department stores. Moreover, the aforementioned Miller has suggested that these stores helped integrate the non-bourgeois social strata into consumer society as well.72 This latter notion has not found unanimous support, primarily because, at best, only certain department stores in certain periods could have embodied this middle-class ideal, while for much of the twentieth century, this was not the case. By the time the lower classes became regular customers at department stores after the middle of the twentieth century in Western Europe, the department store business itself had already become fairly stratified. 73 As the spread of department stores indicates, concentration—that is, the process of squeezing smaller, family-run commercial enterprises out of the market—was another important tendency in the twentieth-century transformation of commerce.74 This process was already underway in the first half of the century, and regained momentum starting in the 1960s and 1970s. Self-service shops had begun to spread through Europe after World War II, but it was only in the seventies that supermarkets, hypermarkets,

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and shopping centers really caught on. These characteristic new forms of commercial operations were often even larger than traditional department stores, and thus were regularly built at the edges of residential districts, where building sites were cheaper and where shipping logistics were easier to manage than at department stores located in crowded downtown areas. Shopping centers tended to either offer an especially large selection of a particular group of goods (food, furniture, etc.), or make it possible to find all kinds of products in a single location. Sainsbury’s in the United Kingdom and Carrefour in France were among the first companies to organize large grocery chains. By the turn of the millennium, over half the groceries in Great Britain and over threequarters of the groceries in France were distributed through supermarkets. Besides their wide selection, their prices also attracted shoppers given that bulk purchasing and the efficient turnover of goods enabled them to undercut smaller traditional shops. In the 1980s, concentration began to affect other commercial sectors including domestic appliances, home improvement equipment, building materials, electronics, and office supplies. These big-box stores did not, however, come to dominate the market for every kind of good uniformly: for instance, in fashion, where individual taste plays a more important role, they were less successful. These market segments were affected by a  transformation of another sort: starting in the late-1960s and early-1970s, malls began to crop up in Western Europe, which were also often built on urban peripheries.75 These indoor shopping centers were not integrated, allowing businesses to maintain their separate identities although the entire facility was managed by a centralized administration that regulated the mix of shops, hours of operation, and coordinated advertising campaigns. These malls also characteristically featured attractions where consumers could spend their leisure time: movie theaters, restaurants, and fitness centers. One such example is Shopping City Süd, which opened just south of Vienna in 1976 and was publicized as the largest such facility in Europe.76 The public, and especially urban sustainability advocates, often regarded these sorts of commercial developments as evidence of Americanization and criticized them as threats to traditional urban design and the urban way of life. These fears were perceived by many who considered the crucial role motorization would play in retail concentration; automobiles made it considerably easier to travel from residential districts to distant malls and shopping centers. At the turn of the millennium, another round of retail

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concentration was facilitated by the spread of information technology. The use of digital networks enabled retailers to develop logistics systems that significantly reduced warehousing and distribution costs. These processes required large investments, though, which put them beyond the reach of many small businesses. Thus, even the smaller shops that survived tended to be acquired by retail chains with high levels of working capital.77 Concentration was also accompanied by the multinationalization of retail enterprises.78 The Swedish firm IKEA, which has established outlets across almost all of Europe and around the world, is emblematic of this process. By the end of the century, German grocery retailers like the Metro Group, Aldi, and Tengelmann as well as the aforementioned French retailer Carrefour were also operating in a  large number of countries.79 Apparel retailers like the British firm Marks and Spencer, the Italian company Benetton, the Swedish concern Hennes and Mauritz, and the Spanish outfit Zara followed suit. Retail concentration did not proceed at a uniform rate in the individual countries of Western and Southern Europe. Small enterprises tended to be squeezed out of grocery retailing in Great Britain, France, and Germany. In Southern European countries, such as Italy, small shops survived in substantially larger numbers than in Northwest Europe.80 Shoppers in the south were generally less willing to give up on the little shops near their homes; the less concentrated urbanization patterns and large expanses of historical urban quarters there also seem to have facilitated the survival of smaller shops. Moreover, even in the most affected Western European countries, retail concentration has never reached the level to which it has risen in the United States.81 A  generous selection of smaller shops and boutiques has continued to survive in city centers, trafficking primarily in clothing and specialty products. Another important trend in the structural transformation of downtown commerce was the establishment of malls and shopping plazas consisting of multitudes of smaller shops and open stalls, often built underground or along public promenades. The consequences of this explosion of giant retail outlets produced a number of controversies among urban developers and the wider public. Opponents of this process expressed concern for the shops in downtown areas and residential districts, contending that the closure of such businesses could contribute to urban decay in those areas. They also objected to the environmental damage caused by the automobile traffic engendered by these large shopping centers. In Belgium, for example, government inter-

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vention has been used to limit retail concentration. These issues have also led several other governments and local authorities to resort to regulation: a law intended to protect small grocery stores was introduced in France in 1996. Elsewhere, local authorities have permitted the construction of shopping centers only if they are in outer neighborhoods, which is obviously only a partial solution to these problems. In the 1990s, Norwegian authorities completely suspended building permits for such projects pending the completion of wide-ranging investigative studies of the social and environmental effects of the spread of shopping centers.82 The outcomes of the processes described above have been inconsistent in certain respects, but, on the whole, they have contributed to an expansion of the quantities and varieties of available goods. Though consumer protection cannot substitute for market mechanisms, they might still further ensure that consumers’ interests are respected. After World War II, the developed market economies put more and more effort into drafting laws and establishing institutions designed to correct the distortions created by dysfunctional markets. Information about the goods that reach the marketplace is the responsibility of—and in the interest of—producers and retailers, but the reliability of this information depends on the institutions and legal frameworks that implement consumer-protection policies such as independent quality-control agencies, consumer-protection publications, labeling guidelines, and productcertification schemes. Consumer protection laws and organizations enable shoppers to find information about the risks related to the consumption of particular goods and services; they also create safety guidelines to prevent accidents that might endanger consumers.83 From this standpoint, civic initiatives and pressure groups, like those that have organized food safety campaigns, have come to play a large and growing role, even if their effectiveness has been variable.84 Over time, the European Union has assumed an active role in developing and coordinating consumer protection institutions in member states.

3.1.4 Configurations of leisure: The changing structure of disposable time Quantities of leisure time significantly affect standards of living and quality of life in general. On the one hand, many would consider extra free time to be equivalent to, or even more attractive than additional consumption; on the other hand, quantities of leisure time influence consumption pat-

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terns. Consequently, the growth of leisure time is one of the fundamental factors in the development of a consumer society. From this vantage point, changes in working hours are particularly worthy of scrutiny, as obviously, the less the laboring population works, the more free time it has at its disposal. Changes in working time. At the end of the nineteenth century, the European industrial labor force worked 10 to 12 hours per day, 6 days a week, with no paid vacations.85 Growing productivity facilitated reductions in working time, though these two processes were by no means parallel; for a long time, employers and governments resisted shortening the working time. In 1870, Great Britain had the shortest work week in Western Europe although by the turn of the century, several countries in the region began to close the gap. By World War I, with the exception of a few countries, the average work schedule in Western Europe had already dropped below sixty hours per week.86 The real breakthrough for advocates of the eight-hour workday came after World War I.87 At the end of the 1920s, the average number of hours worked per week was already substantially smaller than it had been a decade and a half earlier. In addition, working times converged to a fairly uniform standard over the course of that decade: according to the available data, the work week everywhere in Western and Southern Europe was between forty-six and forty-eight hours in 1929. During and after World War II, the length of the workday rose again temporarily, but by the end of the reconstruction period, it was already shrinking again. Besides this reduction in the length of the workday, an increase in the number of days off also contributed to the shrinking amount of weekly working time. The demand for a  half-day on Saturdays first appeared at the end of the nineteenth century in England and then in other countries as well. In practice, the half-day Saturday appeared after World War I and began to spread in the 1930s; then, decades later, starting in the 1960s, the five-day work week was realized in most Western European countries. Thus, in rough terms we can say that the six-day work week was characteristic of Western Europe up to World War I, the five-and-a-half-day work week was largely in effect from then up to the middle of the century, and after 1960, the five-day work week became the standard, though it did not prevail in every sector or every country.88 At the beginning of the twentieth century, employers rarely offered paid vacations, and there were barely any paid holidays: these sorts of ben-

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efits were available only in the state bureaucracy and in certain white-collar positions, not to laborers. After World War I, the introduction of vacation time and the extension of its duration became an important goal for employees and their union representatives. ILO initiatives and pressure from trade unions eventually pushed employers to introduce paid holidays and paid vacations. This took place in the 1920s in several East Central European countries, and British authorities made a week of paid leave mandatory in several branches of industry in 1936.89 Though growth in the length of paid vacation was slow after World War II, gradual increases meant that by the turn of the millennium, employees were able to spend substantial amounts of time away from their jobs. This process was accompanied by growth in the number of paid holidays. At the end of the nineteenth century, days off—not counting Sunday—were generally limited to traditional religious celebrations. A significant portion of them, especially in Catholic countries, had developed over time into secular holidays, which also increased the number of paid days off. As a  result, the countries of Western Europe averaged a combined total of thirty-six days of paid vacation and holidays at the end of the twentieth century.90 These reductions in the length of the workday and the work week, combined with the rising number of holidays and the increasing length of vacations, significantly reduced annual working time. At the end of the nineteenth century, Western European employees worked an average of 2,600 to 3,100 hours per year. The lower number of that range belonged to Great Britain though over the course of the decade after World War I, most Western European countries dropped to similar levels; this was the period in which the largest such declines took place all across the continent. At the same time, this process of reduction—disregarding the war years and the reconstruction period—did not stop in the following decades, though its pace slowed. Thus, by 1990, finally, the average in Western Europe was about 1,600 labor hours per year. Norway led the field; in the year 2000, employees there dedicated an annual average of 1,457 hours to gainful employment. At the other end of the spectrum was Ireland, where workers averaged an annual total of 1,933 labor hours at the turn of the millennium (Table 3.7).91 Finally, the amount of time spent at work was further diminished over the course of the twentieth century by a  gradual drop in the number of years people spent as part of the active labor force. On the one hand, as the amount of time spent on education increased, workers were getting older

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Poland

3008

3006

3014

2953

2153

3000

Italy

2301

2123

2731

Finland

2742

2152

2283

2933

2745

2281

2128

Norway

3172

2745

2704

2723

2182

2162

2203

2131

2085

2187

2171

2196

2427

2513

2106

1994

2107

2053

2129

2087

2008

3434

2937

2834

3056

2690

2229

2281

2294

Denmark

3187

2925

3108

2795

2841

2233

1760

2011

1950

3436

3083

3223

2869

3064

2942

2198

2200

1938

Sweden

3284

Germany/FRG

3017

3177

3037

2933

2257

1929

1991

3108

Ireland

3344

3105

3115

2656

1913

3195

3483

Belgium

3194

3119

2656

1900

Switzerland

3274

Netherlands

3165

2669

1890

2096

3168

France

2740

1880

Austria

2755

United Kingdom

1870

2173

2059

2024

1945

1891

1918

2070

2181

2393

2005

1852

2191

2032

1960

2042

1980

1835

1884

1723

1946

1900

1973

2424

1889

1836

2007

1873

1970

1856

1849

1580

1605

1517

1778

1891

1756

2204

1707

1578

1823

1792

1980

Table 3.7 The length of working hours in European countries, 1870–2010 (the number of average working hours worked per year)

2107

1864

1769

1503

1463

1561

1675

1835

1583

2182

1663

1474

1665

1745

1990

2082

1851

1742

1457

1490

1642

1674

1807

1452

1933

1595

1462

1535

1693

2000

2049

1773

1668

1426

1436

1635

1613

1669

1390

1801

1546

1421

1494

1643

2010

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1938

1950

1960

1970

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1990

1727

Bulgaria

1640

1853

2033

1816

1896

2000

1645

1861

1958

1807

1800

2010

Notes: Data of full-time employees; the estimates include paid overtime and exclude paid hours that are not worked due to sickness, holidays, vacations, etc.; Belgium, Ireland, Netherlands, Switzerland, Italy 1913: extrapolation based on the data between 1870 and 1900; Different dates: Ireland 1913; Finland 1930; Norway 1930; Germany/FRG 1998; Poland 1993; Czech Republic 1993; Romania 1994; Bulgaria 1995. Sources: Michael Huberman and Chris Minns, “The Times They Are Not Changin’: Days and Hours of Work in Old and New Worlds, 1870–2000,” Explorations in Economic History 44 (2007): 548 (Western Europe 1870–1913; Germany, United Kingdom, France, Netherlands, Belgium, Austria, Switzerland, Ireland, Sweden, Denmark, Italy 1929); Angus Maddison, Dynamic Forces in Capitalist Development: A Long-Run Comparative View (Oxford: Oxford University Press, 1991), 270–71 (Finland 1930; Norway 1930); Total Economy Database—Output, Labor and Labor Productivity, 1950–2016, retrieved August 6, 2017, Adjusted version, https://www.conference-board.org/data/economydatabase/index.cfm?id=30565 (Western Europe 1950–2010; Central and Eastern Europe 1980–2010).

1907

Romania

2193

1980

1945

1929

Hungary

1913

1828

1900

Slovakia

1890

1890

1880

Czech Republic

1870

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and older before they even entered the labor market, and on the other, with the spread of pensions, they were leaving the market at substantially earlier ages than they had at the beginning of the century. Meanwhile, there were significant increases in average life expectancy, and thus by the end of the century, people were spending a much smaller proportion of their lives at work than they had three or four generations earlier. This process is illustrated best by the case of Great Britain, where estimates suggest that the average laborer in the middle of the nineteenth century worked 124,000 hours over the course of a lifetime, a number that had dropped to 69,000 by 1981. This means that the citizens of Western European societies at the end of the twentieth century were no longer at work for half, but rather closer to a fifth of their disposable lifetime—that is, the time available to them after we deduct the hours spent on sleep and other physiological necessities.92 These changes happened most quickly in the decade after World War I and in the final third of the century. Free time and leisure. The changes in working time discussed above allowed for increasing amounts of time to be spent on leisure and for the diversification of recreational activities. Leisure merits attention because services that offered these activities would account for an increasingly significant proportion of consumption in the period under discussion. This process was dependent on a  number of long-standing antecedents. Historians generally place the development of leisure as understood in its modern sense at the beginning of the eighteenth century in Western Europe.93 Until then, neither the concept nor the kinds of activities signified by it really existed. Great masses of laborers regularly took part in celebratory activities on various holidays, and just as regularly sang, chatted, drank, and even danced on typical workdays as well, but there was no sharp distinction between working hours and free time for leisure. Starting at that time, however, there was initially slow and then dynamic growth in the numbers of industrial workers and salaried employees, the very social strata that had a set work schedule, which formed the basis of the distinction between working time and leisure time. This shortening and fixing of working hours fundamentally transformed the significance and character of leisure in the societies of Europe.94 Industrialization had a significant effect on the way people spent their free time in other respects as well. Before the eighteenth or nineteenth century, the most universal forms of entertainment—dancing, singing,

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conversation—were free of charge insofar as the participants themselves created the frameworks in which they enjoyed themselves. In the rapidly growing cities of the industrial age, however, new forms of entertainment began to proliferate, which were subject to growing commercialization.95 At the end of the nineteenth century, the most popular gathering places continued to be taverns, coffee houses, and restaurants, venues that often provided music or other sorts of cultural programming.96 Soon, radically new forms of leisure activity began to spread as well, including phonographs, illustrated newspapers and other cheap periodicals, and especially the cinema. Movies quickly became popular, and by World War I, were already squeezing other forms of entertainment into the background. The number of visits to movie theaters grew dynamically in every social stratum in the years after World War I. These cinemas, which began projecting films with sound in 1927, were primarily for entertainment, but they also transmitted information on diverse aspects of life. Movies relayed new norms of social communication as well as changes in fashion, lifestyle, and manners, and thereby accelerated changes in these areas.97 From the standpoint of leisure-time usage and the spread of popular culture, the development of electronic communications has had the greatest long-term effect. After a  period of military and navigational use and a brief experimental phase, regular radio broadcasts started in the middle of the 1920s in Europe. Radio usage spread quickly: a number of stations came into existence, most of which remained under government control for decades. Receivers, which were initially the bottleneck that limited the spread of radio, extended to a wide range of Western European households in the 1930s: by 1938, there were already 182 per thousand residents in Great Britain, and Germany, which had started broadcasting later, was not far behind with 172 per thousand residents. Radio would also alter entertainment habits significantly. In place of communal forms of entertainment, this isolated, individual form of recreation appeared, despite the fact that in the early days of the medium, those without radios often sought out radio-owning relatives, friends, and neighbors so as to listen to broadcasts together. Radios continued to be an important means of communication well into the second half of the twentieth century, but from the 1950s, it was increasingly replaced by television.98 The first experimental television broadcasts were conducted in Berlin in the 1930s, but regular programming and the popularization of the device would have to wait until the end of the 1940s.99 As with the radio,

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Great Britain was the first nation in Europe where television would become a mass phenomenon, but regular programming would be launched in the other countries of Western Europe just a few years later: Sweden, Austria, and Switzerland began broadcasting in 1955 though, of course, television broadcasting took place within a relatively modest framework everywhere at first.100 In most countries, programming was limited to one or two public television stations for decades. These channels sought to satisfy the demands of every social stratum and age group, to maintain a variety of programs, and to prevent subjecting viewers to business interests. Advertising was allowed only within a very narrow framework: in West Germany, for example, no ads were broadcast during primetime or on the weekends, and they were limited to a total of twenty minutes per day during the week. The first commercial station was established in Great Britain in 1955, but the spread of television channels that operated according to business principles was constrained for a considerable period by the limited availability of broadcast frequencies on the electromagnetic spectrum. The appearance of satellite television in the 1980s and the spread of cable eliminated these technical limitations and greatly expanded the number of channels available to the average household from a  few to several hundred, which gave commercial television new impetus. In France, Germany, Norway, and other countries, the first privately operated channels were introduced in the 1980s. These stations made entertainment the centerpiece of their programming policies, and in the interest of expanding viewership, broadcast rather undemanding fare: various talk shows, soap operas, crime dramas, and other series formed the backbone of their schedules, while their news shows often omitted the essentials and focused on events that would attract viewers.101 The appearance of television affected households in ways that were similar in several respects to the effects that had accompanied the radio a  few decades earlier. Unlike traditional forms of entertainment, television was primarily a  solitary pleasure. However, the effect of the screen proved to be substantially more intense than that of the radio.102 The time spent watching television grew rapidly.103 By the end of the twentieth century, residents of Western Europe were averaging two or three hours per day in front of a screen, and in some countries, four or five. By the end of the century, with television sets available at very low prices, families with lower incomes were watching particularly large amounts of television. The

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medium also had a considerable effect on the daily lives of children and the elderly: these age cohorts also spend greater-than-average amounts of time in front of the screens. According to time budget surveys, watching television began to supplant not only listening to the radio and going to the movies, but also reading, board games with family members, and even conversation. In addition, people tended to find time for watching television by cutting their ties with community members outside their families; that is, television arguably contributed to the disintegration of communities.104 News programs unquestionably made it possible for viewers to get information about distant events more quickly than ever before, and social problems were also featured in other programming. At the same time, television—especially in its commercial variety—was criticized all the more often at the turn of the century because it inspired the spread of a  consumer mentality. Advertising took up almost a third of the programming time on commercial channels, but other kinds of programming transmitted similar consumerist attitudes, if somewhat more surreptitiously. The prominence of American productions, which had dominated European ratings practically from the beginning, also provoked growing concern in Western Europeans. The series that attracted the greatest number of viewers in the 1970s was Kojak; in the 1980s, it was Dallas; and in the 1990s, Baywatch. According to these fears, trans-Atlantic productions might result in the encroachment of American popular culture, the homogenizing effects of which might threaten the existence of Europe’s national cultures. For this reason, authorities in several countries—notably France—strove to create a  balance between domestic and European programming on the one hand, and American productions on the other. In 1989, the European Commission also promoted a binding directive to counter American influence, but because practically all programs can be counted, the results were less than straightforward.105 Finally, over the course of the twentieth century, tourism would become another important way to dispose of free time, and this marked another transformation of consumer practices.106 The origins of mass tourism in Europe can be located at the end of the nineteenth century, and the practice developed first in Great Britain. Above all, tourism was oriented toward the sorts of destinations that offered a broad swathe of the urban population a chance to unwind. Seaside resorts were important, especially once the development of railroads and transportation ships made them more easily accessible from large cities and industrial centers. These include

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the spas of Kent; Brighton, which became the best-known spot on the coast of the English Channel; and Blackpool, which attracted the inhabitants of the Midlands in the north. Trouville in France, Ostend in Belgium, and Scheveningen in the Netherlands were all similarly fashionable resorts—regular visits by royal families contributed to the popularity of the latter two.107 From its inception at the end of the nineteenth century to the latter half of the twentieth century, mass tourism was primarily domestic tourism. International tourism existed, of course, but it did not assume significant proportions and was mostly limited to the elites. Beginning in the 1960s, however, the situation changed rapidly. Mass tourism became an international phenomenon; in Europe, it expanded to the Mediterranean, and then somewhat later took over the Alps. Rapidly rising incomes were, of course, the primary factor behind this process although increases in free time, and especially in the length of paid vacations were also contributing factors. Another important influence was the development of air travel, which made it possible to transport large masses of people at affordable prices. There were also significant changes in the way trips were organized. Travel agents put very attractive prices on “packages” that included transportation, lodging, food, tour guides, and other services. Based largely on demand from these travel agents, investors developed large tourist complexes, especially in resort towns along the coast of the Mediterranean, and these often resulted in crowded surroundings. The appearance of seaside resorts that had become destinations for masses of tourists was substantially changed: hotels that served tourists, restaurants, and shops followed one after another until these communities began to lose their distinctive character; that is, tourism at least partly destroyed the very attraction that had initially motivated its development.108 This process ran its course above all in Spain (Costa del Sol, Costa Blanca, Costa Brava, Mallorca, Ibiza, and the Canary Islands), and along almost the entire length of the Mediterranean coast of France as well as in Italy (Rimini). This cycle started somewhat later in Greece and Yugoslavia; more recently, Turkey, Cyprus, Portugal (Algarve), and even Tunisia have joined this group. By the 1990s, there were already roughly 140 million tourists turning up each year on the European coasts of the Mediterranean. Similar processes were already underway in the resort towns of the Alps, and though the number of visitors to that region was substantially smaller than the population of bathers along the sea, by the end of twentieth century, travel patterns there could also be described as mass tourism, especially during ski season.109

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Vacationing abroad became fashionable in Western Europe and served simultaneously as both a  definition and a  demonstration of one’s social position. Europe became the world’s number one tourist market, and by the end of the millennium, European countries were the destination for 58 percent of the world’s cross-border tourist trips, while 64 percent of the world’s foreign travelers arrived from other European nations. At that same time, tourism provided 14 percent of the total gross domestic product of the EU-15 countries, and 19 million people were directly employed in their tourism industries. France was the most important tourist destination in the world, with 70 million visitors, though Spain (42 million) and Italy (29 million) were also among the most popular countries for foreign travelers. With regard to intra-European tourism, it continues to be oriented primarily from north to south—as we have seen—and Spain has become its chief destination, especially among German and British travelers.110 In the last two decades of the century, the tourism industry developed or enhanced several new branches that have not replaced traditional destinations—beaches and ski resorts—but have rather supplemented them. Among these new branches, the first is rural (or green) tourism, which is aimed primarily at domestic travelers. According to some estimates, a quarter of intra-EU tourism fell under the heading of rural tourism by the turn of the millennium. Another rapidly growing branch of the industry has been urban tourism. The great cities of Europe have always been important tourist destinations, but in the last decade of the century, their popularity grew even further. This development was influenced decisively by the transformation of European air travel in the 1990s. Starting in 1992, the European Union re-regulated its air-travel market, one consequence of which was the establishment of new “discount” airlines, which offered tickets at substantially cheaper prices than before, though with lower standards of service. The Irish firm Ryanair and the British operation EasyJet are among the largest such airlines. Thus, air travel has become affordable for the masses, even just for a few days of urban tourism.111 The new ways of using leisure time that emerged during the twentieth century often elicit contradictory opinions from observers. According to critics, the undeniable growth in the amount of free time available to the populace did not produce the expected effects; because of the domination of commercial interests, rest and self-improvement received surprisingly little emphasis. The inhabitants of Western Europe instead spent a significant portion of their increased free time in front of screens, lost amid tor-

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rents of television advertising. Others point out that the entertainment industry produced formulaic junk that often distorted reality in the pursuit of profits. New mass-media outlets were concentrated in the hands of relatively few businesses, which made it possible for them to influence or even manipulate the public by means of ever more refined marketing methods and technical tools.112 According to others, the development of mass communications also meant democratization in the sense that it allowed information to reach an ever greater proportion of the populace. Movies and (later) television gave the less well-to-do a greater degree of access to artistic work, allowing them to enjoy the same sorts of creative output that were previously available only to the more privileged inhabitants of larger cities. For that matter, optimists would also point out that the power of the media to manipulate the public has its limits: most viewers are capable of choosing among the available television channels and other cultural productions. Furthermore, local television and radio broadcasters do not necessarily destroy communities but can instead build them up, and the internet might have a similar effect.113

3.1.5 The emergence of consumer society in Western Europe: Elements and functions As we have seen in the previous sections, consumption and leisure time grew spectacularly and diversified markedly in the western part of the continent over the course of the twentieth century, especially the second half. This provided the basis for the widespread use of the expression consumer societies to refer to the societies of Western Europe, North America, and a few other developed regions. And while high standards of living are inseparable from the concept of consumer society, the definition of the latter is more complex than the former: it signifies the sort of social formation that is organized around the consumption of goods and services, rather than around their production. In other words, in contrast to the “productive” societies of the nineteenth century, the chief determinant of the functioning of the industrial societies of the late twentieth century was consumption and the attitudes and value systems connected to it. At the same time, this notion is characterized by numerous contradictions largely because it was used from the time of its appearance not merely for analytical purposes, but also as a criticism of the views and attitudes—widespread in developed industrial societies—that identify a  high level of consump-

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tion as social success and treat it as a  primary source of personal happiness. Making use of the lessons of the analyses undertaken thus far, the following section surveys the evolution of consumer society in Western Europe; describes the most important characteristics of its development; and positions the period under discussion along the historical timeline of this process.114 For a  long time, historians and sociologists emphasized the role of industrialization in the evolution of consumption and, accordingly, tended to place the origins of consumer society at the beginning of the twentieth century. Scholars who took this approach generally regarded this phenomenon as the product of the rapid economic growth that began in the eighteenth or nineteenth century—the growth of which reached every stratum of society as a result of mass production. More recently, however, numerous authors have argued precisely the opposite, suggesting that it was consumption that played an important role in the formation of capitalism or, according to another approach, in the development of the industrial revolution. This notion allowed these scholars to suggest that it was not only the expansion of supply, but also the transformation of demand that played a  serious role in the historical evolution of consumption. In their studies of seventeenth-century Holland and eighteenth-century England, Jan De Vries, Colin Campbell, Neil McKendrick, and other scholars seem to have found evidence of new and important trends related to the evolution of consumption, phenomena which previous scholars had dated to much later periods. These include advertising and other refined marketing techniques, retail diversification, and consumerist—or even hedonist— attitudes toward the use of goods.115 Several recent studies have asserted that the consumption habits of elites were of decisive importance in the development of consumer culture, as elites’ consumption patterns trickled down to the lower social strata. Large commercial centers played a  similarly important role in that they made the lifestyles of the upper classes visible; nineteenth-century bourgeois homes, as embodiments of comfort and refinement in consumption, were also influential.116 In some respects, all this suggests a return to the ideas of Werner Sombart’s classical work, according to which luxury products and goods from the colonies, along with the establishment of new social values and societal conditions facilitated the development of a new life style in the modern period. In studies of the nineteenth century and the beginning of the twentieth, scholars tend to focus on the establishment of department stores

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and the evolution of the retail sector in general as well as the appearance of modern advertising techniques, all of which contributed decisively to the transformation of consumption.117 Between the two world wars in Europe, largely on the basis of American examples, the professionalization of occupations related to retail sales and marketing progressed at an extraordinary clip: this list includes advertising professionals, salespeople, warehousing staff, fashion designers, and fashion journalists. The transformation of advertising is a good illustration of the fundamental change of the discourse related to consumption over the course of the twentieth century. New media proliferated; at the beginning of the century there were illustrated magazines and movies, then radio, and later television, and finally the internet, which greatly increased the portion of the public that could be reached by advertising. Whereas ads had previously been strictly differentiated according to gender and social status, with the appearance of these new media capable of targeting large masses, the specialization of advertising diminished. This process was also fostered by the dwindling importance of gender roles and the fact that nearly everyone was considered a potential customer in the age of mass consumption.118 Retailers and the media were already promoting not just the urge to acquire specific goods, but attempting to stimulate a perpetual appetite for the most desirable goods. Studies concerned with the middle third of the century put a  great emphasis on the effects the increasingly popular technologies that emerged primarily in the area of durable goods including telephones, televisions, and refrigerators had on everyday life. The era of the economic boom is of particular importance because the levels of consumption in that period grew at rates that Western Europe had never seen before.119 For these reasons, historians and social scientists explain the evolution of consumer society by means of several factors, not simply by relating it to the mass-production processes that developed as a consequence of industrialization.120 They have demonstrated that there were several developments that contributed to the formation of a consumer society over the last two or three centuries, and thus it would be difficult to describe any single point in time as its outset. Consumer society came into being gradually, as the result of a series of factors, and its advance cannot be graphed with a simple straight line. Consumer society was brought about by sweeping social changes such as urbanization, increasing social mobility, and gender equality. Its development was also facilitated by economic factors including the growth of consumption, commercialization, the spread of Fordist mass pro-

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duction, and later, the post-Fordist, or post-materialist emphasis on individual values as well as the spread of consumer credit.121 These phenomena were also accompanied by changes in mentalities and norms related to production and consumption.122 Regardless of this wide range of precedents, however, it is beyond dispute that by the final decades of the twentieth century, consumer society had evolved and developed its own distinctive forms in Western Europe. Each of the processes outlined in the earlier part of this chapter played an important role. Consumer society obviously assumes high levels of consumption and free time, after which point it is no longer work, but rather consumption and its organization that takes up the better part of the lives of citizens. In this respect, the second half of the century—which was marked by more rapid growth in consumption than had ever been seen— ushered in a  real breakthrough. The structural patterns of consumption underwent a  similarly profound transformation including—as we have seen—a drastic drop in the share of expenditures dedicated to food and other basic necessities. In addition, the qualitative aspect of consumption defined consumer society; that is, consumers enjoyed a high level of autonomy since citizens had access to an increasingly wide range of goods and services in postwar Western Europe, even though, in the twentieth century, continuity in this respect was relatively strong.

3.1.6 Homogenization and diversity in Western Europe There were significant regional differences in the patterns of consumption in Europe at the beginning of the twentieth century. The produce that was consumed, and especially the character of the foods that made up the largest share of Europeans’ consumption, was largely determined by local growing capacity, which was, in turn, primarily a function of climate and soil conditions.123 Although the growth of international trade had made it possible for consumers across the continent to get hold of numerous kinds of consumer goods and foodstuffs as early as the nineteenth century, at that time, these sorts of items were real possibilities only for the upper and middle classes. A large part of the populace was unable to indulge in regular purchases of imported merchandise—with the possible exceptions of tea, coffee, and spices that originated from outside Europe. Moreover, the transportation of perishable goods was plagued by difficulties from the outset. It is properly documented that the convergence of living standards

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in the Atlantic economy occurred starting in the late nineteenth century.124 Over the course of the twentieth century and especially in its latter half, consumption patterns in Western Europe leveled out considerably. A number of important indicators of consumption patterns attest to this process of homogenization. The disparities in the proportions of expenditures that average households dedicated to food, clothing, housing, and other important items were substantially smaller in the 1980s than they had been a half-century earlier. This convergence between France and Germany has been demonstrated by Hartmut Kaelble, but also exemplified by F. Gardes’s analysis of four countries (France, West Germany, the Netherlands, and the United Kingdom), which shows that the differences in their consumption structure shrank at an annual rate of 2 to 4 percent from 1960 to 1978.125 A more extensive analysis of patterns in fourteen Western European countries indicated an annual rate of convergence of 1 to 3 percent from 1960 to 1982, even though this trend was interrupted in 1973 and these countries diverged for a few years thereafter.126 On the basis of consumption structure and especially the patterns of food consumption, other researchers also argue that convergence prevailed in Western Europe throughout the three decades after 1960.127 The case of numerous foodstuffs, as well as alcohol, also illustrates a  degree of homogenization. There were no substantial changes in European alcohol consumption over the first six decades of the century, except for the fact that people in most regions of Europe were drinking less at the end of this period than they had been before. Europe can be divided into three consumption zones during this portion of the century: Scandinavians preferred to drink hard liquor, inhabitants of the north western and central areas of the continent (the British Isles, the Netherlands, Germany, and the northern part of East Central Europe) preferred beer, and wine was the most popular alcoholic beverage among Southern Europeans. Starting in the 1960s, however, the nature of alcohol consumption shifted significantly in most countries because the importance of these traditionally consumed types of alcohol began to fade. The traditional beer-drinking nations were consuming more and more wine, which in Great Britain, for example, was an exclusively imported commodity, while beer became more popular among Southern Europeans.128 A similar process played out with the fats used in cooking. At the beginning of the century, people in the Mediterranean region used olive oil almost exclusively, while the rest of the continent tended toward butter or lard and sometimes fish oil in the north. This

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stark north-south division began to dissolve, however, as processors began to produce greater and greater quantities of sunflower and rapeseed (also known as canola) oils. Both these plants were cultivated in Northern and Southern Europe, though it was only in the 1970s that they became a genuine competition for traditional cooking fats. The fact that more and more households in Northern and Central Europe began to use olive also contributed to this convergence. Finally, the 1970s saw similar tendencies begin to affect the consumption of meat: the consumption of pork and poultry, and to a lesser degree, fish and beef, began to even out across the various regions of Europe. From 1965 to 1985, annual per capita beef consumption in the United Kingdom, a traditionally large consumer of beef, dropped from 20.9 kg (46 lbs.) to 18.9 kg (41.6 lbs.), while annual per capita poultry consumption rose from 8.8 kg (19.4 lbs.) to 17.2 kg (37.8 lbs.).129 In addition to foodstuffs, we also see growing similarities in the ever greater proportions of household expenditures dedicated to durable goods.130 With regard to major consumer goods, the disparities between the societies of Western and Southern Europe, which were still significant in the 1950s, had clearly diminished by the end of the examined period, and these changes affected not only consumption structures, but also the appearance and character of available goods. Thus, the types of cars, computers, washing machines, televisions, and mobile phones sold in individual countries were largely identical by the turn of the millennium. 131 In this area, the remaining disparities resulted not so much from differences in taste, but rather from variable quantities of purchasing power. This leveling out of consumption patterns can be ascribed to a number of factors. Without a  doubt, the basis of this process was convergence in the levels of economic output in the region, which led to increasingly similar income levels. We also see convergence in other important determinants of consumption levels such as investment ratios and numbers of hours worked. Important indicators of consumption structure also show evidence of increasing similarities. In the period between the two world wars, there were still significant disparities in the shares of public consumption, but these diminished beginning in the 1950s. Other leveling factors include gradual increases in agricultural productivity and export capacity, improvements in shipping and methods for preserving perishable goods, and the growth in food imports from outside Europe. There was also convergence in the economic structure of these nations and, more specifically, in the industrial structure that resulted in more similar conditions of supply and

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demand.132 The international division of labor; the development of international trade; and the harmonization of economic policies—within the framework of the European Economic Community (EEC) or the European Free Trade Agreement, for example—led to more uniform relative prices, which drove the further standardization of levels of supply and demand. In the last decades of the century, European integration significantly contributed to convergence in consumption, above all by creating favorable conditions for foreign trade and the free flow of goods. Moreover, the EEC introduced common standards in a number of areas, which also facilitated similarities in the production of goods. Neither can we omit the role played by the diffusion of customs and norms in expediting the homogenization of consumption patterns. The widening of the geographical horizons of average Western European citizens, which was achieved primarily through more regular tourist travel and business trips to other European countries, was instrumental in this process. Among these factors, as H. Kaelble has noted, several had their greatest effect during the post–World War II boom in Western Europe (1950– 1973): it was in this period that the structures of Western European economies, families, and households became more similar; settlement patterns became more homologous; and economic integration took on momentum, all of which drove further convergence in consumption patterns, and at the same time provided an explanatory framework for the timing and dynamics of this leveling out.133 It is also true that this homogenization had its limits. National and regional traditions in food consumption, construction, interior design, and other areas persist to this day. The increasing uniformity of Western European societies was also offset by the gradual growth and concentrated appearance of immigration insofar as new migrants brought their own eating habits and other consumption practices with them. It is also important to emphasize that this reduction of differences within Western Europe was concurrent with a  global transformation of consumption patterns, and thus was not a strictly European phenomenon. There are also scholars who describe the process of European homogenization as outright Americanization. According to the aforementioned F. Gardes, this convergence to a  common model was not an intra-European development, but rather part of a  general shift toward the consumption patterns of the United States.134 In contrast, others—while acknowledging the spread of American consumption practices—suggested that a consumption model unique

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to Western Europe had developed by the end of the century. On the one hand, among the developed market economies, the differences between Western European countries diminished most substantially. On the other hand, consumption goods in Western Europe did not merely become more similar; they also underwent an observable Europeanization in the period after World War II. A growing proportion of the furniture, automobiles, and televisions marketed in the region originated in other Western European countries, and these products were developed to appeal to distinctively European tastes and design preferences, which often diverged from the predilections of American shoppers.135

3.2 Consumption in Communist East Central Europe Having completed the foregoing survey of the post–World War II consumption history of the western half of the continent, now the post-1945 period in East Central Europe will be evaluated using similar criteria. First, we will discuss the levels and composition of consumption there, and then the social differences in consumption will be examined. Following these will be an exploration of the qualitative characteristics of consumption, after which changes in leisure time will be tracked. Finally, the peculiarities of the consumer cultures that developed in East Central Europe in the second half of the twentieth century will be outlined.

3.2.1 Level and composition: Prosperous intervals and recurring austerities Changes in consumption levels. As it has been noted earlier, the various indicators of economic output such as gross domestic product, gross national product, and national income were devised as measurements of economic activity in its narrowest sense. Yet in the literature, per capita quantities of these have also become the most commonly used indicators of consumption levels.136 Some of the causes for such usage have been acknowledged; for now, it should suffice to refer briefly to two facts: first, with regard to the past, GDP is the most readily accessible economic indicator related to consumption; second, researchers have come to a much broader consensus about the calculation of GDP than they have about the use of other indicators that might serve to approximate levels of consumption. These consid-

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erations are especially relevant here, in that the number of countries and the length of the time period under discussion are both fairly significant, which will complicate any attempt to compile comparable long-term data for these societies. The expedient solution, thus, appears to be the use of economic output data as the basis for this study of consumption levels, though it will also be necessary to account for several factors that may distort such information. As indicated earlier, economic output, especially over the long term, is the most important determinant of consumption levels, and thus analyses of the patterns of growth in economic output can also provide important information about the evolution of consumption levels. At the same time, economic output includes not only consumption but capital formation as well. The share of capital formation determines, in part, the proportion of output that is allocated to consumption. In addition, international financial transfers (such as lending, borrowing, and aid) can also alter the level of resources available for domestic use and capital accumulation. To put it in the language of national accounting, GDP equals consumption (private and government), plus gross capital formation (investments and inventories) and net exports. An in-depth analysis of the national accounts of East Central European economies would be impossible here, and so in addition to capital formation, only the effects of exports and imports will be addressed. First, changes in gross capital formation—which includes both investments and inventories—will be assessed, and then an attempt will be made to determine if foreign trade balances significantly affected domestic use. 1. Capital formation can exert a  distorting effect: its increase—assuming that the foreign trade balance does not change—reduces the level of consumption and vice versa. According to the fragmentary data available, the share of capital formation—or, to put it differently, capital accumulation— in the countries of East Central Europe was lower in the years following World War I than the mean value for the countries of Western Europe. In 1929, 8.1 percent of Poland’s national income was dedicated to capital formation, while the average share of accumulation in Hungary over the latter half of the 1920s was 11.2 percent of its net national product (NNP).137 These, however, were exceptionally prosperous years.138 As a result of the Great Depression, the share of capital formation in most East Central European countries fell by several percentage points over the following

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decade as it did in Europe’s western half. Thus, according to some scholars, the average in Hungary during the interwar period was around 5 to 6 percent;139 another estimate yielded a figure of about 8 percent.140 Surveys of Polish data produced similar results.141 The situation in Czechoslovakia was exceptional: its share of accumulation amounted to 19.7 percent of its GDP in 1929, a number that was high not only in comparison to the rest of the region, but in the wider European context as well.142 In the decades after World War II, the share of capital formation grew significantly everywhere in East Central Europe. In the first half of the 1950s, it generally accounted for 18 to 25 percent of the gross national product, and in certain years, it approached 30 percent. The former percentages largely correspond to Western European averages, although if the Eastern region’s levels of economic development are taken into account, the rates were high.143 Meanwhile, significant regional and chronological disparities began to form. Czechoslovakia was again the exception insofar as it exhibited considerably lower average shares of capital formation than did Hungary or Poland. Even more striking, however, are the large fluctuations in the shares of accumulation from one year to the next, which were seen all over East Central Europe. For instance, in Czechoslovakia, the share of capital formation in 1949 was 11.4 percent, while in 1950 it was only 5.8 percent; it then rose to 16.4 percent by 1953, but had dropped drastically again by 1954, to 9.2 percent. This obviously had a  significant effect on consumption trends. In the first half of the 1950s, these fluctuations often reduced the levels of consumption, even in absolute terms, and remained significant throughout the region in this decade.144 The volatility of investment ratios decreased somewhat later on but remained significant. Between 1960 and 1989, the coefficient of variation of the annual average growth rate of investment was 187 percent in Poland, 171 percent in Hungary, and 131 percent in Czechoslovakia, while it was 159 percent in Ireland, 130 percent in Sweden, and 127 percent in Austria.145 Nevertheless, from the end of the 1950s onward, these fluctuations only resulted in the stagnation of consumption, or in an increase of consumption lagging behind economic growth; that is, in the short term, it weakened the connection between economic growth and consumption, though it did not result in declines in absolute levels of consumption. In the following two decades or so, up to the end of the 1970s, investment activity continued to grow in most centrally planned economies with

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strong fluctuations in shares of accumulation, and capital formation ratios peaked toward the middle or the end of the 1970s. Poland’s average share of capital formation was 34 percent of its national income between 1971 and 1975, and reached 40.4 percent in 1975.146 This amount substantially exceeded the rate of roughly 25 percent that was customary in Western Europe at the time.147 Hungary’s shares of accumulation were similar to Poland’s in that period, while Czechoslovakia’s economy continued to be marked by significantly lower investment activity. From the middle or the end of the 1970s, there was a noticeable drop in accumulation levels everywhere in the region, but even so, this reduction only put them more in line with Western European averages. A more in-depth analysis of trends in accumulation cannot be undertaken here, but rather we will offer a few observations about the connections between consumption and the tendencies described above. The first and most important of these assertions is that the character of East Central European accumulation levels—low by international standards for the first half of the century, and then high and strongly volatile after World War II— had a considerable effect on evolving consumption patterns. During the interwar period, the share of consumption in the economies of East Central Europe with the exception of Czechoslovakia was generally higher than in Western Europe and more in line with the proportions in Southern Europe. Accordingly, the gaps between East Central European consumption levels and those of the leading European economies tended to be of a smaller magnitude than the disparities between per capita GDPs in the two regions. After World War II, however, the share of accumulation in the regions grew, only in certain years, initially, but later for longer time spans, and thus the share of consumption in the GDP there dropped. As a result, the consumption gap between the eastern and western halves of the continent grew even faster than the disparity in economic performance. This high degree of accumulation in the postwar decades was related to the priorities of economic planners, the possibilities open to them, and the characteristics of the economic system. In the early part of this period, the goal of increasing consumption was subordinated to economic growth everywhere in the region, and the high investment rate was thought to serve the latter aim. In addition, central economic authorities were in possession of every possible means to increase investments to rates substantially higher than their previous and internationally customary levels, even at the cost of consumption. Later, the satisfaction of consumer demand

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gained importance among the goals of decision makers. However, especially because of the low efficiency of investments, East Central European countries could produce growth at a  pace that was considered acceptable only by means of high levels of capital formation, again at the cost of consumption. It must also be noted that a significant portion of this growth in accumulation took the form of stockpiled inventory, which was also related to problems with the economic system. On the one hand, this was the result of hoarding on the part of enterprises struggling with the unpredictability of their suppliers; on the other hand, these firms often produced low quality goods that were difficult to sell, which also resulted in growing inventories.148 As we have seen, the intense volatility of investment levels also resulted in fluctuations in the share of consumption. Thus, the level of consumption was largely dependent on the planning authorities that determined investment quantities and defined other economic policy goals, which is one of the chief peculiarities in the consumption history of communist East Central Europe. This impact contributed a  great deal to the politicization of consumption.149 Nevertheless, scholars are not in complete agreement about the relationship between consumption and investment, especially in the case of the centrally planned economies. Most are of the opinion that the goal of centralized economic administration was the maximization of growth, and that the main tool for accomplishing this aim was a  high level of investment; that is, the development of consumption was subordinated to investment, which crowded out consumption.150 According to others, consumption did not serve as a buffer, and fluctuations in its levels were not dependent on the desires of central authorities who considered investments to be their priority. Instead, economic growth, and thus investments, evolved cyclically, and consequently, the level of consumption as a  proportion of output also changed according to a  similar pattern.151 Concerning the argument put forward here, however, it does not particularly matter whether one or the other of these mechanisms was at work: the essential facts are that investment growth has an adverse effect on consumption, and that their proportions often shifted significantly from one year to the next. In examining the relationship between capital formation and consumption, it is almost as important to note that the structure of postwar East Central European investments diverged significantly from that of the Western European market economies. This difference appears, above all, in the

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share of total investment directed toward sectors which planners considered unproductive: housing construction, healthcare, education, etc. While the proportion of investment directed toward these sectors approached, and in some places reached 50 percent in Western Europe in the first two decades after World War II (and later exceeded that threshold everywhere in the western half of the continent), in Czechoslovakia between 1961 and 1965, for example, this figure was 25.6 percent; in Hungary in 1965 it was 25.3 percent, and even in 1980 it reached only 32.5 percent there.152 All this had an especially profound effect on housing construction. Even in the 1960s and 1970s, when the share of total investment dedicated to housing was relatively high in the countries of East Central Europe, it still lagged significantly behind levels that were characteristic of Western Europe. In Czechoslovakia, 15.7 percent of total investment was directed to housing construction from 1968 to 1977; in Poland in that same period, the figure was 14.9 percent;153 and in Hungary, it amounted to 16.8 percent from 1976 to 1980. Meanwhile, from 1976 to 1980, housing construction accounted for an average of 30.2 percent of the Netherlands’s total investments and 29 percent of West Germany’s.154 The communist regimes’ relative indifference to investments in housing and other sectors the decision makers considered unproductive had further negative consequences for the levels of consumption and for the qualitative characteristics of consumption as well, which will be considered later. In addition, over the longer term, their disregard for infrastructure also had damaging effects on human capital, which degraded the prospects of economic growth as well.155 2. As has been indicated in a  previous section, levels of consumption are influenced not only by capital formation, but by net export volumes as well. Whenever a national economy’s foreign trade balance is negative, the level of domestic use (consumption and capital formation) goes up, which has to be financed with credits or other transfers. There are also examples of the converse—for example, a trade surplus when a given national economy forgoes, at least temporarily, the use of a portion of the goods it produces. Disparities between domestic use and economic output were not unfamiliar phenomena in interwar East Central Europe. Systematic information on this subject is not available, but data related to capital flows and foreign trade might serve as a starting point.156 In the wake of World War I, the relative size of capital import was the largest in Hungary; according

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to the contemporary calculations of the finance ministry, the inflow of capital reached roughly 7 to 8 percent of the national income in the latter half of the 1920s.157 These sums cannot be fully regarded as additional resources that served to increase consumption, as a  large portion of this credit was used to cover financial obligations and make investments. In the other countries of the region, capital imports tended to be smaller in relative terms. In this respect, Czechoslovakia was in an exceptional position again: in the interwar period (disregarding a few years of the Great Depression), it actually exported a  significant volume of capital.158 Nevertheless, changes in Hungary’s and Poland’s foreign trade balances indicate that domestic use exceeded economic output in those countries in the decade after World War I.159 In Hungary, the difference between imports and exports—the foreign trade deficit—amounted to 2.9 percent of the national product from 1924 to 1929.160 In the 1930s, modest foreign-trade surpluses developed not just in Czechoslovakia, but also in the other countries of the region, including Hungary. Thus, on the whole, capital imports followed no marked pattern and had no significant influence on consumption levels in interwar East Central Europe. At most, we can say that capital flows allowed Polish and Hungarian policy-makers greater freedom to maneuver with regard to consumption in the 1920s, while capital exports from Czechoslovakia acted as a mild check on the domestic use of its gross national product in the interwar period.161 The disparities between the levels of economic output and domestic use were larger all over the region starting in the latter half of the 1950s, and in certain countries, these gaps were persistent, while elsewhere their dimensions were variable. Calculated with constant prices, Hungary’s domestic use exceeded its economic output every year from 1950 to 1983. The difference was generally significant, more than 6 percent, and its value was particularly high in 1957 (13.8 percent), 1971 (19.2 percent), and 1978 (14.7 percent).162 This suggests that Hungary could maintain a given level of consumption and capital formation only by increasing its external indebtedness. The transformation of the structure of imports also indicates that the motivation for the largest wave of borrowing in the 1970s was the intention to maintain or increase the level of consumption, not to boost investment.163 Starting in the early 1980s, Hungary’s economic policy of relying on foreign resources reached its limits. The assumption of further debt was no longer possible, partly because Hungary’s indebtedness had already reached a high level, and partly as a result of a sudden increase in borrowing costs. From 1982 onward, the repayment of these debts required

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a  positive foreign trade balance, the effect of which on the standard of living was exactly the opposite of the previous years or decades; that is, domestic use dropped. Poland followed a similar path, resorting to foreign loans to give themselves room to maneuver and increase consumption in the 1970s, but then the repayment of these debts forced cutbacks in consumption in the 1980s.164 Another important peculiarity of the East Central European centrally planned economies was the magnitude of the fluctuations in consumption ratio, which resulted from the preferences of economic policy-makers, political crises, and economic emergencies. Even more damaging to the level and quality of consumption was the peculiar structure of capital formation in the centrally planned economies, particularly their obliviousness to housing construction and other investments in infrastructure. A rough sketch of the evolution of consumption levels in twentiethcentury East Central Europe can undoubtedly be produced from economic output data and the aforementioned adjustments to it. It might also seem necessary to make use of the contemporary standard of living estimates that are available for some countries.165 These calculations, however, do not take entire populations into account and also rely on wage indices and are, thus, not representative of all households.166 Another approach characteristic of the historical literature on consumption is to describe levels of consumption by means of physical measures. Related studies feature data on numerous sorts of products, and tend to illustrate changes by tracking the evolution of food consumption (sugar, flour, fats, milk, etc.) or the ownership of consumer durables. These kinds of statistics, however, cannot convincingly characterize levels of consumption for several reasons. On the one hand, physical quantities—especially in the case of complex products—obscure differences in quality. The number of cars or refrigerators per thousand inhabitants tells us nothing about the quality or design of these goods. Furthermore, the nature of these indicators makes them unsuitable for aggregation: one cannot obviously compile numbers of shoes and television sets. For this reason, physical measures will play a role in the following section in the course of a discussion of the structural transformation of consumption in East Central Europe.167 Structural shifts: Constraints on consumer choice. There is relatively little data available concerning the relation of public and private consumption

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in interwar East Central Europe, but it is certain that public consumption amounted to a mere fraction of private consumption at that time, as was the case in the countries of Western Europe.168 The proportions of public consumption grew significantly in the communist period, though by international standards, these values were not particularly high.169 Meanwhile, especially from the 1960s onward, the proportion of GDP represented by government expenditures also grew significantly in the welfare states of Western Europe.170 In post–World War II East Central Europe, however, a number of peculiarities arose in the composition of government consumption, which is the sum of collective consumption and in-kind social benefits provided to the populace. The share of in-kind social benefits: healthcare, childcare, education, vacation, etc., was relatively high. These benefits appeared as a portion of government consumption, but they formed a part of private consumption alongside personal consumption.171 Within this category, the structural characteristics of private consumption demand the most attention given that the size of this type of consumption was and continues to be much larger than that of collective consumption. It was also primarily in this area that consumer choice evolved, which is of fundamental importance both for the development of consumer society in general and the trajectories of consumption in postwar East Central Europe. Over the course of the period under discussion, international trends concerning the patterns of private consumption surfaced in East Central Europe as well. As in Western Europe, there was a long-term moderation in the proportions of household-budget expenditures on food and especially clothing, while the shares budgeted for transportation, communication, housing, heating, energy, entertainment, and culture all rose.172 In most areas, however, this transformation was not as deep as it was in Western Europe, and in certain periods, distinctive tendencies developed as well.173 Our knowledge of the composition of private consumption in the societies of East Central Europe in the two decades after World War I is sparse at best. In addition, postwar inflation and the Great Depression both significantly distorted relative prices, which also affected the structure of consumption. The available data concerns only small subsets of the population in the region, and thus its representativeness is questionable. A sample of fifty working-class families and fifty middle-class families shows that in Budapest in 1929, food accounted for 53.3 percent of the expenditures of the former

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and 33.2 percent of the latter. Spending on clothes added up to 10 percent and 8.9 percent of their family budgets respectively, while rent and home maintenance claimed 17.6 percent and 23.5 percent of their expenditures; other components of consumption accounted for a few percent each.174 Thus, in this case, the proportions of expenditures that households dedicated to food were significantly higher than the levels observed in Western Europe and more in line with Southern European patterns.175 It appears, however, that the significance of food purchases among household expenses in interwar East Central Europe also dropped as a consequence of declining agricultural prices that resulted from the agrarian crisis. The proportion of expenses dedicated to clothing also decreased somewhat, while the shares directed toward durable goods and housing maintenance increased.176 After World War II, income structure and relative prices were thoroughly transformed in every country of the region, significantly influencing the structure of household expenditures.177 This partly resulted from postwar reconstruction, but it also reflected the priorities of the emerging communist system, for instance, its tendency to favor the industrial working class over the agricultural workforce or white-collar occupations. Though the incomes of this latter group remained higher, their advantage over the working class diminished significantly. Another striking feature of the emerging consumption structure was the proportion of expenditures dedicated to food, alcohol, and tobacco, which was high when judged by international standards. One cause of this development was the fact that per capita food consumption grew markedly starting in the mid-1950s, and thus East Central Europeans’ consumption of basic foodstuffs like flour, meat, and eggs soon reached levels on par with those of Western European countries. While the quality and variety of their food did not improve as significantly, these populations, which had suffered through the poor provisions and, in some places, outright famine of the wartime and post–World War II years, undoubtedly experienced this improvement as a great achievement. Food supplies were a problem, and thus an important political question in almost every country of the region, not least because their levels, after the aforementioned improvement, were not constant everywhere. Czechoslovakia was relatively quick to do away with food rationing, putting an end to it in the early 1950s. Hungary’s population was also in a relatively good position as their food supply could be described as relatively secure from the late 1950s onward. This was an important advantage over several other communist countries, and the relatively stable food supply clearly strength-

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ened the legitimacy of their regimes. In contrast, the levels of the Polish food supply fluctuated: availability, especially of meat, fell off again by the beginning of the 1970s, which largely contributed to social unrest in the decades to follow.178 At the same time, the households of the region continued to dedicate a  very large proportion of their expenditures to food: Hungarians were still spending over half their incomes on it in 1960, though the Western European average at that time was below 40 percent. Moreover, this gap between the Eastern and Western halves of the continent would continue to grow over the following decades: while the proportion of Western European consumption expenditures dedicated to food, alcohol, and tobacco decreased significantly over the next two decades (Table 3.1), their share barely dropped in East Central Europe over the same period. They still averaged 40.2 percent of a  Czechoslovakian household budget and 48.8 percent of a Polish budget in 1978, and 44.9 percent of a Hungarian budget in 1980.179 Even with the more rapid decline of the 1980s, the households of East Central Europe were still spending a notably high proportion of their incomes on food in 1990.180 This suggests that although Engel’s Law prevails in East Central Europe, that is, the higher the personal income becomes, the less is spent on food in relative terms, the income elasticity of food consumption was relatively small there in the decades after World War II.181 The percentage of income spent on food rose nearly as fast as the percentage increase in income. The picture changes somewhat if food and luxury goods like alcohol and tobacco are considered separately. The proportion of expenditures dedicated to tobacco, coffee, and alcohol was growing in East Central Europe while it was falling in the societies of Western Europe in the postwar decades. By the end of the 1970s, Hungary had reached the point where its residents were spending more on these items in relative terms than the people of any Western European country except Ireland. In 1983, Hungarians devoted 8.1 percent of their household budgets to such goods; this figure was 6.7 percent in Denmark at that time and under 4 percent in Italy and the Netherlands.182 The proportion of expenditures dedicated to clothing was also fairly high in the region in the decades after World War II. This was not the result of any particular consumer preferences, but rather a  consequence of the relatively high prices of apparel.183 Nevertheless, it was in this area that the transformation of the structure of consumption proceeded at its fastest

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pace over the following decades. In 1960, Hungarian households spent 14.8 percent of their budgets on apparel, while in 1990, only 6.5 percent. This was the result of a drop in the relative price of clothing (Table 3.1). Together, these two components—food and clothing—took up such a  large proportion of household expenditures in East Central Europe in the first few decades after World War II that they crowed out other types of spending to a considerable extent.184 This is especially true of housing, heating, and household energy supplies. Of course, this is also a result of the fact that rents and energy prices determined by central authorities were set at low levels. It is not possible, however, to apply that same explanation for housewares and home furnishings: their share of household expenditures was low although their relative price level was very high. The spending dedicated to healthcare also developed in a peculiar way: it was essentially stagnant for a long period and began to grow only in the late 1970s, a pattern which was notably divergent from international trends because these costs had already been rising elsewhere for decades. The share of private consumption expenditures directed toward transportation and communication was extremely low in the decades after World War II. On the one hand, this was partly the result of state subsidies for public transportation and railroads, which kept ticket prices low. On the other hand, there was always a serious shortage of communication technology: telephone supplies were very limited in most of these countries, and among the consequences of the shortage economy was a  continual failure to achieve a breakthrough in this area (Table 3.5). Supplies of personal automobiles would develop somewhat differently in certain countries in the region. In comparison with Western Europe, motorization began relatively late in Czechoslovakia (the 1960s), Hungary, and Poland (the 1970s), but it proceeded at a  faster pace.185 Despite the high prices and modest quality of personal automobiles, there was a particularly serious shortage in this area, and thus the process of motorization advanced only haltingly, which had a noticeable effect on the share of expenditures dedicated to automobiles. Even so, the pace of motorization still eclipsed the development of communication (Table 3.5 and 3.6). Finally, it must be noted that very high and dynamically growing proportions of expenditures were dedicated to education, culture, vacation, and sports, which was made possible in part by the previously mentioned high proportion of free or nominally priced in-kind benefits (daycare, complimentary use of company vacation destinations).186

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The divergence between the consumption structures of East Central and Western Europe was striking in the four decades or so after World War II. Differences in levels of development, national variations in preferences and habits of consumption, and higher or lower levels of consumption can only partly explain these structural disparities. The differences can be attributed primarily to the peculiarities of East Central European price structures and to the high proportion of in-kind social benefits there.187 Thus, for example, the high share of expenditures dedicated to food and clothing as outlined above can be traced back not to high levels of consumption of these items, but rather to the features of the price system. In comparison with the countries of Western Europe, food and particularly luxury consumables could be relatively expensive to obtain in East Central Europe, and more refined clothing could be pricy, too: in Hungary, the relative price level of luxury consumables (coffee, cigarettes, alcohol) was 124.4 percent of the average price level of private consumption, while the relative price level of clothing was even higher, at 128.6 percent.188 Finally, the analysis of consumption structure suggests that insofar as a large portion of households’ purchasing power was taken up by the acquisition of food, clothing, household energy, and other basic goods and services necessary for survival, there was very little room left for consumer choice in post–World War II East Central Europe.

3.2.2 Social variations in consumption: Gini, gender, and generations Specific social groups have varying levels of access to consumer goods and services, and they also use consumer goods differently. This section, then, is an analysis of the social differences between categories of consumers. The most important dimensions of the differences under discussion include class distinctions, generation gaps, gender, and the rural-urban divide. Income, occupation, and class. Information about East Central European income distribution during the early decades of the twentieth century is scarce. Nevertheless, several researchers suggested that the income inequalities that arose and grew during the first phase of the industrial revolution did not further intensify in the region. These assertions align with the general tendencies that have been observed in industrial societies, which would suggest that income differentials gradually decreased in this period: the variation in personal incomes declined, the ratio of labor

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incomes to capital revenues rose, and the income disparities between social classes faded.189 After World War II, incomes underwent a  rapid leveling in the new communist countries.190 In Czechoslovakia, the upper decile’s share of total personal income was 14 percent in 1962, which was the lowest level of income concentration in Europe—and probably the entire world—at the time.191 In addition, the income share of the poorest residents of this group of countries grew from the postwar period up to the end of the 1970s. Meanwhile, the situation of the middle classes, those who occupied the central 60 percent of the income scale, went largely unchanged. Starting in the 1980s, however, income inequality began to grow again in East Central Europe. The magnitude of this growth was not uniform: the tendency was clearer in Hungary and Poland, while the change was more moderate in Czechoslovakia.192 Gini coefficients from the late 1980s demonstrate that by that time, it was no longer communist countries that had the lowest levels of income inequality in Europe, but the Scandinavian countries, most notably Finland. The distribution of net incomes was more equal in West Germany than in most communist countries.193 In contrast to the abstract statistical categories mentioned above, historians generally analyze the situations of various social classes or groups. This approach reveals the relationships between belonging to a particular social group and the ways income is distributed to particular segments of society. At the same time, this approach makes comparisons more difficult in that the available studies often analyze social categories composed of divergent elements. Thus, relatively little is known about these aspects of interwar inequality in East Central Europe, even if it is obvious that income differentials between occupational groups and social classes were much higher at that time than they were in the second half of the twentieth century. Though income trends in the Western European democracies were also influenced by factors other than market mechanisms, income differentials in communist countries were much more directly shaped by political goals and decisions, a state of affairs facilitated by the fact that a majority of workers were employees of the state. As a result, the income structures characteristic of the interwar period were fundamentally transformed by setting the salaries of teachers, doctors, and other white-collar employees at levels substantially closer to manual workers’ wages than they had been before. For example, in Czechoslovakia in the 1960s, white-collar employees earned an average of just 17 percent more than manual workers, though

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it is true that this differential was larger in other countries: in Hungary and Poland, the gap was 57 percent. The level of differentiation within individual occupational groups was also smaller than in Western Europe: skilled workers could expect larger incomes than unskilled workers, though these gaps ranged from a mere 5 percent to 20 percent, and in Poland these disparities were negligible.194 Consequently, there was a  significant change in the position of the industrial working class relative to other social strata. In accordance with the ideology of the communist systems, workers’ relative income levels and social status improved, especially in comparison with their position in the interwar period, but also relative to their Western European contemporaries as well. In Poland in 1937, non-manual employees earned on average three times as much as manual workers, while in 1960, they brought home only 9 percent more.195 In comparison with Western Europe, these workers also enjoyed a greater degree of job security. The relative equality of incomes, however, was accompanied by other kinds of inequality that put the working class in a relatively disadvantaged position (for instance, in terms of health conditions and life expectancy). The political priorities of the regimes were also reflected by the low wages of the agricultural population. Central planners hoped to drive the rural workforce into manufacturing jobs; however, the wage gap illustrates the anti-peasant bias of communist ideology. It was after collectivization, beginning in the 1960s, that agricultural incomes made significant advances in catching up to the wage levels of industrial workers.196 These developments obviously affected consumption patterns. On the whole, such patterns were homogenized as a  consequence of what might be called the emancipation of industrial labor. The wage policies described above raised some segments of the working class, primarily skilled industrial laborers, into the middle class, even if this mobility was limited to income gains insofar as these gains did not extend to cultural capital. Especially in the 1950s and 1960s in Czechoslovakia, consumption was characterized by a relatively low degree of differentiation, even by the standards of other communist countries in Eastern Europe.197 In Hungary, as a result of the spread of private enterprise, it was not just employees of large industrial firms that were benefiting from this process by the 1980s.198 At the same time, social differentiation prevailed in the communist period, and after a  while—mostly from the 1970s onward—inequalities of consumption began to grow significantly in East Central Europe. All this had a con-

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siderable effect on the structure of consumption. The compression of the income scale initially tempered the demand for non-essential goods and services, but later, growing income inequality increased the public appetite for such goods and also intensified the consumerist aspirations and frustrations of the social strata that were lagging behind. It is also important to stress that in the communist countries, income distribution did not completely describe differences in access to goods, and neither did they properly express inequalities of consumption.199 Among these factors, two deserve particular attention: the system of price subsidies and turnover taxes, and unequal access to shortage goods. As János Kornai and others have pointed out, an extensive system of price subsidies and turnover taxes developed in communist countries. The explicit goal of the system was to make the most important goods and services available to lower income social strata while forcing consumers of luxury goods—or products regarded as such—to make greater material sacrifices. On the one hand, price subsidies affected a wide range of goods and services, such as public transportation, heating fuel, rent, milk and bread, theater tickets, and recordings of classical music. Moreover, certain services, for example, daycare and children’s music lessons, were available at no charge or for nominal prices. On the other hand, personal automobiles, higher-quality articles of clothing, and certain import goods, for example, were taxed at high rates.200 Price subsidies, however, were not simply elements of social policy; they also fulfilled other social and economic functions. Most importantly, they served as a means of support for unprofitable producers. In particular, companies with a good bargaining position, that is, with leaders who enjoyed well-established connections to the party or planning bureaucracy, could often secure generous price subsidies for their products. Price subsidies were a major category of budget expenditures for the communist states of Central and Eastern Europe, though their proportions were not uniform. In 1988, consumer price subsidies accounted for 5 percent of Hungary’s GDP and 10 percent of Poland’s,201 although in the latter case, these expenditures did not assume the proportions that they would in East Germany in the 1980s, where the sums dedicated to price subsidies exceeded expenditures on social insurance.202 Price subsidy trends were also peculiar, in that they diverged from the dynamics of welfare benefits. Hungarian price subsidies—excluding housing allowances—grew at their fastest pace in the 1950s, the 1970s, and the first half of the 1980s, and then, after reaching

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their peak in 1986–87, they steeply declined.203 Additionally, a number of researchers have found that their redistributive effect was limited, or even that the wealthier strata were overrepresented among the beneficiaries of such policies.204 Moreover, in certain areas, for example in healthcare, these subsidies led to a significant waste of resources.205 For these reasons, there are scholars who describe price subsidies as a perverse form of redistribution.206 The practice of redistribution often observable contradicted professed principles, and this inconsistency was especially notable in housing. In the years after World War II, a significant portion of the urban houses and apartments in the communist countries of East Central Europe were nationalized and used as rental housing, while dwellings in villages and rural areas remained almost exclusively private property. This in itself led to significant inequalities because in practice, only the urban population had access to heavily subsidized rental housing. Almost all the inhabitants of villages and rural areas had to provide their own lodging, building and maintaining their own homes. A  number of studies have also suggested that the distribution of housing in urban areas did not reflect the incomes of tenants, that is, it was not the poorest residents who had access to the dwellings with the lowest rents. On the contrary, tenants who found good prices for large dwellings that were in good condition and in desirable locations tended to come from the upper social strata. Thus, white-collar professionals and highly skilled workers received a  greater share of publicly built and publicly owned apartments than did semi-skilled and unskilled laborers with lower incomes.207 The expense of buying a  home represented an extraordinarily large share of average incomes. As Iván Szelényi has suggested, in a  large part of the region, the subsidized portion of the monthly rent for a newly built state apartment could approach the value of an industrial worker’s monthly earnings.208 Thus, those households that built or bought their own homes were able to consume substantially less over the long term than their fellow citizens who managed to acquire state-owned housing, even though official income differentials did not necessarily reflect this gap.209 Access to several other free or low-cost services was also marked by significant inequalities sometimes linked to specific types of workplaces. Employees of enterprises and institutions that had their own resorts might have had access to free or very cheap vacations, especially if they were among the “better connected.” As a  rule, agricultural laborers had fewer

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opportunities to take advantage of such services because rural workplaces did not generally have their own vacation resorts. Overt distributional inequalities appeared immediately following World War II: the ration-coupon system gave preferences to certain social groups including members of the armed services, laborers who performed physically demanding jobs, and workers in economic sectors that were considered to be of crucial importance, such as mining and steel production. By the middle of the 1950s, rationing systems were falling out of use, but merit-based principles of distribution in the above sense continued to determine access to certain goods like housing and automobiles.210 These more or less open forms of distributional inequality, however, were less significant than the system of hidden consumption inequalities that governed access to goods in short supply.211 One of the inherent features of the shortage economy was that the more sought-after and better quality products were often available only to people who had the right informal connections or to small groups privileged by the regime (upperlevel party leaders and members of the party bureaucracy, outstanding athletes, leading scholars, etc.). These groups were entitled to the services of less crowded and better equipped clinics and hospitals, while certain institutions were maintained exclusively for their benefit. The privileges of lower-ranking members of the nomenclature were less formal; rather, they had access to scarce or high-quality goods and services depending on their informal standing and connections. Employees who produced or distributed these scarce goods, and often even the shop assistants who handled them, were able to capitalize on their positions by securing such items for their relatives and friends. Members of the upper echelons of society had access to these goods through special shops, a theme to which we will return. These factors suggest that the actual levels of consumer inequality in the communist countries of East Central Europe were almost certainly deeper than income distribution statistics indicate. The consumer practices and consumer behaviors engendered by the shortage economy, along with the broader social consequences of this system, will be the subjects of the following section. Gender. Gender was another important dimension of income inequality. In fact, throughout Europe, even at the turn of the millennium, gender was usually a more important determinant of one’s income level than one’s belonging to any particular occupational group. Though non-manual employees typ-

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ically earned more than manual workers, the incomes of female non-manual employees in all but a few countries were lower than those of male manual workers. This disparity cannot be explained by referring to differences in qualifications: women’s average incomes with a few exceptions lagged behind men’s, even when their occupations were the same.212 In addition, sectors typically associated with female workforces tended to offer lower wages than other sectors. Though the high proportions of women who pursued higher education and high female employment rates were considered major successes of women’s emancipation in communist countries, the persistently significant gaps between men’s and women’s wages demonstrate that this process had its limits. In Czechoslovakia in 1959, women in the same position took home an average of 66 percent of a  man’s wage, and this disparity decreased only minimally in the following decades: the corresponding number was 68 percent in 1988.213 In the 1970s, Hungarian women were paid an average of three-quarters as much as men in the same jobs, a  gap roughly in line with the differences measured in West Germany, Finland, Great Britain, and the Netherlands—the ratios in Denmark (86 percent), Italy (85 percent), and Sweden (92 percent) reflected substantially more equal incomes.214 In Poland, gender differences were more significant than in Czechoslovakia and Hungary, but all in all, in the 1970s and 1980s, the gender income gap in the East Central European countries was comparable to those in Western Europe.215 Nevertheless, the locus of consumption is the household, which is particularly important for an analysis of East Central Europe, where high rates of marriage prevailed throughout the twentieth century, and thus where most households consisted of a male and female partner. The members of a household tend to aggregate their incomes and consume them jointly so it is difficult to translate gendered income differentials into differences in consumption. However, leisure time is one possible indicator of gendered inequalities in consumption, and it can also be used as a  proxy for such divergences. We have access to a  relatively precise and comprehensive portrait of the distribution of leisure time starting in the 1960s, when several countries launched extensive series of time budget surveys conducted using identical methods.216 According to these surveys, quantities of household labor (including production in the household unit) and leisure time were divided unequally between individual family members in East Central Europe in the final decades of the twentieth century. Even though house-

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hold appliances and a range of new services reduced their burdens, women still took care of an overwhelming proportion of the domestic chores.217 It is true that men in this region took part in household labor at rates roughly in line with wider European averages;218 however, gendered differences in leisure time, and especially in the amounts of time available for entertainment, continued to be substantially larger in East Central Europe. According to a 1965–66 survey, urban married working women in Poland had 67 percent of the free time of similarly situated men; this figure was 63 percent in Czechoslovakia and 62 percent in Hungary, and these numbers were similar to, if somewhat lower than the corresponding ratios in Belgium (69 percent), France (64 percent), and West Germany (76 percent).219 Disparities in the relative amounts of time available for entertainment, however, varied considerably within East Central Europe. In Poland in the mid1960s, for example, married working women with children spent 64 percent of the time that similarly situated men spent on entertainment; this ratio was 85 percent in Czechoslovakia but only 55 percent in Hungary. The corresponding figure was 74 percent in Belgium, 76 percent in France, and 97 percent in West Germany.220 According to another series of surveys, between 1963 and 1976, the amount of leisure time available to Hungarian women aged 15 to 69 actually dropped in comparison to the amounts available to men, and even though the gap closed over the following decade, the proportion was still only 73 percent in 1987.221 These differences between the genders diminished more rapidly in Western Europe: data for seven Western European states suggests that the quantities of leisure time available to women there were, on average, 95 percent of the amounts available to men in the 1980s.222 Generations. Age and generation are also factors exerting significant influences on patterns of consumption. Earlier research has not taken into account how generational shifts shaped consumption in East Central Europe even though this factor is essential for an understanding of the role consumption played in state socialism and the evolution of these regimes. In most of the countries of Central and Eastern Europe, the mid-1960s saw the emergence of a  new generation of young consumers who paid a great deal more attention to fashion; strove to acquire the sorts of products that would provide them with autonomy and mobility; and used such goods to express their own particular youth culture.223 Like their peers in the West, young East Central Europeans expressed these desires in the con-

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sumption of motorcycles, transistor radios, and records as well as in their choices of entertainment, such as rock concerts.224 Thus, in the 1960s, the consumption habits of the generation that was around twenty years old diverged much more substantially from the aesthetic ideal of the communist consumer than their parents’ generation did.225 Although there were undoubtedly parallels with developments in the West, the substantial differences between East Central and Western Europe cannot be ignored. Generational shifts in consumption preferences and practices took place in a considerably different manner in the two regions. In postwar Western Europe, on the one hand, growing material well-being and physical security contributed to a significant shift from materialist to post-materialist value orientations.226 In East Central Europe, on the other hand, there was no comparable diffusion of post-materialism. In fact, value orientations there seem to have shifted in the opposite direction, toward materialist values and an increasing appreciation of consumerism. Unfortunately, comprehensive empirical investigations of this phenomenon are scarce. According to one such analysis, consumers in the communist countries had even more incentive to acquire material possessions since luxury consumer goods imparted even more status to their owners than they did in the capitalist countries of Europe.227 One important cause of materialism was that the younger generations born after the war were unable to establish and maintain their own lifestyles or make certain elements of their lifestyles socially dominant the way their Western European peers did. The urban middle classes, which were the primary bearers of post-materialist values, were substantially smaller in East Central Europe,228 but East Central Europeans were almost universally married by the time they reached their mid-twenties, which fundamentally changed their consumption behaviors. Paying for housing and providing for their families absorbed most of their income and time. And an even greater rupture would affect their material situations later, when they reached retirement age around the end of the century because the post-communist transformational crisis reduced standards of living everywhere in the region, where pensions were much smaller in relation to wages and salaries than they were in Western Europe. In the countries of East Central Europe, long-term value changes were not primarily determined by increasing material well-being. Improvements in consumption levels were not as substantial and certainly not as sustained and reliable as they were in the consumer societies of the Western

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half of Europe. The population of the region was increasingly aware that they were lagging behind Western standards of living and generally perceived this change as a fairly relative improvement. In contrast, political factors played a more significant role in the formation of the region’s value systems. Political upheavals such as the unsuccessful revolts of 1953, 1956, and 1968 pushed the population away from public activities and toward materialist objectives. In itself, this reality, in addition to the aforementioned shortages and the public’s strong awareness of them, obstructed or prevented the spread of post-materialist value orientations. While earlier age cohorts displayed their political dissatisfaction directly, later generations used consumption as an important means of expressing opposition to the system, or at least detachment from it or ambivalence toward it. This tendency manifested itself in particular forms of conspicuous consumption, which will be discussed in the following section. Urban and rural areas. Another important dimension of consumer inequality was the urban-rural divide, several important aspects of which have already been brought to light in this section. Throughout the first few decades of the twentieth century, ethnographic and economic research documented the distinctive consumer cultures of the region’s rural populations. Self-sufficiency was an important part of these cultures, especially with regard to food consumption but also in the areas of clothing, housing construction, and home furnishings. In the second half of the century, however, the traditional peasantry began to disintegrate, a  process that accelerated in those countries that launched collectivization campaigns. In the 1950s, the classical period of the economy of shortage, the availability of food was obviously less of a problem in the villages, though the provision of other types of goods, such as clothing and consumer durables, was even worse there than in the cities. Poverty among the elderly assumed much larger proportions in rural areas especially up to the 1960s, partly because in Poland and Hungary pension entitlements were slowly extended to agrarian populations.229 Collectivization spurred a number of changes in the consumption patterns of the peasantry in the affected societies. It marked the beginning of the political emancipation of the rural population, which was illustrated by the growing attention authorities paid to the supplies of goods that reached the villages. The gap between the consumption patterns of rural and urban populations remained a significant dimension of inequality in East Central

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Europe during communism, but the homogenization of consumption levels and consumer practices of these segments of societies would continue throughout the 1970s and 1980s in every country of the region.230

3.2.3 Consumption practices: Waiting, hunting, gathering, blackmarketing In order to describe the transformation of consumption in twentiethcentury Europe, it is not enough to examine the levels and structure of consumption or the standards of living there. These elements have to be supplemented with discussions of what might be called qualitative factors, especially consumer choice, which play a decisive role in determining consumption practices. This will be the chief purpose of the following section. Along with other qualitative aspects of consumption, the selection of goods available in East Central Europe in the interwar period was undoubtedly different from the range of choices found in the countries of Western Europe, but the disparities were not profound. In addition to cultural traits that influenced consumer preferences (and thus supply), it was primarily East Central Europe’s lower purchasing power that produced these differences in as much as it affected the selection and quality of the goods that were traded there and the commercial forms. Czechoslovakia typically kept up with most of the societies of Western Europe in its consumption of many of the durable goods that appeared in the period, like radios, telephones, and automobiles. The other East Central European countries lagged significantly behind, though this difference did not grow but rather stabilized during the interwar period. It is worth noting, however, that the numbers of radios and telephones per thousand residents in Czechoslovakia and Hungary were higher than in some Southern European nations in the 1930s (Tables 3.3 and 3.5). Thus, various consumer goods began to spread in accordance with the levels of economic development in the countries of the region. Meanwhile, consumer autonomy was hardly limited as is demonstrated by the presence of leading brands like Philips, Siemens, and Mercedes-Benz in the radio and automobile markets.231 Foreign exchange restrictions introduced during the Great Depression reduced the range of choices available to the consumers of the region, though these regulations had a greater impact on the use of currency while abroad than on domestic commerce. The limited extent of purchasing power can explain the fact that modern forms of commerce, like the department store, appeared at relatively

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late dates and spread relatively slowly in East Central Europe. The first modern shopping center in Czechoslovakia, for instance, the Bílá Labut (White Swan) in Prague, opened in 1939. Belated commercial modernization was also accompanied by other factors such as middle-class preferences for traditional shopping habits and consumption practices.232 Although some scholars assert a  connection between the diffusion of department stores and the emergence of consumer culture, the small number of classical giant department stores in interwar East Central Europe should not be any cause for doubt that consumer culture was spreading there. We see substantially larger disparities in this area in the decades after World War II. In the years immediately following the war, rationing systems and shortages, especially of food, were the more or less natural consequences of the military destruction, economic disorganization, and inflationary characteristic of wartime. And while food supplies were normalized over the course of a few years in most Western European countries, the socio-economic system brought into being by the communists’ seizures of power in East Central Europe resulted in what came to be known as the economy of shortage. The first half of the 1950s is regarded as the classical period of the economy of shortage in the region. As János Kornai, who coined the concept of the shortage economy, suggested in his classic work, shortages in this system were not merely isolated phenomena restricted to particular sectors of the economy, but rather a general characteristic that manifested itself in the realms of consumer goods and services, international currencies, imported products, and all kind of resources. These shortages were not merely temporary; rather they were permanent features of the system and had a powerful effect on the behavior of consumers and other economic actors.233 In this period, even the most fundamental items were often impossible to acquire through ordinary retail channels. The goods in short supply included basic foodstuffs like bread, meat, and cheese. Imported products were practically unavailable in shops. As a  result of these chronic shortages, consumers were forced to acquire important goods and services either through bureaucratic distribution mechanisms like registering for wait lists or other administrative allocation schemes, by standing in line for them, or by searching for them on the black market. Waiting, hunting, gathering, and black marketeering became major means of acquiring goods and services. The scarcity of goods affected not only the way these products were obtained; it also had an impact on the phase of consumption itself. People

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gave up on purchasing market services and instead resorted to self-provisioning and repairing, that is, these economies were marked by a process of renaturalization. Finally, shortages also shaped the needs and aspirations of consumers: household objectives came to be dominated by market materialization as people who were obsessed with finding scarce goods eventually turned to materialist values that drowned out life goals and aspirations associated with family, leisure, and civic activities. Reforms that were intended to reconcile the contradictions inherent in these centrally planned economic systems appeared fairly early on, starting in 1953.234 However, these reforms displayed varying degrees of depth and duration, which resulted in significant disparities in the quantities and quality of goods available in the individual countries of the region. Despite these reforms, scarcity continued to be a fundamental characteristic of the supplies of goods all the way up to the time of the 1989 system change.235 Hungary, for example, had introduced what were, in many respects, the most consequential market reforms in 1968, and it was the best-supplied country in the communist camp in several respects by the 1980s. Quantitative shortages of foodstuffs were no longer prevalent there, but it still faced occasional difficulties with supply, especially in rural areas, and even in this country, consumer articles manufactured in the West continued to be genuinely difficult to acquire.236 There were only a few types of commodities and services that were relatively expensive in the Western part of the continent but more accessible to the citizens of the communist countries. The most obvious example is the dacha. These small, architecturally modest holiday houses were typically located on the outskirts of towns and cities and surrounded by tiny gardens used to grow fruits and vegetables for the family.237 Other examples include art and music classes, which were cheap but available almost exclusively in urban settlements. Shortages were especially serious in the markets for housing, telephones, and automobiles.238 As has already been discussed in another context, rents were, for political reasons, set at very low levels; this, however, had very serious consequences for the general condition of housing stocks and for the construction of new dwellings. In the 1980s, the wait time for state-allocated housing was fifteen to thirty years in Poland, six to eight years in Czechoslovakia, and four to six years in Hungary, though these periods could be even longer depending on one’s social status, family situation, number of children, place of residence, and other factors.239 Furthermore,

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this system of allocation was generally available only to urban populations. Public housing was not completely unknown in the countryside (projects there were usually connected to some kind of larger industrial enterprise or collective farm), but on the whole, it played a very minor role in the lives of rural populations, and most residents of villages had no other choice but to build their own homes. Czechoslovakia was an exception due to its expulsion of German- and Hungarian-speaking citizens and other forms of emigration; as a consequence of these large population losses, there was a relatively plentiful supply of housing available in rural areas there. The period between a request for telephone service and the installation of a line could span more than a decade, especially in smaller communities, and in certain areas, it was simply impossible to obtain a phone connection. Initially, in the 1950s, private individuals were unable to purchase automobiles; the small number of cars in circulation were reserved for official use. Later, a  special permit was required to buy one; it was only in 1957 that Hungary allowed a  couple of models of cars to be sold without a  permit. After East Germany, Czechoslovakia became the first communist country to come up with the idea of a people’s car, which became the subject of serious experiments at Škoda’s Mladá Boleslav factory starting in 1954, and which finally rolled off the assembly line in the form of the Škoda 1000MB in 1964.240 Despite later, similar attempts in Poland, East Central European motorization was characterized by significant shortages and low quality vehicles, and not just in its early phases, but in later periods as well. The chief method of distribution was the wait list combined with the payment of a deposit. In 1989, the wait for a Soviet-manufactured Lada, the design of which was based on an early-1960s Fiat, was five to six years in Poland, three to four years in Czechoslovakia, and four to six years in Hungary, waiting periods dwarfed by Bulgaria’s, where it could take ten to twelve years to get a car. The wait time for a Romanian Dacia, however, one of the less desirable makes, could be substantially shorter.241 While on the subject of automobiles, it is worth turning briefly to the difficulties comparative studies face when they deal with the consumption history of communist countries. They often fail to take into account the fact that shortages and low quality were fundamental characteristics of the supply of goods in East Central Europe. A representative example of this approach is the typology of the noted Swedish sociologist, Göran Therborn, who set up a typology of postwar consumer societies on the basis of an analysis of car and television ownership per thousand inhabitants, or,

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more precisely, the ratio of cars to televisions. He categorized consumption patterns in communist Czechoslovakia and Hungary as “car-driven” alongside countries including Sweden, Switzerland, and West Germany. In so doing, he neglected not only the considerable difference between the East Central European rates of vehicle ownership and rates in Western European countries, but also the disparity in the quality of the automobiles in the two regions as well as the fact that the ways in which cars could be acquired and used in the two halves of the continent were completely dissimilar.242 A more plausible approach would be to describe the distinctively socialist car culture that arose in the region, the characteristics of which were in many respects representative of the broader consumer culture of these countries. The relevant features include the fact that the authorities there were never able to satisfy the demand for cars like many other goods and services. Given the lack of a functioning market, other distribution channels developed, and although they could not substitute for the market, they did at least ease the tensions created by shortages. These mechanisms included bureaucratic distribution and the black market. Non-market distribution mechanisms were marked by significant regional differences, but across the region, political elites were able to maintain their greatly privileged status up to the very end of the regimes.243 In addition to these factors, Western influences also affected the process of motorization in East Central Europe. The automobile was, in some ways, a Trojan horse for Western consumer culture insofar as designers, engineers, and especially consumers could hardly avoid direct comparisons with capitalist societies when assessing the quantity and quality of the models produced by them and available in their countries.244 The markets for services and other durable goods were also characterized by shortages and quality problems.245 Serious shortages greatly contributed to the fact that corruption appeared in and became a general condition of the healthcare systems of the region’s countries starting in the 1950s. Patients attempted, by means of extra payments, to skip the waiting times for treatment; to secure spots in preferred hospitals; or simply to assure themselves, their children, or other relatives of better, more attentive care.246 There were privileged groups who could take advantage of special channels to obtain otherwise unobtainable goods. As outlined above, members of the political nomenklatura, along with outstanding athletes, artists, and scholars were the beneficiaries of preferences in the allocation of housing,

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automobiles, and telephone connections.247 Those who had sufficient material resources such as entrepreneurs in the shadow economy could, in certain cases, use bribes to access these sorts of goods as well. In Poland, the Office of the Council of Ministers (Urząd Rady Ministrów) had a  certain number of cars it could distribute to private individuals, and it was an open secret among leading Polish intellectuals that one could obtain an automobile through the prime minister’s office, so large numbers of these scholars petitioned the ministry in hopes of acquiring a vehicle.248 Early in the communist era, special shops with otherwise unobtainable goods and lower prices were established for the socialist aristocracy, that is, the upper stratum of the nomenklatura. Hard currency shops, which often operated in hotels and were theoretically established for the use of foreign tourists, fulfilled a similar function. These sorts of outlets, like the Pewex network in Poland or the Tuzex shops in Czechoslovakia, allowed the privileged strata who had access to convertible currencies, including those who had relatives in the West, to obtain goods that had been produced in Western countries and were not available elsewhere, or simply to procure domestic products made scarce by shortages.249 Nevertheless, these kinds of retail operations were not distributed uniformly throughout the region. In Hungary, the sorts of exclusive outlets that were available only to the socialist aristocracy were already beginning to wither by the 1970s, and the volume of sales in hard currency shops there was smaller than in Poland.250 Though Polish and Hungarian family enterprises were officially allowed to operate as small manufacturers, service providers, and retailers, on the whole, they constituted a very small proportion of the respective sector. In Poland in 1950, for example, they accounted for 6.6 percent of the country’s non-agricultural work force, and by 1980, this figure was only 4.9 percent.251 The informal economy, which was of much greater significance, developed in a variety of forms.252 The major motivating force behind these sorts of operations was not the desire to avoid taxation as was the case with most similar activities in the Western European market economies; instead, they tended to be reactions to the anomalies of the shortage economy and to economic restrictions implemented by the state. Jerzy Kochanowski distinguishes several kinds of illegal and quasi-legal markets in communist Poland: the quasi-legal “gray market,” the essentially illegal “brown market,” and the black market, where traffickers exchanged goods acquired through criminal activities. Among the quasi-legal, mostly tolerated, and most significant forms of informal economy were the private sales of foodstuffs and

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the renting or selling of privately owned or already leased real estate. Car repairs, tutoring, private medical consultation, and a  range of other services were also offered on the gray market. A portion of these activities was performed after work, often at the workplace, using the tools and equipment available there. The goods traded on the illegal brown market were primarily items that were theoretically available at state retail outlets but were in short supply. These goods were often held back or stockpiled at factories and shops and then marketed through various channels at prices above those established by the state. Finally, the black market involved traffic in goods that were obtained or produced through overtly criminal activity, such as liquor sales that bypassed the state’s alcohol monopoly.253 At the same time, authorities’ decisions about what was permitted and what was forbidden could change depending on the country and the era. Accordingly, official judgments of a particular “criminal” activity might be revised in relatively short order. Authorities could also use discretion in deciding which laws to apply to a  particular case. Additionally, more permissive periods in a particular country might be followed by strict enforcement campaigns: authorities might initially turn a blind eye toward forbidden or restricted activities and then suddenly launch a crackdown designed to repress them. A good example of an activity that was sometimes tolerated and sometimes investigated is moonlighting. Because the means of production were almost never privately held, employees of state and collective enterprises often used the machines, tools, raw materials, and vehicles at their workplaces to produce goods and services for private use. Workers usually engaged in this kind of production to satisfy their own needs or those of their families, or to provide themselves with goods that had become unavailable due to shortages. It was, thus, one of the most notable forms of self-provisioning that prevailed in these economies. Officially, of course, moonlighting was forbidden everywhere, though enterprise managers generally ignored it, taking issue with it only when it began to consume an excessive proportion of a workplace’s resources. It should also be noted that the number of prohibitions was already dropping in Poland and Hungary in the 1970s, when a significant portion of formerly black market activities began to slide over into the gray market or even into the realm of legitimate commerce. For instance, Polish tourists—taking advantage of their nation’s relatively lax travel regulations— created a significant network of legal and quasi-legal exchanges of goods in several of the region’s countries in the 1980s.254 These sorts of establish-

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ments sprang up in Hungary, too, where they were mockingly referred to as Comecon markets or Polish markets; even in that period, however, stricter Czechoslovakian authorities were still quick to intervene and prevent such transactions.255 Another peculiarity of the consumption history of the communist countries was the important role that workplaces played in supplying their employees with goods and especially certain services. Although it was not unheard of for Western European employers to offer certain social welfare benefits to their workers, these programs were substantially more extensive in the communist systems of Eastern Europe. Factories and other workplaces offered a number of social welfare programs as benefits, including childcare, sports clubs, cultural centers, medical clinics, and vacation resorts. The existence of these programs and the extent of their facilities were determined by the size of and level of resources available to the enterprises that maintained them; a giant metallurgy firm might have supported the operations of several daycare centers while a small construction cooperative might not have been able to support even one. Certain kinds of goods were also distributed through the workplace: firms often used their own vehicles and employees to procure potatoes, apples, and other basic foodstuffs for their workers. Workplaces’ most significant influence on distribution, however, may have the effect they exerted on the market for housing, which was among the goods in shortest supply. Some enterprises and institutions were endowed with housing for their workers; some had the right to nominate the tenants who could lease certain housing; and others were able to determine which of their employees could purchase a flat. Households continued to be the most important locus of consumption throughout the twentieth century and beyond. From the description above, it would seem that there were three large waves of changes in the locations where consumption took place. The appearance of department stores in the interwar period, though it essentially affected only the region’s larger cities, was the first such significant change. The next, even larger transformation in the system of consumption began in the 1960s, when self-service shops began to spread throughout the region although the diffusion of workplace dining halls and school cafeterias was almost as important a process. The most important shift, however, as we will see, was initiated in the 1990s and involved both a transformation of commerce according to the principles of the market economy and the technological change taking place all over the world.

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3.2.4 Leisure patterns: The advance of television Working time and leisure time. As we have seen, the growth of leisure time was an important aspect, if not the fundamental driver of the development of the consumer societies of Western Europe over the course of the twentieth century. A useful starting point for a study of changes in leisure time in East Central Europe might be to frame the concept as the time that remains after the completion of those other tasks that are necessary for survival, including, above all, work. Accordingly, the first part of this section will be an examination of trends in working time, followed by a discussion of developments in the typical uses of leisure time.256 The regulation of working time in the industries of East Central Europe began at the end of the nineteenth century, but this process accelerated after World War I. The eight-hour workday was introduced in Czechoslovakia in 1918 and in Poland in 1919.257 In Hungary, however, the length of the workday continued to be determined by business cycles well into the interwar period. Thus, as the economy boomed in the latter half of the 1920s, working times grew alongside it.258 As a result, in 1928, only 45.4 percent of Hungarian manufacturing laborers worked eight hours or fewer per day in the summer, and only 55.1 percent this length of workday in the winter.259 It is true that a substantially higher proportion of miners worked days of eight hours or less, while in agriculture, which employed the largest number of workers, and in the hospitality and retail industries, the proportions of laborers in this category were even lower. In 1937, the standard workday was fixed at eight hours, and the work week was set at fortyeight hours except in the agriculture and hospitality sectors.260 Poland and Czechoslovakia also led the way with the introduction of paid vacations in the wake of World War I, although it is important to emphasize that most of the regulations of working time described above did not apply to agriculture, and thus, with the exception of the agricultural laborers of Czechoslovakia, the largest group of workers in the region were still not covered by such labor laws. An important factor in the reduction of the working time of the populace was, thus, the structural transformation of the economies of the region insofar as this process signified a drop in the proportion of workers employed in agriculture, a sector which was generally characterized by longer working times except in the winter. This observation is valid not just for the interwar period, but even more so for the two decades after World War

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II. Reducing working times in the manufacturing and service sectors was not on the agenda during the period of reconstruction and forced industrialization. Political declarations and public discourse at that time were much more concerned with the need to make more intensive use of working time. Starting in 1956, countries in the region began to reduce the length of the work week from forty-eight hours, and thus by 1967, only Hungarian employees had to work six full days a week.261 Conditions of employment in East Central Europe continued to include few paid holidays and vacations and widespread overtime. Accordingly, the number of hours worked in the region at the beginning of the 1960s was still high in comparison with Western Europe. Time budget surveys from medium-sized cities in the mid-1960s suggest that residents of Olomouc, Czechoslovakia, spent a  daily average of 337 minutes on paid labor, while inhabitants of Torun, Poland spent 334 minutes per day and those of Győr, Hungary, 374. These numbers for the West German city of Osnabrück and six French cities, however, were 234 and 277 respectively.262 In addition to the causes already mentioned, another chief reason for the excess working time in East Central Europe was the high level of female employment in most countries of that region, which affected these averages. Moreover, starting in the 1960s, side jobs became an important means of acquiring supplemental income in several East Central European countries. Data for all employees also indicates that time spent on the job continued to decline, and that the pace of this reduction accelerated somewhat during the 1970s and 1980s, even if it still lagged behind the dynamics observed in Western Europe.263 At the end of the 1960s, for example, Hungarians still averaged well over two thousand hours of work per year, a number exceeded only by the Irish in Western Europe.264 Working times dropped at a relatively significant rate in the 1980s, at least partly as a result of the introduction of the five-day work week in 1981. Thus, by 1990, Hungarian employees were spending an average of 1945 hours per year at their primary workplaces, which was on average about 250 hours more than their Western European counterparts.265 This differential was 160 hours in Czechoslovakia, and 420 hours in Poland (Table 3.7). Meanwhile, however, there was considerable growth in the amount of time Hungarians, especially men, spent acquiring supplemental income, either through side jobs or overtime.266 According to the time budget statistics, these forms of supplemental employment ate up two-thirds of the reduction in working times. Second

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jobs were not as common in the other countries of the region, and thus did not have as profound an effect on leisure time there. The regulation—and the slow down and later accelerating reduction— of working times over the course of the first two-thirds of the twentieth century did not merely increase quantities of leisure time; it also facilitated the separation of labor and leisure.267 These processes, which were observable across Europe, made it both possible and necessary to organize regular after-work activities. In addition to traditional forms of entertainment, new ways of using leisure time: bathing at the beach, watching movies, participating in sports, traveling and tourism, were already spreading by the end of the nineteenth century, primarily in the larger cities at first. In addition to increasing quantities of free time and sharper distinctions between work and leisure, a host of other socio-cultural and political processes also contributed to the diffusion of these new activities. Chief among these factors were growing urbanization and commercialization, but changes in social structures, especially the development of the service industry and the increasing dominance of employees, were equally important. In the wake of World War I, an emphatic demand arose for useful ways to spend leisure time, which led to the popularization of sporting activities that served to revitalize the body and the spirit. Football, also known as soccer, would become and continue to be the most popular sport across the region. Large numbers of people began to play football in part because it did not require complicated equipment. Many also started playing the sport competitively; matches attracted large numbers of spectators and became a form of entertainment in their own right. The first national championship was organized in Hungary in 1901, and over the following decade, Budapest saw the construction of stadiums outfitted with covered bleachers and other appropriate facilities. Poland launched its own national championship in 1918, and Czechoslovakia did so in 1925. Going to matches soon became a way for the masses to unwind; many found these spectacular displays of athleticism to be a relatively cheap form of entertainment, while supporting a  local team became a  way to connect to one’s community. Other sports, including ice skating and swimming, also attracted the masses, and rowing and nature hikes also became popular pastimes in the interwar period.268 In keeping with international trends, employers, especially at larger enterprises and institutions, regularly offered liberal support for their employees’ efforts to engage in healthy pastimes based on the assumption

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that doing so would have a positive effect on their work performance and loyalty. For example, the Czechoslovakian firm Bata helped create recreation options in the newly built sections of the city of Zlín in the 1920s. After World War II, socialist enterprises opened ball fields, public beaches, and rowing clubs, though these offerings were available mostly to residents of large industrial centers. These firms also supported athletic associations, which functioned primarily to organize sporting competitions, but which also played a key role in implementing state athletic policies.269 Physical fitness began to receive an increasing share of political attention during the interwar period. In several Slavic countries of the region, nationalism and sports were linked in a  distinctive way by the Sokol movement,270 and the connection between politics and sports intensified considerably during the communist period. According to official propaganda, athletic successes on the international stage were proof of the viability or even the superiority of the socialist system in comparison to capitalism. Regional leaders also hoped that these successes would improve the morale of populations that were suffering from shortages and other kinds of deprivation. Political goals were obviously served by mass sports events as well. In Czechoslovakia, union-organized athletic tournaments— the spartakiads—mobilized hundreds of thousands of young people who might not have been interested in events or organizations exhibiting an overtly political character.271 The sports themselves played the central role in these mass events, but the symbols of the system formed the backdrop, while local and national party leaders, along with youth-movement activists, received their share of publicity as well. Sports were also an avenue for social advancement, as successful athletes enjoyed privileges: they got nominal or no-show jobs, they could travel abroad, they had an easy time finding housing, and they often went unpunished for acts that might have gotten the average citizen into considerable trouble. Leisure time activities were increasingly commercialized over the first half of the century in the region, but this process was halted during the decades of communism, which can be traced by following the spread of cinemas and radio.272 In Hungary, the first regular projections of films took place in 1896; theaters dedicated exclusively to movies, like the Odeon and Apolló, were established in Budapest starting in 1906; and Hungary’s first film-distribution company was founded in 1908. There were 114 cinemas operating in Budapest by 1910; as points of comparison, there were 260 such establishments in Berlin and 400 in London at the same time. After

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the war, American films began to take regional market share away from French, German, and other European productions, but soon all the countries of East Central Europe had their own domestic film industries, which often benefited from policies of cultural protectionism.273 In 1928, there were 501 cinemas operating in Hungary—87 of them in Budapest alone— with 171,717 seats. These theaters sold twenty-six million tickets over the course of that year, nearly half of them in the capital city. 274 Hungarian theaters first projected sound films in 1929, and after 1931, they were among the first in Europe to show sound newsreels, which soon became a required portion of their regular programming. Starting in 1939, authorities made presentations of popular science and instructional films obligatory, along with productions conceived to “educate the nation,” as it was put at the time, while also outlawing expressions of opinion such as applause. Meanwhile, cinema operators were making their facilities more comfortable and differentiating their offerings: the New York news theater, which showed forty-five-minute newsreels all day, opened in Budapest in this period. Despite the attraction of sound films, the Great Depression slowed the spread of movie theaters in the early 1930s and sent ticket sales into a tailspin: in 1935, there were 599 cinemas but only nineteen million tickets purchased, though the number of viewers would grow rapidly again in the latter half of that decade.275 After World War II, the numbers of theaters and spectators grew rapidly in East Central Europe. In 1950, Hungary’s 1,549 movie theaters sold forty-seven million tickets. This form of entertainment reached its peak in Hungary around 1960, when 4,558 cinemas presented close to a  million screenings for a  total audience of 140 million ticket-buyers. At the same time, it would be hard to describe this period as a golden age of cinemas in the region given that the selection of films was relatively narrow; the best international productions never reached Hungarian, Czechoslovakian, or Polish theaters; and many of the movies that were projected were of an ideological nature.276 In any case, largely because of competition from television, film distribution went into a serious decline around that time: the average Hungarian visited a movie theater fourteen times per year in 1960, but only six times per year in 1980, and only once per year by the turn of the millennium.277 Radio broadcasts began in 1923 in Czechoslovakia, 1925 in Hungary, and 1926 in Poland.278 In accordance with international trends, the number of license holders shot up starting in the late 1930s, a  develop-

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ment that was obviously a  consequence of the public’s growing appetite for news about military developments.279 The sequence mentioned above also reflects the pace at which radio stations spread through the region. In 1937–38, Czechoslovakia issued user licenses at the highest rate, with seventy-two receivers for every thousand residents280 (Table 3.3). The number of radio licenses grew significantly in the period immediately following World War II as well, reaching what could be called market saturation by the mid-1960s, when Czechoslovakia was averaging almost one radio per household. As in most of the countries of Western Europe, radio stations in East Central Europe remained under state control almost up to the end of the century, a state of affairs that was simplified by the fact that—disregarding regional broadcasters—there were only a few stations operating in each of these countries. For instance, Poland had two national and eight regional stations, though even the latter were under the direction of central authorities. More significant changes arrived beginning in the 1980s, when the central monitoring organization, the Committee for Radio and Television, was no longer able to maintain its earlier forms of control. The first private radio stations, however, such as Radio-Market in Gdańsk, were established only at the very end of the 1980s.281 Cinema and radio undoubtedly transformed the way people spent their leisure time, but their greatest impact was limited to the middle decades of the century and never approached the level of influence later exercised by television.282 The first year of regular television broadcasts was 1952 in Poland, 1953 in Czechoslovakia, and 1957 in Hungary. Poland had only fourteen television licenses per thousand inhabitants in 1960, sixty-six in 1965, 129 in 1970, and approached one television per household in the latter half of the 1970s (Table 3.4).283 Programming time was initially minimal across the region: Hungarian broadcasts amounted to twenty-two hours per week in 1960 and exceeded eighty hours per week only at the end of the 1970s, even though a second channel had been launched in 1971.284 As in the societies of Western Europe, time budget surveys show growth in the amount of time spent watching television while also illustrating the evolving significance of other leisure time activities. In Hungary in 1963, the adult male population (18–60 years of age) enjoyed an average of 174 minutes of leisure time per day, the largest portions of which were spent on reading and studying (fifty-four minutes) and socializing (fifty-four minutes). Listening to music and radio broadcasts accounted for twenty-four minutes, watching television took up twenty-four minutes,

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attendance at cultural and athletic programs came to six minutes, while walking, hiking, and participation in sports took up another six minutes. Women divided their smaller allotment of leisure time (154 minutes per day) in a fairly similar way. Quantities of free time increased significantly over the following three decades, to 281 minutes per day for men and 241 minutes per day for women. For both genders, however, the leisure time gains achieved over the course of these decades were almost completely consumed by watching television, which by 1993 had grown to 159 minutes per day for men and 139 minutes per day for women. These quantities easily exceeded the amounts of time dedicated to any leisure activity, including socializing (fifty-nine and forty-four minutes respectively), reading and studying (thirty-four and thirty-two minutes), walking and sports (fifteen and eight minutes), listening to music or the radio (six and three minutes), and attending cultural or sporting events (three and two minutes).285 Changes in the use of leisure time were already homogenizing the habits of the various social classes as early as the interwar period. A good example of this standardizing effect is the impact of the cinema, though radio and television would turn out to be even more profoundly influential. Although the lower middle classes rarely visited the theater, members of these social strata regularly attended film screenings. Starting in the late 1960s, the spread of television sets had an even more powerful homogenizing effect, since viewers spent substantially more time in front of the TV than they had at the cinema.286 Among the other social effects of movies and television, it must be noted that they also helped usher in a change in the social position of women. From the beginning, cinema attendance was an accepted pastime for both genders, and this fact, along with the presence of emancipated female characters on the silver screen, helped facilitate the spread of new models of feminine behavior throughout East Central Europe in the interwar period. Later, starting in the 1950s, television would present gender equality in a more direct, sometimes even propagandistic manner. In the communist countries, the spread of movies, radios, and later television was much less influenced by commercialization than it was in Western Europe, but the popular media were much more affected by political control and government indoctrination. As pastimes, listening to the radio and watching television corresponded perfectly to the political goals of the regimes and to the structure of public discourse considered desirable by the political class. These forms of media were readily suscep-

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tible to centralized control and easily utilized for propaganda purposes; they also offered the public a relatively cheap form of isolated, individual entertainment. In the first decades of television broadcasting, programmers in the three countries of East Central Europe leaned on the same genres as their counterparts in Western European public television: movies, sports, and news. At the same time, they were diligent in their efforts to feature shows that were produced either domestically or elsewhere in the Eastern bloc although the dominance of such programming can also be attributed to their lack of hard currency.287 Television did markedly less to promulgate consumer culture in East Central Europe than it did in Western European societies: advertising, for example, played a much smaller role in the region’s broadcasts than it did on Western European channels. Even so, the effect that film and television exerted in this area should not be underestimated. In addition to Yugoslavia, it was primarily Hungary and Poland where Western films and television series began to trickle slowly into the Eastern bloc.288 These productions, along with news sequences about events in Western European countries, began to convey important information about consumer societies: modern cars and richly decorated homes, fashionable clothing and beautifully kept streets. Images like these had reached almost every stratum of society by the late 1970s, making everyone conscious of the disparities between Western lifestyles and their own. The development of mass tourism is another indicator of twentiethcentury trends related to consumption and the use of leisure time. When tourism began to evolve in East Central Europe in the nineteenth century, spa resorts were the primary destinations. Some of these, like Marienbad (Mariánské Lázně) and especially Karlsbad (Karlovy Vary) in a region that later became part of Czechoslovakia, handled a large flow of international travelers; others, like Opatija (now in Croatia), were less fashionable but still attracted an international clientele, while the reputations of still other resorts were limited to locals.289 Tourism to mountainous areas—to the Tatra region of Czechoslovakia and Poland, for instance—especially for therapeutic purposes, intensified in the interwar period. Though its proportions were smaller than in Western Europe and its Eastern variants were marked by significant peculiarities, mass tourism also developed in the communist countries after World War II. From the beginning of the new regimes, state propaganda put great emphasis on

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the vacation opportunities available to the social classes, primarily workers and other lower-level employees that had formerly barely participated in travel and tourism. Among the peculiarities of tourism in the region was its collective character; traveling in groups was supposed to stress solidarity among the workers, but this was also a means of political surveillance, especially during trips abroad. Moreover, this type of tourism was easier for larger, state-run companies to organize, and was, thus, more compatible with the centrally planned economy. The typical destination for summer travelers was a resort owned either by the state, a large enterprise, or a  trade union, which promised all-inclusive service at a  reasonable price, but usually operated according to very modest standards. Guests received the right to vacation there either on the basis of merit, as a reward, or simply by standing in line for it. In any case, the infrastructure for this system was expanded starting in the 1970s. In 1975, for example, Czechoslovakian trade unions and enterprises were running 1,845 resorts, while a  decade later, there were already 3,147 such establishments in operation, with 61,790 available beds.290 Cross-border tourism was limited to considerably narrower circles.291 In the communist countries of East Central Europe, foreign travel, even to the other states of the Eastern bloc, was a special privilege in the 1950s. In the following decade, however, restrictions were gradually loosened in most countries, and a significant stream of foreign visitors began to flow into the three countries of East Central Europe. Travels to Western countries were strictly limited all the way to the end of the 1980s, even in countries such as Hungary and Poland, which had gone further than any other Eastern bloc nation in liberalizing foreign travel for their citizens. Starting in the mid-1960s, ordinary Hungarians were allowed to make relatively frequent visits to capitalist countries: once every three years initially, and once a year from 1982 onward. One important factor was that passports did not in themselves entitle their bearers to travel; in order to travel to a capitalist country, it was also necessary to petition domestic authorities for an exit visa. In 1988, the Hungarian government issued new passports that allowed their bearers to leave the country freely; even so, the amount of foreign currency that people could legally acquire was heavily restricted.292 At the same time, Hungarian and Polish officials allowed currency that had been remitted from abroad (or obtained in other ways) to be deposited into special accounts that could be used for foreign travel.293

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The stricter communist travel regimes are exemplified by Czechoslovakia, which slowly liberalized its rules for travel within the Eastern bloc starting in 1954. In 1965, authorities there published a new passport law— followed by a decree that implemented it—that made exit visas obligatory for travel to the West. In 1968, they were planning to issue a  new, more permissive travel law, but the Soviets and other Warsaw Pact countries invaded before it could be enacted, and it soon dropped off the legislative agenda. Starting in 1969, travel to the West would become almost impossible, with the exception of visits to relatives who had legally emigrated— which required a  formal letter of invitation—as well as state-organized tourist excursions. There was no formal ban on traveling alone, but the police rarely permitted individuals to do so. In addition, currency permits issued by the State Bank of Czechoslovakia (Státní banka československá) also limited the possibility of travel to the West. According to the law, citizens could obtain convertible currency only from the state bank once a year, and this money had to be withdrawn immediately before one’s trip and could be used only for that purpose. It was easier to visit neighboring socialist countries, although political events in Poland caused officials to tighten restrictions on trips there starting in 1981. Authorities began issuing exit visas more freely even for travel to the West starting in 1988, but they continued to maintain their limits on exchanges of currency. As has already been discussed in another context, “entrepreneurial” or “trader” tourism was a significant form of travel between the socialist countries and a distinctive manifestation of the habits and practices of consumers in the region. Travelers of this sort were inspired to visit other countries not—or not primarily—by factors that traditionally motivate tourists, for instance, seeing historical sites or discovering foreign cuisine, but rather by the possibility of enriching themselves economically.294 Polish, Hungarian, and other travelers endeavored to exploit differences in the varieties and prices of goods available in various socialist countries. They transported hard-to-find goods from one country to the next, or simply bought low in one location and sold high in another. Their activities were differentiated from those of classical merchants primarily by the fact that prohibitions forced them to purchase relatively small quantities of goods, generally to transport them in hand luggage, and to operate by circumventing customs regulations.295 In the 1970s and 1980s, for example, an overwhelming proportion of the tourist traffic between Hungary and Czechoslovakia consisted of one-day trips for entrepreneurial purposes like these.

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3.2.5 Consumer culture between austerities and growing aspirations: Did a “socialist consumer society” exist? Research into the consumption history of East Central Europe in the latter half of the twentieth century has gained momentum recently. This is partly because a more mature form of consumer society developed in the Western world during this period, which in itself intensified interest in comparisons with and to East Central European countries. Furthermore, the outcome of the competition between communism and capitalism was largely determined by how these systems were able to satisfy consumer demand. Thus, consumption history has played an important role in the study of the evolution of the communist regimes in Europe. As we have seen in the previous sections, post–World War II trends in East Central European consumption corresponded only partially to the developmental patterns exhibited by the mass consumption societies of Western Europe. Levels of consumption in communist societies also rose significantly in the postwar decades although they continued to lag behind those of the Western European nations by considerable margins. Even by the end of the communist era, consumption had not reached the level that would have allowed a majority of the population to take care of their basic needs and still have enough disposable income left over to cover wants and desires. In fact, the level of consumption in Poland actually dropped in the 1980s. These differences are also illustrated by the structure of household final consumption expenditures, in which food costs dominated and would continue to form a high proportion of total spending throughout the 1970s and 1980s. Yet it was in the qualitative aspects of consumption that the East Central European region diverged most significantly from the consumer societies of the West, especially in the very limited range of choices available to consumers. For these reasons, it seems implausible to describe the countries of East Central Europe as consumer societies or even “socialist consumer societies” before the system change of 1989. Beyond the characteristics enumerated above, the evolution of consumption in communist countries was also marked by unusual dynamics, while the determinants of changes to and the broader social consequences of the system of consumption also exhibited a peculiar character. There are two main approaches to these subjects in the related literature of consumption history. One the one hand, both earlier and more recent scholarly research tends to emphasize the notion that the communist sys-

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tems neglected consumption primarily because decision makers regarded economic growth as their chief goal and considered improvements in consumption to be obstacles to these goals.296 Other researchers, however, deem this description relevant only for the early phases of communism insofar as consumption policies would later change and move in the direction of consumerism. This shift occurred all over the Eastern bloc at roughly the same time, in the latter half of the 1950s, at least partly as a result of changing emphases in the economic policies implemented under the new Soviet leader, Nikita Khrushchev. These new policies were based largely on the developmental patterns of Western consumer societies, even if communist decision makers were not interested in outright imitation. A number of researchers have argued that over time, this new course led to the formation of a kind of “socialist consumer society,” especially in Hungary.297 It has also been suggested that this change in consumption policies ultimately contributed to the collapse of these communist regimes because they were unable to compete successfully with Western societies in their attempts to satisfy consumer desires.298 Different analysts describe the dynamic relationship between consumption patterns and consumption policies in various ways, but one common element among them is the notion that consumption policies played a  decisive role in the formation of the consumer culture of the Eastern bloc, while the relationship was less direct in Western Europe. The evolution of consumption in the communist countries of Europe is understood as a function of political decisions, either because economic policies there always disregarded consumer demand, or because policy makers eventually adapted to it. Furthermore, consumption and consumption policy seem to have been destabilizing factors in East Central Europe as opposed to the Western half of the continent, where consumer society tended to have a more stabilizing effect on political processes. These interpretations emphasize some important characteristics of the consumption history of post–World War II East Central Europe, but are nevertheless in need of some refinement. First of all, consumption policy and changes in consumption patterns generally diverged from the dynamic described by these scholars. Second, the roles played by consumption policies have to be clarified. Among the causes of changes in consumption patterns, policy decisions were not completely autonomous factors that could determine the degree to which these regimes were able to satisfy their consumers’ demands, neither at the beginning of the 1950s, nor at any point

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thereafter. Additionally, consumption’s potential to create political disruptions was not simply a consequence of consumption policy; the processes by which this potential developed were considerably more complex. The following section intends to examine some of these peculiarities of consumer culture in communist East Central Europe. As has been indicated, there is a widespread scholarly opinion which holds that one important idiosyncrasy of the communist systems was their indifference to consumer demand. In allocating their resources, these regimes clearly subordinated consumption to the requirements of industrialization, especially at the beginning of the communist era. This set of priorities is illustrated by their high rates of capital formation and the sectoral distribution of their investments. However, this does not mean that political decision makers failed to pay attention to consumption. From the early phases of communist rule in East Central Europe, authorities there considered consumption growth to be an important goal. According to the official Marxist doctrine of the era, continuous improvement in the standard of living—especially for the working class—was the fundamental principle of socialism, and it was ritually repeated by party leaders in their speeches on economic policy and in party documents. This notion was based on some important ideological antecedents. According to the visions of communism in classical Marxist texts, a  communist society would satisfy needs without considering labor performance, on the basis of the principle “from each according to his ability, to each according to his need.” This principle was not consistently put in practice; in fact, the idea of performance-based pay gained more and more ground in the European communist countries from the 1960s. And yet its influence was considerable, especially in the early years of the communist regimes in East Central Europe. It was a kind of moral compass according to which goals were set and any deviation from it could only be temporary. It was the basis of egalitarian income policies and largely influenced the public’s understanding of social inequality as well. Political and economic decision makers’ intentions and levels of awareness were not the primary obstacles to the improvement of the living standards of workers; both in the early and later phases of the communist era, formulations of economic policy confronted them with fundamental contradictions. Increasing the standard of living while simultaneously accelerating economic growth, especially by means of high investments, led to serious conflicts among the decision makers of the period. This contradic-

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tion dogged the communist regimes throughout their history, as it arose from fundamental characteristics of their economic system. Low productivity could be partly offset by high levels of capital accumulation, but this solution was realized chiefly through cuts in consumption. The concentration of other resources—especially labor—in heavy industry was driven by similar motivations, and it also negatively affected consumption. Early in the communist period, one characteristic attempt to solve this problem was the notion of “scientific consumption.” The idea of organizing consumption patterns on the basis of fundamental scientific principles was vivid in the minds of political and economic leaders throughout the region. According to this vision, which was imported from the Soviet Union, there existed an ideal, scientifically determinable model of consumption that encompassed both the quantities and the composition of consumption, and which would serve as a  guide to central economic planners in their attempts to determine the volumes of goods and services to be produced.299 This ideal system rendered superfluous the choices consumers might make based on their own preferences, and thereby made it possible to plan the production of consumer goods in advance and to save resources while doing so. In these centrally formulated “consumption plans,” consumption levels were calculated using only the most important physical indicators, such as square meters, pairs, kilograms, liters, pieces, etc., and thus the quality and selection of the items that would be produced played almost no role in such planning. The scientific determination of “optimal consumption” and the practical implementation of distribution systems based on it did not succeed anywhere, and aspirations like these began to fade into the background from the 1960s. Even so, traces of these consumption plans continued to show up in economic policy documents across the region all the way up to the system change.300 In every East Central European country, other initiatives more practical than the concept of scientific consumption were adopted in hopes of resolving the contradictions outlined above. The “classic” system of centrally planned economies universally characteristic of East Central Europe at the beginning of the 1950s went through a considerable change in these countries in later decades. Starting in the mid-1950s, planners in the region would repeatedly describe more adequate responses to consumer demand as one of their important goals. Economic reform initiatives in several countries were aimed at least partly at improving the quality and selection of goods and services. This change of emphasis was most striking in

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the Soviet Union, but the shift was notable in the countries of East Central Europe as well. Depending on the political leadership and changes in the party line, improvements in consumption levels and selections of goods and services would receive varying amounts of emphasis in the individual countries of East Central Europe. Thus, economic policy in Hungary and Poland took a turn toward consumption soon after the popular revolts of 1956. Later, in the mid-1960s, Hungarian and Czechoslovakian authorities formulated comprehensive market-oriented economic reforms although, in the end, it was only in Hungary that these plans were realized, and even there they were at least partly retracted within a  few years. In any case, Hungary’s 1968 reforms, which involved giving up on a number of goals once considered important pillars of socialism, such as price stability and equality in income distribution, succeeded beyond a doubt in increasing the range of choices available to consumers. The partial or complete withdrawal of these reforms did not necessarily lead to a drop in consumption; on the contrary, consumption levels in these countries continued to improve in the 1970s. Rather, putting the brakes on these reforms obstructed further improvement in the quality and selection of available products. After the end of Stalinism, consumption was rehabilitated not just in production planning, but in public discourse as well. The quality of goods, new products, fashion, and other similar themes were discussed increasingly often in the media. Political leaders in these countries implicitly accepted that Western patterns of consumption would serve as their template, and they wanted to enable their populations to adopt or imitate at least some elements of the Western model. At the beginning of the 1960s, state propaganda started suggesting it would be possible to overtake Western countries’ standards of living in the foreseeable future, usually predicting that it would take a couple of decades to do so. Authorities later stopped specifying the date by which they would reach this goal, but by means of economic policies that paid greater attention to consumer demand, they wanted to encourage the hope that the important achievements of Western consumer societies would someday be available to the average person. All this suggests that an indifference to consumption was characteristic of the communist regimes of East Central Europe only in their early years, and even at that time, it was not universal. In official public discourse, authorities put greater emphasis on improving the standard of living starting at the end of the 1950s; in fact, alongside improvements

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in social welfare, they described it as the most important political goal of the regimes. Thus, the period under discussion cannot be described as homogeneous.301 However, it is not plausible to conceive these changes in consumption policy in East Central Europe as a  shift from neglecting consumption to an intention to satisfy consumer demand. A more or less linear progression of this sort might have characterized Hungary, but this dynamic was not observable in other communist countries including Poland and Czechoslovakia. Starting in the mid-to-late 1950s, authorities in the region initiated a number of important changes, which eventually took shape as the reforms of the system of economic management mentioned above. At the same time, as the partial or total withdrawal of these market reforms demonstrates, economic and political administrators in every country of the region continued to have a  conflicted relationship with the idea of consumer demand. This conflict is also suggested by the contradictory depictions of consumption that appeared in the press and in other outlets for official or semi-official discourse.302 On the one hand, it was obvious that improvements in the supplies of available goods were an indispensable condition of political stability, given that much of the popular dissatisfaction in the communist countries was caused by poor provisions and shortages of everyday necessities. The regime could not renounce their emphasis on consumerist goals, which, as we have seen, regularly took the form of promises about the future.303 Instead, decision makers often understood improvements in the supply of goods as a kind of compromise, a concession to the less conscious and less committed classes that had to be made despite the damage it might do to their real objectives, especially the acceleration of economic growth by means of increased investment. According to this conception, consumption was compatible with the larger goals of socialism only within certain limits. Especially in the 1950s and early 1960s, politicians often labeled consumer desires as dangerous, fearing that “petit bourgeois” attitudes might spread to the working classes.304 The debates that flared up in the press echoed the asceticism and anti-consumerism of the early labor movement and often presumed to defend higher-order human pursuits like communal activities from the spread of the consumerist mentality. For example, in Hungary in 1961, Mihály Váci, a quasi-official poet of the regime, spoke out in the journal Új Írás (New writing) about his worries that society needed to be protected from an excessive focus on the material aspects of life, and his

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words ignited a debate over what came to be called Frigidaire socialism.305 Opinions like these faded into the background later on, but they never disappeared in communist East Central Europe. Even in the 1970s in Hungary, periodicals that reflected official or quasi-official positions would describe the dangerous “distortion of life ideals caused by the notion of ‘consumer society’ that has been imported from the West”—or, as it appeared in a related publication, “having bloomed again in the pores of socialist society, the lifestyles of the ‘upper’ strata of the petite bourgeoisie (in common parlance, ‘big shots’) are now seeping into the working classes.”306 With respect to their orientations toward consumption, the communist systems of East Central Europe were plagued by persistent contradictions. These paradoxes can be traced back to the characteristics of the economic system, like its low levels of efficiency and the related, pervasive shortages of consumer goods and services. These problems became serious because, as we will see later, the demonstration effect of the western countries was continually intensifying. In addition, these contradictions unquestionably had ideological causes as well such as conflicts over egalitarian visions and consumer asceticism that stretched back to early Marxism on the one hand, and the need for differentiation that was born of everyday experience on the other. These sorts of internal contradictions prevented the implementation and perfection of consumer-oriented policies, and thus, even from the late-1950s onward, it is not possible to describe developments in this area as linear progress toward consumerism or a socialist consumer society. Rather, this process was burdened by setbacks, or in the case of Poland, marked by cycles of advances and declines. Bogdan Mieczkowski has suggested that the growth of consumption in postwar Poland was inversely related to the power of the Communist Party: the traditional policy of the Party’s leadership was to promote investment and the production of capital goods such as machinery and other industrial equipment. These policies, however, brought about consumer dissatisfaction, examples of which include the protests in Gdańsk in 1970, the violent demonstrations in Radom in 1976, and the strikes in Gdańsk in 1980. Sudden and dramatic increases in consumer prices, especially food prices, were the precipitating causes of all of these conflicts: in 1970, the prices of meat and cheese, among other products, were raised by 18 percent and 25 percent respectively; in 1976, butter and cheese prices went up by 50 percent, meat prices by 69 percent, and the price of sugar doubled; in 1980, meat prices again

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jumped by 60 percent.307 Overall, periods of weaker Communist Party rule seemed to lead to improvements in consumption performance, while consolidations of communist power allowed the Party to reinstate traditional economic policies favoring investments and capital goods. Mieczkowski goes so far as to suggest that consumption performance was at the heart of social change and contributed decisively to the long-term transformation of the communist system.308 These frequent, cyclical variations in several facets of consumption and consumption policy were in themselves enough to increase popular dissatisfaction in the countries they affected. As we have seen, scholarly literature on communist East Central Europe’s history of consumption also emphasizes the politically disruptive and even destructive influence of consumption, which was to become a distinctive feature of these societies. The following sections will involve an examination of the evolution of this disruptive consumption dynamic in the region and provide an explanation of its important role in motivating the system change of 1989. It will also argue that the tight bond between consumption and politics was an important factor in the collapse of these regimes. At the same time, the reason that consumer dissatisfaction increased was not simply official indifference to consumption, its low status among economic policy priorities, or even the later shift to consumer-oriented policies, that is, there was more behind this phenomenon than just political factors. Economic and social factors were at least as important, and these can be described most convincingly by tracking changes in the aspirations of the citizens of the region. Politicization. Without a  doubt, consumption policies had an enormous impact on the evolution of consumption patterns and the development of consumer culture in post–World War II East Central Europe. As can be gathered from the foregoing descriptions, these countries adopted consumption policies that differed in several respects, but the strong politicization of consumption was a common characteristic of all the communist regimes in the region. A fundamental reason for this similarity was that by nationalizing property and regulating prices, wages, and other economic variables, the state took responsibility for almost every factor that determined the supply of material goods available to the public in these countries.309 Moreover, the politicization of consumption resulted from official ideology. The regimes maintained that the standard of living of the working people would constantly improve under socialism. Therefore, the regimes elevated consumer

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aspirations but frustrated consumers with the shortages of quality goods and services and even by austerity policies.310 Consumption became politicized because the very definition of “needs” was a matter of disagreement. These needs, or at least basic needs, were defined to a large extent by the socialist state relying on political principles such as egalitarianism. The public often contested this definition, which inevitably led to political dissent. Political influence was most pronounced in the distribution of goods. Here, several conflicting ideas and policies emerged. In the early years of these regions egalitarian ideas were influential, but soon these gave way to the principle “to each according to his work,” which is to say that labor performance dominated. This proposition, however, was difficult to implement. Evaluations of performance were made possible by labor markets, which obviously distorted the realization of this principle. In addition, as we have seen, members of certain social groups enjoyed certain privileges; political considerations and the position they occupied in the power hierarchy could also influence the size of their share of goods produced. Moreover, the notion of equality continued to prevail insofar as official ideology persisted in treating large income differentials as unacceptable and regimes worked to prevent them from developing. In other words, the doctrine of social equality exerted significant influence and was in open conflict with the aforementioned principles of meritocratic distribution. The close relationship between politics and consumption also manifested itself in other ways. The fact that communist countries failed to satisfy the desires of their consumers did not prevent governments from using consumption to legitimize the political aims of the party or the state. The connection between politics and consumption created conflicts, but at the same time, it also served the interests of communist authorities, as solving or mitigating these conflicts—increasing the wages of a certain group, or improving the provisions in a certain area—was almost exclusively the province of the party. Viewed from the perspective of ordinary citizens, this system developed in such a way that consumption became the focus of broader political grievances and a tool for subtly criticizing regimes that had suffocated the public sphere, stifled civil society, and suppressed traditional forms of social and political dissent. In many ways, criticism of consumption policies became a substitute for civil rights activism and political opposition in East Central Europe; the subject was intensively debated there and became highly politicized starting in the 1950s.311

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It was generally impossible to criticize the “system,” but poor quality jackets and rude salespeople in the shops were acceptable targets. After Stalinism ended, publications across the region printed commentaries, letters to the editor, and other articles that outlined these sorts of consumer grievances. Consumption was of great importance both to politicians and to the population, since these regimes were far more likely to compromise on this subject than on matters more directly related to political life, such as the freedom of the press. A movement expressly dedicated to the protection of consumer interests known as the Federacija Konsumentów (Federation of Consumers) was founded in Poland in 1981, and similar aspirations in Hungary led to the appearance of a consumer protection journal called Nagyító (Magnifying glass).312 Thus, impediments to higher levels of consumption were more likely to be rooted in economic constraints than in political restraints. Consumption also created a direct link between everyday life and politics in communist East Central Europe. The political emphasis on consumption and improving standards of living, which intensified starting in the late 1950s, meant that consumption became an arena for expressing dissent. This was the case with conspicuous consumption, where the acquisition of certain products—wearing blue jeans, for example—conveyed specific, sometimes political messages. Female workers combined their class, gender, and consumer identities. In the traditional division of labor that was dominant throughout the region, daily shopping tasks fell largely to women, and thus it was they who regularly dealt with shortages, stood in lines, and lived through the larger portion of the frustrations connected to consumption.313 Aspirations. The politics of consumption described above brought about dangers for the stability of the communist regimes; however, by itself, it would not have resulted in the aforementioned destructive potential. From the 1960s, standards of living in East Central Europe were already reaching levels at which the fundamental material needs of the majority of the population were taken care of, and the following decade saw an increase in the availability of more and more nonessential goods and services. Despite these developments, the satisfaction of the population with the standard of living did not increase; in fact, it actually declined in the 1980s.314 The main explanation for this phenomenon is that while the standard of living was generally improving, people’s aspirations grew even faster, and thus the gulf between the two widened.315

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The growing gap between aspirations and actual consumption levels can be traced back to several causes. At its root was the increasing divergence in the consumption levels of East Central Europe and developed industrial nations, especially the countries of Western Europe. As we have seen, it was not just that the communist countries lagged behind Western Europe economically; their disadvantages in consumption were further intensified by their high rates of accumulation and the peculiar structure of investments. As consumption grew and the fundamental needs of the population were satisfied, citizens expressed new, more differentiated demands. These included high-quality, fashionable clothing, home appliances, foreign travel, and other goods and services of similarly high standards. Enterprises that operated under the direction of central planners preferred to manufacture bulk goods, but they could not guarantee the supply of such products. Thus, the most important explanation of this widening gap was that the changing needs of the population, which were continually transformed and differentiated by economic development, were making growing demands on the centrally planned economy, which was unable to respond because of its inherent limits. Another significant reason for the massive increase of consumer aspirations was the effect that shortages of goods and services exerted on popular value orientation. An emphasis on satisfying material needs and desires rather than other kinds of demands, which corresponded to the order in which the needs in Maslow’s familiar hierarchy are to be satisfied, could be characterized as a general tendency in the communist societies of East Central Europe. This was true especially in the early period of communism, when postwar reconstruction and rapid industrialization drew resources away from consumption, and the consequences of the new economic system began to assert themselves. However, this tendency also prevailed very strongly in later periods of crisis, such as the 1980s in Poland, when political and economic emergencies resulted in the deterioration of supplies of goods and the (re)introduction of rationing systems. Oppressive rule obstructed the spread of alternative lifestyles and, thus, impeded the diffusion of non-materialist or post-materialist value systems, thereby contributing to the persistence of materialist value orientations as well. The communist ideology and the increasingly obvious failures of the communist regimes also helped to bring consumerist goals to the fore. On the one hand, the egalitarian messages of this ideology contributed to an

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intensification of consumerist aspirations, especially among the less-skilled and lower-income social strata. The emphasis on social equality as a social value and an objective faded over time, but it never really disappeared, leaving a persistent mark on the ideas that these groups formed about the standards of living they could achieve. On the other hand, communist ideology stressed the primacy of communal objectives, but in practice, these governments stymied social self-organization and favored centralization in social and political affairs, pushing independent civil action into the background and rendering it almost inconceivable. The materialism of the ideology also had an effect on everyday life. Among their social goals, these regimes accorded places of honor to the notions of increasing production and improving the standard of living, which, as we have seen, regularly took the form of promises to be fulfilled sometime in the future. In the Khrushchev era, the idea of catching up to the West economically was not merely a generality, but a plan with a  specified target date: around 1960, this deadline was often said to be 1980. Heaps of propaganda materials proclaimed that by then, the communist countries of Europe would reach such high standards of living that it would be possible for them to offer most basic services and many kinds of goods for free. Over time, however, it became increasingly obvious that these regimes were unable to fulfill their promises. In addition, attempts to reform these systems through revolution or reform, which might have given the public hope that a  higher proportion of their wants and needs would be satisfied in the future, all failed. From the 1970s, these regimes directed their efforts much more toward survival than toward the accomplishment of any kind of long-term historical mission. The pragmatism that dominated the politics of this era was not merely an implicit acknowledgement that the regimes had given up on their original goal of societal transformation, but also an admission of the hopelessness of trying to catch up to the consumer societies of the West. In this ideological vacuum, a crisis of values developed and pushed consumerist attitudes to the forefront of popular consciousness. The growing demonstration effects of the Western societies were of utmost importance in the development of consumerist aspirations in the region. After the death of Stalin, the isolation of the East Central European countries gradually diminished and their populations were able to obtain more and more information about Western consumer societies. Movies and newspapers, tourist contacts, and especially the Western products that

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found their way to East Central Europe—from automobiles to clothing— were all transmitters of this sort of information. The westernmost communist countries, like Poland and Hungary, which began to open up politically and economically in the 1960s, were especially susceptible to the pull of the “magnetic field” of the West. As we have seen in the section on the social differentiation of consumption, generation gaps also had a significant impact on the development of consumerist aspirations. As in Western Europe, in the countries of East Central Europe, the 1960s saw the rise of a new youth cohort that paid much more attention to consumption than did the previous generation. Its members were particularly dedicated followers of fashion, through which they expressed their own new and distinctive youth culture. They also sought to acquire the sort of products that offered them autonomy and mobility.316 Here, however, the parallels between the generational changes in values in Eastern and Western Europe come to an end. In post–World War II Western Europe, the different youth cohorts shifted noticeably in the direction of post-materialist value orientations, which were rooted primarily in a growing sense of material well-being and security.317 In East Central Europe, however, there was no parallel spread of post-materialism. In many respects, value changes diverged from the Western pattern, with the public adhering to a  greater appreciation of materialist values and consumption.318 The major reason behind this development was that unlike in Western Europe, improvements in material security did not play the definitive role in the long-term value changes seen in the countries of East Central Europe. On the one hand, material conditions did not improve as quickly and thoroughly as they did in the consumer societies of the western half of the continent. On the other hand, the populations who lived under communism were increasingly aware that their standards of living were lower than those in the West, and thus they assessed improvements in their standards of living as evidence of only relative progress. In contrast, political factors played a larger role in the formation of East Central European value systems. The significant place occupied by politics in the evolution of consumption patterns and consumer culture is one of the important features of the region’s consumption history in the forty years or so that followed World War II, although among the causes of change, consumption policy cannot be regarded as an autonomous factor. Among the determinants of consumption, economic and social aspects must be accorded their rightful

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places alongside consumption policies. Decision makers had much less latitude in formulating consumption policies than some researchers have suggested, and for this reason it is clear that there was no radical turn in the late 1950s, nor at any other point. The widening gap between consumerist aspirations and actual possibilities for consumption was the factor that dictated the evolution of consumption policies. This was the element that economic policy makers were reacting to when they changed directions, but given the limits imposed by the political and economic systems, such reactions could achieve only minimal successes. It also helps to understand the mechanisms that connected the changes in East Central European consumer culture to changes in wider political transformations, and especially how such changes contributed to the destabilization of the communist regimes. On the whole, levels of consumption improved in the decades after 1950; consumer satisfaction, however, did not exhibit congruent growth and, in fact, clearly declined toward the end of the communist era. Tensions over consumption, the product of the growing consumer aspirations, contributed decisively to the failure of communism, as did the communist state’s assumption of an all-encompassing role in the provision of material goods with all its inherent conflicts and inconsistencies.

3.2.6 East Central Europe and Western Europe: Regional gaps versus convergence clubs As the preceding chapter has described it in detail, the level of per capita economic output in interwar East Central Europe ranged between 50 and 65 percent of the Western European average. Following a post–World War I low point, these countries improved in relative terms, slightly closing the gap by which they lagged behind the West. According to the data available, consumption levels in the countries of the region corresponded roughly to their relative levels of economic output. The proportions of capital formation in Poland and Hungary were lower than the Western European average, and these countries also took on a significant amount of foreign debt in the 1920s, which compensated somewhat for their lagging economic output. While the low level of investment in interwar Hungary and Poland— Czechoslovakia differed in this respect—and thus their relatively high levels of consumption as a share of gross domestic product offset to some extent their continuing disadvantage in terms of gross national product

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compared to the Western European countries in the wake of World War II, their high levels of accumulation produced precisely the opposite effect. In that period, their high level of capital formation relative to the countries of Western Europe resulted in even lower consumption levels than their otherwise lagging levels of economic output would have made possible. For a considerable period, Hungary and Poland attempted to make up for these deficiencies by taking on foreign debt, which gave decision makers more room to maneuver in formulating their consumption and investment policies. By the beginning of the 1980s, however, their indebtedness—as demonstrated earlier—reached such proportions that further borrowing became impossible. In fact, the rising debt service payments characteristic of that period led to cuts in consumption and in investment. Thus, on the whole, in the decades after World War II, consumption in the countries of the region diverged even more substantially from Western European levels than did the per capita levels of their gross domestic product. As to the structure of consumption, the relative proportions of public and private consumption did not exhibit marked changes in East Central Europe in comparison with international tendencies. If we take into account welfare transfers, levels of public consumption in East Central Europe were largely in line with Western European averages in the period following World War II, especially from the 1960s onward, after the expansions of welfare-state programs in Western Europe. One difference was that in-kind social benefits—healthcare services, free childcare facilities, etc.— made up a relatively high proportion of consumption in post–World War II East Central Europe. The structure of household consumption in East Central Europe as in Western Europe changed continuously over the course of the twentieth century, though East Central European consumption was marked by a number of distinct features throughout this period. The proportion of expenditures dedicated to food and luxury consumables like alcohol and tobacco remained high all the way to the end of the century, which left less room for growth in other categories of consumption. It is remarkable that Czechoslovakia, which diverged considerably from the other two countries of the region in the interwar period, resembled them in the structure of consumption during the communist era. The most important distinguishing features of the region’s consumption dynamics can only be grasped if we also take into account the qualitative aspects of consumption. This is the area in which we see the greatest dispari-

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ties between East Central Europe and the Western European market economies from the 1950s onward. Economic reforms and planning that offered better prospects for consumers would produce important results, especially in Hungary, where the selection of goods improved significantly after 1968. Despite these developments, however, low product quality, shortages of important goods and services, and consumers’ helplessness in dealing with these issues would both epitomize the economic history of the communist system throughout the region and typify the divergence between Western European and East Central European consumption patterns. The most significant parallels between East Central European and Western European consumer societies are discernable in the evolution of leisure time and the ways in which it was spent from the 1960s onward. The eminent factor in the transformation of leisure time was the differentiation of working time and leisure time, which was largely supported by the diminution of self-employment and expansion of the industrial working class in the region, which resulted from nationalization campaigns and the relative decline of agriculture. At the same time, starting in the 1960s, Hungarians—and much less the population of Poland and Czechoslovakia—relinquished much of this growth in the quantity of free time by participating in ever-growing numbers in the second economy, also known as the informal economy.319 Another peculiarity of the post–World War II transformation of leisure time in the region is that commercialization played a much less significant role there than it had during the interwar period or in the societies of Western Europe. The characteristics of the communist systems such as the economy of shortage and the primacy of political considerations had a much greater impact on leisure time than did commercialization, as exemplified by tourism and television programs. Thus, on the whole, the societies of East Central Europe did not merely lag behind in almost every significant aspect of consumption, they actually dropped further behind their Western European counterparts in the post– World War II period. Consequently, the similarities between East Central European countries in their levels and patterns of consumption seem to have grown in the communist era, in particular, up to the 1980s. In other words, using the language of more recent convergence theories, these countries formed a kind of convergence club.320 That is, although the distance they drifted from Western Europe contributed to an increase in intra-European difference, they themselves converged with one another.

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4 Quality of Life: Towards a More Comprehensive Understanding of Well-Being

4.1 Conceptual and Methodological Issues Over the course of the twentieth century, especially during its latter half, European economies grew more rapidly than ever before. Standards of living and consumption rose considerably throughout the region although the degree of prosperity varied from country to country and social group to social group. Already in the 1960s, however, at the height of the economic boom, concerns emerged that economic growth is not always accompanied by improvements in economic and social conditions in a  wider sense. In connection with these considerations, critics also began to question methods of measuring economic activity that diffused after World War II, and particularly the plausibility of indicators like GDP and GNP. Such indicators were originally devised to assess economic output, but over time, they came to be used increasingly as markers of welfare in its most general sense. The changing relationship to economic growth was driven by a number of factors. The anti-materialist counterculture of the 1960s and the anti-growth environmentalist movements of the 1970s clearly contributed to new perceptions.1 Shifts were also encouraged by a transformation of values and attitudes that led the public to accord greater significance to environmental protection, individual autonomy, and opportunities for selfexpression, as well as other factors that are often described by the concept of quality of life.2 These developments were related to the growth of material welfare: according to comprehensive international investigations like the World Values Survey, when per capita incomes rise above a certain level,

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the above non-material factors exercise more influence over subjective wellbeing than does further growth in material consumption.3 Scholars also made their voices heard: numerous researchers called attention to the fact that economic growth can produce a  range of negative effects. Damage to the natural environment was one of the first such outcomes to attract widespread publicity. A group called the Club of Rome, founded in 1968 by a hundred prominent thinkers from around the world, provoked an immense response with its 1972 report “The Limits to Growth,” which described the ill effects of growth on—and imminent dangers to—the environment. In the following decades, the societies of Europe would experience these problems directly in forms ranging from acid rain to global warming. The potentially negative social effects of growth are less clear insofar as they affect individual countries and classes in completely different ways. These sorts of social burdens and costs do exist, however; they include, for example, the stress that workers experience when confronted by rapidly changing technologies and diminishing job security. The qualitative characteristics of growth attracted more attention in the 1980s, as more and more governments realized they would have to grapple with the social and environmental costs of economic growth.4 Thus, by the end of the century, the idea was gaining ground in both the academic and in the wider public discourse that the goals of societies should cover a much wider range of objectives than economic growth, and that it would be necessary to strive to improve not just economic welfare, but welfare in its most comprehensive sense, that is, quality of life.5 The concept of “quality of life” incorporates the notion of economic welfare— consumption, if you like—but is substantially broader than that. Various definitions also include civil and political rights, environmental conditions, crime rates, social security, income inequality, and a range of other factors that influence people’s feelings of satisfaction with their lives. In a  similar vein, Amartya Sen, an economist widely regarded as an authority on these questions, introduced the “capability approach” to emphasize the importance of opportunities available to an individual. A wide range of opportunities will allow larger numbers of individuals to choose the life goals they would most like to achieve. For Sen, economic activity increases the number of choices available to the individual, but it does not in itself serve to fulfill these goals. As a result, in this paradigm final outcomes are less important than the freedom of individuals to select their own life objectives.6

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It must be noted, however, that an exact definition of the concept “quality of life” is difficult to formulate.7 Individuals and various social groups have diverging preferences and consider different elements in evaluating quality of life. In other words, in the course of determining human needs, we cannot avoid value judgments about the factors we consider more or less significant. These complexities can be illustrated by attitudes toward social inequality. Many regard a  low level of social inequality as a  factor that improves quality of life. At the same time, others consider a  certain measure of social inequality to be necessary, in that it reflects the divergent social preferences of various individuals and groups and also serves to motivate the members of a  society to achieve. Consequently, it is difficult to draw a  line between a  socially necessary and an unacceptable or dysfunctional level of inequality.8 Examinations of quality of life are also encumbered by the difficulties one encounters in measuring some of its components. These include subjective factors like life satisfaction and crosscultural comparisons, which also entail numerous problems. Despite these difficulties, there have been several efforts to create quantitative measures for assessing the quality of life.9 These indices have been derived from three main approaches:10 1. The first group of analysts takes an indicator of economic output (GDP or GNP) and attempts to correct it. The GDP and other indicators of economic output are based on assessment of the monetary value of products and services. The prices of these goods and services are determined by the amounts that consumers are willing to pay for them. Those expenditures and returns that do not become the objects of market transactions are not included in these output calculations. Accordingly, computations designed to correct such conceptual oversights make allowances for the value of goods and services that are useful—that is, increase well-being—but do not reach the market, while at the same time leaving out components judged to be harmful or without value. This novel approach generally augments traditional GDP numbers by including the value of useful but non-marketed activities like family time spent on childrearing or household labor; the value of leisure time; the value of investments by households or governments; and the value of informal instruction (for instance, time spent visiting libraries or museums). But the calculations leave out the value of activities categorized as “regrettable necessities,” which do not directly produce any welfare but are merely necessary conditions of other activities that do: expenditures on police, prisons, the military, intelligence services, or the costs of

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road repairs and commuting; the value of investments necessary for future growth; and the value of “civilizational damage” like environmental contamination, garbage, traffic jams, and noise pollution. 2. Adherents of a second approach make efforts to evaluate the degree to which various social norms and objectives—for instance, more equal income distribution or particular qualities of democratic practice—are realized and then calculate their composite indicators accordingly. The idea that economic growth and consumption must be sustainable has also influenced views about quality of life, and because this viewpoint is not reflected in GDP calculations at all, several quality of life indicators take the depletion of non-renewable natural resources into account as well.11 3. The third main approach is measuring subjective well-being, that is, how people experience and evaluate their lives and specific aspects of their lives. Scholars often distinguish between two components of subjective well-being: affective balance and life satisfaction. Others prefer the concepts of experienced well-being and evaluative well-being. Affective balance or experienced well-being refers to the frequency and intensity of emotional experiences that can be positive or negative, or a combination of them. Life satisfaction or evaluative well-being refers to overall judgments of one’s life. Life satisfaction is typically considered in the long run. Both affective balance and life satisfaction are measured by using a  self-report method that typically relies on questionnaires.12 In practice, combinations of these approaches—especially the first and second variants—show up as well. The most widely used indicators include the World Development Indicators (WDI), the Composite Indicator of WellBeing, the Genuine Progress Indicator (GPI), the Index of Sustainable Economic Welfare (ISEW), and the Human Development Index (HDI). The WDI database, published by the World Bank, is not suitable to be used in a longrun study, since most of the data are only available for the last decades or even only for the last couple of years.13 The Composite Indicator of WellBeing is compiled by the OECD and equally covers a broad range of material and non-material aspects of well-being: GDP per capita, real wages, educational attainment, life expectancy, height, personal security, political institutions, environmental quality, income inequality, and gender inequality.14 The composite index covers broad regions, for instance, East Asia, SubSaharan Africa, and Western Europe. The data for Eastern Europe including the Soviet Union/Russia, cannot be disaggregated in most cases. Thus, the OECD study relying on this database presents systematic evidence on long-

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term trends in global well-being since 1820, but is less useful for surveying East Central Europe in the postwar era. The GPI, which is expressed in monetary terms, modifies traditional measurements of economic output by taking into consideration the economic performance of families and communities while deducting the value of environmental damage and activities that do not improve well-being.15 Like the GPI, the ISEW deducts items such as the value of environmental damage and the costs of commuting to work from total income, while adding the value of unpaid household labor. In addition, it also takes into account levels of income inequality and the costs of traffic accidents.16 Finally, the HDI, originally devised by the United Nations, evaluates the performance of countries in three areas: standard of living, knowledge, and longevity.17 This is essentially a combination of four indicators: per capita GDP based on purchasing power parity; adult literacy and school enrollment ratios at the primary and secondary levels; and average life expectancy at birth.18

4.2 Trajectories of Well-Being in Western Europe Whichever indicators they employ, researchers are in broad agreement that over the long term, quality of life trends in industrial societies are related to economic growth. In the last decades of the twentieth century, however, this relationship stopped being so straightforward in the most developed industrial nations. In that same period, quality of life improvements lagged behind improvements in economic performance; that is, economic growth in these countries seemed to have reached the point of diminishing returns, and each additional unit of growth in economic performance resulted in a  smaller increase—and in many cases an outright decline—in the quality of life.19 Research indicates that Great Britain’s per capita GDP grew continuously from 1975 to 1990 while the value of its ISEW dropped significantly. Several other countries where analogous research was conducted (the Netherlands, Sweden) exhibited similar disparities, though the magnitude of these gaps was not quite as great as in Britain. ISEW values stagnated in Germany and Austria, and though the ISEW improved in Italy, it did not grow as fast as the GDP there. Over a  similar timespan, the GPI for the United States also dropped.20 The primary causes of these less favorable developments in the quality of life were environmental damage and growing income inequality.

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According to these calculations, non-market activities are better determinants of the quality of life than market activities. For instance, “household production” (cooking, cleaning, childcare, etc.) is generally worth 25 to 45 percent of the value of the GDP. The value of leisure time is even greater, and thus, on the whole, roughly two-thirds of total output is not marketed, and the actual GDP represents only one-third of its value.21 ISEW and other similar indicators of quality of life, which were formulated as criticisms of the GDP/GNP, have also provoked counter-criticism, emphasizing the fact that these new indicators are inevitably affected by value judgments. It might be more accurate, however, to say that while value judgments are explicit components of the concept of the revised indicators, they also play a role in GDP/GNP calculations, though their influence on the latter may be more difficult to demonstrate. By the turn of the millennium, the notion of sustainable economic growth—especially with regard to environmental protection—had become an important subject of public debate in Europe. Despite the ambiguities of quality of life research, such work called attention to the shortcomings of GDP numbers and other indicators of economic output, and to the need for economic policies that would take into account not just economic growth, but its social and environmental effects as well. Governments and politicians continue to cling to the use of simple indicators like inflation, interest rates, and economic growth, so these numbers still play an eminent role in public discourse. Among the most important reasons for this is that politicians prefer to communicate in easily digestible information. In addition, politicians are generally forced to adapt to electoral cycles of just a few years, and for that reason they tend to strive for results that will show up quickly. However, a large portion of the factors that exercise a decisive influence over the quality of life can be shaped only over the long term. Nevertheless, the idea of sustainable growth has found its way into politics and even met with official recognition: among other organizations, the European Union has designated it as an important political goal. This also applies to indicators that take the dimensions of quality of life into account: the United Nations, for instance, has recently incorporated the consideration of environmental changes into the assessment of economic output. More importantly, even though economic growth continues to appear in politics and the media as if it were the primary indicator of the achievements of governments and societies, voters’ political behaviors seem to be influenced by a substantially wider range of considerations. In other

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words, in their political decisions, voters also take into account the sorts of factors that are customarily included under the rubric “quality of life,” which could provide further incentive for the diffusion of such indicators. Since 1990, the United Nations Development Programme (UNDP) has been compiling the HDI.22 As indicated above, the HDI has three dimensions: economic development (measured by per capita GDP based on purchasing-power parity), mortality (measured by life expectancy at birth), and education (measured by student enrollment ratios in primary, secondary, and post-secondary education, along with literacy ratio). The HDI combines these measurements into a  single number by establishing a  range of values for each of these categories of data, and then computing percentages for each by dividing the appropriate figure by the difference between these minimum and maximum values. Thus, for example, this index assumes a baseline life expectancy of 25 years and an upper limit of 85. Two-thirds of the education figure is composed of literacy rates, while enrollment percentages at the primary, secondary, and post-secondary levels make up the remaining third; these values obviously range between a minimum of zero and a maximum of 100 percent. Finally, the calculations significantly discount per capita income above a certain level by using logarithms based on a  minimum income value of 100 US dollars and a  maximum of 40,000.23 The origin of the concept can be found in a  line of reasoning that became widely accepted among economists and other social scientists toward the end of the 1980s, according to which underdevelopment cannot be described simply as a low level of economic performance. It is much more likely to be the result of limits on people’s fundamental capabilities or a lack of opportunities to utilize them. Such opportunities are created not just by higher incomes, but also by the availability of public services, especially education and healthcare.24 Accordingly, the HDI frames social development as that which increases the range of choices available to individuals. Rising income contributes to this expansion of possibilities, but it does so primarily when levels of economic development are lower. As wealth increases, the incremental return on further growth drops until at higher levels of economic development, it approaches zero. This notion, which partly determines the method for calculating HDI, has triggered serious debate.25 The developers of the HDI have also acknowledged that this indicator is marked by a number of deficiencies. Above all, it is based on simple averages even though income and education are not uniformly distributed

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in any society. This problem, however, appears in most similar calculations and concepts, and is thus not a particular disadvantage of the HDI.26 A more substantial problem is that this index—whatever sweeping claims its developers may make—actually encompasses some relatively narrow fields of social development. It neglects important aspects like civil and political rights, all of which can significantly limit the range of opportunities available to individuals, and affects the well-being and the quality of life.27 The aforementioned choices of minimum and maximum values for its variables also present numerous problems, as these choices can significantly influence the results it produces, causing it to reflect favorably on one or another developmental level or group of countries while producing disparaging results for others. The weighting of these variables, along with the formula for discounting income levels, can have similar effects. The use of logarithms means that above a certain threshold, additional GDP growth has hardly any influence on the magnitude of the HDI, and thus above this level, differences in gross domestic product yield only minimal disparities in HDI values. For this reason, many analysts have recommended that such logarithmic discounting be abandoned and that per capita income levels be expressed simply as percentages of the observed maximum. Nevertheless, despite certain refinements implemented in the late 1990s, such discounting continues to be a factor in these calculations. In addition, it must also be noted that literacy rates are assigned twothirds of the weight in the education variable and enrollment rates only one-third even though the literacy rates of the industrialized nations were almost indistinguishable in the latter half of the twentieth century. One obvious conclusion to be drawn from this information is that the HDI is not particularly effective in describing quality of life differences between developed countries,28 which even the compilers of this index acknowledge. Another weakness of the HDI is its failure to account for qualitative factors in educational attainment and knowledge. Definitions of the ability to read and write can vary wildly: in certain countries and eras, the ability to sign one’s name has been taken as proof of writing proficiency, while in other instances, this capacity has been tied to a much wider range of knowledge. Similarly large qualitative differences may also lie behind otherwise identical rates of school enrollment. Problems, however, arise in connection with any composite indicator since they are related to the inevitable value judgments that must be made in the course of compiling such indices. The HDI has become widely rec-

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ognized in recent decades, and researchers are much more likely to use it than any other similarly framed index in their discussions of quality of life trends or other dimensions of well-being beyond simple income figures. The relative popularity of the HDI is also obviously at least partly a  result of the fact that an influential international organization like the UN stands behind it, calculating it on a yearly basis, regularly publicizing the results in global reports, and offering commentary on practically every nation around the globe. For these reasons, this indicator is simply the most expedient means by which to present twentieth-century quality of life trends in the countries under discussion here. At the same time, we have to set aside the kind of statistical examinations of convergence and divergence that can be performed with other indicators because the method for calculating the HDI renders such analyses meaningless. Here again, the logarithmic processing of the data for one variable—economic output—radically diminishes the significance of absolute differences.29 In 1913, among the Western European countries under discussion, Denmark produced the highest HDI value, followed by the Netherlands, Great Britain, and Switzerland. At the bottom of the list lagging a good deal behind stood Finland and Italy (Table 4.1). By the middle of the century, the top of the chart had become fairly crowded; though the Netherlands had moved into first place, its indicator was essentially equivalent to those of Switzerland, Denmark, and Sweden. And though they changed places, Italy and Finland continued to round out the Western European list. Table 4.1 The Human Development Index (HDI) in European countries, 1913–2005 1913

1950

1975

1990

2000

2005

UK

0.644

0.766

0.841

0.878

0.928

0.946

France

0.607

0.729

0.848

0.897

0.928

0.952

Netherlands

0.649

0.784

0.861

0.902

0.935

0.953

Belgium

0.590

0.751

0.844

0.896

0.939

0.946

Ireland

0.599

0.734

0.818

0.870

0.925

0.959

Germany/FRG

0.614

0.744

0.859

0.885

0.925

0.935

Austria

0.501

0.720

0.840

0.890

0.926

0.948

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1950

1975

1990

2000

2005

Switzerland

0.643

0.782

0.874

0.905

0.928

0.955

Sweden

0.641

0.780

0.863

0.894

0.941

0.956

Denmark

0.660

0.781

0.868

0.891

0.926

0.949

Norway

0.631

0.776

0.859

0.901

0.942

0.968

Finland

0.450

0.707

0.836

0.896

0.930

0.952

Italy

0.485

0.668

0.828

0.879

0.913

0.941

0.657

0.790

0.792

0.833

0.870

0.835

0.849

0.891

0.820

0.835

0.863

0.804

0.835

0.874

Poland Czech Republic

0.541

0.721

Slovakia Hungary

0.464

0.695

0.777

Notes: For the method of calculating the HDI, see the text; Hungary 1913: present territory, author’s own calculation based on sources indicated below; life expectancy refers to 1910–1911, literacy to 1910, school enrollment to 1920; 1913 school enrollment, literacy, and life expectancy data for Germany and Austria refer to the contemporary territory; the comparability of 2005 data is somewhat limited since it was calculated with a slighly different method; different years: Germany 1980; Poland 2003. Sources: Nicholas Crafts, “The Human Development Index, 1870–1999: Some Revised Estimates,” European Review of Economic History 6 (2002): 396 (Western Europe 1913), 396–97 (Czech Republic 1913, 1950), 397 (Western Europe 1950); United Nations Development Programme, “Human Development Report, 2002” (New York: United Nations, 2002) (Western Europe, Hungary 1975–2000; Poland, Czech Republic, Slovakia 1990, 2000); United Nations Development Programme, “Human Development Report, 2007/2008” (New York: United Nations, 2008) (Western Europe, Poland, Czech Republic, Slovakia, Hungary 2005); Time Series of Historical Statistics, 1867–1992 (Budapest: KSH, 1993), 4 (Hungary, size of 5–24-year cohort 1920), 107–108 (Hungary, life expectancy 1910–1911); Brian R. Mitchell, European Historical Statistics, 1750–1975 (London: Macmillan, 1981), 800 (Hungary, school enrollment 1920); Rudolf Andorka, Tamás Kolosi, and György Vukovich, eds., Social Report (Budapest: TÁRKI, 1990), 34 (Hungary, literacy rate 1910); Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), 100 (1913 GDP of Hungary based on purchasing power parity); Dudley Baines, Neil Cummins, and Max-Stephan Schulze, “Population and Living Standards, 1945–2005,” in The Cambridge Economic History of Modern Europe, vol. 2: 1870 to the Present, edited by Stephen Broadberry and Kevin H. O’Rourke (Cambridge: Cambridge University Press, 2010), 400 (Poland 1950–1975).

Table 4.2 illustrates the absolute and relative magnitudes of these changes. Because of the methodological characteristics of HDI, such as the use of logarithms, the absolute values of these changes should be handled with some caution. It is more important to follow the proportion of the maximum possible change that an actual shift amounted to (how large the relative changes were). The latter are especially useful because they show which countries caught up most rapidly and those in which improvements were relatively moderate.

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Table 4.2 Changes in the Human Development Index (HDI) in European countries, 1913–2005 VALUE OF CHANGE

ACTUAL CHANGE AS A PERCENTAGE OF THE MAXIMUM POSSIBLE CHANGE

1913– 1950

1950– 1990

1990– 2005

1913– 1950

1950– 1990

1990– 2005

UK

0.122

0.112

0.068

34.3

47.9

55.7

France

0.122

0.168

0.055

31.0

62.0

53.4

Netherlands

0.135

0.118

0.051

38.5

54.6

52.0

Belgium

0.161

0.145

0.050

39.3

58.2

48.1

Ireland

0.135

0.136

0.089

33.7

51.1

68.5

Germany/FRG

0.130

0.141

0.050

33.7

55.1

43.5

Austria

0.219

0.170

0.058

43.9

60.7

52.7

Switzerland

0.139

0.123

0.050

38.9

56.4

52.6

Sweden

0.139

0.114

0.062

39.6

51.8

58.5

Denmark

0.121

0.110

0.058

35.6

50.2

53.2

Norway

0.145

0.125

0.067

39.3

55.8

67.7

Finland

0.257

0.189

0.056

46.7

64.5

53.3

Italy

0.183

0.211

0.062

35.5

63.5

51.2

0.135

0.078

39.4

37.5

0.114

0.056

40.9

33.9

Poland Czech Republic

0.180

Slovakia Hungary

39.2

0.043 0.231

0.109

0.070

23.9 43.1

35.7

35.7

Notes: Austria and Germany: 1913 data of school enrollment, literacy, and life expectancy cover the entire national territory in their possession at that time; 2005 data collected with slightly different methods which somewhat limits comparability; different date: Germany 1980. Sources: Author’s own computations based on Table 4.1.

Between 1913 and 1950, the largest relative improvement in HDI growth took place in Finland; that is, even though this country continued to occupy the bottom rung on the Western European list, it made great strides in

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catching up to its neighbors. The quality of life improved almost as strikingly in Austria although this development is partly attributable to its low initial levels. Austria’s relatively unfavorable performance in 1913 is partly due to the fact that its school enrollment, literacy, and life expectancy data covered the entire national territory in its possession at that time. (Similar circumstances affected the data for Germany as well, though even the inclusion of its former territories did not push Germany’s indicator to the bottom of the list for 1913.) France, Ireland, and Germany exhibited the smallest improvements in this period (Table 4.2). The coefficient of variation of these indicators shrank between 1913 and 1950, which is largely attributable to the considerable fall in mortality rates in lower-income nations. The improvement in mortality was the result of advances in living standards and healthcare over the course of the twentieth century, and their impact was particularly large because these achievements were also accessible to poorer countries.30 Estimates by Nicholas Crafts suggest that the income elasticity of the average life expectancy at birth in the industrial age was at best 0.1, meaning that only about a quarter of the improvement in mortality rates between 1870 and 1950 can be attributed to economic growth, at least according to the data for 16 advanced industrial societies.31 By 1975, Switzerland, which had always been among the leaders, reached the top of the HDI ranking list, followed by Denmark, Switzerland, and the Netherlands. Italy moved out of its position at the bottom of the rankings, allowing Ireland to slide back into last place among the Western European countries under discussion. By 1990, substantial changes had taken place, with France and Norway moving up into positions right behind Switzerland and the Netherlands, Finland jumping all the way up to fifth, and Ireland and the United Kingdom dropping to the bottom of the list. Between 1950 and 1990—if we accept the HDI as a reflection of the quality of life—Finland continued to make the greatest improvements in quality of life, with Italy and France lagging just behind it. Surveying the entire twentieth century, one sees that the greatest improvements in quality of life took place in Finland and Norway, while the greatest laggard was clearly the United Kingdom. More importantly, however, by the end of the twentieth century, the differences between Western European countries had shrunk so much that there was hardly any sense left in assembling such rankings. This confirms the earlier observation that the HDI is only moderately useful for making comparisons between

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215

late-twentieth-century Western European countries or between the most advanced industrial nations in general. As we have seen, the HDI is in many ways a debatable solution to the problem of monitoring trends in well-being and the quality of life. None of these shortcomings, however, make the HDI useless for economic and social historians if only because every similarly complex indicator gives rise to difficulties like these. Yet such problems are enough to warrant the use of another indicator in describing developments in the quality of life. The investigation of mortality trends presents the most obvious solution. Mortality is an important dimension of the HDI and life expectancy was included in the index. Consequently, one possible analytical method would, of course, have been to examine each of the components of the HDI individually and then evaluate the composite index itself. This is not the method used here for a  number of reasons: in recent years, the HDI appeared independently in the international literature and in the wider public discourse as the indicator of the quality of life, which is the primary justification for addressing it first. In addition, not every component of the HDI is useful in its own right as an indicator of the quality of life; a separate chapter has already been dedicated to changes in gross domestic product; and finally, analyses of mortality have practically developed into a separate paradigm in recent decades. A number of researchers have already called attention to the fact that the significance of mortality trends goes far beyond demography. According to the aforementioned Amartya Sen, mortality is among the most important indicators of the quality of life because a  long life is in itself one of the most valuable achievements. Moreover, age-specific mortality rates can act as proxies for other kinds of data that might be symptomatic of a society’s successes and failures, but otherwise are difficult to obtain.32 The evolution of mortality rates reflects developments in a number of social, economic, environmental, and other factors: the availability of medical care, the nature of social insurance, the existence of social assistance programs, the development of education, community cohesion, the organization of urban life, and several similar factors can all influence mortality rates. Even though a portion of the factors that determine mortality rates can be measured and quantified, only in the rarest cases do we have reliable information about the qualitative aspects of these factors, especially as we move backward into the past, the significance of which we have already seen in relation to the HDI. To give one example, it is not just the numbers of doc-

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tors and hospital beds, but also the quality of nursing and medical care that determines mortality rates. The influence of these necessarily neglected qualitative factors also appears in mortality trends, and thus average life expectancy at birth will also serve as a  proxy for this sort of knowledge. Therefore, if we examine the evolution of mortality, we will also obtain indirect information on all these factors, including the influence of qualitative factors and the quality of life. Indicators like mortality rates, and especially average life expectancy at birth, have several other advantages over HDI and other complex indicators of quality of life. On the one hand, mortality data is available for a wide range of countries and for time periods that stretch back into the relatively distant past; this includes the countries of Europe in the twentieth century. Conceptual problems hardly affect this sort of data, which greatly improves the comparability of such statistics. It is probably not an exaggeration to say that among the datasets with a possible relationship to quality of life, mortality statistics are of the highest quality. Such data makes it possible to avoid the weighting problems that have provoked criticism of the HDI, the ISEW, and other composite indicators. On the basis of these considerations, the following section will serve as an examination of mortality trends in Western Europe in the second half of the twentieth century, with occasional reference to earlier periods and a  particular concern for the aspects that have framed this volume so far, namely the tendencies toward convergence or divergence within the region. Western European demographic processes, which were already undergoing a  marked evolution as early as the eighteenth and nineteenth centuries, continued to exhibit significant changes in the twentieth century as well.33 An important part of this change was a reduction in mortality rates, though the pace of this transformation differed in individual countries and in various time periods, of course. The crude death rate, which is fundamentally dependent on the age structure of the population, only partly demonstrates the dynamics of these changes in mortality: at the turn of the century, these rates still ranged between 15.8 per thousand and 25.2 per thousand in the various countries, values which dropped to 7.5 per thousand and 12.7 per thousand by the middle of the century, and were 8.7 per thousand and 11.9 per thousand in 1990.34 Age-specific indicators—such as average life expectancy and infant mortality—which cancel out the influence exerted by the age distribution of the population, provide a more nuanced portrait and are, thus, more useful for making comparisons.

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Tables 4.3 and 4.4 show the evolution of male and female life expectancies at birth over the course of the twentieth century. While the life expectancy at birth for the men in the countries with the most favorable indicators—the Scandinavian countries, with the exception of Finland—was barely 50 years at the beginning of the century, by the end of the 1980s it had surpassed 70 years in every country of Western Europe, and in Norway and Sweden was almost 75. The growth in these numbers was even greater for women, and thus by 1990, Western European women could expect to live an average of 6.5 years longer than men. Nevertheless, these improvements in life expectancy did not proceed at a  uniform pace. Growth was very rapid in the first half of the century and could still be described as robust in the 1950s and early 1960s; it then slowed in the latter half of the 1960s and the early 1970s, and then again improved at a somewhat faster pace from the late 1970s onward. Table 4.3 Male life expectancy at birth in European countries, 1900–2005 (in years) 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2005

UK

44.1

51.5

55.6

58.7

66.4

67.9

68.7

70.2

72.9

75.4

77.0

France

45.3

48.5

52.2

54.3

62.9

66.9

68.4

70.2

72.7

75.3

76.7

Netherlands

46.2

51.0

55.1

61.9

70.6

71.5

70.7

72.6

73.6

75.5

77.2

Belgium

45.4

62.0

67.7

67.8

70.0

72.7

75.1

76.2

Ireland

49.3

53.6

57.4

58.2

64.5

68.1

68.8

70.1

72.3

73.9

76.7

Germany/ FRG

40.6

47.4

56.0

59.9

64.6

66.9

67.4

69.6

72.9

75.0

76.2

Austria

39.1

40.7

54.5

61.9

65.6

66.5

69.0

72.4

75.1

76.6

Switzerland

45.7

50.7

54.5

59.3

62.7

66.4

68.7

70.3

72.4

74.2

76.9

78.7

Sweden

50.9

54.5

54.8

61.2

64.3

69.0

71.2

72.2

72.8

74.8

77.4

78.4

Denmark

50.2

54.9

55.8

60.9

63.5

67.8

70.4

70.7

71.1

72.0

74.5

75.6

Norway

50.4

54.8

55.6

61.0

64.1

69.3

71.6

71.2

72.3

74.9

76.0

77.7

Finland

42.9

45.3

43.4

50.7

54.3

58.6

65.5

66.5

69.2

70.9

74.2

75.5

Italy

42.6

44.2

49.3

53.8

63.7

67.2

69.0

70.6

73.5

76.6

78.1

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Spain

33.9

40.9

40.3

Poland

47.1

48.2

Czechoslovakia Hungary

48.4

36.6

59.8

67.4

69.6

72.5

73.4

75.8

77.0

55.6

64.8

66.8

66.9

66.5

69.7

70.8

42.8

47.7

53.7

56.5

62.2

67.6

66.1

66.8

67.5

71.6/ 72.9/ 69.1 70.1

39.1

41.0

48.7

55.0

59.9

65.9

66.3

65.5

65.1

67.4

68.6

Notes: UK 1891–1952: England and Wales; Czechoslovakia 2000–2005: Czech Republic/Slovakia; Hungary: present territories; Different years: England and Wales 1891–1900, 1910–12, 1920–22, 1930–32, 1950–52; France 1898–1903, 1908–13, 1920–23, 1928–33; Netherlands 1890–99, 1900–09, 1910–20, 1921–30, 1931–40, 1950–52, 1980–81; Belgium 1891–1900, 1928–32; Ireland 1900–02, 1910–12, 1925–27, 1935–37, 1940–42, 1950–52, 1961, 1971, 1980–82; Germany 1891–1900, 1910–11, 1924–26, 1932–34, 1949–51, 1960–62, 1970–72; Austria 1901–05, 1906– 10, 1930–33, 1949–51, 1959–64; Switzerland 1889–1900, 1910–11, 1920–21, 1929–32, 1939–44, 1948–53, 1958–63, 1968–73, 1978–83; Sweden 1891–1900, 1901–10, 1916–20, 1926–30, 1936– 40, 1946–50, 1960–64, 1970–74; Denmark 1895–1900, 1906–10, 1916–20, 1926–30, 1936–40, 1946–50, 1961–62, 1970–71, 1980–81; Norway 1891–1901, 1901–11, 1911–21, 1921–31, 1931–41, 1946–50, 1979–80, 1994; Finland 1891–1900, 1901–10, 1911–20, 1921–30, 1936–40, 1946–50, 1960–64, 1970–74, 1981; Italy 1899–02, 1901–10, 1921–22, 1930–32; Czechoslovakia 1909–12, 1920–22, 1929–32, 1937, 1949–51, 1960–61; Poland 1931–32, 1948, 1960–61, 1970– 72, 1980–81; Hungary 1900–01, 1910–11, 1920–21, 1930–31, 1941. Sources: United Nations, ed., Demographic Yearbook, 1948 (New York: United Nations, 1949) (Western Europe 1900–40); Eurostat, Bevölkerungsstatistik: Daten, 1995–1998 (Luxembourg: Eurostat, 1999) (Western Europe 1960–70; United Kingdom 1980; Belgium 1980–1990; Germany 1980; Austria 1990; Finland 1981); Council of Europe, Recent Demographic Developments in Europe, 1996 (Strasbourg: Council of Europe, 1996), 55–57 (Western Europe 1980–1990); Oscar W. Gabriel and Frank Brettschneider, eds., Die EU-Staaten im Vergleich (Opladen: Westdeutscher Verlag, 1994), 502 (France 1950; Ireland 1950–52; Germany 1970–1972; Italy 1950); Peter Flora, ed., State, Economy, and Society in Western Europe (Frankfurt am Main: Campus, 1987), vol. 2, 96 (Austria 1906–10, 1959–64); 97 (Belgium 1891–1900); 98 (Denmark 1895–1900, 1906–10, 1916–20, 1926–30, 1936–40, 1946–50); 99 (Finland 1891–1900, 1936–40, 1946–50); 101 (Germany 1891– 1900, 1924–26, 1932–34); 102 (Ireland 1900–02, 1910–12); 103 (Italy 1899–1902, 1901–10); 104 (Netherlands 1890–99); 105 (Norway 1891–1901, 1931–41, 1946–50); 106 (Sweden 1891–1900, 1916–20, 1926–30, 1946–50); 107 (Switzerland 1899–1900, 1948–53, 1968–73); 108 (England and Wales 1891–1900, 1950–52); Franz Rothenbacher, The European Population since 1945 (Houndmills: Palgrave, 2005), 174 (Czechoslovakia 1909–12–1997–98); 647 (Poland 1952/53–1998); Franz Rothenbacher, The European Population since 1945 (Houndmills: Palgrave, 2005), CD-Rom Publication (Spain 1900–1990); William C. Cockerham, Health and Social Change in Russia and Eastern Europe (New York: Routledge, 1999), 148 (Poland 1931–32, 1948); OECD Factbook 2007: Economic, Environmental and Social Statistics (Paris: OECD, 2007), 214 (Europe 2000); Time Series of Historical Statistics, 1867–1992 (Budapest: KSH, 1993), 107 (Hungary 1900–90), retrieved August 20, 2017, https://data.worldbank.org/indicator/SP.DYN.LE00.MA.IN?end=2005&start=2000 (Europe 2005).

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Table 4.4 Female life expectancy at birth in European countries, 1900–2005 (in years) 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

2005

UK

47.8

55.4

59.9

62.9

71.5

73.7

75.0

76.2

78.5

80.2

81.2

France

48.7

52.4

56.1

59.0

68.5

73.6

75.9

78.4

80.9

82.7

83.8

Netherlands 49.0

53.4

57.1

63.5

72.9

75.3

76.5

79.3

80.1

80.5

81.6

67.3

73.5

74.2

76.8

79.4

81.4

81.9

67.1

71.9

73.5

75.6

77.9

79.1

81.3

67.2

Belgium

48.8

59.8

Ireland

49.6

54.1

57.9

59.6

Germany/ FRG

44.0

50.7

58.8

62.8

68.5

72.4

73.8

76.1

79.3

81.0

81.8

Austria

41.1

42.1

58.5

67.0

72.0

73.4

76.1

78.9

81.1

82.2

Switzerland 48.5

53.9

57.5

63.1

67.0

70.9

74.1

76.2

79.1

81.1

82.6

83.9

Sweden

53.6

57.0

57.6

63.3

66.9

71.6

74.9

77.1

78.8

80.4

82.0

82.8

Denmark

53.2

57.9

58.1

62.6

65.8

70.1

74.4

75.9

77.3

77.7

79.3

80.2

Norway

54.1

57.7

58.7

63.8

67.6

72.7

76.0

77.5

79.0

80.6

81.4

82.5

Finland

45.6

48.1

49.1

55.1

59.5

65.9

72.5

75.0

77.6

78.9

81.0

82.3

Italy

43.0

44.8

50.8

56.0

57.5

67.2

72.3

74.9

77.4

80.0

82.5

83.6

Spain

35.7

42.6

42.1

51.1

53.2

64.3

72.2

75.1

78.6

80.5

82.5

83.6

64.2

70.5

73.8

75.4

75.5

77.9

79.4

Poland

51.4

Czechoslovakia Hungary

61.0

38.2

45.9

50.8

57.5

60.5

67.0

73.4

73.0

73.9

76.0

78.4/ 79.1/ 77.4 77.9

40.5

43.1

51.8

58.2

64.2

70.1

72.1

72.7

73.7

75.9

76.9

Notes: UK 1891–1952: England and Wales; Czechoslovakia 2000–2005: Czech Republic/Slovakia; Hungary: present day territories; different years: England and Wales 1891–1900, 1910–12, 1920– 22, 1930–32, 1950–52; France 1898–1903, 1908–13, 1920–23, 1928–33; Netherlands 1890–99, 1900–09, 1910–20, 1921–30, 1931–40, 1950–52; Belgium 1891–1900, 1928–32; Ireland 1900– 02, 1910–12, 1925–27, 1935–37, 1940–42, 1950–52, 1961, 1971, 1980–82; Germany 1891–1900, 1910–11, 1924–26, 1932–34, 1949–51, 1960–62, 1970–72; Austria 1901–05, 1906–10, 1930–33, 1949–51, 1959–64; Switzerland 1889–1900, 1910–11, 1920–21, 1929–32, 1939–44, 1948–53, 1958–63, 1968–73, 1978–83; Sweden 1891–1900, 1901–10, 1916–20, 1926–30, 1936–40, 1946– 50, 1960–64, 1970–74; Denmark 1895–1900, 1906–10, 1916–20, 1926–30, 1936–40, 1946–50, 1961–62, 1970–71; Norway 1891–1901, 1901–11, 1911–21, 1921–31, 1931–41, 1946–50, 1979–80, 1994; Finland 1891–1900, 1901–10, 1911–20, 1921–30, 1936–40, 1946–50, 1960–64, 1970–74; Italy 1899–02, 1901–10, 1921–22, 1930–32; Czechoslovakia 1909–12, 1920–22, 1929– 32, 1937, 1949–51, 1960–61; Poland 1931–32, 1952–53, 1960–61, 1970–72, 1980–81; Hungary 1900–01, 1910–11, 1920–21, 1930–31, 1941.

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Sources: United Nations, Demographic Yearbook, 1948 (New York: United Nations, 1949) (Western Europe 1900–40); Eurostat, Bevölkerungsstatistik: Daten, 1995–1998 (Luxembourg: Eurostat, 1999) (Western Europe 1960–70; Germany 1980; Belgium 1990; Finland 1981; Austria 1990); Council of Europe, Recent Demographic Developments in Europe, 1996 (Strasbourg: Council of Europe, 1996), 55–57 (Western Europe 1980–1990); Oscar W. Gabriel and Frank Brettschneider, eds., Die EUStaaten im Vergleich (Opladen: Westdeutscher Verlag, 1994), 502 (Germany 1970–72; France 1950; Ireland 1950–52; Italy 1950); Peter Flora, ed., State, Economy, and Society in Western Europe (Frankfurt am Main: Campus, 1987), vol. 2, 96 (Austria 1906–10, 1959–64); 97 (Belgium 1891–1900); 98 (Denmark 1895–1900, 1906–10, 1916–20, 1926–30, 1936–40, 1946–50); 99 (Finland 1891– 1900, 1936–40, 1946–50); 101 (Germany 1891–1900, 1924–26, 1932–34); 102 (Ireland 1900–02, 1910–12); 103 (Italy 1899–1902, 1901–10); 104 (Netherlands 1890–99); 105 (Norway 1891– 1901, 1931–41, 1946–50), 106 (Sweden 1891–1900, 1916–20, 1926–30, 1946–50), 107 (Switzerland 1899–1900, 1948–53, 1968–73); 108 (England and Wales 1891–1900, 1950–52); Franz Rothenbacher, The European Population since 1945 (Houndmills: Palgrave, 2005), 174 (Czechoslovakia 1909–12–1997–98), 647 (Poland 1952–53–1998); Franz Rothenbacher, The European Population since 1945 (Houndmills: Palgrave, 2005), CD-Rom Publication (Spain 1900–1990); William C. Cockerham, Health and Social Change in Russia and Eastern Europe (New York: Routledge, 1999), 148 (Poland 1931–32); OECD Factbook 2007: Economic, Environmental and Social Statistics (Paris: OECD, 2007), 215 (Europe 2000); Time Series of Historical Statistics, 1867–1992 (Budapest: KSH, 1993), 108 (Hungary 1900–90), retrieved August 20, 2017, https://data.worldbank.org/indicator/ SP.DYN.LE00.FE.IN?end=2005&start=2000 (Europe 2005).

Infant mortality rates improved almost as significantly over the course of the twentieth century, which merits special attention because this development was one of the most important components of the reduction in overall mortality rates. In Germany in 1900, the infant mortality rate was over 200 per thousand, but even the best performing countries, Sweden and Norway, had barely managed to push this number under 100 per thousand. In contrast, by the end of the 1980s, this indicator had dropped down to a fraction of its former magnitude: fewer than 9 out of every thousand children born in Western Europe died before their first birthdays (Table 4.5). The decline was especially quick between 1950 and 1990, when the infant mortality rate in the countries of the European Union fell roughly 5 percent per year; over those four decades, its level dropped to one quarter of its original value. 35 Table 4.5 Infant mortality in European countries, 1900–2005 (infant deaths per thousand live births) 1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2005

UK

154

105

80

60

61.0

30.0

22.5

18.5

12.1

7.9

5.6

5.1

France

160

111

123

84

90.5

52.0

27.5

18.2

10.0

7.3

4.4

3.8

Netherlands

155

108

83

51

39.1

25.0

17.9

12.7

8.6

7.1

5.1

4.5

Belgium

172

135

110

100

93.2

53.0

31.2

21.1

12.1

7.9

4.8

4.1

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1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2005

Ireland

109

95

83

68

66.4

46.0

29.3

19.5

11.1

8.2

6.2

4.4

Germany/ FRG

229

162

131

85

64.1

55.0

35.0

23.6

12.6

7.0

4.4

3.9

Austria

231

189

156

104

74.2

66.0

37.5

25.9

14.3

7.8

4.8

4.0

Switzerland

150

105

84

51

46.2

31.0

21.1

15.1

9.1

6.8

4.9

4.3

99

75

63

55

39.2

21.0

16.6

11.1

6.9

6.0

3.4

3.0

Denmark

128

101

91

82

50.0

31.0

21.5

14.2

8.4

7.5

5.3

4.1

Finland

153

118

96

75

88.3

44.0

21.0

13.2

7.6

5.6

3.8

3.1

Norway

91

67

58

46

39.1

28.0

18.9

12.7

8.1

6.9

3.8

3.2

Italy

174

140

127

106

102.7

64.0

43.9

29.6

14.6

8.2

4.5

3.7

Spain

186

149

164

117

108.7

64.2

44.0

28.3

12.3

7.6

5.4

4.8

143

140.0 108.0

56.0

33.2

21.3

16.0

8.1

6.6

Sweden

Poland Czechoslovakia Hungary

223

195

139

135

98.8

77.7

23.5

22.1

18.4

11.3

5.6/ 8.6

4.4/ 8.4

193

153

130.1

85.7

47.6

35.9

23.2

14.8

9.2

7.2

Notes: UK 1900–1930, 1950: England and Wales; Czechoslovakia 2000–2005: Czech Republic/Slovakia; Different years: Austria 1922; Spain 1901; Czechoslovakia 1919; Poland 1938. Sources: Brian R. Mitchell, European Historical Statistics, 1750–1975 (New York: Macmillan, 1981), 140–42 (Western Europe 1900–1930, 1950; Denmark 1940); United Nations, Demographic Yearbook, 1948 (New York: United Nations, 1949), 406 (Western Europe 1940); Eurostat, Bevölkerungsstatistik: Daten, 1995–1998 (Luxemburg: Eurostat, 1999), 182–183 (Western Europe 1960); Council of Europe, Recent Demographic Developments in Europe, 1996 (Strasbourg: Council of Europe, 1996), 54 (Western Europe 1970–1990); Franz Rothenbacher, The European Population since 1945 (Houndmills: Palgrave, 2005), 26 (Spain 1950–90; Poland 1950–90; Czechoslovakia 1950–1990); Franz Rothenbacher, The European Population since 1945 (Houndmills: Palgrave, 2005), CD-Rom Publication (Spain 1901–1940; Poland 1930–1938; Czechoslovakia 1919–1940); OECD Factbook 2007: Economic, Environmental, and Social Statistics (Paris: OECD, 2007), 217 (Europe 2000); Time Series of Historical Statistics, 1867–1992 (Budapest: KSH, 1993), 218 (Hungary 1920–1990); retrieved August 2, 2017, https://data.worldbank.org/indicator/SP.DYN.IMRT. IN?end=2005&start=2000 (Europe 2005; Spain, Czech Republic 2000).

It should be clear from the foregoing that the differences between the mortality rates of individual countries decreased markedly and almost continuously over the course of the twentieth century. Still, the variation in the Western European countries’ mortality rates was still relatively significant in the wake of World War II. In 1950, the disparity between the average life span in the best-performing countries (the Netherlands, Norway, Sweden,

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Denmark) and in the country with the most unfavorable numbers (Finland) was 12 years. The conspicuous convergence of the following decades is indicated by the fact that the life expectancy at birth for Dutch men increased by 3 years from 1950 to 1990, while for Finnish men it went up 12.3 years in that same period. As a result of this rapid catching up, the gap between the chart-topping Swedes and the bottom ranking Finns was only 3.3 years in 1990. And it was not just the difference between the most disparate values that shrank, as the dynamics of the changes in the coefficient of variation make eminently clear: while the coefficients of variation for Western European female and male life expectancies were 8 percent and 8 percent in 1900, they had dropped to 5 percent and 3 percent by 1950, and all the way to 2 percent and 1 percent by 1990. As to infant mortality, the differences between the countries under discussion diminished rapidly from the 1970s onward. While the coefficient of variation lingered around 30 percent over the first three-quarters of the century, it had dropped to 11 percent by 1990 (Appendix: Table IIa). Among all the major demographic phenomena, mortality rates were unquestionably the area in which the countries of Western Europe displayed the greatest degree of convergence (Appendix: Table IIIa).36

4.3 Quality of Life in East Central Europe Before World War I, the societies of East Central Europe performed well below Western European averages in each of the three areas encompassed by the HDI. In 1913, Hungary—within the boundaries of its present-day territory—produced an HDI value of 0.464, which suggests it outperformed only Finland (0.450) among the 13 Western European nations under discussion here. According to this index, the territories that would go on to form Czechoslovakia performed slightly better. In comparison to the rest of Europe, however, the improvements made in East Central Europe over the following decades were considerable. Only the improvements in Finland and Austria were of greater proportions than Hungary’s although in Austria’s case, the possibility of some statistical distortions has already been pointed out. Although Poland still lagged behind every Western European country in 1950 and Hungary surpassed only one (Italy) at that time, the disadvantages of East Central European countries had diminished markedly by then (Table 4.1). While Hungary’s HDI was only 78.2 percent

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of the Western European average in 1913, it was up to 92.9 percent by 1950, at which point Poland’s had reached 87.8 percent.37 The period immediately following the middle of the century stands in stark contrast to the first half of the century,38 not because Poland and Hungary ranked behind every Western European country, but because the pace of relative improvement in each of the societies of East Central Europe between 1950 and 1990 was below the rate of change in the Western European countries, that is, East Central European countries achieved smaller proportions of the changes that were possible for them. Measured in percentages, Poland and Hungary realized only 39.4 percent and 35.7 percent of this potential for improvement respectively, while these proportions generally ranged between 55 percent and 60 percent in Western Europe. Even in the United Kingdom, the worst-performing country in that region, this percentage was 47.9 percent. The lag that Poland, Czechoslovakia (or its successor states), and Hungary experienced was a particularly serious development because the method for calculating the HDI suggests that countries with lower levels should be able to improve their positions with relative ease. And though their HDI numbers put Poland, Czechoslovakia, and Hungary in precisely this sort of situation relative to the rest of Europe (Table 4.2), they were unable to take advantage of this opportunity to catch up. Approaching the quality of life from another perspective, mortality trends in East Central Europe largely corresponded to those of Western Europe over the first two-thirds of the twentieth century since life expectancy there improved considerably over the course of this period. Later, however, mortality indicators for the countries of East Central Europe would improve at a slow rate, or even fall into decline, which suggests that their dynamics began to diverge from those of Western Europe. Over the first half of the century and especially during the interwar period, the average life expectancy at birth rose considerably for both men and women in East Central Europe. In Czechoslovakia, life expectancy in 1937 was 54.9 years for men and 58.7 years for women, numbers which represent increases of 8.5 and 9.4 years respectively in just over a decade and a half.39 The improvement was even more rapid in Hungary, where by 1941, life expectancy at birth had risen to 54.9 years for men and 58.2 for women, figures that were 18 years and 20 years higher than they had been at the turn of the century. This was primarily the result of marked improvements in infant mortality. In the immediate aftermath of World War II, poor healthcare conditions and deficiencies in nutrition contributed to ris-

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ing death rates in several areas of the region although life expectancy would soon begin to improve again, and the decade and a half following the war was the period of the most rapid transformation in the region’s mortality.40 Average life expectancy at birth for Czechoslovakian men rose from 62 years in the late 1940s to 68 years by the beginning of the 1960s; this indicator improved substantially for women there as well, rising from 67 to 73 years in that same period. Hungary, meanwhile, made up a good deal of ground on Czechoslovakia as well as several Western European countries (Tables 4.3 and 4.4). The mid-1960s, however, were a turning point for mortality trends. In the communist countries, improvement stalled, or more precisely, mortality rates stagnated for women and began to ebb for men.41 This change did not affect every country uniformly: while declines were less apparent in Czechoslovakia, they were serious enough in Hungary to have been called an epidemiological crisis.42 The situation for Hungarian women was relatively favorable, as the improvement in their mortality rates merely decelerated; their average life expectancy at birth rose from 72.7 years in 1980 to 73.7 in 1990. For men, however, this indicator initially stagnated and then dropped into a gradual decline, from 65.5 years in 1980 to only 65.1 in 1990. This also meant that the gender differential in Hungarian mortality rates grew substantially larger than in the countries of Western Europe: the disparity between the life expectancy for men and women was more than 8 years in 1990. Nor did these deteriorating mortality rates affect the various age cohorts uniformly; in every communist country, middle-aged men were hit the hardest.43 The different trajectories of communist and Western European countries are demonstrated by the fact that in England and France, for example, between 1970 and 1990, mortality rates improved for every age group except men around the age of 20, for whom they stagnated. These improvements were not uniform in magnitude: infants, children, and the middle aged (40–60 years old) enjoyed the greatest gains in England, while in France, the largest advances were made by infants, children, and those between the ages of 40 and 70. In contrast, over that same period in Hungary, death rates rose for every male age cohort except those under 20, and in some cases these increases were dramatic: the risk of death for a fortyyear-old man was 60 percent greater in 1990 than it had been twenty years earlier.44 Put another way, the life expectancy of forty-year-old men—at that age, the continuing mortality improvements for those under 30, espe-

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cially for infants and small children, did not affect the figures—was 32.7 years in 1965, but two decades later, it was only 29.5. Female life expectancy at the same age, however, remained unchanged at 36 years.45 From the turn of the century up to 1914, infant mortality in East Central Europe ranged between 150 and 250 per thousand, rates that were far greater than those characteristic of Western Europe. In the aftermath of World War I, this value barely decreased: the infant mortality rate in Hungary between 1920 and 1924 was roughly 190 per thousand. From the mid-1920s, trend lines generally improved, and though this progress was marked by occasional relapses, by the end of the 1930s, the infant mortality rate had dropped to 140 per thousand in Poland, 100 per thousand in Czechoslovakia, and 120 to 130 per thousand in Hungary.46 Infant mortality rates were high in the first couple of years immediately following World War II but dropped very quickly thereafter. The reasons for this decline were similar to those in Western Europe: above all, it was due to the spread of antibiotics and the use of vaccines (against diphtheria, etc.). In addition, access to medical care improved markedly in East Central Europe at that time. By the end of the following decade, infant mortality rates had sunk below 60 per thousand in Poland, below 50 per thousand in Hungary, and below 30 per thousand in Czechoslovakia. The rate of decline subsequently decelerated in Czechoslovakia and, for a time, in Hungary as well. However, these reductions picked up speed again in Hungary and Poland in the latter half of the 1970s so that by the beginning of the 1980s, infant mortality rates had fallen to roughly 20 per thousand in all three countries. In 1990, this rate was 16 per thousand in Poland, 11.3 per thousand in Czechoslovakia, and 14.8 per thousand in Hungary (Table 4.5). Despite these large-scale reductions, infant mortality rates in the societies of East Central Europe continued to be higher than those of Western Europe. Differences between the two regions grew significantly over the first third of the century, and after roughly two decades of moderate convergence following World War II, they began to diverge again. From time to time over the course of the twentieth century, East Central European mortality statistics converged with those of Western Europe, but on the whole, between the beginning and the end of the century, divergence prevailed.47 Convergence was particularly notable in the 1930s and in the 1950s, by which time the most developed countries had already reached the point where it was difficult for them to improve their mortality rates, while the societies of East Central Europe still had room

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to progress. Starting in the mid-1960s, however, as mortality continued to improve in Western Europe, death rates for the adult male population of East Central Europe began to deteriorate, initiating a period of intense divergence between the trends in the two regions. Moreover, as a result of the rapid homogenization within Western Europe in the 1980s, especially in infant mortality, the divergence between the two regions intensified even further.48 Although there were obviously several factors involved in its development, this divergence in mortality can be explained by differences in the lifestyles and living conditions characteristic of Western and East Central Europe. On the one hand, the deficiencies of the East Central European healthcare systems, notably in the area of preventive medicine, played a  role in their deteriorating positions.49 By the end of the period under discussion, 18 percent of the deaths in Hungary were so-called avoidable deaths, meaning they could have been prevented if the deceased had received appropriate medical care. The average in the European Union at that time was 11 percent.50 Furthermore, the persistence of unhealthy lifestyles in East Central Europe (especially the prevalence of smoking, excessive alcohol consumption, and diets rich in animal fats) and the characteristics of employment there (poor working conditions, excessive overtime, etc.) may also have played important roles in this unfavorable trend.51 The deterioration of mortality rates might also be considered “system-specific”—that is, connected to the communist regimes. This notion is confirmed not just by comparative analyses of demographic transition, which show, for example, that the central tendencies of the early phases of the Austrian and Finnish demographic transition were identical to those exhibited in East Central Europe;52 it is also indirectly proven by the fact that mortality rates in the East Central European countries began to show improvement again starting in the mid-1990s. Causes related to the political system, such as the conflicts authoritarian institutions and practices created in people’s everyday lives, permanent and intense feelings of vulnerability and stress, and a culturally conditioned incapacity to effectively resolve everyday conflicts, arguably also contributed to the degradation of health of many East Central European citizens.53

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5 Determinants of Change: Accounting for Growth and Beyond

Over the course of the preceding chapters, in describing the trends of economic growth and well-being in the twentieth century, a number of important determinants of these processes have been discussed. This chapter will move beyond the primarily short-term factors that have been dealt with and provide a  more detailed and systematic study of trends prevailing in the long run. This exercise will allow an assessment of the determinants of East Central European economic and social change in the period following World War II, and particularly the causes of convergences and divergences.1

5.1 Factors of Economic Growth Technological development Economists and economic historians have traditionally treated technological change as the driving force of economic growth.2 A host of inventions could be cited as proof of the acceleration of technical progress since the late nineteenth century and the possibilities such advances have created for ever more productive uses of labor.3 Technological change has passed through a number of phases in which various economic sectors were considered leaders, but in the latter half of the twentieth century, the vanguard unquestionably included transportation and communication. The twentieth century did not simply give rise to large numbers of new inventions; the institutionalization of technical progress also took

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place. In the classical period of the industrial revolution, the most important inventions generally originated in practice; that is, skilled and inventive artisans and entrepreneurs worked to improve their instruments and machines until they achieved the results they desired. In contrast, the twentieth century saw these sorts of individual initiatives and pathways taken over by well-capitalized large enterprises as well as universities and other research centers mostly financed with public money, all of which took a scientifically systematic approach to technological innovation by performing a range of activities that came to be known as research and development, or “R&D.”4 The rate of technological change diverged not just in individual economic sectors; in the global economy there have also been great asymmetries in technological advances. While the most important inventions of the early nineteenth century emerged in Great Britain (transportation, textile manufacturing), by the end of that century, the world’s technological leader was Germany (chemical production). In the twentieth century, the United States took over that leading role, and by the 1950s, its technological advantages were greater than any nation’s had ever been. But in the decades after World War II, Western Europe—as we have seen—managed to catch up to the United States somewhat in the areas of economic development and technological progress, though the gaps between the two regions began to grow again by the end of the century. At the same time, several Asian countries were beginning to find success along this developmental path. It is a long-standing observation of economic history that lagging countries should be able to achieve faster growth than leading countries by making use of technological advances created in the latter. Yet this “advantage of the latecomers,” as Alexander Gerschenkron called it, could only be exploited by the “follower” countries under certain social conditions as will be discussed below.5 The technological backwardness of East Central European countries in the postwar era provided them with a  great opportunity for catch-up growth. However, the catch-up was largely obstructed by the isolation of the communist countries, leading to restricted commercial and capital market relationships with the West. The United States—by means of the CoCom system of export controls, for instance—also sought to prevent the diffusion of cutting-edge technologies in East Central Europe.6

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Capital accumulation Throughout the twentieth century, technological development was always contingent on capital accumulation. New inventions and production processes offered the possibility of ever more efficient production, but they took the form of increasingly costly machines and equipment or required the construction of expensive infrastructure. In the United Kingdom, for example, the total value of machines and equipment grew ninety-sevenfold between 1820 and 1995.7 It is also clear that in every case, economically catching up to the leading countries was accompanied by large-scale increases in fixed capital stocks. In France, a country that caught up to the United States in the decades after the middle of the twentieth century, the per-worker value of machines and equipment in 1950 was still just a seventh of the level in America, but by 1992, it was up to nearly 90 percent of the US figure. In Germany, which by mid-century was already known for its capital-intensive heavy industry, the per-worker value of machines and equipment increased by a factor of eight between 1950 and 1992. High levels of capital accumulation—increases in per-worker capital stocks—are also a precondition of productivity growth.8 It is also clear, however, that the volume of capital stock explains only a small proportion (according to certain estimates, only a  quarter) of the developmental differences between national economies, while the remaining larger portion of this variation is determined by the efficiency with which these resources are utilized.9 If an economy’s absorptive capacity is weak, then capital productivity and total factor productivity will be low, and thus the effect of capital accumulation on growth will be limited.10 The growth strategy of the communist countries of East Central Europe was based on a high level of capital accumulation for as long as they existed. Their absorptive capacity, however, was insufficient, which resulted in a low level of capital productivity.11

Human capital The implementation of new production processes and the operation of advanced machinery obviously require the labor force to have a  broader range of knowledge than before.12 Accordingly, in every country that experienced dynamic growth over the course of the twentieth century, the education levels of the population rose substantially. The notion of education

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as an investment that advances economic growth and welfare developed in the late 1950s. In 1961, the American economist Theodore Schultz introduced the concept of “human capital,” which refers to the stock of acquired skills and knowledge which improve the earning power of a  worker or a  group of workers in the labor market, and which has since become an essential component of growth theory. According to human capital theory, knowledge is as important a factor of production as the capital embodied in machines and other equipment and resembles them because it can be augmented, accumulated, and even—at least in part—inherited.13 Assessing levels of human capital is not a simple exercise, but literacy rates and the duration of formal education tend to be good proxies. While in 1913 the average number of years of schooling completed by the adult populations of Great Britain and France were 8.8 and 7, respectively, these figures had risen to 14.1 and 16 by 1992.14 Over time, formal education has not merely increased in length; the content has also been modified and differentiated, which has also fostered technological progress. Although human capital theory became highly influential, the role of education in economic growth has been questioned. Some authors only consider technical expertise beneficial to economic growth; others judge the positive effects of primary and especially secondary education to be convincingly documented.15 It is obvious that the effects of education on economic growth are complex. Several scholars have proposed that the expansion of education predates accelerations in growth by many decades, as is suggested by the cases of the Scandinavian countries, Japan, and Korea.16 It is probable that not only the knowledge being transmitted is of importance, but rather education and literacy lead to changed attitudes, which indirectly result in higher productivity. Schools, in addition to transmitting knowledge, also serve as institutions for socialization by promulgating the kinds of values and norms that are necessary for effective cooperation between individuals.17 The educational systems of the communist countries of East Central Europe underwent significant expansions, and it has been argued that this process significantly increased the human capital stock in East Central Europe.18 However, from the standpoint of promoting economic growth, these modifications were deficient in two ways. On the one hand, it seems that the quantitative growth in human capital was not accompanied by any corresponding changes in its quality: the East Central European school systems did not transmit the sort of values and norms that might have fostered effective cooperation among members of their societies. On the other hand,

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the expansion of education was selective in the region insofar as it did not include the post-secondary or higher education, especially in Hungary.19

Structural change Over the course of the twentieth century, major changes took place in the relative contribution of economic activities to national product, among the most important of which were shifts between economic sectors.20 Insofar as particular activities and sectors exhibit varying levels of productivity, shifts between them affect the level of economic output.21 These changes took place in Europe over the course of the nineteenth and twentieth centuries, when decline in the less productive agricultural sectors benefited the more productive manufacturing and service industries and, thus, drove over-all economic growth.22 This structural transformation continued to play out all over Europe after 1945, but by that time, the service sector was already the chief destination for labor flows in Western Europe, where the role of manufacturing in the growth process had clearly diminished over time. Yet structural changes, as Angus Maddison has pointed out, are almost always accompanied by growth in capital stocks, improvements in the levels of professional skills, and expansions of international trade. All of these are also important growth factors, and thus the separation of their effects from those of structural changes is a complex task.23 Sectoral shifts were the major source of growth for the command economies of East Central Europe, especially in their early phases. These regimes were able to implement large structural changes relatively quickly by means of centralized planning and other measures, such as collectivization and including the use of political violence. The redeployment of agricultural laborers in industry and the expansion of the female workforce participation rate were especially important in this respect. At the same time, the reserves that made this model of extensive growth possible were largely exhausted by the early to mid-1960s, which contributed significantly to the deceleration of growth rates in the region.24

Economies of scale It is easy to understand how goods produced in large quantities have lower per-unit costs. All indicators suggest that economies of scale—that is, increasingly large production runs—played a role in all of the great growth

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performances of the twentieth century, such as those of the United States from 1913 to 1973 and Western Europe after 1950. This factor theoretically gives larger national economies an advantage over smaller ones. In practice, however, there is no observable relationship between the size of a country and the performance of its economy. One obvious explanation for this fact is that international trade allows smaller national economies to take advantage of the opportunities offered by economies of scale. For example, in 1990, the median size of an American firm in manufacturing was no larger than that of a Dutch enterprise in the same sector.25 Planners in the command economies of East Central Europe showed a decided preference for large enterprises both in manufacturing and agriculture. The reasons for this were at least partly ideological; the classics of Marxism described the industrial proletariat as the primary social foundation of the communist system. In addition, the administrative systems of command economies also required larger economic units, as they made it easier for planners to transmit their directives to various economic actors and then check up on their implementation. One of the goals of the Council for Mutual Economic Assistance (Comecon) was to help member states take advantage of economies of scale by specializing in particular goods. Nevertheless, the large size of these enterprises would become an obstacle to flexibility, adaptation, and innovation, just as the administrative decisions to specialize the economies of the Comecon member states did not produce the expected results.26 For this reason, the economic reforms that were launched starting in the 1960s—in Hungary, for example—were conceived with the goal of making room for smaller enterprises that could react more quickly to consumer demand. Largely for the aforementioned ideological reasons, however, such reforms proceeded only haltingly, and until these systems collapsed, large enterprises would continue to dominate the economies of East Central Europe with the exception of the agricultural sector in Poland.27

Prudent macroeconomic policies There is mounting evidence that prudent fiscal and monetary policies and the resulting macroeconomic stability have been important factors in the successful growth performance of postwar Europe. In contrast, several examples from Latin America and elsewhere suggest that the inability to achieve sustained macroeconomic stability has contributed substantially to the economic failures in these countries during the last decades

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of the twentieth century.28 As demonstrated earlier, central planning did not guarantee financial stability in East Central Europe; on the contrary, Poland and Hungary developed serious external imbalances from the 1970s onward.29

Trade regimes and openness The expansion of trade and financial relations between the individual national economies was another important driver of economic growth over the course of the twentieth century. These relationships facilitated increases in efficiency by making it possible for individual national economies to specialize in those goods and services they could produce most efficiently.30 Trade and capital export also fostered the diffusion of new technologies and compensated for deficiencies in natural resources. Accordingly, every successful attempt to catch up economically has been accompanied by an opening up to the outside world and an intensive engagement in international trade. Inflows of foreign direct investment (FDI) seem to be another of these general conditions of catching up.31 American direct investments clearly contributed to Western Europe’s successful efforts to catch up in the wake of World War II. Furthermore, since the 1970s, FDI has become an ever more powerful factor in distributing technology throughout the world economy. The proportion of foreign trade relative to gross domestic product is, of course, largely dependent on the size of the given national economy. As a  general rule, the smaller the national economy, the more likely it is to resort to foreign trade. Insofar as there are numerous relatively small countries in Europe, international commerce was especially important for them over the course of the twentieth century, and whether foreign trade was obstructed or not could have outsized consequences for these countries. In addition to the movement of goods and capital, two more significant influences on economic growth are the free flow of ideas and people. The existence of these freedoms can facilitate—and their lack can impede—the acquisition of knowledge necessary for economic competitiveness.32 As it has already been discussed, the lack of openness was one of the main impediments of growth in the communist economies of East Central Europe. Their autarkic ambitions, first at the national and later at the Comecon level, along with their intensive economic relations with the Soviet Union obviously failed to provide sufficient sources for technological devel-

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opment and instead slowed down industrial progress and hampered social innovations.33

Natural resources and geographical factors The distribution of natural resources among countries is fairly unequal. It is common knowledge that certain states have substantially larger per capita quantities of arable land than others, and that soil quality is variable. Raw materials of crucial importance for manufacturing, like coal and iron ore, are distributed just as unevenly. The influence of other geographical factors, like climate or distance from the coast, can be equally significant. Even in the nineteenth century, these factors still exercised considerable influence on the development of agriculture and industry in individual countries, and in the final analysis, affected their levels of economic development as well.34 As a result of technological developments in transportation as well as the evolution of international trade, the influence of the geographical factors on growth has diminished substantially. Thus, the pessimistic predictions of Malthus, Ricardo, and others about resource depletion have not come to pass. The “economic miracles” of the latter half of the twentieth century—from Germany to Japan to the countries of Southeast Asia—took place in areas with relatively humble endowments of natural resources. The converse is also true: in itself, natural wealth rarely results in high levels of economic development. These days, practically speaking, only generous endowments of hydrocarbons such as petroleum and natural gas can make a country rich; not only are these raw materials used in massive quantities, but since the 1970s, there has generally been a wide gap between their production costs and their prices on the world market. Thus, over the course of the twentieth century, the importance of natural resources has clearly declined, so much so that, by the turn of the millennium, geographical factors were only marginal influences on growth prospects with the exception of the aforementioned hydrocarbons. On the whole, the countries of East Central Europe were endowed with average quantities of natural resources. Though Hungary’s supplies of mineral wealth were relatively small, it was blessed with all the prerequisites for agricultural production. So resource endowment influenced economic development in these countries only insomuch as they were forced to import almost all hydrocarbons consumed. The acceleration of the process of motorization in the 1960s increased their dependence on shipments of

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Soviet oil and gas, and their growing consumption after the 1973 oil shock also contributed to their deteriorating terms of trade.35

Institutions Social institutions determine how the growth factors described above— technology, capital accumulation, natural resources, and others—are utilized and interact with one another. As Douglass C. North suggested, institutions are “the forms of cooperation and competition that human beings develop and the systems of enforcement of these rules of organizing human activity.”36 From the perspective of economic growth, the importance of institutions depends on their ability to motivate individuals to participate effectively in productive activities, in the most general sense, that is, not only in production itself, but in investment, the creation of knowledge, and innovation as well as the extent to which they encourage effective cooperation between individuals and groups. According to North and other representatives of the new institutional economics, institutions are the primary sources of growth and, thus, should be at the center of any economic analysis. Accordingly, technology, for instance, is not an independent growth factor because its progress depends on the extent to which institutions encourage innovation. Institutions include organizations like state agencies, for example, but they are not limited to these formal entities. Among the most important institutions are systems of property rights, social structures (for example, the characteristics of various classes, or particular income-distribution practices) as well as the religious disposition and ideological attitudes of the population (work ethic, inclination to obey tax laws, etc.). Other kinds of institutions include educational systems, the structure of families (nuclear or extended forms), representatives of economic interests (trade unions), and other such factors that shape the value orientation of the population. North accords particular significance to the role of the state in economic development. As he puts it, “there is no such thing as laissez-faire. . . . Any market that is going to work well is structured; it is structured by deliberate efforts to make the players compete by price and quality rather than compete by killing each other or by other means.”37 The effect of individual institutions varies: there are those of arguably fundamental importance for economic growth, such as systems of property rights, and those of secondary significance, such as the forms that financial

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institutions take or the rules that govern social interactions. At the same time, the relative impact of institutions cannot be properly determined by a  general principle: it is not possible to prepare a  universally valid list of institutions of crucial importance for economic growth, and even less possible to rank them in order of influence. Analyzing the interaction of these institutions is an equally difficult task. Analysts who attempt to evaluate the significance of institutions often produce inconclusive results,38 so there is no general theory of institutions for experts to make use of in their analyses of economic history. Institutions help create social continuity and stability as well as social change. Continuity is indispensable, and societies cannot function without it. But it is possible for certain institutions to encourage greater-thanoptimal levels of stability and thereby impede economic growth. Monopolies are one obvious example of this sort of institution, and at the time of the Great Depression, a similar role was also played by those orthodox economic views, which prioritized balanced budgets over all other concerns. In contrast, institutional reforms made it possible to utilize resources more efficiently than before. These include the institution of the market, various forms of modern enterprises (joint-stock companies, etc.), systems of antitrust and competition laws, stock exchanges, and social insurance.39 In a  similar vein, Acemoglu and Robinson differentiated between extractive and inclusive institutions. They suggested that states fail because they have extractive political and economic institutions, such as the concentration of power into the hands of a few without checks and balances; the lack of rule of law; insecure property rights; and entry barriers and regulations that create a non-level playing field for economic actors. In contrast, inclusive political institutions allow pluralism and place constraints on politicians, while inclusive economic institutions guarantee law and order, secure property rights, and uphold contracts, as well as ensure the relatively free entry of new businesses. Inclusive institutions encourage economic growth by fostering investment in new technologies, exploiting the power of markets through the better allocation of resources, allow the entry of more efficient firms, and generate broad participation in education and market activities, among others. Still, extractive institutions often prevail because growth creates both winners and losers. The latter support extractive institutions and stagnation because otherwise they will lose their incomes and their privileged political position. Ineffective institutional settings are difficult to change even though they can be success-

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fully challenged and transformed, particularly during critical junctures of historical change.40 In recent years, the capacity of economic actors to cooperate has played a  particularly important role in other social science paradigms including research on “social capital” and “social capabilities.” Human capital and the knowledge transmitted by formal education are necessary but not sufficient conditions for growth. For this, it is necessary to have norms and values that facilitate effective collaboration between the members of communities, social groups, and nations. These norms and values include trust, integrity, tolerance, and solidarity. More recent literature has featured several other concepts for describing these kinds of competencies. For instance, in the mid-1980s, Moses Abramovitz argued for the importance of “absorptive capacity” and “social capabilities,” and although both of these concepts are difficult to quantify because they incorporate a  number of economic and political institutions, they are nonetheless decisive in determining those societies that will be able to take advantage of the opportunities offered by technological change and those that will not.41 Moreover, scholars recently employed the concept of social capital (the norms and values that foster effective social action and cooperation; these include the levels of trust in social institutions and one’s fellow citizens), which focuses on the social and cultural factors neglected by neoclassical growth theory. Even though the concept has been severely criticized for its ambiguity, there is mounting empirical evidence that social capital has a significant positive effect not only on the operations of individual firms, but also on the economic performance of entire societies and the quality of life in general.42 Despite these conceptual debates and the difficulties of empirical research, it is clear that human factors are of first-order importance for economic development, though by itself, the concept of human capital is incapable of capturing all the elements involved. Whether we accept North’s characterizations of institutional factors or prefer other conceptualizations, it is clear that institutional deficiencies were among the most important causes of the growth problems experienced by the centrally planned economies of East Central Europe. It was not just the nationalizations during the formation of these regimes that damaged property rights; they were never really guaranteed, as illustrated by the process of collectivization in Czechoslovakia and Hungary. Moreover, the new forms of property rights that evolved did not assure that the various factors of economic growth (capital, labor) were allocated efficiently. Especially in

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their long-term decisions about investments, authorities failed to properly consider efficiency among their criteria. Rigid political institutions and the similarly inflexible Marxist-Leninist ideology also hampered the formation of institutions for the effective regulation of cooperation and competition. Strict limits on private properties and the inflexible system of economic administration impeded innovation. While economic reforms and changes in political structures slightly improved the adaptability of these systems, they did not fully compensate for the deterioration of essential growth factors. The absorptive capacity of these systems remained weak. Despite the great distance to the technological frontier and the significant opportunities for catching up which that distance implied, rates of growth in these economies increasingly lagged behind those of Western European countries.

5.2 Determinants of Quality of Life Several aspects of quality of life have been discussed so far, among which mortality is arguably the most complex phenomenon because its change is influenced by a particularly high number of factors and, thus, is related to the transformation of other important fields of society and economy. For this reason, the following section investigates the determinants of change in mortality in contemporary Europe. The underlying factors of mortality decline in modern and contemporary societies are a highly controversial issue in population history. As for the twentieth century, researchers have debated the role medical science and technology played in its change. Nonetheless, mainstream scholarship tends to accept that medicine greatly impacted mortality changes even in the most advanced European countries only in the postwar period.43 Preventive vaccinations had been used for some of infectious diseases, including diphtheria or smallpox, starting in the nineteenth century onward, but mortality related to the most infectious disease had already plummeted prior to medical breakthroughs, especially before medical sciences found a  remedy or preventive treatment against them by employing vaccination. Scholars explained the decline of mortality related to infectious disease with better living conditions, and primarily, with improvements to nutrition, which enhanced the resistance of the population against certain epidemics. Among these diseases, one can count tuberculosis, which was responsible for most of the deaths among the adult population in the

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nineteenth century. Although medicine was able to find a treatment only in the postwar period, tuberculosis was mostly eradicated in Western Europe before World War II. The advance and diffusion of knowledge on the prevention of diseases also facilitated the decrease of mortality. Governmental authorities as well as civil associations worked on the dissemination of medical information to the public. Moreover, the rising level of education also helped these developments. It was an overt function of education to promote knowledge on hygiene and health. The attitudes toward infants and children also changed as parents and society in general tended to pay more attention to their health and welfare. Additionally, working conditions improved, and significant health effects can be attributed to improving housing conditions, which eliminated crowded living arrangements and led to more hygienic and healthier living environments.44 Furthermore, municipal authorities and central governments introduced sanitation measures including the construction of sewage systems, clean drinking water, and the regulation of the trade of food products, all of which influenced changes in public health as early as the first decades of the twentieth century.45 With the further rise of regulative social policy and state intervention in the postwar period, healthcare eventually became a universal right, and healthcare institutions as well as medical innovations could be accessed by virtually the whole population in Europe. The accumulation of these developments led to a major turn in mortality trends, which was called the “epidemiological transition.”46 This concept, coined by Abdel Omran, denotes a change in the patterns of mortality and, more specifically, a shift in the conditions in which fatal diseases occurred. In this new periodization of mortality, after the long-lasting “age of pestilence and famine” in the late eighteenth century, Europe entered the “age of receding pandemics,” which characterized Europe by the late nineteenth century. Ailments of the respiratory system (for instance, pneumonia) and digestive organs as well as infectious diseases became the main causes of death in the latter period. These two periods were followed by a third one in the twentieth century known as the “age of degenerative and man-made diseases.” In this third era, cardiovascular and cancerous illnesses, in addition to other kinds of degenerative health complications step-by-step supplanted major causes of death characteristic of the two former periods. In the twentieth century, the ratio of new ailments increased from one-fifth to two-thirds of deaths in the advanced European countries.47

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The substantial improvement of mortality cannot simply be explained by the longer life span of adults. In the first decades of the twentieth century, it was, above all, declining infant and child mortality that resulted in the increase of life expectancy. The age group where mortality took the greatest dive was early childhood because of vaccinations, improved nutrition for infants, the enhancement of hygiene, etc. In older age groups, the prevention and ultimately the treatment of tuberculosis exercised a similar effect. One could not see a correspondingly rapid improvement of mortality in the case of those over sixty years of age, but the mortality of this age group also significantly improved starting in the 1970s. All European societies witnessed the decline in mortality with considerable status- and class-specific differences; already at the beginning of the twentieth century, the social groups that enjoyed better incomes and higher standards of living had a lower mortality rate than other social strata. They could maintain their relative advantage in the rest of the century even though over time, the mortality differentials narrowed somewhat between social classes in Great Britain and in several other European societies.48 Blue-collar workers experienced accidents more often, and in the case of this group, there was an increased tendency to die from cancer, cardiovascular disease, or liver damage at younger ages. The detrimental effects of their work did not primarily cause this; rather, poorer mortality characteristics were mostly the result of blue-collar workers’ avoidance of medical treatment for illness and high rates of smoking and excess drinking. As Michael Anderson demonstrated in the case of Britain, the children and wives of many men who worked in types of jobs with high mortality also had high death rates in 1950.49 Research into this question pointed out that across Europe, the higher the level of education was, the longer the life expectancy was even for people who worked in the same occupation. However, besides similarities, European societies had many differences in this respect. A study that compared thirty-two countries at the beginning of the 1980s showed that mortality gaps by social group could be witnessed across Europe, but these gaps were smallest in East Germany, the Scandinavian countries, and the Netherlands. Western European countries such as, for example, West Germany, France, and Italy had mortality differences in the middle range. Another group of countries including Hungary, Romania, and Spain showed more sizeable differences between the life expectancy of various groups of society. 50 The discrepancy between male and female mortality prevailing in twentieth century Europe originated from both social and biological fac-

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tors. Studies have recently argued that women’s genetic profile enables more resistance against specific types of diseases. For example, the female endocrine system affords them greater immunity against circulatory diseases.51 However, biological determinants are clearly less significant causes of mortality differentials than social factors such as differences in everyday attitudes and lifestyle. In contrast to what traditional masculine social roles demand, feminine roles enable women to better handle conflict and to express their emotions more effectively than men. This difference lessens the measure of everyday stress. What is more, women pursue closer and more intensive family and social relationships, which helps maintain their psychological balance and is also useful when they become sick. By taking care of their children and other family members, women foster a more sensible approach to problems related to health. This awareness involves a greater reliance on medical advice and preventive methods. In contrast, male workers regularly incur physical strains to a greater extent and face a greater risk of accidents than women. Last but not least, men tend to commit suicide and exhibit addictive behaviors more often than women.52 For most of the twentieth century, female life expectancy improved more than that of men as the chance of perinatal death significantly decreased and, consequently, the excess mortality of women disappeared. Additionally, the lifestyles of men held more risks than those of women, with the growing use of tobacco as the major health hazard. In many European societies, the increase of mortality differences characteristic of men and women stopped and/or the gap began to close from the 1980s. Most likely it was the result of the evening out of male and female lifestyles in industrial societies.53 The divergence between Western European and communist societies in the last decades of the twentieth century mainly originated from different lifestyles and living conditions, even if a number of additional factors including the quality of healthcare and environmental problems also played a role. The unfavorable trends in Hungarian, Czechoslovakian, and Polish mortality can also be explained by the deficiencies of the healthcare systems in these countries with respect to prevention in particular. Researchers estimated the extent of mortality known as “medically avoidable deaths”: those deaths that could have been prevented if there had been more effective public health and medical intervention.54 In Hungary, the ratio of these deaths was 18 percent; in Poland 15 percent; and in Czechoslovakia 9 percent in the mid-1980s.55 These numbers show that deficiencies in healthcare significantly contributed to excess mortality in

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East Central Europe.56 Evidence also suggests that the lifestyle pursued by the people of this region came with high risks. The major components of unhealthy lifestyle were the consumption of animal fats and alcohol as well as profuse smoking. The social group targeted by premature death was mostly composed of middle-aged working-class men, which implies that working conditions greatly reinforced an already unfavorable tendency: detrimental conditions of work coupled with overtime and, especially in Hungary, the widespread practice of holding a second and even third job, which often resulted in stress originating from defective organization. 57 Social stress in a wider sense has arguably also contributed to health problems in communist East Central Europe. The stress was fuelled by everyday conflicts related to the authoritarian political system and the shortage economy; the persistent feeling of vulnerability and helplessness; along with the insufficiency of culturally coded abilities to cope with stressful situations.58 In sum, the deterioration of mortality in East Central Europe can be considered system specific; that is, it can be attributed to the characteristics of the communist political and socio-economic system. Important evidence also comes from comparative analysis of the demographic transition.59 Finland and Austria, for instance, showed the same demographic trends as East Central European countries in the early stages of the demographic transition,60 and divergence only appeared during the communist era. Moreover, mortality once again started to improve in East Central Europe from the early and mid-1990s, after the fall of the communist regimes.61

5.3 Causes of Convergence and Divergence As we have seen, in the latter half of the twentieth century, the societies of Western Europe converged observably in their economic growth, consumption patterns, and in important aspects of quality of life. These trends raise a  number of questions. Was this socio-economic convergence the consequence of specific factors valid only for particular periods of the century, or was it the result of influences that exerted themselves over the long term? Was this convergence related to the process of political and economic integration, or did it unfold independently of it, motivated by other causes? Was convergence part of a  worldwide process or a  specifically European phenomenon? For the time being, there are no definitive answers to these

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questions, but a  survey of the possible causes behind the convergences might bring us closer to a convincing response.62 Research into the causes of economic and social convergence in twentieth-century Europe resulted in five main interpretive approaches that offer important lessons for analyses of the developmental paths of the East Central European countries as well. While differentiating the prime movers, we rely heavily on Hartmut Kaelble’s catalogue of causes.63 The first among the explanations regards the end of the conflicts and divisions between European nation-states as the most important factor, and thus puts great emphasis on the role played by the institutions of European integration in this process of convergence. A second notion accords great significance to the economic boom of the 1950s and 1960s. A third explanation suggests that primarily industrialization and its social consequences led to homogenization tendencies. According to a fourth interpretation, industrialization caused large-scale changes that initially produced intense levels of divergence, but after they ran their course, the resultant disparities began to even out. Finally, a fifth approach attributes the declining disparities in Western Europe to the process of Americanization, which all these societies experienced after 1945, making them part of a world-wide process of homogenization. 1. Without a doubt, the rise of the nation-state had a significant effect on the nature of economic and social development throughout Europe. This influence extended to a number of areas including tariffs, taxes, labor law, and social policies. Because different social groups and political coalitions exercised political power in the European nation-states, their distinct preferences intensified the divergence between European societies. The differing political systems of the German Reich and the French Republic led them to disparate solutions in numerous fields with close links to politics such as social policies and education. The economic and social consequences of this political diversity were also notable in the interwar period; in fact, the division that formed between the dictatorships and democracies at that time was starker than former dividing lines in Europe. In contrast, European integration in the wake of World War II, which moderately diminished the sovereignty of individual nation-states, may have produced economic and social convergence. The European Economic Community (EEC) and its successors fostered the development of various forms of mutual influence in Western Europe: the adoption of government measures originally taken up in other countries, the establishment of international networks of elites, and the penetration by external actors and interests.64

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There are also counterarguments against the notion that nation-states have played an important role in convergence processes. On the one hand, the dynamics of convergence was not always congruent with that of the power of the nation-state. This is most obvious in demographic development. The interwar period in Western Europe was marked by convergences in this area, even though nationalism was on the rise and distinct population policies emerged. After 1945, in a shifting political context, we see similar reductions in demographic differences.65 Moreover, there are serious arguments for the notion that the nation-states of Western Europe did not undergo a process of weakening from the 1950s, but rather a process of consolidation. It was not a loss of faith in the nation-state as such that took place after the war but rather a repudiation of the nationalisms that had flourished in the interwar period.66 Furthermore, the EEC and its successors had almost no jurisdiction whatsoever over a range of social issues. The case was quite different in economic policy, where one of the objectives of the European integration process was the reduction of regional economic disparities for which the EEC had a number of important means at its disposal. The integration process in Europe has arguably contributed to economic convergence across the continent even if it is not clear whether the strengthening or weakening of the nation-states played a  decisive role in the trends related to economic differences within Europe.67 2. The Western European economic boom of the 1950s and 1960s is also often regarded as the principle driver of convergence. This line of reasoning seems to be supported by the fact that Western European levels of economic output increasingly converged in these decades, and there was similar convergence in other areas beyond the scope of this analysis, such as occupational structure, social policy, and education. This period was one of rapid industrialization in the less developed countries of Western and Southern Europe, which significantly reduced the differences between individual countries’ manufacturing capacities. The boom made it relatively painless to abandon the sorts of policies that protected domestic markets, and this helped to bring about the creation of the EEC and also fostered trade with non-member states. This wave of prosperity also increased governments’ financial room to maneuver, which gave less developed countries opportunities to catch up in areas closely related to economic development, consumption patterns, and quality of life, such as social policy and education.68 Nevertheless, it would be misleading to describe the economic and social convergences exclusively or even primarily as the result of the eco-

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nomic boom. Though the rates of change were undoubtedly smaller, these processes were already underway before the boom and continued after it not only in the areas under discussion here, but also in occupational structures and urbanization, for example. It is also not obvious that the economic upswings of earlier periods, such as those at the end of the nineteenth century and the beginning of the twentieth, fostered processes of convergence. The converse is also true: there were signs of convergence between the countries of Western Europe even in the crisis years between the wars. Consequently, factors other than the economic cycles have arguably also played a role in the reduction of differences between the societies of Western Europe in the 1950s and 1960s. 3. Another explanation posits that structural shifts, that is, the process of industrialization and later the ascendance of the service economy, were the main causes of convergence in Western Europe. This is essentially the argument of classical convergence theory, according to which the process of industrialization produces very similar political, cultural, and social characteristics in societies. Industrialization allowed market forces to achieve a dominant role in the European economy and also facilitated the development of the modern transportation system and advanced communication technologies and mass media. Industrialization also created similar requirements for populations, enterprises, and governments.69 The inexorable process of industrialization had been underway in Europe since the late eighteenth century, and as it gathered momentum in more and more societies, they began to develop similar occupational structures, settlement patterns, educational systems, and welfare states, all of which influenced the trends under investigation here. It was in the interwar period that the manufacturing sectors in Italy, Denmark, Sweden, and Norway first caught up to those of the industrialized nations of Western Europe, just as Ireland’s and Finland’s did in the wake of World War II. And thus, there seems to be a fairly close relationship between the process of industrialization and the convergence of the Western European countries. Of course, this connection does not undermine the importance of the post-1945 boom; if anything, it emphasizes the particular role the boom played in the process of convergence.70 Nevertheless, this argument does have its shortcomings. First of all, it does nothing to explain episodes of divergence. If the process of industrialization advanced continuously over the course of the twentieth century in Europe, then how could social changes in various countries or regions move in opposite directions? And how could certain socio-economic disparities

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persist over long periods? The postwar economic divergence between Western Europe and East Central Europe demonstrates that industrialization alone cannot even generate similar output levels, let alone similar social conditions. Second, this theory is also unable to explain why certain societies could make relatively rapid progress while others lagged behind: this is especially true of those areas where policy played a large role. This line of reasoning does not offer suitable explanations for these sorts of disparities and rapid changes of direction.71 4. Yet another interpretation calls attention to the fact that every large-scale social change in Europe originally produced significant—and often growing—differences between economies and societies. Divergent political, cultural, and economic conditions affected the ability of individual countries to adopt new institutions or initiate novel social processes and, thus, boosted existing diversity. The introduction and spread of social insurance at the end of the nineteenth century is a good example of this; Germany’s highly centralized and effective state bureaucracy facilitated the establishment of insurance schemes, but no similar administrative capacity existed elsewhere. Moreover, the early phases of the establishment of a new institution are marked by experimentation, which in itself creates diversity. After the most efficient solution is found, others will adopt it, at which point disparities will begin to diminish again. Continuing with the prior example, the maturation of social insurance programs led to convergence as the extension of coverage shows: over time, more and more countries reached full coverage, after which even small amounts of growth in others resulted in further convergence. And this serves as a more general lesson about the socio-economic homogenization of Europe insofar as every important social institution may have its own distinct life-cycle: at the time of emergence, it increases diversity since it may not appear in every country at the same time, but as more and more countries adopt it, the result is convergence. To simplify, comprehensive socio-economic changes initially intensify disparities, but imitation will ultimately result in similarities.72 Moreover, some societies turn down developmental blind alleys: recognizing these dead ends and correcting course may require considerable time, which means that these periods may be marked by divergence. All of this could mean that convergence and divergence are almost necessarily alternating phenomena. This notion, however, is contradicted by the twentieth-century development of Western Europe, which was dominated by social and economic convergences. The institutions of integration emerging

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in Europe in the latter half of the twentieth century significantly also accelerated processes of imitation and adaptation, which has to be taken into account. Consequently, periods of divergence may have been more abbreviated, and convergences re-initiated more quickly than in previous eras. 5. Finally, it can be argued that the process of economic and social convergence in Western Europe was actually nothing more than the manifestation of universal, global tendencies, sometimes described as Americanization or the adoption of the “American model.” This seems to be the case particularly in the worlds of consumption, entertainment, mass communications, and media.73 Without a doubt, several major trends originally developed in the United States and later appeared in Western Europe, especially after World War II. However, there are also types of development in which Western Europe and the United States followed divergent paths over the course of the twentieth century: the trend lines of their economic development and the role of the state in the economy differed markedly. Other significant processes that differentiate the two regions but are outside the scope of this investigation include urbanization and changes in fertility and family structures in the latter decades of the century. Thus, Americanization does not, in itself, appear to be the cause of socio-economic convergence.74 The most important lesson of the preceding survey might be that none of the factors described above can, on its own, explain economic and social convergence—or, depending on the case, divergence—in Western Europe, and in particular, the dynamics of these changes. At the same time, despite the limitations of the explanations offered above, they illuminate important aspects of these processes, and, taken together, they constitute a comprehensive framework in which the institutions of European integration, industrialization, accelerating processes of diffusion and adaptation (facilitated by the two prior factors), long periods of peaceful development, and global tendencies all play a  role. These factors also defined convergences and divergences that developed between Western Europe and East Central Europe. At the same time, the case of East Central Europe might also provide further lessons about the causes that stimulate tendencies toward economic and social integration. The factors surveyed above are valid explanations of the convergence in Western Europe especially in the decades following World War II. This period was distinguished not just by an economic boom, but also by the weakening of nationalism, the establishment of the institutions of Euro-

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pean integration, and the major thrust of Americanization. As we have seen, however, East Central Europe followed its own peculiar path during the “broken twentieth century” (1945/1948 to 1990), during which it was left out of the intra-European process of economic convergence. The peculiarities of this region and the increasing distance between it and Western Europe can be explained by the fact that almost none of the processes described above affected East Central Europe during that period. With respect to the first factor, while efforts to establish institutions of economic and later political integration gained momentum in Western Europe starting in the 1950s, East Central Europe rather notoriously failed to participate in this process, initially even going so far as to pursue consciously strict policies of isolation from the West. Dwindling contact with Western societies diminished both the diffusion of advanced technology and the intensity of demonstration effects.75 Unlike Western Europe, East Central Europe also missed out on the two decades of sustained, large-scale economic growth that followed postwar reconstruction. In contrast to the Western boom, economic growth in communist societies stalled several times in the 1950s and again showed signs of running out of steam in the early to mid-1960s. More importantly, as we have seen, the growth processes in these countries were burdened with disproportionalities and imbalances, and thus the growth that was realized there tended to be founded largely on the neglect of long-term growth factors like human capital, infrastructure, and broader institutional elements, or even the active depletion of the remaining reserves in these areas. Likewise, it need not be stressed that if East Central Europe’s social, economic, and cultural contacts with Western Europe dwindled, its relations with the United States were even more dramatically curtailed. In addition to their differing political and economic systems, this isolation in itself prevented the appearance of any kind of Americanization, so this possible source of intra-European social convergence was almost completely missing in the countries of East Central Europe. The absence of the above factors offers one explanation for the lack of post-1945 convergence between East Central and Western Europe in the areas under investigation here, although the importance of these causes is relativized somewhat when we consider that the interwar period also exhibited economic and social convergence in several areas when none of these influences was manifest.76

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A few remarks need to be made about industrialization as a determinant of convergence. On the one hand, there is unquestionably a connection between industrialization (and socio-economic transformation in general) and rates of economic growth—in East Central Europe as well. On the other hand, in the communist period, the dynamics of economic and social change were much more likely to be influenced by ideological and political factors, such as the inherent contradictions of communist ideology, political crises, and efforts to legitimize these regimes. East Central European social and economic history confirms the importance of political factors in the process of convergence inasmuch as the differences between East Central and Western European economies faded somewhat over the first half of the twentieth century but then grew in the succeeding decades. In terms of growth, consumption, and the quality of life, this process of convergence over the first half of the century and divergence over the second half reflects the change of political systems in East Central Europe. Though the trajectories of East Central and Western Europe do not unconditionally refute the notion that industrialization and the economic and technological changes that follow it lead to economic and social convergence, it does draw attention to the fact that such convergence is possible only when accommodating political conditions coexist. These causes largely explain why there was no economic convergence between communist East Central Europe and Western Europe. In the earlier section of this chapter, while surveying factors of growth, a  number of reasons were proposed for why East Central Europe lagged behind and, thus, diverged from Western Europe economically, and only the most important causes will be outlined here. These include inefficient allocation of investments, the failure to invest in human capital, and a lack of openness toward capital imports and international trade. In addition to these, scholars also acknowledge a  fourth factor related to the political institutions of communist countries, which is often described as the ultimate cause of East Central Europe’s economic performance.77 After World War II, the command economies of Eastern Europe generally dedicated considerably higher proportions of their resources to investment than the Western European countries did. The magnitude of these investments played a  greater role in the growth of the Eastern European communist countries than did the increase of productivity. This strategy is called the extensive growth model, as opposed to the intensive model of Western Europe, where the most important source of economic growth in

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the postwar period was not an increase in the input of the factors of production like capital and labor but rather improvements in total factor productivity. The countries of East Central Europe could not take advantage of the opportunities offered by technological development; that is, investments in this region did not lead to the phasing in of newer, more efficient technologies because their investments were often misallocated and were not implemented effectively. Turning to another major growth factor, in the interwar period, education levels in the East Central European region lagged behind those of most Western European countries although literacy ratios, school enrolment, and other related indicators were better than those of Southern Europe and continued to be so for a time even after World War II. In developing human capital, communist countries initially produced impressive results even in comparison with Western Europe.78 The improvements in primary and secondary education began to decelerate starting in the 1960s, however, and the gap by which East Central European institutions of higher education lagged behind those of Western Europe grew rather pronounced. Moreover, the available indicators are not suitable reflections of the quality of the education there. Several investigations have shown that the Western European educational systems performed significantly better, for example, in the field of vocational training. The communist countries’ disadvantages were already clear by the early 1970s, especially in higher education, and there was no meaningful change in the following two decades. Finally, the closed nature and isolation of the communist economic systems made it impossible for them to adopt the technologies of the leading nations. The acquisition of technology has been of crucial importance in every successful attempt to catch up economically. The openness of an economy is generally indicated by the volume of its foreign trade and the quantities of foreign direct and foreign portfolio investment it receives, and thus East Central Europe’s openness clearly declined after 1945. International trade flows made up a  significantly smaller portion of economic output there than they did in Western Europe, and an overwhelming proportion of this trade was conducted with other Comecon countries. This decline in foreign trade not only obstructed flows of technologically advanced products; it also reduced import competition, along with all of its benefits such as stimulating the rationalization of production and the efficient allocation of resources. Trade with other Comecon countries did not produce such effects because the product specialization that emerged

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through bureaucratic procedures often merely reinforced monopolies inside the bloc. Foreign investment dropped off even more than foreign trade; in the early decades of the communist system, it ceased altogether.79 Both of these factors can be traced back to a  fourth and final determinant: the system of political institutions particular to communism or state socialism. The idiosyncrasies of this system determined the patterns of growth in East Central Europe. In the two decades or so after World War II, communists’ adherence to the extensive growth model was still producing relatively rapid growth. Even in this initial period, however, obstacles to long-term growth were beginning to take shape: the system of social, economic, and political institutions that came into being could not, even through restructuring or reform, achieve the kind of sustained and significant productivity growth seen in the economies of Western Europe. Thus, the lessons to be gleaned from the study of economic growth in East Central Europe go beyond the conclusion that neither economic factors nor other kinds of influences are capable, in themselves, of explaining the processes of convergence and divergence, which must be described as the results of numerous determinants. Among these determinants, significant emphasis should be placed on political factors that definitely contradict the classic formulation convergence theory has suggested.

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ear the end of the twentieth century, the conditions under which the European economies operated changed in several significant ways. With the collapse of the communist dictatorships of Eastern Europe, the Cold War came to an end, making it possible for the Eastern and Western halves of the continent to establish closer economic ties. The European Union served as an important institution for the promotion of such collaboration, and the advance of European integration became an important question in this period. On the one hand, the member states wanted to intensify their cooperative efforts, a goal served by the establishment of the common currency; on the other hand, the enlargement of the Union was also on the agenda, which meant that several of the former communist countries might join. Another important role the European Union intended to play was fostering economic growth in its member states: by the end of the twentieth century, Western Europe’s ability to maintain its competitiveness in the midst of globalization had become a question of decisive importance in both politics and broader public discourse. In addition, though not independently of the preceding issues, Western Europe had to confront a range of other economic and social problems, perhaps the most important of which was high unemployment. Former communist countries including East Central European states were faced with even more profound issues; the establishment of market-economy institutions and the often-serious economic and social consequences of the transformation process. Though no subsequent juncture has matched 1973 for its momentousness as a turning point in economic history—it is still too early to judge

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the ultimate significance of the crisis that began in 2008—the mid-1990s might serve as a kind of dividing line. This was the period of the shift customarily described as the transition to the “new economy,” which was characterized by the ascendancy of information and communication technologies (ICT).1 The economic history of East Central European countries was marked by a substantially larger break toward the end of the century, in that the collapse of the centrally planned economies in 1989 put an end to a period that had begun around 1949. All this means that periodizations of economic growth diverged significantly in the two halves of the continent at the end of the millennium.

6.1 Economic Growth in Western Europe at the Turn of the Millennium: Changes in Quality of Life Western Europe in the global economy Surely the most important development in the world economy at the turn of the millennium was the acceleration of globalization, which changed Western Europe’s position in the world economy significantly.2 Around the end of the twentieth century, economists and journalists both in Europe and beyond were suggesting pessimistic appraisals of Western Europe’s economic performance and growth prospects in this globalized environment.3 Comparisons between Western Europe and the United States, with their similar sizes and levels of development, attracted a great deal of attention because they provide a number of meaningful lessons. It was often noted in these debates that while the Western European countries’ economy expanded more rapidly than the United States’ had in the decades after World War II, the latter was again growing more quickly than most Western European countries by the turn of the millennium. Consequently, per capita GDP in the United States continued to exceed the Western European average by a considerable margin. Productivity growth was another item on the critics’ list: in the 1980s, productivity in the majority of the Western European economies grew more quickly than in the United States, a momentum which carried over into the first half of the 1990s. Starting in the middle of that decade, however, the United States surpassed Western Europe in this area as well.4 Euro-pessimists also pointed out that the Western European countries’ share of the world export market was in continuous decline. Between

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1990 and 2000, every member state of what would become the eurozone saw its share of the world export market decline. This drop was especially sharp in Germany, whose share of the market declined over the course of the decade from 12.1 percent to 8.1 percent. Similar processes played out in France, where this share dropped from 6.1 percent to 4.8 percent, and in Italy, where it fell from 5.1 percent to 3.9 percent. One possible cause for these instances of decline was the inability of European producers to offer their goods at competitive prices because their costs were higher than those of their competitors. On the other hand, this phenomenon was triggered by the Western European economies’ relative strength in sectors characterized by slower growth, and these sectors produced a considerable share of their exports; on the other, these economies lacked a presence in more rapidly developing branches of industry.5 Another important social issue for Western Europe in this period was high unemployment, which also had serious social consequences. Between 1990 and 2000, the labor market situation in most of these countries continued to deteriorate. In three of the four largest economies in the region— Germany, France, and Italy—job seekers’ chances of finding positions decreased; only Great Britain showed any improvement. Despite these generally negative trends, disparities between the countries of Western Europe were significant: at the beginning of the 1990s, for instance, the unemployment rate in Austria was just over 4 percent, while in Italy and France it was closer to 12 percent. These phenomena stirred debates about their causes. The most regularly cited explanatory factor was the inflexibility of Western European countries’ economic systems. This situation was often described using the term “Eurosclerosis,” which encompassed a range of obstacles to economic growth and global competitiveness that were characteristic primarily of Western Europe.6 Critics generally condemned the high degree of income redistribution and the resultantly high tax levels as well as the over-regulation of the labor market and restricted competition.7 Among these factors, the advanced welfare state, extensive employment protection, and support for manufacturing and state enterprises were considered to be the main causes of inflexibility. Further, while the European Union had eliminated most of the obstacles that impeded intra-European flows of goods and services, this was still not the case with the workforce, and thus the European Union itself could still do a lot to improve the competitiveness of its member states. The rigidity of the labor market was also often cited

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as a cause of high unemployment levels. On the one hand, because of the high level of labor protection, employers had difficulty laying off redundant workers, which made them very cautious in their hiring practices as well; on the other, relatively high income tax levels gave less-skilled workers little incentive to look for jobs.8

European integration: Deepening and enlargement Some of the economic difficulties that appeared in the wake of the oil crisis, such as high inflation, were transitory, while other problems, like high unemployment levels and the deceleration of economic growth, proved to be persistent. As we have seen, numerous observers have suggested that this economic slowdown was not primarily a consequence of the stagflation that followed the oil crisis but instead a function of the inflexibility of Western European countries’ economic systems. As we will see later, these criticisms were exaggerated, but European public opinion and decision makers were sensitized to these issues. Insofar as the majority of Western European nations were members of the European Economic Community, it is not surprising that they wanted to use this institution to improve their productivity, competitiveness, and economic growth, even if it was already obvious at that time that there were serious limits on the ability of the EEC to do so.9 Many saw the intensification of European integration as a way out. In 1983, the Ball–Albert report was already calling attention to areas that had not yet been affected by integration and were, thus, saddling European enterprises with significant additional costs. Though tariffs between EEC member states no longer existed, other trade barriers remained. These included the continued use of border controls as well as regulations on the production and sale of goods, rules that could differ markedly from country to country. According to the conclusion of this report, if the European Economic Community could not actually implement the common market anticipated by the Treaty of Rome, its member states would not be able to make themselves decisive factors—or even maintain their relative positions—in the world economy. This report was followed by other investigations with similar objectives, all of which reinforced the original report’s findings: the report of the so-called Dooge Committee (1985) also recommended the creation of a unified internal economic space.10 The process of integration took on further momentum when Jacques Delors, who became the president of the European Commission in 1985,

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began to argue persuasively in favor of the establishment of a single European market in which goods, services, capital, and labor would all be able to flow freely. Under the terms of the Single European Act, ratified in 1987, this borderless community, which eliminated the last remaining non-tariff obstacles to free trade, came into being on January 1, 1993. It also implemented a range of other reforms to insure the smooth operation of the European Community. The single European market, including 344 million consumers in its twelve states, was expected to improve the competitiveness of European firms on a global scale. In 1995, three more high-income countries joined the European Union. The single European market unquestionably boosted continental trade: in 1995, the EU countries conducted 63 percent of their total international trade with each other. There was also an increase in the number of “European” enterprises—firms operating in multiple EU countries—either through mergers or other means of consolidation. These changes had their greatest impact on the largest economies: Germany, France, and Great Britain. The European Union, however, continued not to be a single internal market like that of the United States, China, or Japan. There was no common language nor was economic policy consistent in every respect—there was no uniform tax structure or economic law, for instance. And perhaps the most striking sign of fragmentation was the lack of a common currency. The creation of the latter quickly found its way onto the agenda if only because the implementation of the plan for a single European market did not bring about the expected results, which many attributed to the lack of a monetary union.11 In 1992 in Maastricht, the member states signed an agreement that laid out the steps for the implementation of the common currency and determined the conditions (convergence criteria) members would have to meet in order to begin using it. The convergence criteria consisted of important and easily measurable indicators of a country’s macroeconomic situation, especially its monetary and fiscal policies, which would insure the effective operation of the monetary union. They included price stability (measures of inflation), the sustainability of the government’s financial situation (state budget deficits and levels of total government debt), exchange rate stability, and the stability of long-term interest rates. Not every country found it easy to fulfill the Maastricht criteria. In the end, however, twelve of the EU’s fifteen members introduced the common currency on January 1, 2002. The three missing states—the United Kingdom, Denmark, and Sweden—deliberately stayed away from the Monetary Union.

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The launch of the euro was not entirely smooth in the sense that its value initially dropped in relation to the dollar. It was soon trading above the dollar, however, and in time it became an important stabilizing factor in the world economy. Its international reception showed a slight expansion of its role as a reserve currency, and the Eurozone developed into one of the most important international bond markets.12 The primary task of the newly established European Central Bank was to insure price stability in the eurozone. The introduction of the euro—or even the transition to it—significantly reduced inflation and government budget deficits in the member states. The euro’s exchange rate was stable, meaning it eliminated foreign exchange risks, reduced transaction costs, and increased competition within the Eurozone insofar as it made pricing more transparent. Thus, one effect of the monetary union was to expand trade between its members even though some studies suggest that the euro’s impact on trade was relatively moderate if we control for long-term trends in trade integration. The euro also helped increase flows of foreign capital investment into Europe.13 On the one hand, national governments sacrificed a certain amount of financial room to maneuver because they lost exchange rate management as a policy tool. But fiscal and structural policies remained in their hands, which made it possible for them to continue to pursue divergent economic policies. On the other hand, the Stability and Growth Pact put strict limits on fiscal policies in order to prevent any individual member state from endangering the stability of the common currency.14 The common currency and the establishment of the European Central Bank created advantages for a number of countries. This was true for small countries, which were able to shape the decisions of the ECB much more than they had been able to influence the financial market earlier. There were also advantages for countries traditionally inclined to less responsible monetary policies, such as Italy. However, for other countries, especially Germany, which had maintained a stable currency for decades, no such advantages were demonstrable. For some countries, the loss of the ability to manipulate exchange rates and limits on fiscal policies created disadvantages in certain situations, which caused them to sacrifice potential growth. Despite these disadvantages, the influence of the euro on the economies of the Western European member states was generally positive, even if its effect on growth was moderate.15 The distribution of these advantages and disadvantages changed fundamentally in the wake of the economic crisis that broke out in 2008,

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which deeply affected the eurozone. The main cause of the predicament was that the economies of the eurozone differed in their capacity for dealing with difficulties. While the northern and western member states of the eurozone were largely able to overcome these problems within a few years, the southern member states, especially Greece, were not. Their situations were exacerbated by the fact that a significant number of the traditional tools of economic policy, like currency devaluation, were no longer available to them.16 The European Union strove not only to intensify the process of integration: it was also open to expansion. At the beginning of the 1990s, its agenda included the accession of several Southern European and formerly communist states. The list of candidates and the dates of their accession were uncertain for a considerable period, but finally in 2004, ten new member states joined the EU, followed by another two in 2007.17 Without a doubt, the introduction of the common currency and the several waves of enlargement were the EU’s most significant efforts to enhance the level of continental integration. However, sensing Europe’s declining role in the world economy and threats to its competitiveness, European leaders also made other, similar attempts to improve intracontinental cooperation. As an example, at the Essen Summit in 1994, the European Council designated five crucially important areas in which changes would be needed in order to reduce unemployment. These included improvements in vocational training, increases in the employment intensiveness of growth, reductions in non-wage labor costs, improvements in labor market policies, and increased protections for groups hit especially hard by unemployment. The 1997 Treaty of Amsterdam designated job creation as one of the EU’s most important goals, and numerous institutions were set up to monitor the situation of the labor market.18 The most important program, however, was the strategy announced at the Lisbon Summit in March 2000, during which the European Union set the goal to be “the most competitive and dynamic knowledge-based economy in the world” within ten years, so that its employment rates would improve substantially. And while these economic and social policies might have had some effect, the fact that unemployment rates had improved in almost every country of the Union around the turn of the century was more likely the result of favorable global economic conditions. Germany continued to be a significant exception at that time; improvements in employment would arrive there later.19

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Competitiveness and growth Competitiveness is an unwieldy concept; however, it is obvious that the original objectives of the Lisbon Strategy were not realized in this area. Nevertheless, it would be an exaggeration to describe Western Europe as lagging significantly behind in the global economy, and misunderstandings of the evolution of Western European economic performance from the 1990s abound. The notion that Western Europe’s global economic competitiveness has deteriorated is most often substantiated by citing its declining share of the world export market. However, it must be taken into account that in recent decades, the population of the Eurozone has increased at a substantially slower pace than that of the rest of the world. On this basis alone, we would assume that Western Europe’s share of world trade would have dropped. Data also support the notion that differences in population growth played an important role in the evolution of national shares of world trade: for instance, Germany’s per capita exports grew more rapidly than those of the United States in the period from 1990 to 2000. More importantly, however, changes in a country’s share of the value of the world export market are influenced by a range of factors beyond competitiveness. One such factor is variation in the dollar–euro exchange rate: an increase in the value of the dollar will raise the value of the trade conducted outside the Eurozone and reduce the value of the goods exchanged within it, and thus its share of world trade. In reality, this factor may be a dominant influence: for example, changes in Germany’s and France’s shares of the world export market closely tracked the movement of the value of the dollar over the last two decades of the twentieth century and after the turn of the millennium as well, when their export shares began to grow again. Changes in the price of oil had a similar effect: rising oil prices increased oil-exporters’ shares of the world export market while simultaneously diminishing other countries’ shares. In summary, there is no convincing evidence that the competitiveness of the Western European or the Eurozone countries significantly deteriorated in the 1990s and the first decade of the new millennium.20 This claim is also supported by growth data as exemplified by the following trends.21 In the 1990s and beyond, growth rates in the United States unquestionably exceeded those of the European Union and most individual Western European countries. In the decade between 1994 and 2003, for instance, the GDP of the United States grew at an annual average rate of 3.3

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percent, while that of the Eurozone grew at a rate of only 2.1 percent. These data, however, apply to the gross domestic product of the entire economies of the United States and the EU. Trends in their per capita quantities of economic output diverge considerably from the preceding numbers because the US population and workforce grew much more dynamically than that of Western Europe. The average annual population growth of the United States was 1.15 percent in the 1990s, which was 0.8 percentage point higher than that of the eurozone.22 With this factor taken into account, the data look very different: between 1994 and 2003, the average annual growth rate of per capita GDP in the United States was 2.1 percent, while in the eurozone it was 1.8 percent.23 Analyses of per capita economic output, however, still fail to consider another crucial factor, which is how many working hours are required to reach a given level of GDP. Advanced industrial nations exhibit fairly large disparities in the amounts of time spent at work. While American employees worked an annual average of roughly 1,860 hours at the turn of the millennium, this number was down to less than 1,340 in the Netherlands, hovered around 1,450 in France and Germany, and even in Ireland, where workers spent more time on the job than anywhere else in Western Europe, this figure was less than 1,700; the average for the entire eurozone was roughly 1,550 working hours per year at that time.24 These differences in the amounts of time spent at work also largely explain disparities in per capita GDP levels.25 Moreover, the labor force participation rate was substantially lower in Western Europe: in 2003, for every hundred working-age residents (between 20 and 64) of the fifteen EU member-states 64 were economically active, while in the US 71 were employed.26 Accounting for trends in the numbers of hours worked, we see that on the whole, in the period from 1994 to 2003, productivity increased somewhat more rapidly in the economies of the eurozone than in the United States. By the end of this period, the GDP per hour worked for the entire eurozone was only 5 percent lower than in the United States, while three decades earlier it had been roughly 30 percent below the American level. By 2003, the value of output per hour worked in France and a number of other countries was already higher than it was in the United States (Table 6.1).27 Thus, all this data refutes the notion that Western Europe’s economic performance in the last decades of the twentieth century and the years immediately following the turn of the millennium lagged behind that of the United States.

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Table 6.1 GDP per hour worked in European countries, 1990–2010 (2010 USD, purchasing power parity) 1990

2000

2010

UK

32.1

41.0

47.1

France

43.8

52.2

57.0

Netherlands

47.6

54.2

59.4

Belgium

46.8

56.9

63.2

Ireland

28.6

44.9

58.1

Germany/FRG

40.7

50.6

56.3

44.5

51.2

Austria Switzerland

42.5

50.0

55.9

Sweden

35.5

44.9

53.1

Denmark

44.8

54.8

60.3

Finland

32.0

43.9

50.3

Norway

54.7

71.9

76.7

Italy

40.5

47.3

47.2

Poland

12.2

18.1

25.5

Czech Republic

19.1

23.1

31.9

Hungary

14.5

20.4

30.4

Notes: Different date: Poland 1993; Czech Republic 1993; Hungary 1991. Source: http://stats.oecd.org/index.aspx?DataSetCode=PDB_LV, retrieved August 7, 2017.

Even so, debates arose about the factors that led to shorter working times and lower labor force participation rates in Europe. According to some, these differences are attributable to cultural factors, as Europeans have been willing to give up additional income in the interest of shorter working times.28 In accordance with this notion, trade unions and other interest groups have sought to reduce the time spent at work, not just to increase the real value of wages. Voters there also prefer this alternative, and thus the shortening of the work week has become a part of numerous political platforms, such as in France, where the 35-hour work week was signed into

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law in the year 2000. According to another perspective, shorter working times are much more likely a consequence of Europe’s high levels of taxation, which means that working extra hours is not worthwhile for most European employees.29 In contrast, some observers claim that America’s growing income differentials result in longer working times because a portion of the population there seeks extra hours of labor to try to compensate for incomes that are deteriorating in comparison to others’.30 Still other analysts have connected lower levels of working time to the rigidity of the labor market and the considerable power of trade unions. According to this approach, Western European trade unions wanted to prop up failing sectors and were, thus, willing to accept shorter work weeks. This then influenced other sectors in which working times also decreased.31 In any case, the explanations mentioned above are not mutually exclusive but rather complement each other, and thus—though their weights in the equation might vary—several of these factors could play a role in accounting for this phenomenon.32 None of this is to say, however, that Western Europe’s economic performance since the turn of the millennium has been strong enough to justify all of the opinions of Euro-optimists. For instance, productivity growth in this region, or, more precisely, in the EU-15 countries, regularly and substantially exceeded that of the United States up to 1995, but these improvements then decelerated. There are a number of possible explanations for this rather sudden trend change. Cyclical causes were clearly behind it: in the latter half of the 1990s, the fiscal restraint necessitated by the Maastricht criteria for the introduction of the euro put the brakes on growth in many European countries. Simultaneously, the stock-market boom in the United States created additional momentum for economic growth there. Differences in financial systems were another cause. In most of the national economies of Western Europe, securities markets were less developed than in the United States, and consequently venture capital was harder to come by. European banks were traditionally cautious in their lending policies, which were mostly financing already proven firms and sectors with relatively secure futures ahead of them. Insofar as the prospects of firms that operate in new branches of industry are often uncertain, banks’ conservative investment policies can hinder their development. Nevertheless, it might be more practical over the long term for banks to engage in more cautious credit practices as the events of 2008 demonstrate. Europe was also unquestionably at a disadvantage in

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its R&D expenditures, especially given that research and development are closely related to the ability to create and exploit new technologies, which is an important factor of growth. In 2003, the United States spent 2.8 percent of its GDP on these sorts of objectives, while the EU average was 1.9 percent. Europe has also traditionally lagged behind in the proportion of its workers with a post-secondary education, which can also inhibit the use of new technologies, though in recent decades it has rapidly caught up in the share of its students who pursue higher education.33 Exploring possible explanations further, several investigations have also pointed out that the United States has been able to achieve striking productivity gains in two areas since the mid-1990s. The first of these is information and communication technology. An analysis of the sources of economic growth indicates that between 1995 and 2000, the contribution of information and communication technologies to improvements in worker productivity was twice as large in the United States (1.2 percent) as in the European Union (0.6 percent). The profitability of investments in this area also grew at a rate that exceeded the average by a considerable margin in recent years. The proportion of such investments has been higher in the United States than in Europe since the beginning of the 1980s. According to Bart van Ark, Western Europe’s significantly lower levels of investment in the information and communication sector, along with its stricter regulation of the labor market, has made it unable to take full advantage of the opportunities offered by new technologies.34 Some researchers have suggested that a high degree of employment protection inhibits investment in information and communication technologies although not investment in general. According to this argument, such protections impede labor turnover and the reorganization necessary for the adoption of new technologies.35 The other sectors in which the United States has advantages are financial services and retail and distribution—which are considerably larger branches of industry than the information technology sector. These sorts of operations make extensive use of new information technologies, which in both internet-based retail and banking services have certainly contributed to the productivity gains noted above.36 At the same time, we could also point to broader social reasons for these disparities in retail efficiency. While in the United States urban planning and zoning laws barely limit the spread of large shopping centers, European efforts to maintain the historical structures of cities and other settlements require the perpetuation of

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networks of smaller, less efficient shops. In other words, the maintenance of the kind of social and residential environment that insures a higher quality of life requires the sacrifice of a certain measure of growth.37 All this demonstrates that the economic systems and social institutions that have developed in Western Europe have both costs and benefits in terms of economic growth, unemployment, social security, and a range of other concerns. Moreover, the relative proportions of these advantages and disadvantages change over time. While in the decades following 1945—all the way up to the mid-1990s—the advantages dominated, especially in comparison with other institutional solutions, the disadvantages began to show up around the turn of the millennium, especially in the areas of economic growth and employment. In other respects, however, such as poverty rates and income distribution, the societies of Western Europe continue to perform outstandingly in comparison with the rest of the world. And this brings us back to the problem of the quality of life at the turn of the millennium, which will be discussed below.

Growth and convergence Having outlined the most important conditions framing the economic development of Western Europe, we will now survey the growth performance of the thirteen countries under investigation, including the convergence or divergence that developed between them. On the basis of an analysis of this sample, Western Europe’s economic growth at the end of the twentieth century and the beginning of the new millennium has been similar to the rate the region experienced after the 1973 oil crisis—a level substantially lower than in the preceding period. In the decade and a half after 1990, Ireland produced the most growth, so that by 2005 its per capita gross domestic product ranked it behind only Norway—which performed almost as outstandingly— among the thirteen Western European countries (Table 2.1).38 The process of economic convergence within Western Europe continued after 1990 as well. By the turn of the century, the coefficient of variation for the countries under discussion dropped significantly, to 0.07, which was by far the lowest level recorded over the course of the twentieth century (Appendix: Table IIa). The convergence process was decisively influenced by Ireland’s explosive growth, which allowed it to move out of last place, considerably behind next-to-last-place Italy in 1990, and catch up to the vanguard. Italy and the United Kingdom also moved up closer to the

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average, but the effects of these processes could not be neutralized by the divergent influence of Norway’s much greater than average growth. Following the turn of the millennium, differences in growth rates began to expand again. Increases in the coefficient of variation for this period, however, are largely the result of statistical distortion because the data of the newly unified Germany are included, pulling down the average and increasing standard deviation. If we account for this, we see more stagnation than further increase of the coefficient of variation. Other research, involving slightly different samples and timeframes, also confirms these results concerning convergence in the countries of Western Europe.39

Quality of life in Western Europe at the turn of the millennium Global comparisons are more favorable to Western Europe if we conduct them not on the basis of economic output or productivity, but rather overall quality of life.40 Numerous studies have indicated that if the developments in other regions and countries—like the United States—are judged not according to narrower criteria like economic growth, but on the basis of a variety of determinants of the quality of life, they compare unfavorably with those of Western Europe over the last two or three decades.41 And though these sorts of calculations are still in their infancy, several researchers have suggested that the proportion of “regrettable necessities” in the gross domestic product of the United States is higher than in Europe: under a given set of social circumstances, expenditures on the armed services, police, prisons, and other forms of organized coercion, as well as the costs of commuting and other such expenses may be unavoidable, but in reality they do not improve the quality of life.42 According the HDI, the quality of life indicator discussed in chapter four, every Western European country continued to show improvement in the period around the turn of the millennium. Between 1990 and 2000, Ireland, Norway, Belgium, Sweden, and the United Kingdom moved up in these rankings particularly quickly. While the pace of improvement would later drop off significantly in the latter three countries, this process continued unabated in Norway and Ireland. Consequently, these two nations stood at the top of Western Europe’s HDI list by 2005, and Norway was the highest-ranked country in the world. They were followed by Sweden and, slightly farther back in line, Switzerland and the Netherlands. It must be noted, however, that by the end of the twentieth century, the margins sepa-

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rating the countries of Western Europe were exceedingly narrow, and thus the differences between the leading countries and those farther back were minimal. For this reason, and because other factors—as we have seen—limit the usefulness of the HDI in discussions of quality of life differences between advanced industrial countries, mortality trends also provide important information on this issue. Western European mortality not only continued to improve in the last decade of the twentieth century, but the extent of this improvement was similar to that of the preceding decade. Trends diverged slightly for the two genders, although the differences in the rates of these changes essentially canceled each other out. By 2000, the average life expectancy at birth for men had risen to 75.4 years in Western Europe, an improvement that slightly surpassed that of the prior period. The average life expectancy for women rose to 81.1 years, which means that it increased slightly less than in the previous decade (Tables 4.3 and 4.4). These changes in mortality rates thus confirm the observations made in examining the HDI that the quality of life in Western Europe continued to improve around the turn of the millennium and that the region exhibited further convergence in this area.

6.2 East Central Europe after the Regime Change: Economic Transformation, Consumer Aspirations, and the Pursuit of Well-Being Legacies and tasks The preceding chapters have shown that the economies of East Central Europe—in various forms and to differing degrees—were already in crisis in the 1980s, well before the system change. In fact, it was precisely these problems that set the stage for the collapse of the communist regimes. The legacies of these systems included distorted economic structures, neglected infrastructure, internationally uncompetitive enterprises, serious environmental damage, corrupt bureaucracies, and in Poland and Hungary, accelerating inflation, high degrees of external indebtedness, and fiscal imbalances.43 Despite the seriousness of this legacy—or often, precisely because of it—a number of contemporary observers were optimistic: because so many

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unreasonable institutions inimical to economic prosperity had developed in the previous system, it was assumed that sweeping them away would open a path to recovery. Many also argued that the countries of the region were already industrialized: the manufacturing traditions of Czechoslovakia received special emphasis, but in the wake of World War II, the other two countries had also undergone a wide-ranging process of industrialization, the social consequences of which were favorable to long-term growth. Furthermore, their workforces were relatively well educated, and in certain— albeit narrow—sectors, they had proven themselves capable of creating and using modern technology. Several experts also stressed that the population of Poland had proven its entrepreneurial abilities in the difficult economic circumstances before the system change, while Hungary’s market reforms were decades old by then. Consequently, even if they were still rudimentary, important market institutions already existed, and the public, enterprises, and economic administrators all respected these traditions. The tasks necessary for transformation, often referred to as “economic transition” in the literature, were similar throughout the post-communist zone, but individual countries and groups of countries dealt with them in various ways and produced differing results.44 Numerous factors influenced these outcomes such as the size of the inherited private sector, prior reforms, the level of indebtedness, the degree of dependence on Comecon, patterns of economic structure, geographical position, and government stability, as well as non-economic factors like levels of corruption and the willingness to comply with tax laws.45 In some cases, these advantages and disadvantages canceled each other out, while at other times their effects were cumulative.46 In accordance with the complexity of these inherited problems, it was not just political changes that were on the agenda in post-communist East Central Europe; these would also have to be accompanied by parallel economic transformations in several areas. Even experts could not fully agree on the content and order of the steps to be taken, nor on the speed at which they should be implemented, although a good number of them were in agreement about the indispensability of certain measures. First, the creation of macroeconomic stability was essential; above all, this meant balancing domestic consumption and production levels and managing foreign debts. It would also include getting control of the money supply and maintaining at least a roughly balanced budget. These objectives would require the elimination of price controls and subsidies for enterprises, which

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meant the creation of hard budget constraints for banks and other firms. Price reforms and the liberalization of trade would ensure that supply and demand were reflected in prices. Among the many other tasks, privatization was aimed at creating a genuine private sector where enterprises were run by actual responsible owners. In addition, legal frameworks suitable for market economies needed to be created, and currencies needed to be made convertible by implementing appropriate exchange-rate policies. Welfarestate institutions, like unemployment insurance and social assistance, that would help the population handle the difficulties of the transformation, also needed to be established.47 The economies of post-communist East Central Europe exhibited a range of common traits over the course of their transformations. In the period between 1989 and the turn of the millennium, these evolving economic conditions can be characterized by the following important factors. 1) Poland’s economic policy was shock therapy first, then, from 1993 the policies of liberalization and macroeconomic stabilization shifted towards gradualism, while Czechoslovakia and Hungary followed a recipe of more gradual transformation from the onset; nowhere did decision makers stick to one or the other strategy in every area. 2) Old institutions collapsed and new ones came into being; above all, the mechanisms of economic coordination were transformed. 3) Capital stocks shrank and then later began to expand again. 4) The size of the labor pool decreased, and its structure was transformed. 5) The direction of foreign trade changed, and the size of domestic market initially narrowed significantly. 6) The structure of the economy was transformed. 7) These changes were accompanied by large social costs. Finally, 8) as a result of all these factors, economic output initially dropped markedly and then recovered. Poland began to converge with Western Europe in the early 1990s, while the other countries did so a few years later.48 The following section will explore these aspects in greater detail.49

Economic policy Among the factors that influence the transformation process, the nature of economic policy plays an important role. The most radical route is often called “shock therapy” or “the big bang,” which consists of harsh austerity measures and a rapid transformation of the economic system. The latter requires the introduction of a “bundle” of market-economy reforms, preferably all at once. The measure most characteristic of this policy is the trigger-

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ing of a price shock by rapidly eliminating price subsidies, devaluating the currency, and liberalizing import policies, which forces enterprises to adapt as quickly as possible. As the American economist Jeffrey Sachs, a proponent of such solutions who advised the Polish and later the Russian government, put it, “You can’t cross a chasm in two jumps.” The severity pays off over the long term by allowing the advantages of the market economy to manifest themselves earlier. A second approach emphasizes gradual transformation, and instead of leaping, recommends the methodical work of bridge building. Its advocates are of the opinion that shock therapy involves unnecessary growth sacrifices—that is, it causes inordinate economic and social damage for which later growth cannot compensate.50 Nevertheless, in practice these strategies were not completely incompatible, and for the most part, a combination of the two was implemented across East Central Europe: individual countries pursued more radical policies in certain periods and economic sectors, while at other times and in other sectors they favored slower changes. The experience of the formerly communist countries does not bear out the notion that shock therapy is the most effective transformational strategy in the long run. At the same time, it is also obvious that the measures these countries took to develop market economies needed to reach critical mass. Where this failed to occur, the transformation process took too long and the burdens on the population could be larger overall than in places where shock therapy was used.51 The policy mix that Poland chose consisted primarily of shock therapy. It was here that the earliest radical reforms in the region were implemented, beginning in January of 1990. In accordance with the Balcerowicz plan, named for Poland’s finance minister at that time, the zloty was radically devalued in the interest of reaching a realistic foreign-exchange rate and making the currency convertible.52 The central bank was prohibited from financing the state budget deficit and inefficient state enterprises were allowed to fail. Price-stabilization measures, which limited wage increases at state-owned companies, were introduced in order to prevent hyperinflation. Government subsidies to producers and on consumer goods and services were cut back from 17 percent of the GDP in 1989 to 4 percent in 1991. Foreign trade was liberalized, including measures such as the lowering of trade barriers and the reduction of tariffs. Authorities also announced the privatization of a significant portion of state-owned enterprises, though this process proved to be a slow one: after three years, only

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556 of the roughly 7,000 state-owned enterprises had been sold. The results of these measures were quick and spectacular: inflation dropped rapidly, goods became abundant, and the budget deficit disappeared.53 Czechoslovakia’s transformation program was a mixture of radical measures and gradual evolution, which its two successor states continued with certain differences in emphasis. The starting points for this transformation were the freeing of prices, the elimination of controls on foreign trade, and the implementation of currency convertibility. Bankruptcy laws, however, were employed more cautiously than in the other two countries, which helped prolong the economic transition; unemployment there was still only 2.5 percent in 1992. The Czechoslovakian privatization scheme used a peculiar coupon or voucher method that entitled every adult citizen to shares of stock in state-owned firms. This made it possible to sell off state-owned enterprises quickly, but at the same time, it often slowed the formation of ownership structures that were capable of making effective decisions. A large proportion of these vouchers were sold by their owners, and thus masses of them ended up in the possession of the four large banks, which themselves continued to be state property until 1998. Thus, the reorganization of the state sector proceeded slowly, and the Czech economy entered a crisis phase in 1997–98. These structural changes also proceeded slowly in Slovakia, though they accelerated considerably there around the turn of the millennium.54 In Hungary, the transformation of certain kinds of economic policies proceeded quickly, for instance its rather harsh use of bankruptcy laws. On the whole, however, gradual change tended to prevail there; in fact, Hungary was often cited as a textbook example of “gradualism.”55 This is not to deny that the transformation of the economic system—or of economic policy in general—was characterized by cycles or waves that developed as a result of necessity or because of changes in governments’ economic philosophies.56 A systematic survey of economic policies would be impossible in this space, and thus these differences will have to be illustrated with just a few examples. Hungary’s various post-communist governments developed significant differences of opinion about privatization and the role of the state in the economy. The Antall government pursued a policy of rapid privatization, but in many respects, it wanted to reinforce the state’s regulatory role; similarly, the Horn government implemented a radical privatization program and pursued a range of other economic policies informed by neoliberal principles. In contrast, the Orbán government returned

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to a more activist conception of the social and economic role of the state espoused by Hungary’s first democratic government. Subsequently, because of the quick changes, for years it was difficult to characterize economic policies, but at the time of the second Gyurcsány government, the pendulum had once again swung back in the direction of minimizing the state’s role in the economy and in social welfare provisions. From 2010 onward, the second Orbán government—despite all of its rhetoric to the contrary—combined austerity in welfare, education, and human services in general with forceful and often ad hoc state interference in the economy.57

The transformation of coordination mechanisms The process of institutional transformation is illustrated by the fate of coordination mechanisms. The dismantling of the old bureaucratic mechanisms of economic administration did not result in rapid improvements in economic efficiency or in economic recovery. The latter failed to materialize immediately because the economy initially slipped into the sort of transitional state in which the old bureaucratic coordination mechanisms were no longer functioning properly, but market coordination mechanisms were not yet capable of fulfilling this role effectively.58 This first phase of the economic transformation has also been called the transformational recession because there was necessarily a lag between the destruction of the old centralized economic system and the formation of the new institutions of market economy, a delay that had a negative effect on production levels. János Kornai describes this process as follows: the old behavioral norms for participants in the economy had already disappeared, but these players had still not assimilated the appropriate behaviors that would allow them to adapt to the new situation; the individual institutions of the prior system of bureaucratic coordination—its structures and regulatory frameworks—had disappeared, but the new institutions of the market were slow to form; the information networks of bureaucratic coordination were also vanishing, but the corresponding institutions of the new system had still not come into being, or market players did not yet know how to use them properly; finally, bureaucratic coordination had provided a certain measure of reliability in the period before its final dissolution, while the market, by its nature, carried certain risks for participants, especially in the initial phase of the transformation.59

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The agricultural sector exemplifies these phenomena well. Except in Poland, the changeover to private ownership altered practically every aspect of administration, production, and sales. Until then, a relatively limited circle of big firms had been linked to the various authorities, banks, and retail and manufacturing enterprises, but in the new system, small producers proliferated. In addition, these new individual producers had various kinds of knowledge, connections, capital backing, production capacities, etc. As a result, conducting commerce with them, extending credit to them, and regulating their agricultural markets would require completely different tools than before. Individual producers themselves had to gather information about other market players and learn how this evolving system operated. The development of a new coordination system, thus, required time, and during this period, production necessarily declined. Another example of the importance of institutions to the economic transformation is the situation of and role played by the financial sector. The underdevelopment of the financial sector—as János Kornai has suggested— was of particular significance in the development of the transformational crisis. Commercial banks were state property, and their clients were also mainly state-owned enterprises, with all the attendant consequences. This was the situation in Hungary, where a two-tiered banking system had come into being well before the system change. Among the most important consequences of this development were irresponsible credit practices, which often reflected political considerations instead of the evaluation of risks and benefits. This double state ownership—the banks and the enterprises connected to them were both government property—often made it possible for state-owned firms to secure credit by mobilizing their political connections using a method well known in bureaucratic systems. These efforts were regularly successful because in the final analysis, the banks’ management was dependent on political decision makers who appointed the banks’ executive personnel. The banks’ indulgent treatment of state-owned firms resulted in ballooning stocks of underperforming and later unrecoverable loans while it simultaneously inhibited the financing of the private sector. While the exact degree of corruption is unknown, every indication suggests it was another significant factor in bankers’ irresponsible lending decisions, which also included the credit they extended to private firms. The result was further growth in the volume of ultimately unrecoverable debt.60 At the same time, however, banks, manufacturers, and other firms suffered from a certain degree of risk-aversion, which also had negative

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economic consequences: banks insisted on terms that were stricter than they needed to be, which discouraged potential clients. Manufacturers and other producers were also routinely too cautious in their borrowing practices, which sometimes interrupted production or prevented its expansion. These forms of hesitation were primarily consequences of the economic situation and its uncertain prospects, which made risk assessment difficult: tax rates, the legal environment, prices, inflation, cyclical factors, and general economic conditions all made banks and enterprises sensitive to uncertainty.61 This sense of precariousness was exacerbated by the rudimentary nature of East Central Europe’s financial culture and financial services. In the early 1990s, services and institutions that had long been familiar in the market economies either did not exist or were only just then taking shape in the formerly communist countries: bank transfers were slow and expensive; credit cards and checks were not in widespread use; stock markets and various kinds of investment funds (venture capital funds, retirement funds, etc.) were only just then coming into being. At the time of the system change, the regulatory framework was also fairly rudimentary; for instance, there was no legal basis for mortgage lending.62 Empirical research has not paid sufficient attention to the role of institutions in the transformation of the post-communist economies, though on a theoretical level, an ever stronger consensus has formed around the notion that institutions play an important role in economic successes and failures, and thus the outcome of the transformation was determined in large part by the development of institutions that supported the market economy.63 One possible cause of this neglect is that economists and economic historians have not yet been able to determine with any precision the roles institutions play in fostering growth, nor have they come up with a means of measuring such impact. Most often, they try to assess the development of institutions by analyzing the prevalence of property rights and the rule of law. The influence of governments on the judicial system, the evolution of regulations on commercial transactions and trade deals, corruption, the speed of court decisions, and other similarly relevant factors are all genuinely important indicators of institutional development. At the same time, as we have seen, “institutions” can cover a substantially wider range of factors,64 a systematic analysis of which will be an important task for future researchers concerned with the economy in the post-communist countries.

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Capital formation In the market economies, the savings rates of households and businesses are consistently lower than the administrators of the authoritarian states were capable of managing by means of central planning. The situation was no different in the command economies of East Central Europe, where levels of investment—and capital accumulation in general—were high in comparison with those of market economies even if their efficiency levels were lower. This was largely true even for those economies that introduced reforms that eliminated numerous elements of centralized administration starting in the 1960s. For this reason, observers at the time of the system change expected market mechanisms to reduce levels of domestic accumulation; they also presumed there would be simultaneous improvements in investment efficiency.65 The structural patterns of East Central European economies, like overindustrialization, technological underdevelopment, and newly forming private companies, created great demand for new investments, but a host of obstacles stood in their way. During the deep and protracted transformational crisis, state-owned firms’ frequent financial difficulties hampered their ability to find investors. Because of the crisis, numerous firms struggled with excess capacity, which also obviously slowed investment. At firms undergoing privatization, prospective owners’ intentions were often unclear, which also postponed investments. Finally, the years of economic uncertainty following the system change had a negative effect on investment activity in every business category, as did the underdevelopment of securities markets and the financial system in general. Moreover, market participants were confronted with significant information asymmetries in the early stages of the economic transformation: large numbers of firms lacked the kind of credit history that could have assured banks of their credit-worthiness. These problems were slow to subside, and many continued to linger well past the turn of the millennium.66 Investment activities went through a number of phases after 1990. In the early years, the intensity of investment declined, though this was not a new phenomenon; the levels of accumulation in these countries had already faded significantly in the 1980s. In the first years of the transformation, investment levels dropped more than the gross domestic product did, and thus capital formation rates diminished although not by a uniform margin. While Hungary’s annual rate was 28.8 percent in 1980, it had declined to

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20.3 percent in 1989 and 18.4 percent by 1993.67 This reduction was not particularly dramatic, nor did this rate reach the sort of level to which those of market economies customarily dropped in times of economic crisis. Shares of accumulation in Slovakia and the Czech Republic, however, were even higher than in Hungary throughout the early 1990s, and continued to be so—though by smaller margins—thereafter as well. From the mid1990s onward, investment shares in Hungary again began to exhibit moderate growth, eventually stabilizing around 22 to 23 percent of the GDP, while total accumulation hovered around 27 to 28 percent.68 Insofar as the structural transformation of the economy required significant investments, capital imports, especially imports of foreign direct investment, would play a large role.69 The latter was especially important in the diffusion of modern technology. Foreign direct investment initially moderated the decline in investments and then contributed to the recovery in capital formation although, on the whole, it was dwarfed by domestic accumulation. In the mid-1990s, however, its significance started to grow in every country except Hungary, where it declined in the period from 1997 to 2004.70 EU membership intensified capital inflows, especially into Poland.71 The sectoral structure of investment changed only slightly from 1990 onward. The drop in the share of manufacturing corresponded to a comparable increase in investments in the service sector. As a result of an extraordinarily large proportion of investments in Slovakia’s automotive manufacturing, the share of industry remained relatively high there.72 In general, capital formation played a crucially important role in economic growth, particularly because they were a vehicle for technological change. At the same time, it is also true of the post-communist transformation that capital accumulation was merely a necessary but not a sufficient condition of long-term economic growth. The latter depended on a range of other factors including levels of human capital and the qualitative characteristics of these investments, especially their capacity to improve efficiency.73

Changes in the labor force The transformation of the East Central European economies had a profound effect on employment levels and structure. The large enterprises of the socialist era were notorious for employing overly large numbers of laborers whom they could not provide with sufficient work, which employ-

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ers were compelled to do by centralized regulators. When the latter were eliminated at the beginning of the economic transformation, many of these firms also immediately freed themselves of these surplus employees. As market conditions developed, however, it was not just overemployment that came to an end. Because of import competition and drops in demand caused by other factors, many enterprises saw their output sink below previous levels, which rendered additional workers redundant. Laborers and employees who lost their jobs either became unemployed or withdrew from the labor market altogether. Unemployment quickly spiked.74 At its peak in 1993, unemployment hit 16.4 percent in Poland, which was the highest level recorded anywhere in the region during the entire transformational crisis. In Hungary, it topped out at 12.3 percent in 1992.75 Over the rest of the decade, the numbers of job seekers in these two countries declined continuously. In contrast, Slovakian and Czech unemployment rates peaked at the end of the decade, though at much lower levels than in Poland and Hungary. By 2001, unemployment had dropped to 5.7 percent in Hungary, which was a relatively favorable level by international standards. Unemployment hit socially disadvantaged groups especially hard, including less-skilled and older workers, the Roma population, and inhabitants of less prosperous regions; moreover, these disadvantages were often cumulative. Perhaps more surprising was the much greater growth in the numbers of workers who abandoned the labor market altogether. Early retirement and disability pensions played important roles in the retirement patterns in most of these countries, but especially in Hungary, where a more permissive system made it possible for many to retire. These trends primarily affected the middle-aged and older generations although the labor force participation rate also declined for young people, partly as a consequence of extended secondary educations, but mainly as a result of greater enrollment in higher education, which also served as a means of moderating unemployment. By international standards, employment rates in the communist period, especially for women, were exceptional. Until 1990, more than 70 percent of Hungary’s working-age population (between 15 and 64 years old) had jobs, a rate which dropped significantly in just a few years: by 1996, statistics suggest this number was down to 52.7 percent. This means that Hungary lost roughly 1.5 million or 28 percent of its employees. The subsequent uptick in economic growth did not substantially improve

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employment levels. While Hungary’s per capita level of GDP grew 49 percent between 1995 and 2005, its labor-force participation rate rose from 53 percent to just 56.9 percent. This rate was slightly higher in Poland and Slovakia and substantially so in the Czech Republic.76 Other factors also contributed to the unfavorable trends in labor force participation. The economy recovered thanks in large part to the development of export-oriented enterprises whose production processes were not labor intensive. In addition, the geographical mobility of the labor force was low partly because of the rigidity of the housing sector, and even as businesses expanded, they were less able to absorb workers from regions and sectors in decline. Finally, shortcomings in the skills of considerable segments of the population also limited improvements in labor force participation rates. The structure of the active labor force also changed in many ways: on the one hand, workers flowed out of the declining state sector into the expanding private sphere; on the other hand, employment in manufacturing and agriculture gave way to service-industry jobs at an accelerating pace.77

Shifts in external and domestic market conditions During the initial phase of transformation, the volume of foreign trade and its share of the GDP dropped in East Central Europe, then grew substantially, a development that was accompanied by a marked shift in foreign trade partners. The initial decline was related to the deterioration of trade between former Comecon members. These exchanges were not priced according to market principles, and thus the new economic circumstances made it impossible to maintain them at their former levels. Having switched to dollar-denominated accounting, the former partners were no longer willing to purchase uncompetitive—relatively high-priced, lowquality—products from each other. Moreover, the economic recession had reduced the Comecon countries’ purchasing power, which contributed directly to the collapse of this market. East Central European enterprises suffered especially large losses when the Soviets stopped placing orders, partly because the Soviet Union was having economic difficulties of its own, and partly because the switch to dollar-denominated foreign-trade accounting allowed Soviet consumers—and later the consumers of its successor states—to express more sophisticated demands and make purchases

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through other markets. In 1991 alone, the drop in Soviet orders amounted to 4.5 percent of Hungary’s GDP, 1.6 percent of Poland’s, and 2.2 percent of Czechoslovakia’s.78 Thus, in the early period of the transformation, the collapse of the Comecon market contributed significantly to the decline of the GDP in East Central European countries, especially given that a large proportion of the goods previously sold there could not be marketed elsewhere. Even before the system change, the advanced industrial economies were already important foreign trade partners for Poland and Hungary, and during the transformation their shares continued to grow rapidly. In 1988, OECD countries received 44.7 percent of Poland’s exports, 37.2 percent of Hungary’s, and 33.5 percent of Czechoslovakia’s. By 1994, the OECD’s share of Polish and Hungarian exports reached 75 percent and almost doubled to 58.9 percent of the Czech Republic’s.79 Over this same period, the export shares of former Comecon countries dropped by roughly the same proportions. The openness of the East Central European economies—with the exception of Poland, which had a larger domestic market—increased dramatically. While in 1993, Hungary’s international trade amounted to 29.5 percent of its GDP, by the turn of the millennium, this proportion had hit 73.9 percent and continued to grow thereafter.80 Slovakia’s exports made up 96.6 percent of its GDP in 2012, and Hungary barely lagged behind it.81 The transformational crisis also affected the domestic markets of the post-communist countries of East Central Europe. Public and private consumption both decreased in the early years of the transformation, though these declines were smaller than the drops in the GDP.82 This development makes sense if we take into account the reduction of the GDP, the massive unemployment, and the general slump in labor force participation. These dynamics of consumption, however, also draw attention to the fact that a significant number of the workers who disappeared from the official statistics were earning their incomes on the black market. Another important cause of the decline in output was that at the beginning of the transformation, the quality of the goods in the region was generally below the quality of the goods available on the world market. Once foreign goods were accessible, many local products became unsellable or were marketable only at much lower prices than before. In addition, a wide range of products had been rendered saleable only by means of subsidies. With the elimination of state subsidies, prices for a number of goods jumped up above world mar-

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ket prices, and thus they could no longer be produced economically. According to certain estimates, this phenomenon affected 19 to 24 percent of the manufacturing output of East Central European countries.83 Other factors also suggest that the drop in foreign and domestic demand was one of the chief triggers of the transformational crisis. At the beginning of 1987, only 26 percent of the Hungarian managers who were surveyed cited a lack of demand as an obstacle to production growth in their country, while by the beginning of 1991, that number had risen to 60.6 percent. At the same time, among the causes they cited in 1991, shortages of raw material and labor—responses that had dominated the earlier survey—disappeared almost completely.84

The evolving structure of the economy In the 1990s, the economies of East Central Europe were affected by profound structural modifications.85 The most significant transformation took place in agriculture, the contribution of which to the GDP fell continuously in all of these countries: whereas in 1990, this sector produced roughly a tenth of the regional GDP—slightly more in Poland and Hungary, slightly less in Slovakia and the Czech Republic—a decade and a half later, it was down to 2.6 percent in the Czech Republic, while in the other three countries it was barely more than 4 percent. The change in the significance of manufacturing was not as substantial, nor did it proceed in such a linear way. In the first half of the 1990s, its contribution to the gross domestic product dropped slightly across the region, and then generally rose somewhat before stabilizing around 25 to 30 percent after the turn of the millennium.86 The growth of the private sphere relative to the state sector was another important structural shift. In 1990, private enterprise played a subordinate role in all of the region’s economies except for Polish agriculture. The private sector accounted for 18 percent of Hungary’s GDP at that time, but 55 percent in 1994, and it climbed to 80 percent by 2000. The respective share was the same in Slovakia and the Czech Republic by then, and it came to 70 percent in Poland.87 The expansion of the private sector was partly the result of the privatization of state assets and also a consequence of the more rapid development of enterprises with foreign and domestic private ownership.

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Social costs During the early, critical phase of the transformation, living conditions deteriorated significantly for an overwhelming proportion of the population in the region, who also had to adapt to previously unknown phenomena such as the loss of job security, rising inflation, and spectacular wealth differentials.88 Among the social costs of the economic transformation, two stand out: growing unemployment, which has been addressed earlier, and increasing income inequality, which was amplified by the fact that most people’s real incomes were rapidly declining.89 While in 1987 the average income of the uppermost decile of the Hungarian population was less than five times as large as the average income of the bottom decile, by the mid1990s, it was more than seven times as large.90 Also in 1987, the Gini coefficient in Poland was 0.268, 0.236 in Hungary, and 0.201 in Czechoslovakia, numbers that had grown to 0.389 in Poland, 0.294 in Hungary, and 0.260 in Czechoslovakia’s successor states by 1995. These indicators subsequently stabilized for the most part.91 Broader social consequences also include phenomena like the deterioration of mortality rates. On the one hand, this trend was the continuation of a process that had been underway for some time, and on the other, it stalled in the mid-1990s in East Central Europe, arguably as a result of the system change. This draws attention to the fact that the significant costs of the system change were also accompanied by some major benefits for these societies. Mortality trends will be dealt with below.

The growth process The most striking economic development of the first phase of the transformation was the drop in output in every country of the region. This process started first in Poland, which was also the first country in the entire postcommunist zone to recover from its transformational recession. By 1992, Poland’s GDP was already growing again, and the rate of this growth was high. The other countries of the region began to recover two years later, and their growth rates also continued to be lower partly because of their higher late-1980s baseline. In the latter half of the 1990s, Poland exhibited high growth rates, especially in comparison with Hungary and the Czech Republic, where the expansion of economic activity again decelerated. After the

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100

100

100

100

100

100

100

100

Czech Republic

Slovakia

Hungary

Romania

Slovenia

Serbia and Montenegro

Croatia

Bulgaria

90.9 81.5 75.3 71.6 71.6 72.6 66.1 62.4 64.9 66.4 69.9 72.8 76.3 79.6 85.5 92.4

93.1 73.5 64.9 59.7 63.2 67.5 71.5 76.3 78.2 77.5 79.7 83.2 87.6 91.3 95.0 98.9

92.1 81.4 58.7 40.6 41.6 44.1 46.8 50.2 51.5 42.4 45.1 47.6 49.4 50.1 54.8 58.0

95.3 86.8 82.0 84.3 88.8 92.6 96.0 100.4 104.1 109.7 114.2 117.4 121.2 124.1 129.4 134.4

94.4 82.2 75.0 76.1 79.1 84.7 88.1 82.7 78.7 77.8 79.0 83.3 87.2 92.4 101.6 106.5

96.5 85.0 82.4 81.9 84.3 85.6 86.7 90.7 95.1 99.1 104.3 108.2 112.0 115.3 121.3 126.9

97.4 83.2 77.7 74.8 79.1 83.9 89.0 93.3 97.3 98.7 100.7 104.5 109.2 113.9 119.9 128.0

98.8 87.4 86.9 86.9 88.9 94.2 98.2 97.5 96.6 97.0 100.3 103.1 104.8 108.2 113.5 120.7

90.6 84.3 86.3 89.7 94.4 100.9 107.0 114.2 120.7 125.7 130.8 133.8 135.1 140.2 147.5 152.7

Source: Ryszard Rapacki and Mariusz Próchniak. “Economic Growth Accounting in Twenty-Seven Transition Countries, 1990–2003,” Eastern European Economics 47, no. 2 (2009): 73 (Eastern Europe 1990–2003); László Csaba, A fölemelkedő Európa [Europe rising] (Budapest: Akadémiai Kiadó, 2006), 86–87 (Serbia and Montenegro 1990–2003); retrieved October 10, 2017, https://data.worldbank.org/indicator/NY.GDP.PCAP. KD.ZG?end=2005&start=2004 (Eastern Europe 2004–2005)

100

Poland

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Table 6.2 Real GDP indices in post-communist countries, 1990–2005 (1989=100)

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turn of the millennium, Slovakia displayed the most spectacular development, while Poland was the most successful in withstanding the 2008 crisis, not just in comparison with the other countries of the region, but with the rest of Europe as well (Table 6.2).

Divergence and convergence The post-1989 economic performance of East Central Europe surveyed above also determined the phases in which it converged with or diverged from Western Europe.92 Starting in 1992 or 1994, the contractions of the transformational recession were replaced by growth rates that compared favorably with the dynamics of the western half of the continent, and although the magnitude of this expansion was not uniform from year to year, it continued for more than a decade. The convergence process of East Central Europe can be differentiated by four phases: 1) The transformational recession was marked by clear and rapid divergence. This phase was actually the continuation of a period of falling behind that had already been underway for decades. 2) In 1992 or 1993, GDP numbers in the region stopped falling and began to grow again. These trends—as we have seen—varied in the individual countries of East Central Europe. Though Poland had started at a substantially lower level than the others, it converged dynamically both with the East Central European countries and with the economies of Western Europe, while growth in the Czech Republic and especially Hungary was so moderate in certain years that sections of their trend lines have to be described not as convergence, but rather as pauses in the process of divergence. 3) After the turn of the millennium, surging regional growth initiated a period of rapid convergence that continued unbroken up to the crisis of 2008. In this period, the productivity catch-up of the East Central European region was spectacular (Table 6.1). 4) In the aftermath of the crisis, the countries of the region have again differentiated themselves: Poland has continued to catch up to the West at a rapid rate, Slovakia and the Czech Republic have done so at a more moderate pace, and Hungarian growth rates have dropped below the Western European average for years. Hungary is the only country in the region where convergence stopped.93

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If we compare the region to the members of the European Union using GDP per capita data calculated according to purchasing power parity, we see that the developmental gap between the two groups of countries closed considerably from 1995 to 2005. In this period, Poland’s per capita GDP grew from 34.4 percent to 44.3 percent of the EU-12 average, while Slovakia’s rose from 40.3 percent to 49.2 percent, and Hungary’s increased from 44.9 percent to 57.1 percent. The rate of convergence was most moderate in the Czech Republic, where this ratio grew from 62.2 percent to 66 percent over the course of that decade. The convergence performance of East Central European countries put them in a favorable position relative to the other formerly communist nations: only the Baltic countries, which started at lower levels, did a better job of closing the developmental gap separating them from the European Union. Between 1995 and 2005, Slovenia whittled 11.2 percentage points off the gap still separating its per capita GDP from the EU average. These same data show that Bulgaria was able to cut 3.8 percentage points off this gap, and Romania a mere 2.8.94 This is substantially consistent with Oblath and Szörfi’s account of significant convergence between East Central Europe and the Western European countries—more precisely, the EU-15—in the period between 1995 and 2006.95 If we examine the pace of convergence over a longer period, from 1991 to 2008, Halmai’s estimates suggest that Slovenia’s annual rate was 4.46 percent, Estonia’s was 3.76 percent, Slovakia’s was 3.43 percent, the Czech Republic’s was 1.97 percent, Poland’s was 1.75 percent, and Hungary’s was 1.34 percent.96 Nevertheless, despite all this catching up, the relative backwardness of East Central European countries continued to be significant by the mid-2000s (Table 6.2). Table 6.2 Income disparities in the enlarged European Union, 2004 (purchasing power parity) GDP/PER CAPITA (EU-25 = 100)

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Luxemburg

230

Ireland

136

Denmark

119

Austria

113

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GDP/PER CAPITA (EU-25 = 100)

Belgium

108

Finland

106

Netherlands

106

UK

105

Germany

104

Italy

102

Sweden

102

France

101

Spain

85

Greece

73

Portugal

69

Average, EU-15

102

Slovenia

73

Cyprus

71

Malta

70

Czech Republic

66

Hungary

56

Estonia

55

Slovakia

54

Lithuania

47

Poland

44

Latvia

43

Average, new member states

54

Source: Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton: Princeton University Press, 2007), 408.

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Standardized data for the entire East Central European region suggests a similarly intense process of divergence from Western Europe in the first half of the 1990s: the effects of economic contraction in the formerly communist countries was reinforced by the continuing or even accelerating process of homogenization in Western Europe. This was still noticeable at the turn of the millennium, although by that point, convergence between the two regions was already well underway—that is, after roughly half a century of continuous divergence, there was finally a turn, which is confirmed by the subsequent standardized data. In examining these processes within East Central Europe, we see that the regional divergence that began in the 1980s continued into the early 1990s and was then followed by a period of internal homogenization. One main factor in this development was that Poland began to catch up again. This was accompanied by Slovakia’s outstanding performance after the turn of the millennium, which allowed it not only to catch all the way up to Hungary, but also to begin closing the gap with the Czech Republic (Appendix: Tables IIa, IIb, IIc).

Consumption and quality of life As a result of the transformational recession that followed the system change, the population of the region saw its incomes drop considerably. According to household budget surveys data, real per capita incomes in Poland, Hungary, the Czech Republic, and Slovakia were 26 percent, 26 percent, 12 percent, and 29 percent smaller respectively in 1993 than they were in 1987.97 According to macroeconomic data, the fall was much more moderate, especially in the case of Hungary, where this measure demonstrated that real per capita incomes fell 12.9 percent between 1990 and their low point in 1996. Sustained growth in real incomes began again in 1997, and they returned to their 1990 levels around 2001. As in several other countries, this drop in incomes contributed both to lower consumption levels and to structural changes in consumption. The latter, however, were not limited to the period of the recession; these changes were even more rapid once the economy began to grow again. In the 1990s, food and home maintenance continued to be the largest household expenses, but after a small, temporary increase, the proportion dedicated to this first item dropped markedly; the proportion dedicated to the second rose significantly. Between 1993 and 2004, the share of household expenditures dedicated to food fell from 33.8 percent to 24.4 percent in Hungary, while hous-

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ing-related costs jumped from 14.2 percent to 19 percent. The proportions of expenditures dedicated to transportation, communication, healthcare, culture, and entertainment also grew, while the share Hungarians spent on clothing dropped.98 A similar development took place in Poland, the Czech Republic, and Slovakia.99 Not only did the levels and structures of consumption shift; its qualitative characteristics also changed in every East Central European society. In fact, it was in this area that consumption underwent the most rapid and profound transformation after the system change. Before, shops were merely conduits through which goods were distributed; they hardly engaged in any kind of proper commercial activity. This was reflected not only in their selections of goods, but also in their locations, the appearance of their exteriors and interiors, the presentation of their wares, and in the service they offered shoppers. In the transition to market economies, retail became the sector that was transformed the fastest. Retail trade was among the first branches of the economy to be privatized, and masses of small shops came into being because it took relatively little capital or expertise to operate one. So while Western European development was moving in the direction of retail concentration, a process of decentralization was clearly underway in East Central Europe in the early years of the market economy. Later, however, a concentration process similar to that in Western Europe would develop here too. Retail and supermarket chains generally established by foreign firms came into being. And while differences in purchasing power discouraged numerous retailers from setting up shops in the region and the outlets that did exist regularly offered narrower selections of goods than in Western Europe, on the whole, retailers were generally able to offer the kinds of goods that were familiar in other parts of Europe, and to do so in similar circumstances. Thus, after the system change, the qualitative characteristics of consumption in the region clearly and rapidly converged with those of Western Europe and the other consumer societies of the advanced industrial world.100 Perhaps paradoxically, none of this led to improvements in popular levels of satisfaction with the standard of living even in the years of relatively rapid growth in consumption. One significant cause of this dissatisfaction was the growth of income inequality in the wake of the system change; that is, broad segments of society moved into a disadvantaged position even as this consumer society was forming. In 2005, only 35 percent of the Polish population and only 28 percent of Hungary’s were satisfied with their stan-

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dards of living. By international standards, taking into account data for countries both richer and poorer than these two, these proportions were low.101 As we have seen, the East Central European countries consistently lagged behind the societies of Western Europe on the Human Development Index between 1950 and 1990. Their relative decline in the rankings continued for a time even after the system change, primarily because of declines in their relative GDP levels and their unfavorable mortality trends, which would continue for another few years. However, starting in the mid-1990s, the return to economic growth and the end of the mortality crisis not only improved their HDI values, but also initiated a period in which they slowly caught up to Western Europe in these rankings (Table 4.2).102 Turning to mortality, death rates followed earlier trends for a few years after the system change: life expectancy continued to deteriorate for Hungarian and Polish men, though it improved somewhat for men in Czechoslovakia and its successor states.103 For women, these declines were much smaller; they might be better described as stagnation. These developments were especially dramatic because infant mortality continued to improve, and there were no significant changes in mortality of the elderly, so this deterioration was the result of further growth in the mortality of the middle-aged male—and, in certain years in Slovakia and the Czech Republic, female—population.104 Before long, however, more favorable trends began to develop. Hungary, which had been among the hardest hit, saw its rising male mortality rates top out in 1993 and started to show small improvements starting in 1994. These favorable tendencies continued over the following years so that by the turn of the millennium, the average life expectancy at birth for Hungarian men had increased by almost three years since the beginning of the 1990s; for Polish men, the increase in this period was 2 years; for Czech men, 3 years; and for Slovakian men, 2 years. For women in most of the region, mortality trends also bottomed out around 1992, but showed continuous improvement thereafter (Tables 4.3 and 4.5).105 These changes also signified a measure of convergence with Western Europe; its pace was slow, but its significance lay largely in the fact that close to four decades of divergence between East Central European and Western European this trend had come to an end (Appendix: Table IIIa). This was another indication that the quality of life in East Central Europe was beginning to catch up to Western European levels in the 1990s even though this process clearly did not evolve along a straight line.

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The study has explored important economic and social trends in Western

Europe and East Central Europe in the twentieth century in a  long-term and comparative perspective with a focus on the period from World War II to the millennium. In particular, the research has examined how well-being in East Central Europe changed in view of the changes in the western half of the continent. In addition to this, it has also investigated the aspects and periods during which convergence unfolded between these societies as well as when and where distancing was characteristic, and moreover, to what extent the development of East Central European societies could be considered uniform in the examined period. Meanwhile, the triple approach developed for the purpose of this study has been employed. Thus, it has explored fields including economic growth, consumption, and the quality of life simultaneously because parallel inquiries into these might provide best possible means to realize the research aims. Albeit in different ways, looking at all three of these fields yields essential insights. Comparative analysis of the quality of life without doubt offers a  richer survey of the change of living conditions than the mere examination of economic growth. However, any research of this kind may face considerable methodological difficulties. The farther one digresses from analyzing economic output and approaches the complex phenomenon of the quality of life, the more research problems one encounters due to the impact of value preferences. It is primarily because there is less and less consensus among scholars regarding which factors ought to be investigated

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and how to weigh them. Obviously, dealing with value preferences cannot be ignored when researching material living standards or consumption, but this problem manifests to a far lesser extent than in the case of quality of life. What is more, indicators relating to the latter are not properly elaborated (at least for the time being), and they are not or scarcely available retrospectively in a longer historical time span. Therefore, these considerations substantiated the use of the triple approach, which, on the one hand, may capitalize on the research advantages originating from the relatively unequivocal definition of economic growth, and the more favorable availability of sources in this field. At the same time, it might yet rely on the more sophisticated analytical potential offered by consumption patterns and quality of life on the other. Precisely for this reason, results gained may complement one another, and it is also possible to contrast them, on the grounds of which more convincing conclusions can be drawn. In the study, such analytical viewpoints have been chosen which are suitable for the purposes of long-term analysis, enable to measure the dynamics of change, and are not biased toward any social system. The main method of investigation has been asymmetrical comparison, namely one by one, Western European societies were examined in lesser depth than the societies of the East Central European region. However, comparison made it possible in many aspects to elucidate the image so-far construed of the East Central European economic and social development in the twentieth century. Furthermore, with respect to numerous quantitative indices, relatively complete time series are available for doing comparisons between East Central Europe and Western Europe. Thus, one could calculate the standardized East Central European data, while taking into account the change of East Central European conditions simultaneously benchmarked against the Western European average and Western European standard deviation. Beside these quantitative indicators, the development of those fields that do not have such indicators was also obviously considered. Though the study has not primarily aimed at examining processes within Western Europe, it seemed indispensable that the processes of East Central European and Western European societies coming closer to or distancing from each other could be better determined and interpreted. In this aspect the present investigation mostly reinforced and complemented the results of earlier research. In the case of the thirteen Western European countries that made up the respective sample of this study, convergent

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processes dominated with regard to economic growth and consumption in the twentieth century. These convergences manifested particularly strongly in the three decades following World War II. However, the fading of differences at the end of the twentieth century could not be seen. There were dissimilarities notwithstanding between each field under examination: while confluences in the realm of consumption are less apparent in the primarily examined postwar period, then convergence regarding economic growth was significant and virtually continuous. In summing up the results pertaining to paths of growth, one possible vantage point is to claim that the GDP per capita in East Central European countries at the end of the nineteenth century (on the basis of their present territory) amounted to a little bit more than the half of the average Western European level, and, except for Finland, lagged behind the performance of the Western European countries featuring in the sample of this study. Before World War I, the East Central European region converged with Western Europe to a lesser extent, and this process culminated in the years directly before World War I, at 60.3 percent as for the later territories of Czechoslovakia and at 61.2 percent in Hungary. The dynamics look somewhat different if the changes of internal dissimilarities of Western Europe are also considered, and because of this reason, standardized East Central European data are used. From this perspective, East Central European countries caught up with Western Europe mostly around 1890, then the already achieved relative level eroded a  bit, and in 1913 these countries lagged somewhat farther behind Western Europe than in 1890. In this respect, it seems quite remarkable that the developmental paths of the three East Central European countries were practically identical. In the period after World War I, we can distinguish three main periods with regard to the economic performance of East Central European countries examined in an international perspective that do not necessarily and entirely coincide with epochs of the region’s economic history that could be designated on the basis of the development of institutions and other aspects. The first period lasts until World War II; the next one starts at the end of the war and expands to the years after the system change; while the starting point of the third period is the mid-1990s. In the first phase, East Central European economic output preserved its earlier position as measured to the standards of Western European national economies although the unity of the region, which could be observed in the previous period, disappeared: Czechoslovakia showed out-

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standing performance in the 1920s, and then the relative position it had already achieved deteriorated during the Great Depression, while Hungary represented an opposite dynamic to that of the Czechoslovakian. World War I and the following years in particular had more severe economic repercussion on the region (especially in Poland and Hungary) than in most Western European countries, and it also manifested in the developments of the proportions of the economic output. At the same time, prosperity commenced relatively early and potently in East Central Europe nonetheless, and thus the GDP per capita in Czechoslovakia reached 70.2 percent of the Western European average on the eve of the Great Depression. Because the economic crisis hit Hungary less excessively than many other countries and the recovery from it was also quick and determined, it reached the level of relative economic development prior to World War I, amounting to 58.3 percent of the Western European average in 1939. Standardized data represent a slightly different path of development in this case as well: Poland diverged from Western Europe in the whole period, while one can pinpoint convergence in Czechoslovakia and Hungary at the beginning of the period between 1920 and 1938, then, as a result of the lessening of the differences within Western Europe, divergence ensued. In other words, no substantial change occurred in this respect in this period. As has been pointed out above, the relationship between the East Central European and Western European paths of growth altered after World War II. During the decades before the war, phases of coming close to and moving further away from Western Europe alternated. However, in the second half of the twentieth century, or more precisely, from the mid-1960s to the mid-1990s, East Central Europe unequivocally fell back as compared to the growth performance of Western European national economies, and the pace of lagging behind intensified in the period. Examining and comparing trends of economic growth in this epoch are also facilitated by the fact that this was a relatively long period when wars did not impede economic growth in Europe. In the 1950s, the proportion of GDP per capita compared to the Western European average even slightly increased in Czechoslovakia and Hungary, but afterwards one can essentially see only a  continuous lagging behind. This falling behind had begun in Poland already in the 1950s. In the beginning, it commenced relatively slowly, but the deterioration of the relative position of East Central Europe accelerated starting in the 1970s. From the end of the 1980s and the beginning of the 1990s, the collapse of the centrally planned economic system led to the rise of

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a transformational crisis. This critical conjuncture in turn resulted in creating the largest economic development gap ever recorded between East Central Europe and Western Europe. The continuous, decades-long degradation stopped in the mid-1990s, from which point on East Central Europe started to catch up again with Western Europe. Additionally, if one works with standardized East Central European data, which, as has been pointed out above, incorporate both the level of East Central European GDP per capita as compared to Western Europe as well as the unfolding of differences in the Western half of the continent, then one also experiences the continuous lagging behind of East Central Europe. Furthermore, as a result of the substantial decrease of the standard deviation among Western European countries, the distancing of East Central Europe from Western Europe was even more significant in this case from the mid1970s, and it did not stop for a long time, that is, not until after the transformational crisis subsequent to the system change had come to an end. Therefore, the results of this study’s investigations cast a  different light on the claims of the scholarship on economic history in two particular aspects. On the one hand, until now, historical scholarship has presented the argument that the East Central European economic performances of the pre–World War I and interwar periods are to be sharply contrasted. However, we have argued that this claim cannot be substantiated, especially in the case of Czechoslovakia and Hungary. The East Central European economic growth in the decades directly before World War I can only be regarded as outstanding if it is compared to the period between 1913 and 1939, including the years of World War I, but the difference between the dynamics of the two periods does not seem to be dramatic in this case either. On the other hand, the average annual growth during the period between 1920 and 1939 was nonetheless significantly higher than that of a quarter of a century before World War I. Yet the level of production in 1920 did not reach the prewar level anywhere in the region yet, so choosing this year as a gauge involves the chance of distorting results. However long-term international comparison might offer solutions to these methodological problems, which could hardly be resolved by examinations focusing on single countries. Moreover, combining the use of several comparative perspectives showed that the economic dynamism of East Central Europe in the two decades before World War I was only slightly better than the economic performance of the interwar years.

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The results of the study for the decades after World War II, or for the period of the communist system more precisely, were even more robust than in the case of previous epochs. In relation to this, arguments in the scholarly literature as well as opinions often expressed by the wider public, which claimed that East Central Europe would catch up to advanced industrial countries beginning in this period cannot be substantiated either. On the contrary, a process with an opposite direction unfolded: after an initial, relatively stagnant period, a  continuous and intensifying fallback ensued compared to Western European national economies. In spite of the gap closing tendencies that reasserted themselves again in the 1990s, the lagging behind of East Central Europe remained considerable afterwards, too. In the course of the twentieth century, the GDP multiplied in East Central Europe. This obviously affected the level of consumption as well, but it is insufficient to describe the transformation of consumption properly: therefore, it is necessary to study additional characteristics of consumption, especially the structure of consumption, and its qualitative features as well as its social impacts. The level of East Central European consumption in the interwar period essentially conformed to the relative standard of economic output; in other words, it fell behind the consumption characteristic in Western Europe to the same extent as did its economic output. More precisely, a  somewhat more favorable standard level was reached: as compared to the Western European average, the lower accumulation ratio in Hungary and Poland (in Hungary, complemented by the impact of borrowing significant foreign loans in the 1920s) compensated for the fallback with respect to economic output to a certain extent. In addition to this, in relation to the GDP, the higher consumption ratio in East Central Europe served as something of a counterweight to the already-existing disadvantage compared to Western Europe. However, after World War II, an exactly opposite consequence was brought about by the high level of accumulation, this time in Poland and Hungary as well. The robust investment activity in Western Europe allowed for a lower consumption level during most of this period than what resulted from the otherwise progressively decreasing level of economic output. The external loan transfers increased the “maneuverable” scope of consumption and investment policy in Poland and Hungary, but as referred to above, indebtedness grew to such heights in the 1980s that it made further borrowing and/or loans impossible. Furthermore, the increased capital and interest repayments had

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already withheld consumption and above all investments in these countries. Additionally, a far lesser proportion of capital accumulation served housing and human infrastructure in East Central Europe than in Western Europe. These processes resulted in a more considerable falling back of consumption levels in East Central Europe in the decades after World War II compared to Western European consumption than in GDP per capita. The study also explored developments in the structure of consumption. In particular, with regard to the change in the proportion of public consumption and private consumption, one cannot identify pronounced tendencies in East Central Europe during the twentieth century in an international comparison. Taking into account welfare transfers as well, the level of public consumption in East Central Europe was practically in line with the Western European average after World War II, and especially from the 1960s, when the welfare states in Western Europe expanded. However, one peculiarity was that the proportion of in-kind social benefits (healthcare, access to childcare institutions, etc.) within consumption was relatively high in East Central Europe in the decades following World War II. The significance of different types of commodities and services within the structure of the consumption of households was continuously transforming in East Central Europe in line with Western Europe during the twentieth century, but at the same time, a couple of specificities could also be highlighted nonetheless. Most of all, the ratio of expenditures on food and luxury products within household budgets remained high until the end of the century and that, in turn, had a crowding-out effect on other categories of consumption; in other words, their expansion was impeded. However substantial structural changes are, it is also necessary to noticeably take into account the qualitative aspects of consumption to understand the most important characteristics of consumption patterns. Moreover, the latter are worth considering because this field represented the quickest distancing between East Central Europe and Western Europe starting in the mid-twentieth century, and it also indicated the most significant difference when comparing interwar and postwar East Central Europe. In other words, the peculiarities of the consumption history of centrally planned economies may be best defined perhaps through these qualitative markers. Planning that realized the interests of consumers more definitely and the new economic reforms commencing from the 1960s brought about results in this field, since they facilitated the improvement of the range and variety of wares. However, this change did not manifest in the

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same manner in every country and it was not linear. In Poland, only a temporary improvement occurred, and from the beginning of the 1970s, gross shortages appeared, which led to social protest movements. In Czechoslovakia and particularly in Hungary, which significantly advanced in terms of its market reforms due to the 1968 New Economic Mechanism, the supply of goods was far more reliable. However, the lack of important services and commodities as well as their low quality, and the defenselessness of consumers were unchanging characteristics of the economic history of the communist system in Hungary as well. The parallels between the consumer societies of East Central Europe and Western Europe from the 1960s can be best discerned with respect to the importance and use of leisure time. In the long run, besides the decrease of working time, the most important factor of the transformation of leisure time was the separation of working time and leisure time. Similarly to the western half of the continent, this was also facilitated in East Central Europe after World War II by the rapid decrease of the proportion of the self-employed, the enlargement of the group of employees, and, above all, nationalizations and the reduction of agricultural employment (especially in Czechoslovakia and Hungary). One can also see the manifestations of international tendencies with regard to spending leisure time: the increasing role of watching TV is particularly worth mentioning. However, the transformation of leisure time had important specificities in East Central Europe: its growth was greatly withheld in Hungary and Poland because of the increasing share of participation in the second economy (working outside of one’s the main workplace) from the 1960s on. Another peculiar feature was that commercialization played a lesser role in the transformation of leisure time as compared to the interwar years and Western European societies. Nonetheless, the characteristics of the communist socio-economic system, and the consequences of the shortage economy in particular, as well as the considerations of political control played a  far more important role. On the basis of analyzing different aspects of consumption history following the model of consumer society, all in all, it is not plausible to define this as “consumer socialism” in East Central European countries of the 1960s or even the 1970s, which implies the existence of some kind of approximation of Western European consumption patterns. Consumer society developed in East Central Europe as a result of the system change. During the transformational crisis, the real income of the population took a significant dive, but this setback did not amount to

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the level of recession that could be seen in the case of the gross domestic product. Moreover, by the millennium (in Poland even before that) the real income of the population reached the 1989 levels again. The structural changes of consumption were not limited to the period of recession but accelerated after the economic growth took off and unequivocally reflected an approximation toward Western European consumption patterns. Besides the structure and level of consumption, however, its qualitative features changed the most. Because of the differences in purchasing power, shops usually continued to provide a more modest selection of wares than what was commonly the case in Western Europe; yet all in all, trade mostly offered goods generally in circulation across Europe under similar circumstances. Leisure time did not increase significantly although how it was spent changed considerably; namely, it was commodified. The most decisive change had to do with consumer choice: due to its dramatic increase, it can be argued that consumer society arrived to the East Central European region in the 1990s. Considering the qualitative aspects of consumption, therefore, East Central Europe unequivocally and rapidly came closer to Western Europe and to advanced industrial or consumer societies in general. However, the expansion of consumer society did not bring about a parallel improvement of the population’s satisfaction with their standard of living, not even during the years of the relatively rapid expansion of consumption. An explosion of expectations among East Central European people regarding their standard of living also considerably contributed to this disequilibrium. What is more, income inequality also increased simultaneously after the system change; in other words, from the beginning, large social groups had relatively unfavorable positions when it came to taking advantage of the benefits offered by the early formation of consumer society. After looking at the changes of economic growth and consumption patterns in the twentieth century, this study examined an even more comprehensive phenomenon: the changes in the quality of life in East Central Europe in international comparison. In doing so, in accordance with (partly theoretical, partly pragmatic) considerations referred to above, the long-term examinations of the HDI and mortality were privileged during the investigation. The HDI includes three fields: economic development, lifespan, and education. In all of these fields, East Central Europe performed below the Western European average before World War I. Thus, it is not surprising that the 1913 value of the Czechoslovakian index (calculated on the basis of the

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country’s present-day territory) surpassed the indices of only three countries among the thirteen Western European countries featuring in this investigation, while the respective Hungarian value exceeded only one Western European country’s indicator. However, in the upcoming decades, the extent of East Central European changes stood out in a European comparison as well. In 1950, Czechoslovakia still preceded only three, while Hungary only one Western European country, but with respect to the value of the indicator, they significantly caught up with those in front of them. The decades between 1950 and 1990 stand in sharp contrast to the first half of the century. On the one hand, Poland, Czechoslovakia, and Hungary lagged behind all Western European countries with respect to the HDI. On the other hand, they also lagged behind all Western European countries in relative improvement, that is, the ratio of improvement measured in percent against (maximal) potential change. From another perspective, this meant that the HDI values of East Central European societies fell farther behind the Western European average than before, although, due to the specific calculation method of the HDI, those on a lower level, including the East Central European countries, could more easily improve their relative positions. The level of the East Central European Human Development Index compared to that of Western European countries continued to decline for a while after the system change primarily because of the decrease of the GDP and the persistent deterioration of mortality rates for several years. From the mid-1990s, however, with the renewed rise of economic growth and the end of the mortality crisis, the value of the HDI began to improve again, and the process of catching up with Western Europe also commenced. Several arguments claiming that mortality is a robust indicator of the quality of life have been discussed. An image that is similar to what has been outlined above can be drawn for the twentieth-century changes to the quality of life in East Central Europe if one focuses on mortality. The level of mortality in East Central Europe sometimes came closer to the level characteristic of Western Europe during the twentieth century, while in other periods, distancing was typical. Its convergence with Western Europe significantly advanced in the interwar period (in Czechoslovakia particularly in the 1920s, and in Hungary in the 1930s), and then in the 1950s and in the first half of the 1960s, when the most advanced industrial countries reached a point where they could improve their indicators only more slowly, although, at the same time, East Central European societies considerably

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lagging behind them were still able to advance more quickly. However, from the mid-1960s, the mortality of the middle-aged male population started to dramatically deteriorate in the region. In Hungary and Poland, the mortality of the entire male population worsened as well, and it improved only a  little in Czechoslovakia. Women were less influenced by this process, but improvement slowed down significantly in this case too. Meanwhile, in Western Europe mortality conditions changed in a  dynamically positive way in the case of both sexes and in essentially all age groups. Thereby, a definite divergence unfolded with respect to mortality between East Central Europe and Western European societies. What is more, this was further enhanced in the 1980s, especially if one calculates it with standardized data, which are susceptible to the effects of rapid unification within the western half of the continent and, thus, indicate a marked change with regard to infant mortality. The development of mortality followed the unfavorable trends in East Central Europe for a couple of years after the system change. This mostly affected men since, in their case, the decline of life expectancy continued, while in the case of women, one can rather see the stagnation of this indicator. The process was particularly dramatic because, at the same time, infant and child mortality was improving and no major modification can be seen with respect to old age mortality. In other words, the increased mortality of the middle-aged male population was still responsible for unfavorable mortality patterns. Nevertheless, the trend soon turned: mortality started to slowly improve starting in the mid-1990s in Hungary, which had been most affected by the negative tendencies. So by the millennium, male life expectancy increased by nearly three years compared to the worst value of the early 1990s. A  more significant improvement in life expectancy also began in the case of women. At the same time, this turn resulted in convergence with the societies of Western Europe, which, nonetheless, progressed at a  moderate pace; in some age groups improvement occasionally even stopped, particularly if one takes into account standardized data. Therefore, rising life expectancy is mostly an important development because it terminated the significant divergence between East Central Europe and the western half of the continent that had been going on for almost four decades. In line with the results discussed above, all of this can be interpreted as evidence of the process, namely that after the mid-1990s, the quality of life of the East Central European population started to approach the average level of Western European countries. However, this process unfolded in

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an uneven manner: the institutions of consumer society and the attitudes related to them changed faster, while a slower transformation can be witnessed with regard to well-being interpreted in a far wider sense. As a result of the triple approach, the changes in the living conditions of the East Central European population in the second half of the twentieth century have been investigated from multiple perspectives. Several differences were identified between the dynamics of changes in these three fields. This is not an unknown phenomenon in Western Europe (and in advanced industrial societies in general), where improvements to the quality of life often considerably lagged behind the pace of economic growth at the end of the century. In the case of Poland, Czechoslovakia, and Hungary, this phenomenon had already appeared earlier. It is noticeable that the development of various indicators of quality of life fell behind the also relatively low pace of economic growth in the last decades of the century, and thus these indicators showed an even more marked divergence from Western Europe. However, one can see other differences in East Central Europe, among which the discrepancy between economic growth and the expansion of consumption have a prominent place that arose after World War II. These differences explain the dynamics of the East Central European political systems to a considerable degree, especially in the last decades of the century. All in all, the results of the three fields under investigation strengthen one another with regard to long-term tendencies, especially with respect to the dynamics of change of East Central European living conditions interpreted through an international comparison. This might yield important arguments in favor of the historical use of economic output as the most accessible indicator, although it does not cast doubt on research into consumption and quality of life from a historical as well a contemporary perspective. Consumption reaches beyond the sphere of material living conditions, and it helps reveal the interconnectedness of economy, society, and even culture, while the concept of the quality of life was originally conceived for this very purpose. Thus, the study of twentieth-century East Central European societies from the triple perspective employed in this study remains an important task of future research.

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Appendix

On the basis of the time series developed in this study, several aspects of

social and economic development in East Central European countries have been examined via statistical methods in a Western European comparison. In order to determine convergent and divergent trends, the data of East Central European societies can be obviously compared to respective Western European means. This procedure often found in comparative works is indeed suitable for demonstrating important processes. However, for the purpose of this study, this method in itself seems to be inadequate: the interpretation of Western European mean is problematic because it disregards the variations within this region.* Common alternatives for measuring convergence are the standard deviation or variance and the coefficient of variation. In this study, the standard deviation and the coefficient of variation have also been calculated for Western European countries. The latter is a particularly useful tool of comparisons, since it is adjusted for shifts in the mean, which is necessary since, for example, a 10 point spread is likely to have a different interpretation around a mean of 50, than around a mean of 20. The greater the decline in the coefficient of variation over a given period of time, the

* For the forms of convergence, see Alex Inkeles, “Convergence and Divergence in Industrial Societies,” in Directions of Change, ed. Mustafa O. Attir et al. (Boulder, CO: Westview Press, 1981), 13.

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greater the convergence becomes, and, in turn, the more the coefficient of variation increases, the greater the divergence is. In contrast to these studies that measure convergence within a group of countries, this study also aims at examining convergent and divergent processes between a country and a group of countries, namely between specific East Central European countries and Western Europe. For this purpose the coefficient of variation cannot be applied. In order to overcome this difficulty, convergence between the Polish, Czechoslovakian, Hungarian, and Western European societies is measured with the help of standardized data on specific East Central European societies. This indicator takes into account both the changes in the East Central European data, the Western European average, and the standard deviation simultaneously, and hence, provides more comprehensive information. Standardization is the transformation of the values of a distribution, so it has a mean of 0 and a standard deviation of 1. This indicator can be computed by subtracting the Western European mean from the respective data of a specific East Central European society, and then dividing it by the Western European standard deviation. The difference of the number from zero shows the degree of divergence from Western Europe. The greater the decrease of standardized data is in a given period, the greater the convergence is and vice versa.** The advantage of this indicator is that it is not only suitable for pointing out convergent and divergent tendencies but also enables the measurement of the convergence between the East Central European and Western European development, even if Western European societies diverge in a given field.

** “As a result, the standardised data take into account both major forms of convergence described in the literature: the absolute convergence (beta convergence), which occurs when the observed values come closer to each other; and the convergence in deviation (sigma convergence), which occurs when the dispersion of the observed values decreases over time.” Robert J. Barro and Xavier Sala-i-Martin, Economic Growth (New York: McGraw-Hill, 1995), 26–39, 382–413; Xavier Sala-i-Martin, “The Classical Approach to Convergence Analysis,” Economic Journal, no 106 (1996): 1019–36.

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 Appendix

Appendix: Table I Economic output of Poland, Czechoslovakia, and Hungary, 1870–2010 (1990 Geary–Khamis international dollar, GDP per capita) YEAR

POLAND

CZECHOSLOVAKIA/ CZECH REPUBLIC

SLOVAKIA

HUNGARY

1870

946

1164

1092

1890

1284

1505

1473

1900

1536

1729

1682

1910

1690

1991

2000

1913

1739

2096

2098

1920

1933

1709

1924

2353

1912

1925

2606

2279

1926

2575

2162

1927

2752

2237

1928

2977

2415

1929

2117

3042

2476

1930

1994

2926

2404

1931

1823

2809

2268

1932

1658

2680

2192

1933

1590

2552

2374

1934

1593

2443

2370

1935

1597

2410

2471

1936

1625

2599

2618

1937

1915

2882

2543

1938

2182

2655

1939

2838

1940

2626

1941

2626

1942

2743

1946

1721

1947

1774

1948

3088

2200

1949

3259

2354

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AUSTERITIES AND ASPIRATIONS

YEAR

POLAND

CZECHOSLOVAKIA/ CZECH REPUBLIC

SLOVAKIA

HUNGARY

1950

2447

3501

2480

1951

2510

3524

2695

1952

2521

3598

2762

1953

2618

3544

2786

1954

2715

3652

2850

1955

2794

3922

3070

1956

2864

4110

2906

1957

2962

4320

3169

1958

3057

4610

3367

1959

3096

4780

3484

1960

3215

5108

3649

1961

3426

5263

3816

1962

3341

5304

3962

1963

3502

5170

4168

1964

3622

5372

4388

1965

3787

5533

4410

1966

3991

5741

4646

1967

4103

5964

4894

1968

4317

6223

4934

1969

4241

6354

5062

1970

4428

6466

5028

1971

4707

6658

5238

1972

5010

6858

5336

1973

5340

7041

5596

1974

5601

7243

5716

1975

5808

7399

5805

1976

5895

7461

5791

1977

5949

7744

6126

1978

6111

7786

6253

1979

5942

7804

6251

1980

5740

7982

6306

1981

5385

7912

6351

1982

5288

8045

6583

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 Appendix YEAR

POLAND

CZECHOSLOVAKIA/ CZECH REPUBLIC

1983

5498

8147

SLOVAKIA

HUNGARY

6525

1984

5650

8319

6710

1985

5660

8367

6557

1986

5797

8507

6699

1987

5683

8534

6814

1988

5789

8709

7031

1989

5684

8768

6903

1990

5113

8513

6459

1991

4738

7439

5676

1992

4842

7818

6158

5510

1993

5011

7814

6251

5506

1994

5265

7985

6612

5 687

1995

5623

8464

6977

5781

1996

5970

8859

7445

5802

1997

6388

8793

7762

6001

1998

6704

8780

8089

6263

1999

7008

8937

8084

6482

2000

7309

9320

8188

6772

2001

7399

9616

8466

7 035

2002

7509

9829

8845

7365

2003

7804

10204

9257

7664

2004

8226

10693

9712

8047

2005

8529

11421

10344

8379

2006

9065

12229

11190

8715

2007

9684

12939

12346

8736

2008

10186

13350

13037

8826

2009

10356

12735

12377

8237

2010

10762

13097

12877

8353

Notes: Czechoslovakia from 1992: Czech Republic. Sources: The Maddison-Project, retrieved October 12, 2016, http://www.ggdc.net/maddison/maddison-project/home.htm, 2013 version. For the methodology in use, see J. Bolt and J. L. van Zanden, “The Maddison Project: Collaborative Research on Historical National Accounts,” Economic History Review 67, no. 3 (2014): 627–651.

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Appendix: Table IIa Indicators of economic output in Poland and Western Europe, 1870–2005 YEAR

POLISH DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED POLISH DATA = (A–B)/C

GDP per capita (1990 Geary–Khamis international dollar) 1870

946

1992

554.5

0.28

–1.89

1890

1284

2535

733.9

0.29

–1.70

1900

1536

2910

804.1

0.28

–1.71

1910

1690

3269

799.5

0.24

–1.97

1913

1739

3474

796.6

0.23

–2.18

1920

3247

829.0

0.26

1925

3840

989.2

0.26

1929

2117

4336

1116.3

0.26

–1.99

1930

1994

4301

1108.8

0.26

–2.08

1935

1597

4271

1025.9

0.24

–2.61

1938

1625

4667

1048.0

0.22

–2.90

1939

2182

4867

1053.6

0.22

–2.55

1940

4464

1169.4

0.26

1945

4116

1788.3

0.43

1950

2447

5467

1596.1

0.29

–1.89

1955

2794

6554

1696.6

0.26

–2.22

1960

3215

7693

1879.2

0.24

–2.38

1965

3787

9275

2151.9

0.23

–2.55

1970

4428

11117

2355.7

0.21

–2.84

1973

5340

12327

2435.0

0.20

–2.87

1975

5808

12485

2154.8

0.17

–3.10

1980

5740

14235

2191.4

0.15

–3.88

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 Appendix YEAR

POLISH DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED POLISH DATA = (A–B)/C

GDP per capita (1990 Geary–Khamis international dollar) 1985

5660

15380

2302.8

0.15

–4.22

1989

5684

16979

2144.0

0.13

–5.27

1990

5113

17359

2056.4

0.12

–5.96

1995

5623

18298

1847.2

0.10

–6.86

2000

7309

21232

1581.1

0.07

–8.81

2005

8529

22917

2200.3

0.10

–6.54

Notes: Data up to 2000 refer to the 1988 territory of the FRG; 2005 German data refer to the unified FRG. Sources: For Polish data, see Appendix Table I. The other data are the results of the author’s own computations based on the following sources: Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), 60–61 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, United Kingdom 1890–1913); 62–63 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1920–1960); 64–65 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1970–1990); 67–69 (Ireland 1913–1990); 100–101 (Poland 1890–1990); The Maddison-Project, 2013 version (Western Europe 2000–2005), retrieved October 12, 2016, http://www.ggdc.net/ maddison/maddison-project/home.htm.

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Appendix: Table IIb Indicators of economic output in Czechoslovakia and Western Europe, 1870–2005 YEAR

CZECHO­ SLOVAKIAN DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED CZECHOSL. DATA = (A–B)/C

GDP per capita (1990 Geary–Khamis international dollar)

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1870

1164

1992

554.5

0.28

–1.49

1890

1505

2535

733.9

0.29

–1.40

1900

1729

2910

804.1

0.28

–1.47

1910

1991

3269

799.5

0.24

–1.60

1913

2096

3474

796.6

0.23

–1.73

1920

1933

3247

829.0

0.26

–1.59

1925

2606

3840

989.2

0.26

–1.25

1929

3042

4336

1116.3

0.26

–1.16

1930

2926

4301

1108.8

0.26

–1.24

1935

2410

4271

1025.9

0.24

–1.81

1938

4667

1048.0

0.22

1939

4867

1053.6

0.22

1940

4464

1169.4

0.26

1945

4116

1788.3

0.43

1950

3501

5467

1596.1

0.29

–1.23

1955

3922

6554

1696.6

0.26

–1.55

1960

5108

7693

1879.2

0.24

–1.38

1965

5533

9275

2151.9

0.23

–1.74

1970

6466

11117

2355.7

0.21

–1.97

1973

7041

12327

2435.0

0.20

–2.17

1975

7399

12485

2154.8

0.17

–2.36

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309

 Appendix YEAR

CZECHO­ SLOVAKIAN DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED CZECHOSL. DATA = (A–B)/C

GDP per capita (1990 Geary–Khamis international dollar) 1980

7982

14235

2191.4

0.15

–2.85

1985

8367

15380

2302.8

0.15

–3.05

1989

8768

16979

2144.0

0.13

–3.83

1990

8513

17359

2056.4

0.12

–4.30

1995CzR

8464

18298

1847.2

0.10

–5.32

1995Sl

6977

18298

1847.2

0.10

–6.13

2000CzR

9320

21232

1581.1

0.07

–7.53

2000Sl

8188

21232

1581.1

0.07

–8.25

2005CzR

11421

22917

2200.3

0.10

–5.23

2005Sl

10344

22917

2200.3

0.10

–5.71

Notes: See Appendix: Table IIa; CzR: Czech Republic; Sl: Slovakia; Czechoslovakia 1995–2005: Czech Republic and Slovakia. Sources: For Czechoslovakian data, see Appendix Table I. The other data are the results of the author’s own computations based on the following sources: Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), 60–61 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1890–1913); 62–63 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1920–1960); 64–65 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1970–1990); 67–69 (Ireland 1913–1990); 100–101 (Czechoslovakia 1890–1990); The MaddisonProject, retrieved October 12, 2016, http://www.ggdc.net/maddison/maddison-project/home.htm, 2013 version (Western Europe 2000–2005).

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Appendix: Table IIc Indicators of economic output in Hungary and Western Europe, 1870–2005 YEAR

HUNGARIAN DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED HUNGARIAN DATA = (A–B)/C

GDP per capita (1990 Geary–Khamis international dollar) 1870

1092

1992

554.5

0.28

–1.62

1890

1473

2535

733.9

0.29

–1.45

1900

1682

2910

804.1

0.28

–1.53

1910

2000

3269

799.5

0.24

–1.59

1913

2098

3474

796.6

0.23

–1.73

1920

1709

3247

829.0

0.26

–1.86

1925

2279

3840

989.2

0.26

–1.58

1929

2476

4336

1116.3

0.26

–1.67

1930

2404

4301

1108.8

0.26

–1.71

1935

2471

4271

1025.9

0.24

–1.75

1938

2655

4667

1048.0

0.22

–1.92

1939

2838

4867

1053.6

0.22

–1.93

1940

2626

4464

1169.4

0.26

–1.57

4116

1788.3

0.43

1945 1950

2480

5467

1596.1

0.29

–1.87

1955

3070

6554

1696.6

0.26

–2.05

1960

3649

7693

1879.2

0.24

–2.15

1965

4410

9275

2151.9

0.23

–2.26

1970

5028

11117

2355.7

0.21

–2.58

1973

5596

12327

2435.0

0.20

–2.76

1975

5805

12485

2154.8

0.17

–3.10

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 Appendix YEAR

HUNGARIAN DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED HUNGARIAN DATA = (A–B)/C

GDP per capita (1990 Geary–Khamis international dollar) 1980

6306

14235

2191.4

0.15

–3.62

1985

6557

15380

2302.8

0.15

–3.83

1989

6903

16979

2144.0

0.13

–4.70

1990

6459

17359

2056.4

0.12

–5.30

1995

5676

18298

1847.2

0.10

–6.83

2000

6772

21232

1581.1

0.07

–9.15

2005

8379

22917

2200.3

0.10

–6.60

Notes: See Appendix: Table IIa. Sources: For Hungarian data, see Appendix Table I. The other data are the results of the author’s computations based on the following sources: Angus Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003), 60–61 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1890–1913); 62–63 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1920–1960); 64–65 (Austria, Belgium, Denmark, Finland, France, Italy, Netherlands, Norway, Sweden, Switzerland, UK 1970–1990); 67–69 (Ireland 1913–1990); 100–101 (Hungary 1890–1990); The Maddison-Project, retrieved October 12, 2015, http://www.ggdc.net/maddison/maddison-project/home.htm; 2013 version (Western Europe 2000–2005), retrieved October 12, 2016.

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Appendix: Table IIIa Indicators of mortality in Poland and Western Europe, 1900–2005 YEAR

POLISH DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED POLISH DATA = (A–B)/C

Male life expectancy at birth (year) 1900

45.59

3.64

0.08

1910

49.76

4.42

0.09

1920

53.61

3.84

0.07

57.72

3.38

0.06

61.94

3.67

0.06

1930

48.2

1940

–2.82

1950

55.6

65.21

3.32

0.05

–2.90

1960

64.8

68.40

2.05

0.03

–1.76

1970

66.8

69.09

1.74

0.03

–1.32

1980

66.9

70.78

1.28

0.02

–3.03

1990

66.5

73.06

1.09

0.01

–6.02

2000

69.7

75.45

1.00

0.01

–5.75

2005

70.8

76.97

0.98

0.01

–6.32

Female life expectancy at birth (year) 1900

48.23

3.87

0.08

1910

52.29

4.83

0.09

1920

56.51

3.25

0.06

60.77

2.86

0.05

64.06

3.80

0.06

1930

51.4

1940

–3.28

1950

64.2

69.32

2.31

0.03

–2.22

1960

70.5

73.58

1.27

0.02

–2.42

1970

73.8

75.30

1.29

0.02

–1.16

1980

75.4

77.52

1.25

0.02

–1.70

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 Appendix WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED POLISH DATA = (A–B)/C

75.5

79.52

1.06

0.01

–3.79

2000

77.9

81.14

1.12

0.01

–2.89

2005

79.4

82.24

1.05

0.01

–2.71

YEAR

POLISH DATA (A)

1990

Infant mortality (per mill) 1900

154.23

41.16

0.27

1910

116.23

32.18

0.28

1920

98.85

27.60

0.28

1930

143.0

74.38

20.22

0.27

3.39

1940

140.0

65.69

21.64

0.33

3.43

1950

108.0

42.00

14.63

0.35

4.51

1960

56.0

26.45

8.12

0.31

3.64

1970

33.2

18.11

5.45

0.30

2.77

1980

21.3

10.42

2.46

0.24

4.42

1990

16.0

7.25

0.77

0.11

11.36

2000

8.1

4.69

0.74

0.16

4.61

2005

6.6

3.94

0.57

0.15

4.64

Notes: For Polish data, see Tables 4.3–4.5. The other data are the results of the author’s computations based on Tables 4.3–4.5.

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AUSTERITIES AND ASPIRATIONS

Appendix: Table IIIb Indicators of mortality in Czechoslovakia and Western Europe, 1900–2005

YEAR

CZECHOSL. DATA (1)

WESTERN EUROPEAN MEAN (2)

WESTERN EUROPEAN STANDARD DEVIATION (3)

STANDARDWESTERN EUROPEAN IZED CZECHOCOEFFICIENT SL. DATA OF VARIATION = (1–2)/3

Male life expectancy at birth (year) 1900

45.59

3.64

0.08

1910

42.8

49.76

4.42

0.09

–1.58

1920

47.7

53.61

3.84

0.07

–1.54

1930

53.7

57.72

3.38

0.06

–1.19

1940

56.5

61.94

3.67

0.06

–1.48

1950

62.2

65.21

3.32

0.05

–0.91

1960

67.6

68.40

2.05

0.03

–0.39

1970

66.1

69.09

1.74

0.03

–1.72

1980

66.8

70.78

1.28

0.02

–3.11

1990

67.5

73.06

1.09

0.01

–5.10

2000CzR

71.6

75.45

1.00

0.01

–3.85

2000Sl

69.1

75.45

1.00

0.01

–6.35

2005CzR

72.9

76.97

0.98

0.01

–4.17

2005Sl

70.1

76.97

0.98

0.01

–7.03

Female life expectancy at birth (year) 1900

Tomka 00 könyv.indb 314

48.23

3.87

0.08

1910

45.9

52.29

4.83

0.09

–1.32

1920

50.8

56.51

3.25

0.06

–1.76

1930

57.5

60.77

2.86

0.05

–1.14

1940

60.5

64.06

3.80

0.06

–0.94

1950

67.0

69.32

2.31

0.03

–1.00

1960

73.4

73.58

1.27

0.02

–0.14

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315

 Appendix

YEAR

CZECHOSL. DATA (1)

WESTERN EUROPEAN MEAN (2)

WESTERN EUROPEAN STANDARD DEVIATION (3)

1970

73.0

75.30

1.29

0.02

–1.78

1980

73.9

77.52

1.25

0.02

–2.89

1990

76.0

79.52

1.06

0.01

–3.32

2000CzR

78.4

81.14

1.12

0.01

–2.44

2000Sl

77.4

81.14

1.12

0.01

–3.34

2005CzR

79.1

82.24

1.05

0.01

–2.99

2005Sl

77.9

82.24

1.05

0.01

–4.14

STANDARDWESTERN EUROPEAN IZED CZECHOCOEFFICIENT SL. DATA OF VARIATION = (1–2)/3

Infant mortality (per mill) 1900

154.23

41.16

0.27

1910

116.23

32.18

0.28

1920

139

98.85

27.60

0.28

1.46

1930

135

74.38

20.22

0.27

2.99

1940

98.8

65.69

21.64

0.33

1.53

1950

77.7

42.00

14.63

0.35

2.44

1960

23.5

26.45

8.12

0.31

–0.36

1970

22.1

18.11

5.45

0.30

0.73

1980

18.4

10.42

2.46

0.24

3.24

1990

11.3

7.25

0.77

0.11

5.26

2000CzR

5.6

4.69

0.74

0.16

1.23

2000Sl

8.6

4.69

0.74

0.16

5.28

2005CzR

4.4

3.94

0.57

0.15

0.81

2005Sl

8.4

3.94

0.57

0.15

7.78

Notes: CzR: Czech Republic; Sl: Slovakia; for Czechoslovakian data, see Tables 4.3–4.5. The other data are the results of the author’s computations based on Tables 4.3–4.5.

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AUSTERITIES AND ASPIRATIONS

Appendix: Table IIIc Indicators of mortality in Hungary and Western Europe, 1900–2005 YEAR

HUNGARIAN DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED HUNGARIAN DATA = (A–B)/C

Male life expectancy at birth (year) 1900

36.6

45.59

3.64

0.08

–2.47

1910

39.1

49.76

4.42

0.09

–2.41

1920

41.0

53.61

3.84

0.07

–3.28

1930

48.7

57.72

3.38

0.06

–2.67

1940

55.0

61.94

3.67

0.06

–1.89

1950

59.9

65.21

3.32

0.05

–1.60

1960

65.9

68.40

2.05

0.03

–1.22

1970

66.3

69.09

1.74

0.03

–1.60

1980

65.5

70.78

1.28

0.02

–4.13

1990

65.1

73.06

1.09

0.01

–7.30

2000

67.4

75.45

1.00

0.01

–8.05

2005

68.6

76.97

0.98

0.01

–8.57

Female life expectancy at birth (year)

Tomka 00 könyv.indb 316

1900

38.2

48.23

3.87

0.08

–2.59

1910

40.5

52.29

4.83

0.09

–2.44

1920

43.1

56.51

3.25

0.06

–4.13

1930

51.8

60.77

2.86

0.05

–3.14

1940

58.2

64.06

3.80

0.06

–1.54

1950

64.2

69.32

2.31

0.03

–2.22

1960

70.1

73.58

1.27

0.02

–2.74

1970

72.1

75.30

1.29

0.02

–2.48

2020. 07. 17. 14:54:43

317

 Appendix YEAR

HUNGARIAN DATA (A)

WESTERN EUROPEAN MEAN (B)

WESTERN EUROPEAN STANDARD DEVIATION (C)

WESTERN EUROPEAN COEFFICIENT OF VARIATION

STANDARDIZED HUNGARIAN DATA = (A–B)/C

1980

72.7

77.52

1.25

0.02

–3.86

1990

73.7

79.52

1.06

0.01

–5.49

2000

75.9

81.14

1.12

0.01

–4.68

2005

76.9

82.24

1.05

0.01

–5.10

Infant mortality (per mill) 1900

223.0

154.23

41.16

0.27

1.67

1910

195.0

116.23

32.18

0.28

2.45

1920

192.7

98.85

27.60

0.28

3.40

1930

152.5

74.38

20.22

0.27

3.86

1940

130.1

65.69

21.64

0.33

2.98

1950

85.7

42.00

14.63

0.35

2.99

1960

47.6

26.45

8.12

0.31

2.60

1970

35.9

18.11

5.45

0.30

3.26

1980

23.2

10.42

2.46

0.24

5.20

1990

14.8

7.25

0.77

0.11

9.81

2000

9.2

4.69

0.74

0.16

6.09

2005

7.2

3.94

0.57

0.15

5.69

Notes: For Hungarian data, see Tables 4.3–4.5. The other data are the results of the author’s own computations based on Tables 4.3–4.5.

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Notes

FOREWORD 1

 Robert Lucas, “On the Mechanics of Economic Development,” Journal of Monetary Economics 22, no. 1 (1988): 5. CHAPTER 1

1

 In this study, the term “economic output” has been used instead of “economic growth” in several cases for stylistic reasons, even though the two concepts are obviously not completely synonymous since the latter signifies a change in the former. 2  Angus Maddison, “Political Arithmeticians and Historical Demographers: The Pioneers of Macro-Measurement,” in Contours of the World Economy, 1–2030AD, edited by Angus Maddison (Oxford: Oxford University Press, 2007), 249–93. 3  Daniel Speich Chassé, Die Erfindung des Bruttosozialprodukts: Globale Ungleichheit in der Wissensgeschichte der Ökonomie (Göttingen: Vandenhoeck and Ruprecht, 2013), 11–39. 4  Simon Kuznets, “National Income,” in Encyclopaedia of the Social Sciences, vol. 11, edited by Edwin R. A. Seligman and Alvin Johnson (New York: Macmillan, 1933), 205–24. 5  J. E. Meade and Richard Stone, “The Construction of Tables of National Income, Expenditure, Savings and Investment,” Economic Journal 51, nos. 202–203 (1941): 216–33; Chassé, Die Erfindung des Bruttosozialprodukts, 99–103. 6  Colin Clark, The Present Level of Economic Welfare in Different Countries, in The Conditions of Economic Progress (London: Macmillan, 1940), 29–58. 7  Chassé, Die Erfindung des Bruttosozialprodukts, 96–98. 8  Simon Kuznets, “Modern Economic Growth: Findings and Reflections,” The American Economic Review 63, no. 3 (1973): 247–58. 9  Alan Heston and Robert Summers, “What Can Be Learned from Successive ICP Benchmark Estimates?,” in Explaining Economic Growth: Essays in Honour of Angus Maddison, edited by Adam Szirmai, Bart van Ark, and Dirk Pilat (Amsterdam: North-Holland, 1993), 353–73.

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Chapter 1: Notes: 10

10

 Maddison’s selected studies were published as Angus Maddison, Explaining the Economic Performance of Nations: Essays in Time and Space (Aldershot: Edward Elgar, 1995). Other important works include: Maddison, Phases of Capitalist Development (Oxford: Oxford University Press, 1982); Maddison, The World Economy in the 20th Century (Paris: OECD, 1989); Maddison, Dynamic Forces in Capitalist Development: A Long-Run Comparative View (Oxford: Oxford University Press, 1991); Maddison, The World Economy: A Millennial Perspective (Paris: OECD, 2001). 11  Angus Maddison, Monitoring the World Economy, 1820–1992 (Paris: OECD, 1995); Maddison, The World Economy: Historical Statistics (Paris: OECD, 2003). 12  See the institute’s homepage at: http://www.rug.nl/ggdc/. Accessed July 10, 2017. 13  Paul Bairoch, “Europe’s Gross National Product, 1800–1975,” Journal of European Economic History 5 (1976): 273–340; Paul Bairoch, “The Main Trends in National Economic Disparities since the Industrial Revolution,” in Disparities in Economic Development since the Industrial Revolution, edited by Paul Bairoch and Maurice Lévy-Leboyer (London: Macmillan Press, 1981), 3–17. 14  See, for example, the following critique: Michael Kaser, “Economic Continuities in Albania’s Turbulent History,” Europe-Asia Studies 53, no. 4 (2001): 627–37. 15  Andrew C. Janos, East Central Europe in the Modern World: The Politics of the Borderland from Pre- to Postcommunism (Stanford, CA: Stanford University Press, 2000), 348–49. 16  David F. Good and Tongshu Ma, “The Economic Growth of Central and Eastern Europe in Comparative Perspective, 1870–1989,” European Review of Economic History 2 (1999): 103–37. For the aforementioned authors’ work, see Doreen Warriner, Economics of Peasant Farming (London: Frank Cass, 1964); M. C. Kaser and E. A. Radice, eds., The Economic History of Eastern Europe, 1919–1975, vol. 1, Economic Structure and Performance Between the Two Wars (Oxford: Clarendon Press, 1985); D. H. Aldcroft and S. Morehead, Economic Change in Eastern Europe since 1918 (Hants: Edward Elgar, 1995). 17  Thad P. Alton et al., Economic Growth in Eastern Europe: 1965, 1970, and 1975– 1983 (New York: L. W. International Financial Research Inc., 1984); Frederic L. Pryor, A Guidebook to the Comparative Study of Economic Systems (Englewood Cliffs, NJ: Prentice-Hall, 1985); Paul Marer et al., eds., Historically Planned Economies: A Guide to the Data (Washington, DC: The World Bank, 1992). 18  Good and Ma, “The Economic Growth of Central and Eastern Europe,” 104; Maddison, The World Economy. 19  For example, Iván T. Berend and György Ránki, Közép-Kelet-Európa gazdasági fejlődése a 19–20. században [Economic development in East-Central Europe in the nineteenth and twentieth centuries] (Budapest: KJK, 1969). 20  Bairoch, “Europe’s Gross National Product,” 273–340. 21  Iván T. Berend, Central and Eastern Europe, 1944–1993: Detour from the Periphery to the Periphery (Cambridge: Cambridge University Press, 1996); Ivan T. Berend, An Economic History of Twentieth-Century Europe (Cambridge: Cambridge University Press, 2006). 22  Iván T. Berend, “Past Convergences within Europe: Core–Periphery Diversity in Modern Economic Development,” in Economic Convergence and Divergence in

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Chapter 1: Notes: 23

321

Europe, edited by Gertrude Tumpel-Gugerell and Peter Mooslechner (Cheltenham: Edward Elgar, 2003), 9–23; Berend, An Economic History. 23  Eva Ehrlich, “Contest Between Countries: 1937–1986,” Soviet Studies 43, no. 5 (1991): 875–96; Éva Ehrlich, Országok versenye, 1937–1986 [Contest between countries, 1937–1986] (Budapest: KJK, 1991); Éva Ehrlich, “Economic Growth in Eastern Central Europe after World War II,” in Explaining Economic Growth: Essays in Honour of Angus Maddison, edited by Adam Szirmai, Bart van Ark, and Dirk Pilat (Amsterdam: North-Holland, 1993), 301–25. 24  Ignác Romsics, Múltról a mának [On the past for the present] (Budapest: Osiris, 2004), 190. 25  For heavily ideological accounts, see György Simon, Gazdasági növekedés a két világrendszerben [Economic growth in the two world systems] (Budapest: Kossuth, 1986); Ferencné Nyitrai, Népgazdaságunk fejlettsége—nemzetközi tükörben [The development of our people’s economy—an international perspective] (Budapest: KSH, 1979). 26  For some examples concerning economic convergences, see Zbigniew Matkowski and Mariusz Próchniak, “Economic Convergence in the EU Accession Countries,” in Composite Indicators of Business Activity for Macroeconomic Analysis, edited by Zbigniew Matkowski (Warsaw: Warsaw School of Economics, 2004), 405–25; Zbigniew Matkowski and Mariusz Próchniak, “Economic Convergence Between the CEE-8 and the European Union,” Eastern European Economics 45, no. 1 (2007): 59–76; Gábor Oblath and Béla Szörfi, “Makrogazdasági konvergencia az EU új tagországaiban” [Macroeconomic convergence in the EU’s new member states], in Társadalmi riport 2008 [Social report 2008], edited by Tamás Kolosi and István György Tóth (Budapest: TÁRKI, 2008), 204–25; Ryszard Rapacki and Mariusz Próchniak, “Real Beta and Sigma Convergence in 27 Transition Countries, 1990–2005,” Post-Communist Economies 21, no. 3 (2009): 307–26. 27  Cf. Norman J. G. Pounds, “Standards of Living,” in Encyclopedia of European Social History, vol. 5, edited by Peter Stearns (Detroit: Charles Scribner’s Son, 2001), 451–60; Angus Maddison, “Economic Growth and Standards of Living in the Twentieth Century,” Groningen Growth and Development Centre, Research Memorandum 576 (GD-15) (Groningen: Groningen Growth and Development Centre, 1994), 18; Richard A. Easterlin, “The Worldwide Standard of Living since 1800,” Journal of Economic Perspectives 14, no. 1 (2000): 7–26; Wolfram Fischer, “Nord und Süd—Ost und West: Wirtschaftssysteme und Lebensstandard in Europa,” in Lebensstandard und Wirtschaftssysteme, edited by Wolfram Fischer (Frankfurt am Main: Fritz Knapp Verlag, 1995), 213–57; Peter von der Lippe, “Die Messung des Lebensstandards,” in Lebensstandard und Wirtschaftssysteme, edited by Wolfram Fischer (Frankfurt am Main: Fritz Knapp Verlag, 1995), 57–102. For historical changes in material living standards, see A. S. Deaton, “The Structure of Demand in Europe 1920–1970,” in The Fontana Economic History of Europe: The Twentieth Century, part one, edited by Carlo M. Cipolla (Glasgow: Collins/Fontana Books, 1976), 92–94; R. Floud, “Standards of Living and Industrialization, in New Directions in Economic and Social History, edited by Anne Digby and Charles Feinstein (Chicago: Lyceum Books, 1989), 117–29; Henri Baudet and Maria Bogucka, eds., Types of Consumption, Traditional and

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Chapter 1: Notes: 28

Modern (Budapest: Akadémiai Kiadó, 1982). For measurements of living standards that employ anthropometric methods, see John Komlos, Nutrition and Economic Development in the Eighteenth-Century Habsburg Monarchy: An Anthropometric History (Princeton: Princeton University Press, 1989); John Komlos and Peter Kriwy, “The Biological Standard of Living in the Two Germanies,” German Economic Review 4, no. 4. (2003): 459–73; Frank Trentmann, ed., The Making of the Consumer: Knowledge, Power and Identity in the Modern World (Oxford: Berg, 2006); Herman de Jong, “Living Standards in a Modernizing World—A LongRun Perspective on Material Wellbeing and Human Development,” in Global Handbook of Quality of Life: Exploration of Well-Being of Nations and Continents, edited by Wolfgang Glatzer, Laura Camfield, Valerie Moller, and Mariano Rojas (Heidelberg and New York: Springer, 2015), 45–74; Frank Trentmann, Empire of Things: How We Became a World of Consumers, from the Fifteenth Century to the Twenty-First (London: Allen Lane, 2016). 28  Important contributions to the so-called Hobsbawm–Hartwell debate include: Eric J. Hobsbawm, “The British Standard of Living, 1790–1850,” Economic History Review 10, no. 1 (1957): 46–68; R. M. Hartwell, “Interpretations of the Industrial Revolution in England,” Journal of Economic History 19, no. 2 (1959): 229–49; R. M. Hartwell, “The Rising Standard of Living in England, 1800–1850,” Economic History Review 13, no. 3 (1961): 397–416; Eric J. Hobsbawm, “The Standard of Living during the Industrial Revolution: A Discussion,” Economic History Review 16, no. 1 (1963): 119–34. 29  For historical investigations of consumption, see Deaton, “The Structure of Demand,” 92–94; Victoria de Grazia, “History of Consumption,” in International Encyclopedia of the Social and Behavioral Sciences, vol. 4, edited by Neil J. Smelser and Paul B. Baltes (Amsterdam: Elsevier, 2001), 2683; Victoria de Grazia and Ellen Furlough, eds., The Sex of Things: Gender and Consumption in Historical Perspective (Berkeley: University of California Press, 1996); Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka, eds., Europäische Konsumgeschichte: Zur Gesellschafts- und Kulturgeschichte des Konsums (18. bis 20. Jahrhundert) (Frankfurt: Campus Verlag, 1997); Baudet and Bogucka, Types of Consumption; most recently: Peter N. Stearns, Consumerism in World History: The Global Transformation of Desire (London and New York: Routledge, 2001). 30  K aj Ilmonen, “Sociology of Consumption,” in International Encyclopedia of the Social and Behavioral Sciences, edited by Neil J. Smelser and Paul B. Baltes (Amsterdam: Elsevier, 2001), 2687. 31  In the Hungarian context, Károly Keleti’s work must be mentioned here: Károly Keleti, Magyarország népességének élelmezési statistikája physiologiai alapon [Nutritional statistics for the Hungarian populace, based on physiological data] (Budapest: Athenaeum, 1887). 32  Georg Simmel, Philosophie des Geldes, 5th ed. (Munich and Leipzig: Duncker and Humblot, 1930). 33  Thorstein Veblen, The Theory of the Leisure Class: An Economic Study of Institutions (London: Allen and Unwin, 1926). 34  Gábor Gyáni credits the historians of the Annales school with having played a direct founding role in the development of the history of consumption. See

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Chapter 1: Notes: 35

323

Gábor Gyáni, “A fogyasztás forradalmától a fogyasztói társadalomig” [From consumer revolution to consumer society], Múltunk 53, no. 3 (2008): 4. The most significant work on this subject produced in the Annales circle is Fernand Braudel’s Civilization and Capitalism, 15th–18th Century, vol. 1, The Structures of Everyday Life (Berkeley: University of California Press, 1982). 35  John H. Goldthorpe et al., The Affluent Worker in the Class Structure (Cambridge: Cambridge University Press, 1969). 36  David Riesman, The Lonely Crowd (New Haven: Yale University Press, 1961). 37  Walter Benjamin, Gesammelte Schriften (Frankfurt am Main: Suhrkamp, 1972); Max Horkheimer and Theodor W. Adorno, Dialektik und Aufklärung (Munich: Fischer Taschenbuch Verlag, 1971), originally published in 1944. 38  See Gyáni, “A fogyasztás forradalmától a fogyasztói társadalomig,” 5. 39  Pierre Bourdieu, Distinction: A Social Critique of Judgement and Taste (Cambridge, MA: Harvard University Press, 1984). Originally published in French as: Pierre Bourdieu, La distinction: critique social du jugement (Paris: Minuit, 1979). 40  Neil McKendrick, John Brewer, and J. H. Plumb, The Birth of a Consumer Society: The Commercialization of Eighteenth-Century England (London: Europa Publications, 1982). 41  Colin Campbell, The Romantic Ethic and the Spirit of Modern Consumerism (Oxford: Blackwell, 1987). 42  Jean Baudrillard, Selected Writings (Cambridge: Polity Press, 1988). 43  For a recent history of consumption, see Heinz-Gerhard Haupt and Claudius Torp, eds., Die Konsumgesellschaft in Deutschland, 1890–1990 (Frankfurt am Main: Campus, 2009). 44  de Grazia, History of Consumption, 2683. 45  McKendrick, Brewer, and Plumb, The Birth of a Consumer Society; Deaton, “The Structure of Demand,” 92–94; de Grazia, History of Consumption, 2683; de Grazia and Furlough, The Sex of Things; Siegrist, Kaelble, and Kocka, eds., Europäische Konsumgeschichte; Baudet and Bogucka, Types of Consumption; Stearns, Consumerism in World History; Haupt and Torp, eds., Die Konsumgesellschaft in Deutschland. 46  Colin Campbell, “Consumption: The New Wave of Research in the Humanities and Social Sciences,” in To Have Possessions: A Handbook of Ownership and Property, edited by Floyd W. Rudmin (Corte Madera, CA: Select Press, 1991), 57. 47  For surveys of recent trends in consumption research, see Ilmonen, “Sociology of Consumption,” 2687; Frank Trentmann, “Introduction,” in The Oxford Handbook of the History of Consumption, edited by Frank Trentmann (Oxford: Oxford University Press, 2012), 1–19; Frank Trentmann, “Beyond Consumerism: New Historical Perspectives on Consumption,” Journal of Contemporary History 39, no. 3 (2004): 373–401; Paul Lerner, “An All-Consuming History? Recent Works on Consumer Culture in Modern Germany,” Central European History 42 (2009): 509–43. 48  Gyáni, “A fogyasztás forradalmától a fogyasztói társadalomig,” 13. 49  For Hungarian examples, see Zsombor Bódy, “Polgárok és munkások 1929ben: Adalékok a fogyasztás történetéhez” [Citizens and workers in 1929: Contributions to the history of consumption], Korall 3, no. 10 (2002): 187–99; Zsombor Bódy, “Szervezett fogyasztás: Fogyasztási szövetkezetek Budapesten

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Chapter 1: Notes: 50 

a 20. század első évtizedeiben” [Organized consumption: Consumer associations in Budapest in the first decades of the twentieth century], in A fogyasztás társadalomtörténete [A social history of consumption], edited by József Hudi (Budapest–Pápa: Hajnal István Kör–Pápai Református Gyűjtemények, 2007), 261–66; Zsombor Bódy, “A fogyasztás igénye: Rétegspecifikus fogyasztási minták és általános fogyasztási várakozások a két világháború közötti Budapesten” [The demand for consumption: Class-specific consumption models and general consumer expectations in interwar Budapest], in Atelier-iskola: Tanulmányok Granasztói György tiszteletére [The Atelier school: Studies in honor of György Granasztói], edited by Gábor Czoch, Judit Klement, and Gábor Sonkoly (Budapest: Atelier, 2008), 371–86; Gábor Gyáni, “Középosztályi fogyasztási kultúra és az áruház” [Middle-class consumer culture and the department store], Budapesti Negyed 5, nos. 2–3 (1997): 101–27; Gábor Gyáni, Budapest—túl jón s rosszon: A nagyvárosi múlt mint tapasztalat [Budapest—Beyond good and evil: The capital city’s past as it was experienced] (Budapest: Napvilág, 2008), 134–60; Gábor Gyáni, Hétköznapi élet Horthy Miklós korában [Everyday life in the Horthy era] (Budapest: Corvina, 2006). 50   Miklós Vörös, “Életmód, ideológia, háztartás: A fogyasztáskutatás politikuma az államszocializmus korszakában” [Lifestyle, ideology, and households: The politics of consumption research in the age of state socialism], Replika 26 (1997): 17–30. 51  Ilona Kovács, “Nemzetközi tendenciák a személyes fogyasztás alakulásában” [International trends in the evolution of personal consumption], Statisztikai Szemle 62, no. 7 (1984): 702–23; Ilona Kovács, “Fogyasztási szerkezetek nemzetközi összehasonlításban” [Consumption patterns in international comparison], Statisztikai Szemle 65, no. 10 (1987): 975–92. 52  Tibor Valuch, A  lódentől a  miniszoknyáig: A  XX. század második felének ma­g yarországi öltözködéstörténete [From loden to miniskirts: Hungarian fashion history in the second half of the 20th century] (Budapest: Corvina and 1956os Intézet, 2004); Tibor Valuch, Magyarország társadalomtörténete a XX. század második felében [The social history of Hungary in the second half of the 20th century] (Budapest: Osiris, 2001); Tibor Valuch, Metszetek: Válogatott tanulmányok [Cross-sections: Selected studies] (Budapest: Argumentum and 1956-os Intézet, 2006), 202–67. 53  Tomas Cvrcek, “Seasonal Anthropometric Cycles in a Command Economy: The Case of Czechoslovakia, 1946–1966,” Economics and Human Biology 4 (2006): 317–41; Tomas Cvrcek, “Inequality and Living Standards under Early Communism: Anthropometric Evidence from Czechoslovakia, 1946–1966,” Explorations in Economic History 46, no. 4 (2009): 436–49. 54  Ina Merkel, Utopie und Bedürfnis: Die Geschichte der Konsumkultur in der DDR (Cologne: Böhlau, 1999); Ina Merkel, “Consumer Culture in the GDR, or How the Struggle for Antimodernity Was Lost on the Battleground of Consumer Culture,” in Getting and Spending: European and American Consumer Societies in the Twentieth Century, edited by Susan Strasser, Charles McGovern, and Matthias Judt (New York: Cambridge University Press, 1998), 167–85; Jonathan R. Zatlin, “Consuming Ideology: Socialist Consumerism and the Intershops, 1970–1989,” in Arbeiter in der SBZ-DDR, eds. Peter Hübner and Klaus Tenfelde (Essen: Klar-

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text Verlag, 1999), 555–72; Susan E. Reid and David Crowley, “Style and Socialism: Modernity and Material Culture in Post-War Eastern Europe,” in Style and Socialism: Modernity and Material Culture in Post-War Eastern Europe, edited by Susan E. Reid and David Crowley (Oxford: Berg, 2000), 1–24; Olga Shevchenko, “In Case of Fire Emergency: Consumption, Security and the Meaning of Durables in a Transforming Society,” Journal of Consumer Culture 2, no. 2 (2002): 147–70; David F. Crew, ed., Consuming Germany in the Cold War: Consumption and National Identity in East and West Germany, 1949–1989 (Oxford: Berg, 2003); Judd Stitziel, Fashioning Socialism: Clothing, Politics and Consumer Culture in East Germany (Oxford: Berg, 2005); Mark Landsman, Dictatorship and Demand: The Politics of Consumerism in East Germany (Cambridge, MA: Harvard University Press, 2005); Ina Merkel, “Im Widerspruch zum Ideal: Konsumpolitik in der DDR,” in Die Konsumgesellschaft in Deutschland, edited by Heinz-Gerhard Haupt and Claudius Torp (Frankfurt am Main: Campus, 2009), 289–304. 55  Siegrist, Kaelble, and Kocka, eds., Europäische Konsumgeschichte. More recently: Stearns, Consumerism in World History. 56  Heinz-Herbert Noll, “Wohlstand, Lebensqualität und Wohlbefinden in den Ländern der Europäischen Union,” in Die westeuropäischen Gesellschaften im Vergleich, edited by Stefan Hradil and Stefan Immerfall (Opladen: Leske und Budrich, 1997), 440. 57  Paul Allin and David J. Hand, The Wellbeing of Nations: Meaning, Motive and Measurement (Chichester: John Wiley and Sons, 2014), 35–82; Peter Y. Chen and Cary L. Cooper, eds., Work and Wellbeing: A Complete Reference Guide, vol. 3 (Chichester: John Wiley and Sons, 2014). 58  Avner Offer, “Economic Welfare Measurements and Human Well-Being,” in The Economic Future in Historical Perspective, eds. Paul A. David and Mark Thomas (Oxford: Oxford University Press, 2003), 372–83; Avner Offer, “Introduction,” in In Pursuit of the Quality of Life, edited by Avner Offer (Oxford: Oxford University Press, 1996), 1–17. Most recently: Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi, “Report by the Commission on the Measurement of Economic Performance and Social Progress (2009),” accessed and downloaded November 10, 2009, http://www.stiglitz-sen-fitoussi.fr. 59  William D. Nordhaus and James Tobin, “Is Growth Obsolete?,” in The Measurement of Economic and Social Performance, edited by Milton Moss (New York: NBER, 1973), 509–564; Clifford Cobb, Ted Halstead, and Jonathan Row, The Genuine Progress Indicator: Summary of Data and Methodology (San Francisco: Redefining Progress, 1995); Robert Eisner, “Extended Accounts for National Income and Product,” Journal of Economic Literature 26 (1988): 1611–18; Xenophon Zolotas, Economic Growth and Declining Social Welfare (Athens: Bank of Greece, 1981). 60  Amartya Sen, “Mortality as an Indicator of Economic Success and Failure,” The Economic Journal 108 (1998): 1–25; Amartya Sen, The Standard of Living (Cambridge: Cambridge University Press, 1987); Noll, “Wohlstand, Lebensqualität,” 440. 61  Stiglitz, Sen, and Fitoussi, “Report by the Commission,” 145–56. 62  For a survey of such studies: Ruut Veenhoven, “Quality-of-Life Research,” in 21st Century Sociology: A Reference Handbook, vol. 2, edited by Clifton D. Bryant and Dennis L. Peck (London: Sage, 2007), 54–62.

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 Wladyslaw Adamski, Katarzyna Pelczynska-Nalecz, and Wojciech Zabowrowski, “System of Social Indicators, Social Reporting and Polish Society Transformation: State of the Art Report,” EuReporting Working Paper no. 2 (Warsaw: Polish Academy of Sciences, Institute of Philosophy and Sociology, 1999); Rudolf Andorka and István Harcsa, “Modernization in Hungary in the Long and Short Run Measured by Social Indicators,” Sociological Working Papers no. 1 (Budapest: University of Economic Sciences, 1988). 64  Bolesław Domanski, “Public Attitudes to Local Industrial Development and the Quality of Life in Poland,” Geoforum 21, no. 2. (1990): 221–27; Elemér Hankiss and Róbert Manchin, “Szempontok az élet ‘minőségének’ szociológiai vizsgálatához” [Viewpoints on the sociological analysis of the quality of life], Valóság 19, no. 1 (1976): 20–34; Elemér Hankiss, Róbert Manchin, and László Füstös, Életminőség modellek, szempontok a társadalmi tervezés információs bázisának kiépítéséhez [Quality-of-life models and viewpoints on the configuration of databases for social planning] (Budapest: Tömegkommunikációs Kutatóközpont, 1978). 65  György Lengyel and Rita Hegedüs, “A szubjektív jólét objektív tényezői nemzetközi összehasonlításban” [The objective factors of subjective well-being: An international comparison], in Indikátorok és elemzések [Indicators and analyses], edited by György Lengyel (Budapest: BKÁE, 2002), 87–103; Ágnes Utasi, ed., Az életminőség feltételei [The conditions of the quality of life] (Budapest: MTA Politikai Tudományok Intézete, 2007). 66  For these indicators, see also: Fischer, “Nord und Süd—Ost und West,” 218, 221–22; UNDP, “Human Development Report, 1998” (New York: Human Development Report Office, 1998). 67  Examples of the rich literature of comparison include: Adam Przeworski and Henry Teune, The Logic of Comparative Social Inquiry (New York: Wiley, 1970); Charles Tilly, Big Structures, Large Processes, Huge Comparisons (New York: Russel Sage, 1984); Mattei Dogan and Ali Kazancigil, eds., Comparing Nations: Concepts, Strategies, Substance (Oxford: Blackwell, 1994). For historical approaches: Hartmut Kaelble, Der historische Vergleich (Frankfurt and New York: Campus, 1999); Heinz-Gerhard Haupt and Jürgen Kocka, eds., Geschichte und Vergleich: Ansätze und Ergebnisse international vergleichender Geschichtsschreibung (Frankfurt and New York: Campus, 1996); Heinz-Gerhard Haupt, “Comparative History,” in International Encyclopedia of the Social and Behavioral Sciences, edited by Neil J. Smelser and Paul B. Baltes (Amsterdam: Elsevier, 2001), 2397–403. In Hungarian: György Ránki, “Az összehasonlító történetírás problémái” [Problems of comparative historiography], in Mozgásterek és kényszerpályák [Forced marches and freedom to maneuver] (Budapest: Magvető, 1983), 173–202. 68  For comparative methodologies, see Else Oyen, ed., Comparative Methodology: Theory and Practice in International Social Research (London: Sage, 1990); Larry J. Griffin, “Comparative-Historical Analysis,” in Encyclopedia of Sociology, vol. 1, edited by Edgar F. Borgatta and Marie L. Borgatta (New York: Macmillan, 1992), 263–71. 69  For types of historical comparison: Kaelble, Der historische Vergleich, 25–36; A. A. van den Braembussche, “Historical Explanation and Comparative Method: Towards a Theory of the History of Society,” History and Theory 28 (1989): 1–24;

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Theda Skocpol and Margaret Somers, “The Uses of Comparative History,” Comparative Studies in Society and History 22 (1980): 174–97; Tilly, Big Structures, 82–83. 70  For asymmetrical comparison, see Jürgen Kocka, “Asymmetrical Historical Comparison: The Case of the German Sonderweg,” History and Theory 38 (1999): 40–50. 71  Bairoch, “Europe’s Gross National Product”; Bairoch, The Main Trends, 3–17; Brian R. Mitchell, European Historical Statistics, 1750–1975 (London: Macmillan, 1981); Maddison, The World Economy in the 20th Century; Maddison, Dynamic Forces in Capitalist Development; Maddison, Monitoring the World Economy; Maddison, The World Economy: Historical Statistics. CHAPTER 2 1

 Adam Szirmai, The Dynamics of Socio-Economic Development (Cambridge: Cambridge University Press, 2005), 7–16, 68–116; J. L. Anderson, Explaining LongTerm Economic Change (London: Macmillan, 1991), 8–17. 2  Reinhard Spree, “Wachstum,” in Moderne Wirtschaftsgeschichte, edited by Gerold Ambrosius, Dietmar Petzina, and Werner Plumpe (Munich: Oldenbourg, 1996), 137. 3  E. Wayne Nafzinger, Economic Development (Cambridge: Cambridge University Press, 2006), 15. 4  The following observations, in accordance with the goals of this analysis, refer to calculations of economic output for national economies, though they are largely valid for discussions of other units such as regions, branches of industry. 5  Thus, for example, in Ireland, which was a large importer of capital in the 1990s, the GDP substantially exceeded the GNP. 6  My arguments in the following text will generally use gross domestic product, though, unless I specifically indicate, my observations will refer to gross national product. 7  For a survey of the various methods, see Economic Commission for Europe, “Economic Survey of Europe, 2000” (Geneva and New York: UN Economic Commission for Europe, 2000), 172. 8  Maddison, Monitoring the World Economy, 162. 9  Peter Havlik, “East–West GDP Comparisons: Problems, Methods and Result,” Forschungsberichte, no. 174 (Vienna: WIIW, 1991), 11. 10  Maddison, The World Economy: Historical Statistics, 228. 11  See, for example: Ferenc Jánossy, A gazdasági fejlettség mérhetősége és új mérési módszere [The measurability of economic development and a new method of measurement] (Budapest: KJK, 1963), 119–211; Ehrlich, Országok versenye. 12  Economic Commission for Europe, “Economic Survey of Europe, 2000,” 173. 13  Éva Ehrlich, “An Examination of the Inter-Relation between Consumption Indicators Expressed in Physical Units and Per Capita National Income,” Czechoslovak Economic Papers (Prague) 7 (1966): 109–36; Ferenc Jánossy and Eva Ehrlich, “Structural Trends and Prospects in the European Economy: Economic Survey of Europe in 1969” (New York: United Nations, 1970); Ehrlich, Országok versenye, 88–151; Ehrlich, “Economic Growth,” 301–25.

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14

 Israel Borenstein, Comparative GDP Levels: Physical Indicators, Phase III (New York: UN Economic Commission for Europe, 1993). 15  Havlik, “East–West GDP Comparisons,” 36. 16  Elio Lancieri, “Dollar GNP Estimates for Central and Eastern Europe, 1970–90: A Survey and a Comparison with Western Countries,” World Development 21, no. 1 (1993): 162. 17  Paul Marer, “Alternative Estimates of the Dollar GNP and Growth Rates of the CMEA Countries, in East European Economies: Slow Growth in the 1980s” (Washington, DC: US Government Printing Office, 1985), 133–93; Paul Marer, Dollar GNPs of the USSR and Eastern Europe (Baltimore, MD: John Hopkins University Press, 1986). 18  CIA, Handbook of Economic Statistics, 1990 (Washington, DC: US Government Printing Office, 1990). 19  Thad P. Alton et al., “Economic Growth in Eastern Europe, 1965, 1970, and 1975–1980,” Occasional Papers, no. 65 (New York: L. W. International Financial Research, Inc., 1981); Thad P. Alton et al., “Economic Growth in Eastern Europe, 1975–1989: Research Project on National Income in East Central Europe,” Occasional Papers, no. 110 (New York: L. W. International Financial Research, Inc., 1990); Thad P. Alton et al., “Selected Charts of Economic Performance in Eastern Europe,” Occcasional Papers, no. 114 (New York: L. W. International Financial Research, Inc., 1990). 20  Havlik, “East–West GDP Comparisons,” 16. 21  Lancieri, “Dollar GNP Estimates for Central and Eastern Europe,” 167–68. 22  Robert Summers and Alan Heston, “A New Set of International Comparisons of Real Product and Price Levels: Estimates for 130 countries, 1950–1985,” Review of Income and Wealth 34, no. 1 (1988): 1–25; Maddison, Monitoring the World Economy, 96–255. 23  Summers and Heston, “A New Set of International Comparisons,” 1–25; Robert Summers and Alan Heston, “The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988,” Quarterly Journal of Economics 106, no. 2 (1991): 327–68. 24  Summers and Heston, “The Penn World Table,” 341. 25  Ibid., 342. 26  Economic Commission for Europe, Economic Survey of Europe, 2000, 174. 27  Maddison, Monitoring the World Economy, 164. 28  Maddison, The World Economy: Historical Statistics, 227–29. For a critique of this method, see Leandro Prados de la Escosura, “International Comparison of Real Product, 1820–1990: An Alternative Data Set,” Explorations in Economic History 37, no. 3 (2000): 1–41. 29  One of his early works: Angus Maddison, “A Comparison of Levels of GDP per Capita in Developed and Developing Countries, 1700–1980,” Journal of Economic History 43 (1983): 27–41. 30  E xamples which Maddison himself considers to be among the most important: Stephen N. Broadberry, “Forging Ahead, Falling Behind and Catching-up: A Sectoral Analysis of Anglo–American Productivity Differences, 1870–1990,” Research in Economic History 17 (1997): 1–37; Stephen N. Broadberry, “Anglo–

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German Productivity Differences, 1870–1990: A Sectoral Analysis,” European Review of Economic History 1 (1997): 247–67; Stephen N. Broadberry, “How Did the United States and Germany Overtake Britain? A Sectoral Analysis of Comparative Productivity Levels, 1870–1990,” Journal of Economic History 58, no. 2 (1998): 345–407. 31  Maddison, The World Economy in the 20th Century; Maddison, Dynamic Forces in Capitalist Development; Maddison, Monitoring the World Economy. 32  See, for example: Kaser, “Economic Continuities in Albania’s Turbulent History,” 629. 33  Bairoch, “Europe’s Gross National Product,” 307; Bairoch, The Main Trends, 3–17. 34  Marer et al., Historically Planned Economies; Havlik, “East–West GDP Comparisons,” 2. 35  For the classic description of problems with growth data in command economies, as exemplified by the Soviet Union, see Alec Nove, An Economic History of the U.S.S.R. (London: Penguin Books, 1969), 392–99. 36  Havlik, “East–West GDP Comparisons,” 2–4. See also: Marer et al., Historically Planned Economies, 3–4; Alton et al., Economic Growth; Pryor, A Guidebook. 37  Havlik, “East–West GDP Comparisons,” 3. 38  In the latter half of the twentieth century, the GDP in industrialized countries was generally 10 to 50 percent greater than the NMP (national income). 39  In 1989, for example, the GDP exceeded the NMP in East Germany by 35.7 percent, in Czechoslovakia by 22 percent, and in Hungary by 21 percent. Havlik, East-West GDP Comparisons, 3. 40  For these, see Marer, Dollar GNPs of the USSR; Alton et al., “Economic Growth in Eastern Europe, 1965, 1970, and 1975–1980.” 41  For a recent account of these processes, see Jaap Sleifer, Planning Ahead and Falling Behind: The East German Economy in Comparison with West Germany, 1936– 2002 (Berlin: Akademie Verlag, 2006), 31–37. 42  For this effect, see Bart van Ark, “Convergence and Divergence in the European Periphery: Productivity in Eastern and Southern Europe in Retrospect,” in Quantitative Aspects of Post-War European Economic Growth, eds. Bart van Ark and Nicholas Crafts (Cambridge: Cambridge University Press, 1996), 317. For problems with indices and other accounting methods, see Nafzinger, Economic Development, 25–52. 43  van Ark, “Convergence and Divergence in the European Periphery,” 275. 44  Ibid., 276. 45  Sleifer, Planning Ahead and Falling Behind, 43–47. 46  van Ark, “Convergence and Divergence in the European Periphery,” 277–79. 47  Ibid., 281. 48  This database can be found at: http://www.rug.nl/research/ggdc/. 49  See, for example, the studies in the following volumes: Nicholas Crafts and Gianni Toniolo, eds., Economic Growth in Europe since 1945 (Cambridge: Cambridge University Press, 1996); van Ark and Crafts, eds., Quantitative Aspects, 1–431. 50  There is an enormous body of literature on the economic history of this period. For some major contributions, see David S. Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to

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the Present (Cambridge: Cambridge University Press, 1969); Herman van der Wee, Prosperity and Upheaval: The World Economy, 1945–1980 (Berkeley: University of California Press, 1986); Maddison, The World Economy: Historical Statistics; Berend, An Economic History; Nicholas Crafts and Gianni Toniolo, “Aggregate Growth, 1950–2005,” in The Cambridge Economic History of Modern Europe, vol. 2, 1870 to the Present, edited by Stephen Broadberry and Kevin H. O’Rourke (Cambridge: Cambridge University Press, 2012), 296–332. 51  Niall Ferguson, “The Second World War as an Economic Disaster,” in Economic Disasters of the Twentieth Century, edited by Michael J. Oliver and Derek H. Aldcroft (Cheltenham: Edward Elgar Publishing, 2007), 112–19. 52  Maddison, Monitoring the World Economy, 70. 53  Maddison, The World Economy in the 20th Century, 60–69. 54  Maddison, Monitoring the World Economy, 59–87. 55  Charles H. Feinstein, Peter Temin, and Gianni Toniolo, The European Economy between the Wars (Oxford: Oxford University Press, 1997), 9. 56  Maddison, Dynamic Forces in Capitalist Development, 158–59; Angus Maddison, “Macroeconomic Accounts for European Countries,” in Quantitative Aspects of Post-War European Economic Growth, edited by Bart van Ark and Nicholas Crafts (Cambridge: Cambridge University Press, 1996), 59; Bart van Ark and Nicholas Crafts, “Catch-up, Convergence and the Sources of Post-War European Growth: Introduction and Overview,” in Quantitative Aspects of Post-War European Economic Growth, edited by Bart van Ark and Nicholas Crafts (Cambridge: Cambridge University Press, 1996), 5. 57  Feinstein, Temin, and Toniolo, The European Economy Between the Wars, 12. 58  Gerold Ambrosius and Hartmut Kaelble, “Einleitung: Gesellschaftliche und wirtschaftliche Folgen des Booms der 1950er und 1960er Jahre,” in Der Boom, 1948–1973: Gesellschaftliche und wirtschaftliche Folgen in der Bundesrepublik Deutschland und in Europa, edited by Hartmut Kaelble (Opladen: Westdeutscher Verlag, 1992), 7–32. For a more comprehensive account of growth in this period, see Crafts and Toniolo, “Aggregate Growth, 1950–2005,” 296–332. 59  Burkart Lutz, Der kurze Traum immerwährender Prosperität (Frankfurt and New York: Campus, 1984). 60  Economic Commission for Europe, “Economic Survey of Europe, 2000,” 160. 61  Barry Eichengreen, “Institutions and Economic Growth: Europe after World War II,” in Economic Growth in Europe since 1945, edited by Nicholas Crafts and Gianni Toniolo (Cambridge: Cambridge University Press, 1996), 66. 62  Maddison, Monitoring the World Economy, 83. 63  Nicholas Crafts and Gianni Toniolo, “Postwar Growth: An Overview,” in Economic Growth in Europe Since 1945, edited by Nicholas Crafts and Gianni Toniolo (Cambridge: Cambridge University Press, 1996), 7. 64  Maddison, Dynamic Forces in Capitalist Development, 65–66. 65  Nicholas F. R. Crafts, “The Great Boom, 1950–1973,” in Western Europe: Economic and Social Change since 1945, edited by Max-Stephan Schulze (London and New York: Longman, 1999), 43. 66  J. B. Madsen, “Technology Spillover through Trade and TFP Convergence: 135 Years of Evidence for the OECD countries,” Journal of International Economics 72

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(2007): 464–80; J. Eaton and S. Kortum, “International Technology Diffusion: Theory and Measurement,” International Economic Review 40, no. 3 (1999): 535–70. 67  Harm G. Schröter, Americanization of the European Economy: A Compact Survey of American Economic Influence in Europe since the 1880s (Berlin: Springer, 2005). 68  Crafts and Toniolo, “Postwar Growth: An Overview,” 21. 69  Moses Abramovitz, “Catching Up, Forging Ahead and Falling Behind,” Journal of Economic History 46 (1986): 385–406. 70  Béla Tomka, A Social History of Twentieth-Century Europe (London: Routledge, 2013), 109–15. 71  E ichengreen, “Institutions and Economic Growth,” 45–53; Gianni Toniolo, “Europe’s Golden Age, 1950–1973: Speculations from a Long-run Perspective,” Economic History Review 51, no. 2 (1998): 252–67. 72  Eichengreen, “Institutions and Economic Growth,” 38–94; Colin Crouch, Social Change in Western Europe (Oxford: Oxford University Press, 1999), 34–39. 73  Tomka, A Social History of Twentieth-Century Europe, 198–211. 74  Béla Tomka, A jóléti állami Magyarországon és Európában [The welfare state in Hungary and Europe] (Budapest: Corvina, 2008), 66–74. 75  Andrea Boltho, “Growth,” in The European Economy: Growth and Crisis, edited by Andrea Boltho (Oxford: Oxford University Press, 1982), 18–20; Moses Abramowitz and Paul A. David, “Convergence and Delayed Catch-Up: Productivity Leadership and the Waning of American Exceptionalism,” in The Mosaic of Economic Growth, edited by Ralph Landau, Timothy Taylor, and Gavin Wright (Stanford, CA: Stanford University Press, 1996), 21–62. 76  Crafts and Toniolo, “Aggregate Growth, 1950–2005,” 313–14. 77  Barry Eichengreen and Marc Uzan, “The Marshall Plan: Economic Effects and Implications for Eastern Europe and the Former USSR,” Economic Policy 14 (1992): 13–76. 78  Bradford J. DeLong and Barry Eichengreen, “The Marshall Plan: History’s Most Successful Structural Adjustment Programme,” in Postwar Economic Reconstruction and Lessons for the East Today, edited by Rudiger Dornbusch, Wilhelm Nölling, and Richard Layard (Cambridge, MA: MIT Press, 1993), 89–230. 79  Alan Milward, The Reconstruction of Western Europe, 1945–1951 (Berkeley: University of California Press, 1984). For the significance of the influence of international institutions, see Barry Eichengreen, “Mainsprings of Economic Recovery in Post-war Europe,” in Europe’s Post-war Recovery, edited by Barry Eichengreen (Cambridge: Cambridge University Press, 1995), 3–35. For the Marshall Plan, see Helge Berger and Albrecht Ritschl, “Germany and the Political Economy of the Marshall Plan, 1945–52: A Re-revisionist View,” in Europe’s Postwar Recovery, edited by Barry Eichengreen (Cambridge: Cambridge University Press, 1995), 199–245. 80  Maddison, Dynamic Forces in Capitalist Development, 75. 81  Harald Badinger, “Growth Effects of Economic Integration: Evidence from the EU Member States,” Review of World Economics 141 (2005): 50–78. 82  Ferenc Jánossy, A gazdasági fejlődés trendvonala és a helyreállítási periódusok [The trend line of economic development and recovery periods] (Budapest: KJK, 1966); Ferenc Jánossy, The End of the Economic Miracle (White Plains, NY: IASP, 1969). For

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a similar approach to Germany, see Rolf H. Dumke, “Reassessing the Wirtschaftswunder: Reconstruction and Postwar Growth in West Germany in an International Context,” Oxford Bulletin of Economics and Statistics 52, no. 2 (1990): 451–93. 83  Crafts and Toniolo, “Aggregate Growth, 1950–2005,” 310. 84  Ibid., 298–303. 85  Economic Commission for Europe, “Economic Survey for Europe, 2000,” 160. 86  Peter M. Garber, “The Collapse of the Bretton Woods Fixed Exchange Rate System,” in A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, edited by Michael D. Bordo and Barry Eichengreen (Chicago: University of Chicago Press, 1993), 461–94; Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton: Princeton University Press, 2007), 245. 87  Nicholas Woodward, “The Search for Economic Stability: Western Europe since 1973,” in Western Europe: Economic and Social Change since 1945, edited by MaxStephan Schulze (London and New York: Longman, 1999), 63–64. 88  Michael Beenstock, “The Rise, Fall and Rise Again of the OPEC,” in Economic Disasters of the Twentieth Century, edited by Michael J. Oliver and Derek H. Aldcroft (Cheltenham, England: Edward Elgar Publishing, 2007), 133–61. 89  Christopher Allsopp, “Inflation,” in The European Economy: Growth and Crisis, edited by Andrea Boltho (Oxford: Oxford University Press, 1982), 89–94. 90  Maddison, Dynamic Forces in Capitalist Development, 131–32. 91  Ronald Findlay and Kevin H. O’Rourke, Power and Plenty: Trade, War, and the World Economy in the Second Millenium (Princeton: Princeton University Press, 2007), 496–501. 92  Eichengreen, “Institutions and Economic Growth,” 58–65. 93  Eichengreen, The European Economy since 1945, 399. 94  Jánossy, The End of the Economic Miracle. For a similar approach to Germany, see Dumke, “Reassessing the Wirtschaftswunder,” 451–93. 95  Crafts and Toniolo, “Aggregate Growth, 1950–2005,” 310; N. Crafts and T. C. Mills, “Europe’s Golden Age: An Econometric Investigation,” in Quantitative Aspects of Post-War European Economic Growth, edited by Bart van Ark and Nicholas Crafts (Cambridge: Cambridge University Press, 1996), 415–31. 96  Tamás Vonyó, “Post-War Reconstruction and the Golden Age of Economic Growth,” European Review of Economic History 12, no. 2 (2008): 221–41. For a more optimistic take, see Tamás Tarján, “Jánossy elmélete az új növekedési elmélet tükrében” [Jánossy’s hypothesis as reflected in new theories of growth], Közgazdasági Szemle 47 (2000): 457–72. 97  The classic work on convergence is: Robert Barro and Sala-i-Martin, “Convergence,” Journal of Political Economy 100 (1992): 223–51. See also: William J. Baumol, Richard R. Nelson, and Edward N. Wolff, “Introduction: The Convergence of Productivity, Its Significance, and Its Varied Connotations,” in Convergence of Productivity: Cross-National Studies and Historical Evidence, edited by William J. Baumol, Richard R. Nelson, and Edward N. Wolff (Oxford: Oxford University Press, 1994), 3. For a more comprehensive approach, see Glenn Firebaugh, The New Geography of Global Income Inequality (Cambridge, MA: Harvard University Press, 2003). 98  Economic Commission for Europe, “Economic Survey of Europe, 2000,” 169.

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99

 Crafts, “The Great Boom: 1950–73,” 48; van Ark and Crafts, “Catch-up, Convergence and the Sources,” 18. 100  Economic Commission for Europe, “Economic Survey of Europe, 2000,” 166. 101  Classic works on the subject include: William Baumol, “Productivity Growth, Convergence, and Welfare: What the Long-Run Data Show,” American Economic Review 76 (1986): 1072–85; Edward N. Wolff, “Capital Formation and Productivity Convergence Over the Long Term,” American Economic Review 81, no. 3 (1991): 565–79; Stephen N. Broadberry, “Manufacturing and the Convergence Hypothesis: What the Long-Run Data Show,” Journal of Economic History 53, no. 4 (1993): 772–95; Jeffrey G. Williamson, “The Evolution of Global Labor Markets since 1830: Background Evidence and Hypotheses,” Explorations in Economic History 32, no. 2 (1995): 141–96. 102  With the exception of Luxemburg, for which the data related to this earlier period was insufficient. 103  Economic Commission for Europe, “Economic Survey of Europe, 2000,” 166–67. 104  Ibid., 167. 105  The term “convergence club” suggests that we do not observe any narrowing of the gaps between the individual members of a larger group, but do find evidence of convergence among the members of a smaller subset of this group. The latter obviously constitute the convergence club. For economic historians’ accounts of this notion, see Stephen N. Broadberry, “Convergence: What the Historical Record Shows,” in Quantitative Aspects of Post-War European Growth, edited by Bart van Ark and Nicholas Crafts (Cambridge: Cambridge University Press, 1996), 327–46; Jeffrey G. Williamson, “Globalization, Convergence, and History,” Journal of Economic History 56, no. 2 (1996): 277–306. 106  Crafts and Toniolo, “Postwar Growth: An Overview,” 5. 107  van Ark and Crafts, “Catch-up, Convergence and the Sources,” 18. 108  Crafts and Toniolo, “Aggregate Growth, 1950–2005,” 302. 109  Philip Epstein, Peter Howlett, and Max-Stephan Schulze, “Distribution Dynamics: Stratification, Polarization, and Convergence among OECD Economies, 1870–1992,” Explorations in Economic History 40 (2003): 78–97. The following volumes on the subject are also important: Wim Meusen and José Villaverde, eds., Convergence Issues in the European Union (Cheltenham: Edward Elgar, 2002); Gertrude Tumpell-Gugerell and Peter Mooslechner, eds., Economic Convergence and Divergence in Europe (Cheltenham: Edward Elgar, 2003); Robert Leonardi, Convergence, Cohesion and Integration in the European Union (Houndmills and London: Macmillan, 1995). 110  Moses Abramovitz, “Catch-up and Convergence in the Postwar Growth Boom and After,” in Convergence of Productivity, edited by William J. Baumol, Richard R. Nelson, and Edward N. Wolff (Oxford: Oxford University Press, 1994), 108. 111  Maddison, Dynamic Forces in Capitalist Development, 164. 112  Bart van Ark, Mary O’Mahony, and Marcel P. Timmer, “Europe’s Productivity Performance in Comparative Perspective: Trends, Causes and Projections,” in World Economic Performance: Past, Present, Future; Essays in Celebration of the Life and Work of Angus Maddison, edited by D. S. Prasada Rao and Bart van Ark (Cheltenham: Edward Elgar, 2013), 294–96; Péter Halmai, “Az európai növekedési

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modell kifulladása” [The exhaustion of the European growth model], Közgazdasági Szemle 65, no. 2 (2018): 128. 113  For overviews of twentieth-century economic history of East Central European countries, see Włodzimierz Brus, “Postwar Reconstruction and Socio-Economic Transformation,” in The Economic History of Eastern Europe, 1919–1975, vol. 2, Interwar Policy, the War and Reconstruction, edited by Michael C. Kaser and Edward A. Radice (Oxford: Clarendon Press, 1986), 564–641; Michael C. Kaser, ed., The Economic History of Eastern Europe, 1919–1975, vol. 3, Institutional Change within a Planned Economy (Oxford: Clarendon Press, 1986); Alice Teichova, Wirtschaftsgeschichte der Tschechoslowakei, 1918–1980 (Vienna: Böhlau, 1988); Iván Pető and Sándor Szakács, A hazai gazdaság négy évtizedének története, I. kötet [Four decades in the history of the Hungarian economy, vol. 1] (Budapest: KJK, 1985); Berend, Central and Eastern Europe, 1944–1993; Iván T. Berend, From Soviet Bloc to the European Union: The Economic and Social Transformation of Central and Eastern Europe since 1973 (Cambridge: Cambridge University Press, 2009), 6; Mária Barát et al., A magyar gazdaság vargabetűje [The circuitous path of the Hungarian economy] (Budapest: Aula, 1994). 114  See his contributions in: Kaser, ed., The Economic History of Eastern Europe, vol. 3, 3–249. 115  Berend, Central and Eastern Europe, 222; Berend, From Soviet Bloc to the European Union, 6. 116  Derek H. Aldcroft, The European Economy, 1914–2000 (London: Routledge, 2001), 245. 117  Brus, “Postwar Reconstruction and Socio-Economic Transformation,” 564–641; Berend, Central and Eastern Europe, 6–8. 118  Barát et al., A magyar gazdaság vargabetűje, 86. 119  Berend, Central and Eastern Europe, 6. 120  Aldcroft and Morewood, Economic Change in Eastern Europe, 93. 121  Jaroslav Krejči, “The Czechoslovak Economy During the Years of Systemic Transformation, 1945–1949,” Jahrbuch der Wirtschaft Osteuropas 7 (1977): 297–343; Teichova, Wirtschaftsgeschichte der Tschechoslowakei, 96–100; Pető and Szakács, A hazai gazdaság négy évtizedének története, I:62–63; György Lengyel, “Irányított gazdaság és tervgazdaság” [The command economy and the planned economy], in Medvetánc: Magyar gazdaság és szociológia a nyolcvanas években [Hungarian economics and sociology in the eighties] (Budapest: KJK, 1988), 9–23. 122  Pető and Szakács, A hazai gazdaság négy évtizedének története, I:62–67. 123  István Varga, A magyar valutacsoda [The Hungarian currency miracle] (Budapest: Magyar Gazdaságkutató Intézet, 1946), 1–12. 124  For a comprehensive examination of the economic history of this period, see Aldcroft and Morewood, Economic Change in Eastern Europe, 86–205; János Kornai, Paying the Bill for Goulash-Communism (Boulder, CO: Atlantic Research and Publications, 2000); Kaser, ed., The Economic History of Eastern Europe, vol. 3, 3–249. 125  Jiři Kosta, Sozialistische Planwirtschaft: Theorie und Praxis (Opladen: Westdeutscher Verlag, 1974), 183–84; Iván Berend, Gazdaságpolitika az első ötéves terv megindításakor [Economic policy at the time of the first five-year plan] (Budapest: KJK, 1964), 53–96.

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126

 Nigel Swain, “Eastern European Collectivization Campaigns Compared, 1945– 1962,” in The Collectivization of Agriculture in Communist Eastern Europe: Comparison and Entanglements, edited by Constantin Iordachi and Arnd Bauerkämper (New York and Budapest: Central European Press, 2014), 497–534. 127  Jiři Kosta, “Die Einbindung der tschechoslowakischen Wirtschaft in den sowjetischen Block nach dem Zweiten Weltkrieg,” Jahrbuch für Wirtschaftsgeschichte 36, no. 1 (1995): 193–205. 128  A detailed discussion of the operation of this economic system would obviously be impossible here. Outstanding works on the subject include János Kornai, Economics of Shortage (Amsterdam: North-Holland, 1980); János Kornai, A szocialista rendszer [The socialist system] (Budapest: HVG, 1993); Tamás Bauer, Tervgazdaság, beruházás, ciklusok [Planned economies, investment, cycles] (Budapest: KJK, 1981). 129  János Kornai, A gazdasági vezetés túlzott központosítása [Overcentralization in economic administration] (Budapest: KJK, 1957), 104–21; János Kornai, Erőltetett vagy harmonikus növekedés [Forced versus harmonic growth] (Budapest: Akadémiai, 1972), 50–57; László Bogár, A fejlődés ára [The price of development] (Budapest: KJK, 1983), 108–25. 130  Ágnes Ungvárszki, Gazdaságpolitikai ciklusok Magyarországon, 1948–1988 [Cycles of economic policy in Hungary, 1948–1988] (Budapest: Közgazdasági és Jogi Könyvkiadó, 1989), 28–40. 131  Zoltán Kaposi, A 20. század gazdaságtörténete [The economic history of the 20th century] (Pécs: Dialóg Campus, 2004), 290–91. 132  George J. Staller, “Czechoslovak Industrial Growth: 1948–1959,” American Economic Review 52, no. 3 (1962): 385–408; Jozef Wilczynski, The Economics of Socialism After World War Two, 1945–1990 (New Brunswick, NJ: Transaction Publishers, 1970), 78–88; George R. Feiwel, “The Inverse Economic Miracle: Sources of Growth and Retrogression in Postwar Czechoslovakia,” Economic Development & Cultural Change 19, no. 3 (1971), 351. For a different view on the significance of investments, see Tamás Vonyó, “War and Socialism: Why Eastern Europe Fell Behind between 1950 and 1989,” Economic History Review 70, no. 1 (2017): 248–74. 133  Pető and Szakács, A hazai gazdaság négy évtizedének története [Four decades in the history of the Hungarian economy], I:273–92. 134  Jan Adam, Planning and Market in Soviet and East European Thought, 1960s–1992 (New York: St. Martin’s Press, 1993), 3–24, 45–99. 135  Jan Adam, Economic Reforms in the Soviet Union and Eastern Europe since the 1960s (New York: St. Martin’s Press, 1989), 55–106. 136  Barát et al., A magyar gazdaság vargabetűje, 93; Wlodzimierz Brus, “1957 to 1965: In Search for Balanced Development,” in The Economic History of Eastern Europe, 1919–1975, vol. 3, Institutional Change Within A Planned Economy, edited by Michael C. Kaser (Oxford: Clarendon, 1986), 70–138. 137  Zsuzsanna Varga, Az agrárlobbi tündöklése és bukása az államszocializmus időszakában [The rise and fall of the agrarian lobby during state socialism] (Budapest: Gondolat Kiadó, 2013). 138  Bauer, Tervgazdaság, beruházás, ciklusok, 96, 119, 168.

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139

 Iván Berend, Gazdasági útkeresés, 1956–1965 [The search for an economic path, 1956–1965] (Budapest: Magvető, 1983), 123–58. 140  Miloslav Bernášek, “The Czechoslovak Economic Recession, 1962–65,” Soviet Studies 20, no. 4 (1969): 444–61; Feiwel, “The Inverse Economic Miracle,” 347–77; Jan Adam, Employment and Wage Policies in Poland, Czechoslovakia and Hungary since 1950 (London: Macmillan, 1984), 122–24; Jan Adam, “Regulation of Labour Supply in Poland, Czechoslovakia and Hungary,” Soviet Studies 36, no. 1 (1984): 80. 141  B enedikt Korda, “A Decade of Economic Growth in Czechoslovakia (1962– 1973),” Soviet Studies 28, no. 4 (1976): 499–523. 142  Andrzej Korbonski, “The Politics of Economic Reforms in Eastern Europe: The Last Thirty Years,” Soviet Studies 41, no. 1 (1989): 1–19; Gábor Révész, Perestroika in Eastern Europe: Hungary’s Economic Transformation, 1945–1988 (Boulder, CO: Westview Press, 1990), 55–83. 143  Iván Pető, “A gazdaságirányítási mechanizmus és a reform megítélésének változásai a hatvanas évek közepén” [The mechanism of economic administration and changing appraisals of reform in the middle of the 1960s], Medvetánc 6, no. 4 (1986): 7; no. 1 (1987): 1, 63–100. 144  Kosta, Sozialistische Planwirtschaft, 120–54. 145  Kornai, Paying the Bill for Goulash-Communism, 58–75. 146  Erzsébet Szalai, “A reformfolyamat új szakasza és a  nagyvállalatok” [Large enterprises and the new phase of the reform process], Valóság 25, no. 5 (1982): 23–35. For opposing views of the reform process, see János Mátyás Kovács, “A reformalku sűrűjében” [In the thick of the reform negotiations], Valóság 27, no. 3 (1984): 30–55; Iván Berend, “A magyar reform sorsfordulója az 1970-es években” [The changing fortunes of Hungarian reform in the 1970s], Valóság 31, no. 1 (1988): 1–26. 147  Berend, From the Soviet Bloc, 32; United Nations, Statistical Yearbook, 1990/1991 (New York: United Nations, 1993), 920. 148  Barát et al., A magyar gazdaság vargabetűje, 99; Marton Ádám, Világpiaci árváltozások—magyar cserearányok [World-market price changes and Hungary’s declining terms of trade] (Budapest: Kossuth, 1981), 57–106. 149  Iliana Zloch-Christy, Debt Problems of Eastern Europe (New York: Cambridge University Press, 1987), 29–89; Iliana Zloch-Christy, East–West Financial Relations: Current Problems and Future Prospects (Cambridge: Cambridge University Press, 1991), 30–31; Joanna Siwinska-Gorzelak, “Public Debt Structure and Dynamics in the Czech Republic, Hungary, Poland and Romania,” CASE Network Studies and Analyses, no. 162 (Warsaw: Center for Social and Economic Research, 1999), 9–11. 150  “Külső eladósodás és adósságkezelés Magyarországon” [Foreign debt and debt service in Hungary], Magyar Nemzeti Bank Műhelytanulmányok 2 [Hungarian National Bank Working Papers, no. 2] (Budapest: Magyar Nemzeti Bank, 1993). 151  Ungvárszki, Gazdaságpolitikai ciklusok Magyarországon, 60–69. 152  Adam, Economic Reforms in the Soviet Union, 116–19. 153  László Csaba, “Hungary and the IMF: The Experience of a Cordial Discord,” Journal of Comparative Economics 20, no. 2 (1995): 230–31; László Szamuely, ed., A világgazdasági nyitás: gazdaságpolitikai fordulat és intézményi reform [The

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opening of the world economy: The change in economic policy and institutional reform] (Budapest: KJK, 1989). 154  Barát et al., A magyar gazdaság vargabetűje, 92–108. 155  László Antal, Gazdaságirányítási és pénzügyi rendszerünk a reform útján [The Hungarian system of economic adminstration and finance on the path of reform] (Budapest: KJK, 1985), 299–357. 156  Barát et al., A magyar gazdaság vargabetűje, 104–8. 157  István Gábor, “A második (másodlagos) gazdaság” [The second (secondary) economy], Valóság 22, no. 1 (1979): 22–36; István Gábor and Péter Galasi, A “második” gazdaság: Tények és hipotézisek [The “second” economy: Facts and hypotheses] (Budapest: KJK, 1981), 46–106. 158  In Poland, the ratio of net debt to exports sent to Western market economies reached 534 percent by 1986, while it was only 53 percent in the case of Czechoslovakia. United Nations Economic Commission for Europe, Economic Survey of Europe in 1989–1990 (New York: United Nations, 1990), 206. 159  “Transition Report 2001: Energy in Transition” (London: European Bank for Reconstruction and Development, 2001), 61. 160  Berend, Past Convergence within Europe, 13. 161  Stephen N. Broadberry and Alex Klein, “When and Why Did Eastern European Economies Begin to Fail: Lessons from a Czechoslovak/UK Productivity Comparison, 1921–1991,” Explorations in Economic History 48 (2011): 37–52. CHAPTER 3 1

 Noll, “Wohlstand, Lebensqualität,” 440.  See Eric J. Arnould and Craig J. Thompson, “Consumer Culture Theory (CCT): Twenty Years of Research,” Journal of Consumer Research 31, no. 4 (2005): 868– 82; Trentmann, “Beyond Consumerism,” 373–401. For examples related to Central and Eastern Europe, see Ina Merkel, “From Stigma to Cult: Changing Meanings in East German Consumer Culture,” in The Making of the Consumer: Knowledge, Power and Identity in the Modern World, edited by Frank Trentmann (Oxford: Berg, 2006), 249–70; Merkel, Utopie und Bedürfnis; Krisztina Fehérváry, “Goods and States: The Political Logic of State-Socialist Material Culture,” Comparative Studies in Society and History 51, no. 2 (2009): 426–59. 3  Trentmann, “Beyond Consumerism,” 374. 4  Heinz-Gerhard Haupt, Konsum und Handel: Europa in 19. und 20. Jahrhundert (Göttingen: Vandenhoeck, 2003), 20. 5  Peter Kramper, “From Economic Convergence to Convergence in Affluence?” LSE Working Paper, no. 56/00 (London: LSE, 2000), 4. 6  For historical approaches to trends in levels of consumption and material standards of living, see Pounds, Standards of Living, 451–60; Floud, Standards of Living, 117–29; Baudet and Bogucka, Types of Consumption; Siegrist, Kaelble, and Kocka, eds., Europäische Konsumgeschichte. More recently: Stearns, Consumerism in World History. For the measurement of standards of living using anthropometric indicators, see Komlos, Nutrition and Economic Development; Komlos and Kriwy, “The Biological Standard,” 459–73. 7  Maddison, Economic Growth and Standards of Living, 18. 2

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8

 Jürgen Kuczynski, Die Geschichte der Lage der Arbeiter unter dem Kapitalismus (Berlin: Akademie Verlag, 1960–1972); Jeffrey G. Williamson, “Evolution of Global Labor Markets since 1830: Background Evidence and Hypotheses,” National Bureau of Economic Research Working Paper 36 (Cambridge, MA: National Bureau of Economic Research, 1992). 9  Hereafter, as long as we do not specifically differentiate these terms (and with the exception, of course, of references to specific data), we will, for stylistic reasons, use “GDP” to mean “economic output” in general; that is, we will use it to signify both “gross national product” and “national income.” 10  Gerold Ambrosius and William H. Hubbard, A Social and Economic History of Twentieth-Century Europe (Cambridge, MA: Harvard University, 1989), 252–53. 11  Deaton, “The Structure of Demand,” 92–94. 12  This takes into account the average consumption ratio for the periods from 1921 to 1930 and from 1971 to 1980. These calculations are based on the data in Table 2.10 and Table II in the Appendix, as well as the datasets in Maddison, Monitoring the World Economy, 194–95. 13  Maddison, The World Economy in the 20th Century, 55. 14  Deaton, “The Structure of Demand,” 95. 15  Ibid. 16  The components of private consumption can be divided into the following chief categories: (1) food, beverages, and luxuries like alcohol and tobacco; (2) clothing and footwear; (3) housing and energy; (4) furniture, appliances, and household goods; (5) healthcare; (6) transportation and communication; (7) entertainment and culture; (8) other. 17  Secretariat of the United Nations Economic Commission for Europe, “Consumption Trends and Prospects in the ECE Region,” Economic Bulletin for Europe 39, no. 2 (1987): 249. With regard to these comparisons of household budgets in individual countries, it must be noted that the expenditure shares are calculated by using the differing price ratios that have developed in the various countries, and not on the basis of common prices. For this reason, the lower price level of certain groups of products may result in lower expenditure proportions for these groups of goods. 18  Eurostat, “Consumers in Europe, Facts and Figures, 1999–2004” (Luxembourg: Eurostat, 2005), 24. 19  Deaton, “The Structure of Demand,” 107. 20  Ben Fine, Michael Heasman, and Judith Wright, Consumption in the Age of Affluence: The World of Food (London: Routledge, 1996). 21  D. J. Oddy, “Food, Drink and Nutrition,” in The Cambridge Social History of Britain, 1750–1950, vol. 2, edited by F. M. L. Thompson (Cambridge: Cambridge University Press, 1990), 276. 22  Ibid., 278. 23  Derek J. Oddy, Peter J. Atkins, and Virginie Amilien, eds., The Rise of Obesity in Europe: A Twentieth Century Food History (Farnham: Ashgate, 2009). Deaton, “The Structure of Demand,” 113–14. 24  Eurostat, Consumers in Europe, 98.

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25

 Peter Corrigan, The Sociology of Consumption (London: Sage, 1997), 161.  Fred Davis, Fashion, Culture, and Identity (Chicago: University of Chicago Press, 1994), 19–30. 27  Corrigan, The Sociology of Consumption, 168. 28  Anne Power, Hovels to Highrise: State Housing in Europe since 1850 (London and New York: Routledge, 1993), 40–42. 29  Paul Hohenberg and Lynn Lees, The Making of Urban Europe, 1000–1994 (Cambridge, MA: Harvard University Press, 1995), 248–89. 30  Deaton, “The Structure of Demand,” 115–17. 31  United Nations, Compendium of Housing Statistics, 1975–1977 (New York: United Nations, 1980), 237–38. 32  Deaton, “The Structure of Demand,” 118–19. 33  M. J. Daunton, “Housing,” in The Cambridge Social History of Britain, 1750–1950, vol. 2, edited by William J. Baumol, Richard R. Nelson, and Edward N. Wolff (Oxford: Oxford University Press, 1994), 219. 34  Eurostat, “Consumers in Europe,” 112–13. 35  Kenneth Mouré, “Prosperity for All? Britain and Mass Consumption in Western Europe after World War II,” in Consuming Behaviours: Identity, Politics and Pleasure in Twentieth-Century Britain, edited by Erika Rappaport, Mark J. Crowley, and Sandra Trudgen Dawson (London: Bloomsbury, 2015), 223. 36  For an analysis of income distribution, see Thomas Klein, Sozialstrukturanalyse (Hamburg: Rowohlt, 2005), 337–54; for the historical dimensions, see Hartmut Kaelble, Mehr Reichtum, mehr Armut: Soziale Ungleichheit in Europa vom 20. Jahrhundert bis zur Gegenwart (Frankfurt am Main: Campus, 2017), 63–170. 37  Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (1995): 1–28. 38  Hartmut Kaelble, “Introduction,” in Income Distribution in Historical Perspective, edited by Hartmut Kaelble and Mark Thomas (Cambridge and Paris: Cambridge University Press and Maison des Sciences de l’Homme, 1991), 1–56. 39  Peter H. Lindert and Jeffrey G. Williamson, “Growth, Equality, History,” Explorations in Economic History 22 (1985): 341–77; Peter H. Lindert, “Three Centuries of Inequality in Britain and America,” in Handbook of Income Distribution, vol. 1, edited by Anthony B. Atkinson and Francois Bourguignon (Amsterdam: Elsevier, 2000), 167–216. 40  Ambrosius and Hubbard, A Social and Economic History of Twentieth-Century Europe, 70. 41  Hartmut Kaelble, “Der Wandel der Einkommensverteilung während der zweiten Hälfte des 20. Jahrhunderts,” in Politik und Ökonomie: Problemsicht aus klassischer, neo- und neuklassischer Perspektive, edited by Stefan Ryll and Alparslan Yenal (Marburg: Metropolis-Verlag, 2000), 230–31. 42  Franz Kraus, “The Historical Development of Income Inequality in Western Europe and the United States,” in The Development of Welfare States in Europe and America, edited by Peter Flora and Arnold J. Heidenheimer (New Brunswick, NJ and London: Transaction, 1981), 203. 43  Kraus, “The Historical Development of Income Inequality,” 203–204. 26

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44

 Anthony B. Atkinson, Lee Rainwater, and Timothy M. Smeeding, “Income Distribution in OECD Countries: Evidence from the Luxembourg Income Study” (Paris: OECD, 1995), 39–58. 45  Anthony B. Atkinson, “Income Distribution in Europe and the United States,” Oxford Review of Economic Policy 12, no. 1 (1996): 15–28. 46  Bennett Harrison and Barry Bluestone, The Great U-Turn: Corporate Restructuring and the Polarizing of America (New York: Basic Books, 1988). 47  Gini coefficients are calculated with the help of the Lorenz curve. A Lorenz curve is obtained by plotting cumulative population shares along the x- or horizontal axis and cumulative income shares along the y- or vertical axis. If an income distribution is perfectly equal, the angle of the line between the two axes is 45 degrees. Thus, the closer a society’s curve comes to this diagonal, the more equal its income distribution is; the farther this curve lies from the diagonal, the greater its income inequality is. A Gini coefficient is derived by taking the area between the Lorenz curve and the diagonal and dividing it by the total area of the triangle formed by the diagonal and the two axes. 48  Arthur S. Alderson and Francois Nielsen, “Globalization and the Great U-Turn: Income Inequality Trends in 16 OECD Countries,” American Journal of Sociology 107, no. 5 (2002): 1248. 49  Anthony B. Atkinson, “Distribution of Income and Wealth,” in Twentieth-Century British Social Trends, edited by A. H. Halsey and Josephine Webb (London: Macmillan, 2000), 363. 50  Guy Routh, Occupation and Pay in Great Britain, 1906–1979 (London and Basingstoke: Macmillan, 1980), 59–132. 51  Bourdieu, Distinction, 66. 52  Mark Tomlinson, “Lifestyle and Social Class,” European Sociological Review 19, no. 1 (2003): 97–111. 53  Rachel A. Rosenfeld and Arne L. Kalleberg, “A Cross-National Comparison of the Gender Gap in Income,” American Journal of Sociology 96, no. 1 (1990): 69–106; Tanja van der Lippe and Liset van Dijk, “Comparative Research on Women’s Employment,” Annual Review of Sociology 28 (2002): 221–41. 54  Oksana Mont and Kate Power, “Understanding Factors that Shape Consumption,” ETC/SCP Working Paper no. 1 (Copenhagen: ETC, 2013), 45. 55  Juanita Firestone and Bett Anne Shelton, “A Comparison of Women’s and Men’s Leisure Time: Subtle Effects of the Double Day,” Leisure Sciences 16 (1994): 45–60. 56  Erik Bihagen, “How Do Classes Make Use of Their Incomes,” Social Indicator Research 47, no 2 (1999): 119–51. 57  Darrian Collins and Clement Tisdell, “Gender and Differences in Travel Life Cycles,” Journal of Travel Research 41, no. 2 (2002): 133–43. 58  Paolo Capuzzo, “Youth and Consumption,” in The Oxford Handbook of the History of Consumption, edited by Frank Trentmann (Oxford: Oxford University Press, 2012), 614. 59  Ronald Inglehart, “The Silent Revolution in Europe,” American Political Science Review 4 (1971): 991–1017; Ronald Inglehart, The Silent Revolution (Princeton: Princeton University Press, 1977); Ronald Inglehart, “Mapping Global Values,”

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in Measuring and Mapping Cultures, edited by Yilmaz Esmer and Thorleif Pettersson (Leiden: Brill, 2007), 11–32. For other recent value surveys in Europe, see Loek Halman, ed., The European Values Study: A Third Wave, Source Book of the 1999/2000 European Values Study Surveys (Tilburg: Tilburg University, 2001); Peter Ester, Michael Braun, and Peter Mohler, eds., Globalization, Value Change, and Generations: A Cross-National and Intergenerational Perspective (Leiden and Boston: Brill, 2006); Wil Arts and Loek Halman, Value Contrasts and Consensus in Present-Day Europe: Painting Europe’s Moral Landscapes (Leiden and Boston: Brill, 2014); Bernhard Dietz, Christopher Neumaier, and Andreas Rödder, eds., Gab es den Wertewandel? Neue Forschungen zum gesellschaftlich-kulturellen Wandel seit den 1960er Jahren (Munich: Oldenbourg, 2014). 60  Peter Ester, Loek Halman, and Ruud de Moor, eds., The Individualizing Society: Value Change in Europe and North America (Tilburg: Tilburg University Press, 1993); Neil Nevitte and Christopher Cochrane, “Individualization in Europe and America: Connecting Religious and Moral Values,” in Measuring and Mapping Cultures, edited by Yilmaz Esmer and Thorleif Pettersson (Leiden: Brill, 2007), 99–126; David Martin, A General Theory of Secularization (Oxford: Gregg Revivals, 1993), 100–67; David Martin, “The Secularization Issue: Prospect and Retrospect,” British Journal of Sociology 42, no. 3 (1991): 465–74; David Martin, On Secularization: Towards a Revised General Theory (Aldershot: Ashgate, 2005); Steve Bruce, ed., Religion and Modernization: Sociologists and Historians Debate the Secularization Thesis (Oxford: Clarendon Press, 1992); Philip S. Gorski, “Historicizing the Secularization Debate,” in Handbook of the Sociology of Religion, edited by Michele Dillon (Cambridge: Cambridge University Press, 2003), 111–13; Peter L. Berger, ed., The Desecularization of the World (Grand Rapids, MI: William B. Eerdmans Publishing Company, 1999); Pippa Norris and Ronald Inglehart, Sacred and Secular: Religion and Politics Worldwide (Cambridge: Cambridge University Press, 2004). 61  Ronald Inglehart, Culture Shift in Advanced Industrial Society (Princeton: Princeton University Press, 1990), 67–74. 62  Ronald Inglehart and Christian Welzel, Modernization, Cultural Change, and Democracy (Cambridge: Cambridge University Press, 2005), 63. 63  Russel Dalton, “Vergleichende Wertewandelforschung,” in Vergleichende Politikwissenschaft, edited by Dirk Berg-Schlosser and Ferdinand Müller-Rommel (Wiesbaden: VS Verlag für Sozialwissenschaften, 2003), 154. 64  Shinobu Majima and Michel Savage, “Have There Been Culture Shifts in Britain? A Critical Encounter with Ronald Inglehart,” Cultural Sociology 1, no. 3 (2007): 293–315. 65  Scott C. Flanagan and Aie-Rie Lee, “The New Politics, Culture Wars, and the Authoritarian-Libertarian Value Change in Advanced Industrial Democracies,” Comparative Political Studies 36, no. 3 (2003): 235–70. 66  Mark Jayne, Cities and Consumption (London and New York: Routledge, 2006), 21–76. 67  For this notion, see “Consumption Trends and Prospects,” 284. 68  John Brewer, “Was können wir aus der Geschichte der frühen Neuzeit für die moderne Konsumgeschichte lernen?,” in Europäische Konsumgeschichte: Zur Gesellschafts- und Kulturgeschichte des Konsums (18. bis 20. Jahrhundert), edited by

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Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka (Frankfurt: Campus Verlag, 1997), 52–53. 69  Haupt, Konsum und Handel, 118. 70  Wolfgang König, “Massenproduktion und Konsumgesellschaft: Ein historischer and systematischer Abriss,” in Die Konsumgesellschaft in Deutschland, edited by Heinz-Gerhard Haupt and Claudius Torp (Frankfurt am Main: Campus, 2009), 46–61. 71  Michael B. Miller, The Bon Marché: Bourgeois Culture and the Department Store, 1869–1920 (Princeton: Princeton University Press, 1981), 21–22. 72  Ibid., 183–89. 73  Jeanne Catherine Lawrence, “Geographical Space, Social Space, and the Realm of the Department Store,” Urban History 19, no. 1 (1992): 64–83; Jon Stobart, “Cathedrals of Consumption? Provincial Department Stores in England, c. 1880– 1930,” Enterprise & Society 18 (2017): 1–36. For similar problems, see Gyáni, “Középosztályi fogyasztási kultúra és az áruház,” 101–27. 74  Gareth Shaw, Louise Curth, and Andrew Alexander, “Selling Self-Service and the Supermarket: The Americanisation of Food Retailing in Britain, 1945–60,” Business History 46, no. 4 (2004): 568–82. 75  Jonathan Reynolds, “Generic Models of European Shopping Centre Development,” European Journal of Marketing 26, nos. 8–9 (1992): 52. 76  Peter Eigner, “(Detail)Handel und Konsum in Österreich im 20. Jahrhundert: Die Geschichte einer Wechselbeziehung,” in Konsumieren in Österreich: 19. und 20. Jahrhundert, edited by Susanne Breuss and Franz X. Eder (Innsbruck: StudienVerlag, 2006), 65. 77  Paul W. Dobson, Michael Waterson, and Stephen W. Davis, “The Patterns and Implications of Increasing Concentration in European Food Retailing,” Journal of Agricultural Economics 54, no. 1 (2003): 111–25. 78  John A. Dawson, “Internationalization of Retailing Operations,” Journal of Marketing Management 10, no. 4 (1994): 267–82. 79  Neil Wrigley, “Retail Geographies,” in International Encyclopedia of Human Geography, edited by Rob Kitchin and Nigel Thrift (Oxford: Elsevier, 2009), 398–405. 80  Vera Zamagni, “Die langsame Modernisierung des italienische Einzelhandles: Die Geschichte eines Sonderfalls in vergleichender Perspektive,” in Europäische Konsumgeschichte: Zur Gesellschafts- und Kulturgeschichte des Konsums (18. bis 20. Jahrhundert), edited by Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka (Frankfurt: Campus Verlag, 1997), 705–16; Dieter Ahlert, Markus Blut, and Heiner Evanschitzky, “Current Status and Future Evolution of Retail Formats,” in Retailing in the 21st Century: Current and Future Trends, edited by Manfred Krafft and Murali K. Mantrala (Heidelberg: Springer, 2006), 289–308. 81  Ahlert, Blut, and Evanschitzky, “Current Status and Future Evolution of Retail Formats,” 303. 82  Robert C. Ostergren and John G. Rice, The Europeans: A Geography of People, Culture, and Environment (New York: The Guilford Press, 2004), 334. 83  “Consumption Trends and Prospects,” 285. 84  Fine, Heasman, and Wright, Consumption in the Age of Affluence, 273–75.

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85

 For historical trends in quantities of working time, see Gary S. Cross, “Work Time,” in Encyclopedia of European Social History, vol. 4, ed. Peter N. Stearns (New York: Charles Scribner’s Son, 2001), 501–11; Paul Blyton, Changes in Working Time: An International Review (London and Sydney: Croom Helm, 1985), 19; Jesse H. Ausubel and Arnulf Grübler, “Working Less and Living Longer: Long-Term Trends in Working Time and Time Budgets,” Technological Forecasting and Social Change 50 (1995): 195–213; Gerhard Bosch, Peter Dawkings, and Francois Michon, “Working Time in 14 Industrialised Countries: An Overview,” in Times Are Changing: Working Time in 14 Industrialized Countries, eds. Gerhard Bosch, Peter Dawkins, and Francois Michon (Geneva: ILO, 1993), 1–45; Michael Huberman and Chris Minns, “The Times They Are Not Changin’: Days and Hours of Work in Old and New Worlds, 1870–2000,” Explorations in Economic History 44 (2007): 538–67. 86  Cross, “Work Time,” 504–5; Michael Huberman, “Working Hours of the World Unite? New International Evidence of Worktime, 1870–1913,” Journal of Economic History 64 (2004): 964–1001. 87  Bosch, Dawkings, and Michon, Working Time in 14 Industrialised Countries, 1–5. 88  Huberman and Minns, “The Times They Are Not Changin’,” 543. 89  Cross, “Work Time,” 505. 90  Huberman and Minns, “The Times They are Not Changin’,” 546. 91  Commission of the European Communities, “Employment in Europe, 1993” (Luxembourg: Office for Official Publications of the European Communities, 1993), 30–32. 92  Ausubel and Grübler, “Working Less and Living Longer,” 205. 93  Peter Burke, “The Invention of Leisure in Early Modern Europe,” Past and Present 146 (1995): 136–50; Charles Rearick, “Consumer Leisure,” in Encyclopedia of European Social History, vol. 5, edited by Peter Stearns (Detroit: Charles Scribner’s Son, 2001), 207. 94  Ken Roberts, Leisure in Contemporary Society (Wallingford: CABI, 2006), 24–29. 95  Kaspar Maase, Grenzenloses Vergnügen: Der Aufstieg der Massenkultur, 1850– 1970 (Frankfurt am Main: Fischer, 2007), 76–114; Lynn Abrams, “From Control to Commercialization: The Triumph of Mass Entertainment in Germany 1900–25?,” German History 8, no. 3 (1990): 278–93. 96  Rearick, “Consumer Leisure,” 208. 97  L eila Wimmer, “Modernity, Femininity and Hollywood Fashions: Women’s Cinephilia in 1930s French Fan Magazines,” Film, Fashion and Consumption 3, no. 1 (2014): 61–76. 98  Eli Noam, Television in Europe (New York: Oxford University Press, 1991), 116– 17; Alexander Szalai, “The Multinational Comparative Time Budget Research Project: A Venture in International Research Cooperation,” American Behavioral Scientist 10, no. 4 (1966): 30–31. 99  Monika Elsner, Thomas Müller, and Peter M. Spangenberg, “The Early History of German Television: The Slow Development of a Fast Medium,” Historical Journal of Film, Radio and Television 10, no. 2 (1990): 193–219. 100  Janet Thumin, Inventing Television Culture: Men, Women and the Box (Oxford: Oxford University Press, 2004), 24–25.

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 Peter Dahlgren, “Key Trends in European Television,” in Television Across Europe: A Comparative Introduction, edited by Jan Wieten, Graham Murdock, and Peter Dahlgren (London: Sage, 2000), 23–34. 102  David Gauntlett and Annette Hill, TV Living: Television, Culture and Everyday Life (London and New York: Routledge, 1999), 23–32; John P. Robinson and Steven Martin, “Time Use as a Social Indicator,” in Encyclopedia of Quality of Life and Well-Being Research, edited by Alex C. Michalos (Dordrecht: Springer, 2014), 159–79. 103  John P. Robinson, “Television and Leisure Time: Yesterday, Today and (Maybe) Tomorrow,” Public Opinion Quarterly 33 (1968): 210–22. 104  John P. Robinson, “IT, TV and Time Displacement: What Alexander Szalai Anticipated but Couldn’t Know,” Social Indicators Research 101, no. 2 (2011), 200. 105  Brants and De Bens, “The Status of TV Broadcasting in Europe,” 19–20. 106  Hasso Spode, “Der Aufstieg des Massentourismus im 20. Jahrhundert,” in Die Konsumgesellschaft in Deutschland, edited by Heinz-Gerhard Haupt and Claudius Torp (Frankfurt am Main: Campus, 2009), 114–28. 107  John Urry, The Tourist Gaze (London: Sage, 2002), 17–26. 108  Bill Bramwell, “Mass Tourism, Diversification and Sustainability in Southern Europe’s Coastal Regions,” in Coastal Mass Tourism: Diversification and Sustainable Development in Southern Europe, edited by Bill Bramwell (Clevedon: Channel View Publications, 2004), 12–14. 109  Rice and Ostergren, The Europeans, 341–47. 110  Jafar Jafari, ed., Encyclopedia of Tourism (London: Routledge, 2000), 208, 334, 550. 111  Rice and Ostergren, The Europeans, 349. 112  For critiques of consumer society and culture, see Stearns, Consumerism in World History, 61–64; Horkheimer and Adorno, Dialektik und Aufklärung, 108– 50; John K. Galbraith, The Affluent Society (London: Penguin, 1991 [1958]), 126–33; Jean Baudrillard, The Consumer Society: Myths and Structures (London: Sage, 1998 [1970]), 77–86; Roberta Sassatelli, Consumer Culture: History, Theory and Politics (London: Sage, 2007), 74–77. 113  Robinson, “IT, TV and Time Displacement,” 203–5. 114  Sassatelli, Consumer Culture, 2. 115  Jan De Vries, “Between Purchasing Power and the World of Goods,” in Consumption and the World of Good, edited by J. Brewer and R. Porter (London: Routledge, 1993), 85–132; Campbell, The Romantic Ethic; Neil McKendrick, “Die Ursprünge der Konsumgesellschaft: Luxus, Neid und soziale Nachahmung in der englischen Literatur des 18. Jahrhunderts,” in Europäische Konsumgeschichte: Zur Gesellschafts- und Kulturgeschichte des Konsums (18. bis 20. Jahrhundert), edited by Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka (Frankfurt: Campus Verlag, 1997), 75–107. 116  Paul Glennie, “Consumption within Historical Studies,” in Acknowledging Consumption, edited by Daniel Miller (London: Routledge, 1995), 167. 117  Lisa Tiersten, Marianne in the Market: Envisioning Consumer Society in Fin-de-Siècle France (Berkeley: University of California Press, 2001), 15–54. 118  Rebecca J. Pulju, Women and Mass Consumer Society in Postwar France (Cambridge: Cambridge University Press, 2011). 119  Ambrosius and Kaelble, “Einleitung,” 7–32.

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120

 Hannes Siegrist, “Konsum, Kultur und Gesellschaft im modernen Europa,” in Europäische Konsumgeschichte: Zur Gesellschafts- und Kulturgeschichte des Konsums (18. bis 20. Jahrhundert), edited by Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka (Frankfurt: Campus Verlag, 1997), 13–48. 121  Peter Scott, “Consumption, Consumer Credit and the Diffusion of Consumer Durables,” in 20th Century Britain: Economic, Cultural and Social Change, edited by Francesca Carnevali and Julie-Marie Strange (London and New York: Routledge, 2007), 162–79. 122  Susan Strasser, “The Alien Past: Consumer Culture in Historical Perspective,” Journal of Consumer Policy 26, no. 4 (2003): 375–93; Wolfgang König, Kleine Geschichte der Konsumgesellschaft: Konsum als Lebensform der Moderne (Stutgart: Franz Steiner Verlag, 2013), 20–24. 123  Peter Scholliers, “The Transformation from Traditional to Modern Patterns of Demand in Belgium (19th and 20th Centuries),” in Types of Consumption, eds. H. Baudet and M. Bogucka (Budapest: Akadémiai Kiadó, 1982), 58. 124  George R. Boyer, “The Convergence of Living Standards in the Atlantic Economy, 1870–1930,” in The New Comparative Economic History, edited by Timothy J. Hatton, Kevin H. O’Rourke, and Alan M. Taylor (Cambridge, MA: MIT Press, 2007), 317–42. 125  Calculated on the basis of the average multilateral distance between the percentage ratios of consumer goods categories. 126   Hartmut Kaelble, Nachbarn am Rhein: Entfremdung und Annäherung der franzözischen und deutschen Gesellschaft seit 1880 (Munich: C. H. Beck, 1991), 164–66; Sabine Haustein, “Westeuropäische Annäherungen durch Konsum seit 1945,” in Gesellschaften im Vergleich, edited by Hartmut Kaelble and Jürgen Schriewer (Frankfurt: Peter Lang, 1999), 353–90; F. Gardes, “International Convergence of Consumption Patterns,” Economic Bulletin for Europe 39, no. 2 (1987): 280–82. 127  Haustein, “Westeuropäische Annäherungen durch Konsum,” 353–90. 128  Peter Anderson and Ben Baumberg, Alcohol in Europe: A Public Health Perspective (London: Institute of Alcohol Studies, 2006), 399–400. For convergences of drinking cultures since the 1980s, see R. Gordon, D. Heim, and S. MacAskill, “Rethinking Drinking Cultures: A Review of Drinking Cultures and a Reconstructed Dimensional Approach,” Public Health 126 (2012): 3–11; Håkan Leifman, “Homogenisation in Alcohol Consumption in the European Union,” Nordic Studies on Alcohol and Drugs 18 (2001): 15–30. 129  Fine, Heasman, and Wright, Consumption in the Age of Affluence, 205; Roland Herrmann and Claudia Röder, “Does Food Consumption Converge Internationally? Measurement, Empirical Tests and Determinants,” European Review of Agricultural Economics 22, no. 3 (1995), 410; John Kearney, “Food Consumption Trends and Drivers,” Philosophical Transactions of the Royal Society: Biological Sciences 365 (2010): 2798–99. 130  Peter S. H. Leeflang and W. Fredvan Raaij, “The Changing Consumer in the European Union: A ‘Meta-Analysis,’” International Journal of Research in Marketing 12 (1995): 373–87; Jaishankar Ganesh, “Converging Trends within the European Union: Insights from an Analysis of Diffusion Patterns,” Journal of International Marketing 6, no. 4 (1998): 32–48.

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131

 Hartmut Kaelble, A Social History of Europe, 1945–2000: Recovery and Transformation after Two World Wars (New York: Berghahn, 2013), 83–85. 132  Ibid., 81. 133  Hartmut Kaelble, “Europäische Besonderheiten des Massenkonsums, 1950– 1990,” in Europäische Konsumgeschichte: Zur Gesellschafts- und Kulturgeschichte des Konsums (18. bis 20. Jahrhundert), edited by Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka (Frankfurt: Campus Verlag, 1997), 188–89. 134  Gardes, “International Convergence of Consumption Patterns,” 276–77. 135  Kaelble, “Europäische Besonderheiten des Massenkonsums,” 188–89. 136  Janos, East Central Europe, 344–57. 137  Eckstein, “National Income and Capital Formation in Hungary, 1900–1950,” 219, Table I. 138  Jerzy Tomaszewski, “Some Problems of the Capital Formation and Investment in the Capitalist Societies of East-Central Europe,” Acta Poloniae Historica 35 (1977): 145–67. 139  Ivan T. Berend, “Investment Strategy in East-Central Europe,” in The Rise of Managerial Capitalism, edited by Herman Daems and Herman van der Wee (Louvain: Leuven University Press, 1974), 184. 140  Eckstein, “National Income and Capital Formation in Hungary,” 219, Table I. 141  United Nations Economic Commission for Europe, Economic Survey of Europe for 1948 (Geneva: United Nations Economic Commission for Europe, 1949), 45; United Nations Economic Commission for Europe, “Economic Survey of Europe for 1949” (Geneva: United Nations Economic Commission for Europe, 1950), 23. 142  E. Lethbridge, “National Income and Produce,’” in Economic History of Eastern Europe, vol. 1, 550; Frederic L. Pryor, Zora P. Pryor, Miloš Stadnik, George J. Staller, “Czechoslovak Aggregate Production in the Interwar Period,” Review of Income and Wealth 17, no. 1 (1971): 35–59; Teichova, Wirtschaftsgeschichte der Tschechoslowakei, 104. 143  David A. Dyker, “A Note on the Investment Ratio in Eastern Europe,” Soviet Studies 34, no. 1 (1982): 96–105. 144  Václav Holešovský, “Personal Consumption in Czechoslovakia, Hungary, and Poland, 1950–1960: A Comparison,” Slavic Review 24, no. 4 (1965): 622–35; Bauer, Tervgazdaság, beruházás, ciklusok, 70. 145  Kornai, The Socialist System, 191. 146  Bauer, Tervgazdaság, beruházás, ciklusok, 197. 147  For trends in investment, see ibid., 263. For an account that emphasizes the relationship between standards of living and the investment decisions of economic planners, see Bogdan Mieczkowski, Personal and Social Consumption in Eastern Europe: Poland, Czechoslovakia, Hungary, and East Germany (New York: Praeger, 1975), 51–71. 148  Mieczkowski, Personal and Social Consumption, 62–63. 149  Valerie Bunce, “The Political Consumption Cycle: A  Comparative Analysis,” Soviet Studies 32, no. 2 (1980): 280–90; Bogdan Mieczkowski, “The Relationship between Changes in Consumption and Politics in Poland,” Soviet Studies 30, no. 2 (1978): 262–69.

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150

 Kornai, Economics of Shortage; George R. Feiwell, Problems in Polish Economic Planning (New York: Praeger, 1971), 280; Mieczkowski, “The Relationship between Changes in Consumption and Politics in Poland,” 262–69. 151  Wolfram Schrettl, Consumption, Effort, and Growth in Soviet-Type Economies: A Theoretical Analysis (Ph.D. diss., Boston University Graduate School, 1982), 160. For the cyclical nature of investments, see Bauer, Tervgazdaság, beruházás, ciklusok; Oldřich Kýn, Wolfram Schrettl, and Jiři Sláma, “Growth Cycles in Centrally Planned Economies: An Empirical Test,” in On the Stability of Contemporary Economic Systems, edited by Oldřich Kýn and Wolfram Schrettl (Göttingen: Vandenhoeck and Ruprecht, 1979), 109–32. 152  Teichova, “Die Tschechoslowakei,” in Handbuch der europäischen Wirtschafts- und Sozialgeschichte, edited by Wolfram Fischer et al. (Stuttgart: Klett-Cotta, 1987), 630; Barát et al., A magyar gazdaság vargabetűje, 435. 153  Jaroslav Krejči, National Income and Outlay in Czechoslovakia, Poland and Yugoslavia (New York: St. Martin’s Press, 1982), 38. 154  Barát et al., A magyar gazdaság vargabetűje, 194. 155  Eva Ehrlich, “Infrastructure,” in The Economic History of Eastern Europe, 1919– 1975 vol. 1, edited by M. C. Kaser and E. A. Radice (Oxford: Clarendon Press, 1985), 323–78. 156  Zora P. Pryor and Frederic L. Pryor, “Foreign Trade and Interwar Czechoslovak Economic Development, 1918–1938,” Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte 62, no. 4 (1975): 500–33. 157  Iván Berend and György Ránki, Magyarország gazdasága az első világháború után, 1919–1929 [Hungary’s economy after World War I] (Budapest: Akadémiai Kiadó, 1966), 187. 158  R udolf Nötel, “International Capital Movements and Finance in Eastern Europe, 1919–1949,” Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte 61, no. 1 (1974): 65–112. 159  Lethbridge, “National Income and Product,” 554–73. 160  Calculation based on the following source: Eckstein, “National Income and Capital Formation in Hungary,” 165, Table I. 161   Pryor and Pryor, “Foreign Trade and Interwar Czechoslovak Economic Development,” 500–33; Nötel, “International Capital Movements and Finance,” 103; Zdenek Drabek, “Foreign Trade Performance and Policy,” in The Economic History of Eastern Europe, 1919–1975, vol. 1, edited by M. C. Kaser and E. A. Radice (Oxford: Clarendon Press, 1985), 424; Hans Raupach, “The Impact of the Great Depression on Eastern Europe,” Journal of Contemporary History 4, no. 4 (1969): 80. 162  When calculated according to current or nominal prices, this dynamic appears to have developed somewhat differently. The gap was still small—though growing—in the 1950s and 1960s, and then expanded significantly in the following decade. Current price calculations show that domestic use exceeded production by the greatest margin in 1978, at which point it was 9.1 percent larger than the GDP. Barát et al., A magyar gazdaság vargabetűje, 387, 390. 163  Ibid., 176–77. 164  Tomasz Rynarzewski, “The Debt Crisis in Poland: Causes, Consequences, Prospects,” Kiel Working Papers no. 257 (Kiel: Institut für Weltwirtschaft, 1986), 6;

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Chapter 3: Notes: 165

Judit Kiss, “Debt Management in Eastern Europe,” Eastern European Economics 32, no. 3 (1994): 55; Iwona Antowska-Bartosiewicz and Witold Malecki, “Foreign Debt, Foreign Capital, Stabilization and Transformation in Poland,” MOST: Economic Policy in Transitional Economies 3, no. 2 (1993): 11. 165  Béla Kovrig, Magyar társadalompolitika, 1920–1945, I. rész [Hungarian social policy, 1920–1945, part 1] (New York: Magyar Nemzeti Bizottmány, 1954), 201–6. 166  For this approach, see Ágnes Pogány, “Háztartások jövedelemszerkezete a két világháború közötti Magyarországon” [The structure of household income in interwar Hungary], Történelmi Szemle 42, nos. 1–2 (2000): 115–27. 167  K earney, “Food Consumption Trends and Drivers,” 2798–99; Lars Juréen, “Long-Term Trends in Food Consumption: A Multi-Country Study,” Econometrica 24, no. 1 (1956): 1–21. 168  For this subject, see Vera Cao-Pinna and S. S. Shatalin, eds., Consumption Patterns in Eastern and Western Europe: An Economic Comparative Approach (Oxford: Pergamon Press, 1979). Consumption is composed of two parts: collective (or public) consumption and private consumption. Private consumption, in turn, consists of two components: personal consumption and in-kind social benefits provided to the populace (healthcare, education, etc.). According to another sort of categorization, the two constituents of consumption are government consumption and personal consumption. Government consumption can then be further subdivided into collective consumption and in-kind social benefits provided to the citizens. 169  Jaroslav Krejči, “Gross National Product in the United Kingdom and Czechoslovakia: A Comparative Analysis,” Soviet Studies 22, no. 3 (1971): 373. 170  J. N. Du Pasquier and L. Solari, “A Tentative Comparison of Consumption in South Eastern and Western European Countries,” in Cao-Pinna and Shatalin, eds., Consumption Patterns in Eastern and Western Europe, 174. 171  Kovács, “Fogyasztási szerkezetek nemzetközi összehasonlítása,” 988. 172  The components of private consumption can be divided into the following chief categories: (1) food, beverages, and tobacco; (2) clothing and footwear; (3) housing and energy; (4) furniture, appliances, and household goods; (5) healthcare; (6) transportation and communication; (7) entertainment and culture; (8) other. 173  Mieczkowski, “The Relationship between Changes in Consumption and Politics in Poland,” 262–69; Jean Marczewski, “The Problem of Consumption in Soviet-Type Economies,” Soviet Studies 31, no. 1 (1979): 112–17. 174  Bódy, “Polgárok és munkások 1929-ben,” 187–199; Pogány, “Háztartások jövedelemszerkezete a két világháború közötti Magyarországon,” 116–17. 175  Deaton, “The Structure of Demand in Europe,” 104. 176  Gyáni, “Középosztályi fogyasztási kultúra és az áruház,” 101–27; Bódy, A fogyasztás igénye, 371–86. 177  For an overview of consumption trends in East Central Europe, see Mieczkowski, Personal and Social Consumption, 79–275. 178  Charlotte Chase, “Symbolism of Food Shortage in Current Polish Politics,” Anthropological Quarterly 56, no. 2 (1983): 76–82; Alexander J. Matejko, “The Structural Roots of Polish Opposition,” The Polish Review 27, nos. 1–2 (1982): 112–40. 179  Krejči, National Income and Outlay, 49.

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180

 For trends in consumption structure, see A lakosság jövedelme és fogyasztása, 1960–1979 [The income and consumption of the populace, 1960–1979] (Budapest: KSH, 1981), 64–65; A lakosság jövedelme és fogyasztása, 1970–1986 [The income and consumption of the populace, 1970–1986] (Budapest: KSH, 1987), 72–73; A lakosság fogyasztása, 1970–1990 [The consumption of the populace, 1970–1990] (Budapest: KSH, 1993), 24–25; Életszínvonal, 1960–1980 [The standard of living, 1960–1980] (Budapest: KSH, 1981), 135–47. 181  H. S. Houthakker, “An International Comparison of Household Expenditure Patterns: Commemorating the Centenary of Engel’s Law,” Econometrica 25, no. 4 (1957): 532–51. 182  Kovács, “Fogyasztási szerkezetek nemzetközi összehasonlításban,” 979. 183  Cao-Pinna and Shatalin, eds., Consumption Patterns in Eastern and Western Europe, 179; Valuch, “A lódentől a miniszoknyáig,” 102–104. 184  Cao-Pinna and Shatalin, eds., Consumption Patterns in Eastern and Western Europe, 181. 185  Dominik Paprotny, “Measuring Central and Eastern Europe’s Socio-Economic Development Using Time Lags,” Social Indicators Research 127, no. 3 (2016): 949; Lewis H. Siegelbaum, “Introduction,” in The Socialist Car: Automobility in the Eastern Bloc, edited by Lewis H. Siegelbaum (Ithaca, NY, and London: Cornell University Press, 2011), 8. 186  Kovács, “Nemzetközi tendenciák a személyes fogyasztás alakulásában,” 712. 187  For these factors, see Kovács, “Fogyasztási szerkezetek nemzetközi összehasonlítása,” 986–89. 188   A bruttó hazai termék nemzetközi összehasonlítása Európában, 1980, Nemzetközi szervezetek statisztikai tevékenységéből [An international comparison of gross domestic product in Europe in 1980, based on the statistical work of international organizations] (Budapest: KSH, 1985), 66; Kovács, “Nemzetközi tendenciák a személyes fogyasztás alakulásában,” 702–23; Kovács, “Fogyasztási szerkezetek nemzetközi összehasonlítása,” 975–92. 189  Kaelble, “Introduction,” 1–56; Lindert and Williamson, “Growth, Equality, History,” 341–77. 190  Adam, Employment and Wage Policies in Poland, 192; Jiří Večerník, “Earnings Distribution in Czechoslovakia: Intertemporal Changes and International Comparison,” European Sociological Review 7, no. 3 (1991): 238; Jens Gieske, “Soziale Ungleichheit im Staatssozialismus: Eine Skizze,” Zeithistorische Forschungen/ Studies in Contemporary History 10, no. 2 (2013): 1–33. 191  Wolfram Fischer, “Wirtschaft, Gesellschaft und Staat in Europa, 1914–1980,” in Handbuch der europäischen Wirtschafts- und Sozialgeschichte, vol. 6, edited by Wolfram Fischer et al. (Stuttgart: Klett-Cotta, 1987), 61. 192   J. S. Flemming and John Micklewright, “Income Distribution, Economic Systems and Transition,” in Handbook of Income Distribution, vol. 1, edited by Anthony B. Atkinson and Francois Bourguignon (Amsterdam: Elsevier, 2000), 866. 193  Tomka, A Social History of Twentieth-Century Europe, 102. 194  Walter D. Connor, Socialism, Politics, and Equality: Hierarchy and Change in Eastern Europe and the USSR (New York: Columbia University Press, 1979), 231; Adam, Employment and Wage Policies in Poland, 201–204.

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 David Lane, “Structural and Social Change in Poland,” in Social Groups in Polish Society, edited by David Lane and George Kolankiewicz (London and Basingstoke: Macmillan, 1973), 24. 196  Connor, Socialism, Politics, and Equality, 231. 197  Helena Kociánová, “Differentiation of Incomes and Consumption in Socialist Countries,” Eastern European Economics 18, no. 1 (1979): 3–27. 198  Eszter Bartha, A  munkások útja a  szocializmusból a  kapitalizmusba Kelet-Európában, 1968–1989 [The workers’ path from socialism to capitalism in Eastern Europe, 1968–1989] (Budapest: L’Harmattan, 2010), 269. 199  David R. Henderson, Robert M. McNab, and Tamás Rózsás, “The Hidden Inequality in Socialism,” The Independent Review 9, no. 3 (2005): 389–412. 200  Kornai, The Socialist System, 318. 201  Fleming and Micklewright, “Income Distribution,” 872. 202  Göran Therborn, European Modernity and Beyond: The Trajectory of European Societies, 1945–2000 (London: Sage, 1996), 95. 203  International Bank for Reconstruction and Development, Hungary: Reform of Social Policy and Expenditures (Washington, DC: International Bank for Reconstruction and Development, 1992), 121; Rudolf Andorka, Anna Kondratas, and István György Tóth, “A jóléti rendszer átalakulása Magyarországon: felépítése, kezdeti reformjai és javaslatok: A Magyar-Nemzetközi Kék Szalag Bizottság 3. sz. Gazdaságpolitikai tanulmánya” [The transformation of the welfare system in Hungary: Its structure, early reforms, and recommendations; The third economic policy study of the Hungarian International Blue Ribbon Commission] (Budapest: Kék Szalag Bizottság Alapítvány, 1994), 17. 204  Branko Milanovic, “The Distributional Impact of Cash and In-Kind Transfers in Eastern Europe and Russia,” in Public Spending and the Poor, edited by D. van de Walle and K. Nead (Baltimore, MD: John Hopkins University Press, 1995). 205  Rudolf Andorka and István György Tóth, “A szociális kiadások és a szociálpolitika Magyarországon” [Social expenditures and social policy in Hungary], in Társadalmi riport, 1992 [Social report, 1992], edited by Rudolf Andorka, Tamás Kolosi, and György Vukovich (Budapest: TÁRKI, 1992), 442. 206  Kornai, The Socialist System, 320. 207  Ivan Szelényi, Urban Inequalities under State Socialism (Oxford: Oxford University Press, 1983). 208  Iván Szelényi, “Social Inequalities in State Socialist Redistributive Economies: Dilemmas for Social Policy in Contemporary Socialist Societies of Eastern Europe,” International Journal of Comparative Sociology 19, nos. 1–2 (1978): 67. 209  For similar arguments, see Kacper Pobłocki, “‘Knife in the Water’: The Struggle over Collective Consumption in Urbanizing Poland,” in Communism Unwrapped: Consumption in Cold War Eastern Europe, edited by Paulina Bren and Mary Neuburger (Oxford: Oxford University Press, 2012), 68–86; Szelényi, “Social Inequalities in State Socialist Redistributive Economies,” 63–87; Judit Bodnár and József Böröcz, “Housing Advantages for the Better Connected? Institutional Segmentation, Settlement Type and Social Network Effects in Hungary’s Late State-Socialist Housing Inequalities,” Social Forces 76, no. 4 (1998): 1275–1304. 210  For a similar description, see Kornai, The Socialist System, 322–23.

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211

 Henderson, McNab, and Rózsa, “The Hidden Inequality in Socialism,” 395–96.  Rosenfeld and Kalleberg, “A Cross-National Comparison,” 69–106; van der Lippe and van Dijk, “Comparative Research on Women’s Employment,” 221–41. 213  Jiří Večernik, “Earnings Distribution in Czechoslovakia: Intertemporal Changes and International Comparison,” European Sociological Review 7, no. 3 (1991): 245. 214  André Michel, “The Impact of Marriage and Children on the Division of Gender Roles,” in Changing Patterns of European Family Life, eds. Katja Boh, Maren Bak, and Cristine Clason (London: Routledge, 1989), 183. 215  Tanja van der Lippe and Éva Fodor, “Changes in Gender Inequality in Six Eastern European Countries,” Acta Sociologica 41, no. 2 (1998): 131–49. 216  Alexander Szalai, “Women’s Time: Women in the Light of Contemporary TimeBudget Research,” Futures 7 (1975): 385–99. 217  Elżbieta Tarkowska, “Intra-Household Gender Inequality: Hidden Dimensions of Poverty Among Polish Women,” Communist and Post-Communist Studies 35, no. 4 (2002): 429; Júlia Szalai, “A családi munkamegosztás néhány szociológiai problémájáról” [On certain sociological problems related to the division of family labor], in Család és házasság a mai magyar társadalomban [Family and marriage in contemporary Hungarian society], edited by Pál Lőcsei (Budapest: Gondolat, 1971), 188. 218  Therborn, European Modernity and Beyond, 64. 219  Sándor Szalai, ed., Idő a mérlegen [The use of time] (Budapest: Gondolat, 1978), 474–80. Original English edition: Alexander Szalai, ed., The Use of Time (The Hague: Mouton, 1972). 220  Szalai, ed., Idő a mérlegen, 473–74. 221  Rudolf Andorka, Tamás Kolosi, and György Vukovich, eds., Social Report (Budapest: TÁRKI, 1992), 136. 222  Therborn, European Modernity and Beyond, 64–65. 223   Claire Wallace and Sijka Kovacheva, “Youth Cultures and Consumption in Eastern and Western Europe: An Overview,” Youth and Society 28, no. 2 (1996): 189–214; Sándor Horváth, “Aping the West in Hungary: ‘Fridge Socialism’ and the Making of the ‘Teenager,’” in Konsum und Nation: Zur Geschichte nationalisierender Inszenierungen in der Produktkommunikation, edited by Oliver Kühschelm, Franz X. Eder, and Hannes Siegrist (Bielefeld: Transcript Verlag, 2012), 279–302. 224  Ina Merkel, “Working People and Consumption under Really-Existing Socialism: Perspectives from the German Democratic Republic,” International Labor and Working-Class History 55 (1999): 104. 225  Filip Pospíšil, “Youth Cultures and the Disciplining of Czechoslovak Youth in the 1960s,” Social History 37, no. 4 (2012): 477–500. 226  Inglehart, Culture Shift in Advanced Industrial Society, 66–103. 227  Nan Dirk de Graaf, “Distinction by Consumption in Czechoslovakia, Hungary, and the Netherlands,” European Sociological Review 7, no. 3 (1991): 272. 228  Antoni Sulek, “Changes in the Life Values of Polish Youth: Study Results, Observations, Speculations,” Youth and Society 17, no. 1 (1985): 3–24. 229  Tomasz Inglot, Welfare States in East Central Europe, 1919–2004 (Cambridge: Cambridge University Press, 2008), 83, 184. 212

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 Roland J. Fuchs and George J. Demko, “Geographic Inequality under Socialism,” Annals of the Association of American Geographers 69, no. 2 (1979): 2, 304–18. 231  György Majtényi, “Életstílus és szubkultúra: Az autózás története (1920–1960)” [Lifestyle and subculture: A history of driving, 1920–1960], Korall 1, no. 1 (2000): 105–6; Gyáni, “Hétköznapi élet Horthy Miklós korában,” 146–47. 232  Gyáni, “Középosztályi fogyasztási kultúra és az áruház,” 101–27. 233  For the classic description of this system, see Kornai, Economics of Shortage. For some other accounts, see Joseph Hraba, “Consumer Shortages in Poland: Looking Beyond the Queue into a World of Making Do,” Sociological Quarterly 26, no. 3 (1985): 387–404; David M. Kemme, “The Chronic Shortage Model of Centrally Planned Economies,” Soviet Studies 41, no. 3 (1989): 345–64; Małgorzata Mazurek, “Keeping It Close to Home: Resourcefulness and Scarcity in Late Socialist and Postsocialist Poland,” in Communism Unwrapped: Consumption in Cold War Eastern Europe, edited by Paulina Bren and Mary Neuburger (Oxford: Oxford University Press, 2012), 298–320. 234  For a catalogue of reforms, see Kornai, The Socialist System, 393. 235   Stanisław Gajewski, “Consumer Behavior in Economics of Shortage,” Journal of Business Research 24, no. 1 (1992): 5–10. 236  K emme, “The Chronic Shortage Model,” 357; Tibor Valuch, Hétköznapi élet Kádár János korában [Everyday life in the Kádár era] (Budapest: Corvina, 2006), 80–81. 237  Paulina Bren, “Weekend Getaways: The Chata, the Tramp and the Politics of Private Life in Post-1968 Czechoslovakia,” in Socialist Spaces: Sites of Everyday Life in the Eastern Bloc, edited by David Crowley and Susan Emily Reid (Oxford: Berg, 2002), 123–40. 238  Luminita Gatejel, “The Common Heritage of the Socialist Car Culture,” in The Socialist Car: Automobility in the Eastern Bloc, edited by Lewis H. Siegelbaum (Ithaca, NY, and London: Cornell University Press, 2011), 155; Luminita Gatejel, “Driving Behind the Iron Curtain: Automobility in the Eastern Bloc,” Mobility in History 7 (2016): 117–22. 239  Kornai, The Socialist System, 234; Péter Fóti, Röpirat a lakáshelyzetről [Pamphlet on the housing situation] (Budapest: Magvető, 1988). 240  Valentina Fava, “The Elusive People’s Car: Imagined Automobility and Productive Practices along the ‘Czechoslovak Road to Socialism’ (1945–1968),” in The Socialist Car: Automobility in the Eastern Bloc, edited by Lewis H. Siegelbaum (Ithaca, NY, and London: Cornell University Press, 2011), 23–24. 241  Zsuzsa Kapitany, Janos Kornai, and Judit Szabo, “Reproduction of Shortage on the Hungarian Car Market,” Soviet Studies 36, no. 2 (1984): 236–56; Kornai, The Socialist System, 236. For the use of the automobile, see also Ágnes Losonczi, Az életmód az időben, a tárgyakban és az értékekben [Lifestyle: In time, objects, and values] (Budapest: Gondolat, 1977), 430–49. 242  Therborn, European Modernity and Beyond, 140–46. 243  Gatejel, “The Common Heritage of the Socialist Car Culture,” 155. 244  Fava, “The Elusive People’s Car,” 18. 245  Árpád Skrabski, ed., Mit kér a nép? Kielégítetlen szükségletek 1988-ban a ma­­gyar lakosságban, I. kötet. [What do the people want? The unsatisfied desires of the

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Hungarian populace in 1988, vol. 1] (Budapest: Px Informatikai és Humán Kockázatokat Kezelő Kft., 1989), 8–17. 246  György Ádám, Az orvosi hálapénz Magyarországon [Medical gratuities in Hungary] (Budapest: Magvető, 1986). 247  Mariusz Jastrząb, “Cars as Favors in People’s Poland,” in The Socialist Car: Automobility in the Eastern Bloc, edited by Lewis H. Siegelbaum (Ithaca, NY, and London: Cornell University Press, 2011), 38–46; György Majtényi, K-vonal: Uralmi elit és luxus a szocializmusban [The K-line: Luxury and the ruling elite during the socialist era] (Budapest: Nyitott Könyvműhely, 2009). 248  Jastrząb, “Cars as Favors in Poland,” 38–41. 249  Paulina Bren, “Tuzex and Hustler: Living It Up in Czechoslovakia,” in Communism Unwrapped: Consumption in Cold War Eastern Europe, edited by Paulina Bren and Mary Neuburger (Oxford: Oxford University Press, 2012), 27–48; Ivaylo Ditchev, “Spaces of Desire: Consumer Bound and Unbound,” Boundary 41, no. 1 (2014): 101–12. 250  Henderson, McNab, and Rózsa, “The Hidden Inequality in Socialism,” 389–412. 251  Kornai, The Socialist System, 84. 252  Steven L. Sampson, “The Second Economy of the Soviet Union and Eastern Europe,” The Annals of the American Academy of Political and Social Science 493 (1987): 120–36; Andrzej Korbonski, “The ‘Second Economy’ in Poland,” Journal of International Affairs 35, no. 1 (1981): 1–13; Péter Galasi and Endre Sík, “Invisible Incomes in Hungary,” Social Justice 15, nos. 3–4 (1988): 160–78. 253  Jerzy Kochanowski, “Pioneers of the Free Market Economy? Unofficial Commercial Exchange between People from the Socialist Bloc Countries (1970s and 1980s),” Journal of Modern European History 8, no. 2 (2010): 196–220; Jerzy Kochanowski, Jenseits der Planwirtschaft: Die Schwarzmarkt in Poland, 1944– 1989 (Göttingen: Wallstein Verlag, 2013), 14–16. 254  Cristina Petrescu, “Entrepreneurial Tourism in Romania: A System-Stabilizing Factor?,” in “Schleichwege”: Inoffizielle Begegnungen sozialistischer Staatsbürger zwischen 1956 und 1989, edited by Włodzimierz Borodziej, Jerzy Kochanowski, and Joachim von Puttkamer (Cologne: Böhlau, 2010), 115–33; Kochanowski, Jenseits der Planwirtschaft, 414–36. 255  Endre Sik and Claire Wallace, “The Development of Open-Air Markets in EastCentral Europe,” International Journal of Urban and Regional Research 23, no. 4 (1999): 697–714; Ágnes Czakó and Endre Sik, “Characteristics and Origins of the Comecon Open-Air Market in Hungary,” International Journal of Urban and Regional Research 23, no. 4 (1999): 715–37. 256  Blyton, Changes in Working Time, 19; Cross, “Work Time,” 504–505; Huberman, “Working Hours of the World Unite?,” 964–1001; Bosch, Dawkins, and Michon, “Working Time in 14 Industrialized Countries,” 1–5; Haberman and Minns, “The Times They are Not Changin’,” 543. 257  Béla Kovrig, A munka védelme a dunai államokban [The protection of labor in the states of the Danube] (Cluj/Kolozsvár: Universitas Francisco-Josephina, 1944), 94–108. 258   Sándor Farkasfalvi, “Adatok a 8 órai munkaidő kérdéséhez” [Data related to the question of the 8-hour workday], Magyar Statisztikai Szemle 8, no. 3 (1930): 193.

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259

 Dezső Pap, “Munkaidő” [Working time], in Közgazdasági enciklopédia, III. kötet [Encyclopedia of Economics, vol. 3] (Budapest: Athenaeum, no year), 1184; Kovrig, A munka védelme a dunai államokban, 95–126. 260  Kovrig, Magyar társadalompolitika, I. kötet, 91–95. 261  Munkaidő és munkaidő-csökkentés az iparban, 1968 [Working time and reductions of working time in industry, 1968] (Budapest: KSH, 1969). 262  John P. Robinson, Philip E. Converse, and Sándor Szalai, “A mindennapi élet tizenkét országban” [Everyday life in 12 countries], in Idő a mérlegen: 12 ország városi és városkörnyéki népességének napi tevékenységei a Nemzetközi Összehasonlító Időmérleg Kutatómunkálat tükrében [The use of time: Daily activities of urban and suburban populations in 12 countries, as described by the multinational comparative time budget research project], edited by Sándor Szalai (Budapest: Gondolat, 1978), 139. 263  ILO Labour Statistics Database, accessed January 26, 2015, available at http:// laborsta.ilo.org/STP/guest# 444. 264  The reduction in industrial working times in 1968 amounted to roughly 1.5 hours per week. Munkaidő és munkaidő-csökkentés az iparban, 1968, 22. 265  For the reduction of working times in Hungary, see János Timár, Idő és munkaidő [Time and working time] (Budapest: KJK, 1988), 194–226. 266  Ibid. 267  Rudolf Andorka, Béla Falussy, and István Harcsa, “Time Strategies and Way of Life,” in Social Report, edited by Rudolf Andorka, Tamás Kolosi, and György Vuko­vich (Budapest: TÁRKI, 1992), 129–32; Rudolf Andorka, Béla Falussy, and István Harcsa, Időmérleg: Részletes adatok [Time use: Detailed statistics] (Budapest: KSH, 1982); János Farkas and Ágnes Vajda, Időgazdálkodás és munkatevé­ keny­ségek [Time management and work activities] (Budapest: KSH, 1989). 268  Gergely Mohácsi, “Szép, erős, egészséges: Szabadidő és testkultúra Budapesten a 20. század első felében” [Beautiful, strong, and healthy: Leisure time and body culture in Budapest in the first half of the 20th century], Korall 3, nos. 7–8 (2002): 40–43. 269  Thierry Terret, “Sport in Eastern Europe during the Cold War,” The International Journal of the History of Sport 26, no. 4 (2009): 465–68. 270  Diethelm Blecking, “Zum historischen Problem des slawischen Sokolbewegung,” in Die slawische Sokolbewegung: Beiträge zur Geschichte von Sport und Nationalismus in Osteuropa, ed. Diethelm Blecking (Dortmund: Forschungsstelle Ostmitteleuropa, 1991), 7–22. 271  Petr Roubal, “Politics of Gymnastics: Mass Gymnastic Displays Under Communism in Central and Eastern Europe,” Body & Society 9, no. 2 (2003): 1–25; Petr Roubal, “A Didactic Project Transformed into the Celebration of a Ritual: Czechoslovak Spartakiads, 1955–1990,” Journal of Modern European History 4, no. 1 (2006): 90–113. 272  Pavel Skopal, “The Cinematic Shapes of the Socialist Modernity Programme: Ideological and Economic Parameters of Cinema Distribution in the Czech Lands, 1948–70,” in Cinema, Audiences and Modernity: New Perspectives on European Cinema History, eds. Daniel Biltereyst, Richard Maltby, and Philippe Meers (London and New York: Routledge, 2012), 81–98.

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 György Vajdovich, “Filmtörténet” [Film history], in Magyar Kódex, 6. kötet, Ma­­ gyarok a 20. században. Magyarország művelődéstörténete, 1918–2000 [Hungarian codex, vol. 6, Hungarians in the 20th century: The cultural history of Hungary, 1918–2000] (Budapest: Kossuth, 2001), 269–90. 274  Róbert Palágyi, “Film” [Movies], in Közgazdasági enciklopédia, II. [Economic encyclopedia, vol. 2] (Budapest: Athenaeum, n.d.), 230–34. 275   Századok statisztikája [Statistics of centuries] (Budapest: KSH, 2001), 79–80. For a broader overview, see Donald Sasson, The Culture of the Europeans from 1800 to the Present (London: Harper Press, 2006), 952–62. 276  Kyrill Kunakhovich and Pavel Skopal, “Cinema Cultures of Integration: Film Distribution and Exhibition in the GDR and Czechoslovakia from the Perspective of Two Local Cases,” in Cinema in Service of the State: Perspectives on Film Culture in the GDR and Czechoslovakia, 1945–1960, edited by Lars Karl and Pavel Skopal (New York and Oxford: Berghahn, 2015), 275–314. 277  Barnabás Barta, ed., Magyarország művelődési viszonyai [Cultural conditions in Hungary] (Budapest: Kossuth, 1984), 227. 278  Noam, Television in Europe, 279–87. 279  László Ghimessy, “Magyarország rádióvevő-engedélyei 1942-ben” [Hungarian wireless permits in 1942], Magyar Statisztikai Szemle 21, no. 12 (1943): 650–60. 280   UN Statistical Yearbook 1951 (New York: UN Department of International Economic and Social Affairs, 1951); Therborn, European Modernity and Beyond, 141. 281  Noam, Television in Europe, 280. 282  Tibor Valuch, “A magyar művelődés 1948 után” [Hungarian culture after 1948], in Magyar művelődéstörténet [Hungarian cultural history], edited by László Kósa (Budapest: Osiris, 2006), 616–18. 283  Jan Loboda, “The Diffusion of Television in Poland,” Economic Geography 50, no. 1 (1974): 70–82. 284  Barta, ed., Magyarország művelődési viszonyai, 1960–1982, 280; Andorka and Harcsa, Modernization in Hungary, 35. 285   Rudolf Andorka and Béla Falussy, “Az időmérleg változásai, 1963–1977” [Changes in time budgets, 1963–1977], Szociológia 11, no. 3 (1982): 333; Béla Falussy and György Vukovich, “Az idő mérlegén (1963–1993)” [Surveying time use (1963– 1993)], in Társadalmi riport, 1996 [Social report, 1996], edited by Rudolf Andorka, Tamás Kolosi, and György Vukovich (Budapest: TÁRKI–Századvég, 1996), 81. 286  J. P. Robinson, “Television’s Impact on Everyday Life: Some Cross-National Evidence,” in Television and Social Behavior, vol. 4, Television in Day-to-day Life: Patterns of Use, edited by E. A. Rubinstein et al. (Rockville: National Institute of Mental Health, 1972), 410–31. 287  Anikó Imre, “Adventures in Early Socialist Television Edutainment,” Journal of Popular Film and Television 40, no. 3 (2012): 119–30. 288  Sabina Mihelj, “Television Entertainment in Socialist Eastern Europe: Between Cold War Politics and Global Developments,” in Popular Television in Eastern Europe During and Since Socialism, edited by Anikó Imre, Timothy Havens, and Kati Lustyk (London and New York: Routledge, 2012), 17; György Péteri, “Consumer and consumerism under state socialism: demand-side abundance and its discontents in Hungary during the long 1960s,” in Overwhelmed by overflows?

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How people and organizations create and manage excess, edited by Orvar Löfgren and Barbara Czarniawska (Lund and Manchester: Lund University Press and Manchester University Press, 2019), 18. 289  Jill R. Steward, “Moral Economies and Commercial Imperatives: Food, Diets and Spas in Central Europe, 1800–1914,” Journal of Tourism History 4, no. 2 (2012): 181–203; John K. Walton, “Preface: Some Contexts for Yugoslav Tourism History,” in Yugoslavia’s Sunny Side: A History of Tourism in Socialism (1950s–1960s), edited by Hannes Grandits and Karin Taylor (Budapest and New York: CEU Press, 2010), xiii. 290  Allan M. Williams and Vladimir Baláž, Tourism in Transition: Economic Change in Central Europe (London and New York: I. B. Tauris Publishers, 2000), 20. 291  Derek R. Hall, “Evolutionary Pattern of Tourism Development in Eastern Europe and the Soviet Union,” in Tourism and Economic Development in Eastern Europe and the Soviet Union, edited by Derek R. Hall (London: Bellhaven Press, 1991), 104–5. 292  Péter Bencsik, “Documents of Passage, Travel Opportunities and Border Traffic in 20th Century Hungary,” Minorities, Politics, Society 2 (2002): 51–70. 293  Mikolaj Morzycki-Markowski, “How People Crossed Borders in Socialism: The Polish Case,” in “Schleichwege”: Inoffizielle Begegnungen sozialistischer Staatsbürger zwischen 1956 und 1989, edited by Włodzimierz Borodziej, Jerzy Kochanowski, and Joachim von Puttkamer (Cologne: Böhlau, 2010), 55–66. 294  Grzegorz Gołembski, “Tourism in the Economy of Shortage,” Annals of Tourism Research 17, no. 1 (1990): 55–68. 295  Mark Keck-Szajbel, “Shop Around the Bloc: Trader Tourism and Its Discontents on the East German–Polish Border,” in Communism Unwrapped: Consumption in Cold War Eastern Europe, edited by Paulina Bren and Mary Neuburger (Oxford: Oxford University Press, 2012), 374–92. 296  Victoria de Grazia, Irresistible Empire: America’s Advance Through Twentieth-Century Europe (Cambridge, MA: Belknap Press, 2005); Katherine Verdery, What Was Socialism and What Comes Next? (Princeton, NJ: Princeton University Press, 1996), 25. 297  Václav Havel, The Power of the Powerless: Citizens Against the State in Central Eastern Europe (London: Hutchinson, 1985), 38; Ewa Morawska, “On Barriers to Pluralism in Pluralist Poland,” Slavic Review 47, no. 4 (1988): 627–41; Berend, Central and Eastern Europe, 148; Janusz Żarnowski, “East-Central Europe: A Periphery of ‘Genuine Europe?,’” Acta Poloniae Historica 82 (2000): 177; Ferenc Hammer, “A Gasoline Scented Sinbad: The Truck Driver as a Popular Hero in Socialist Hungary,” Cultural Studies 16, no. 1 (2002): 80–126; Krisztina Fehérváry, “Innocence Lost: Cinematic Representation of 1960s Consumption for 1990s Hungary,” Anthropology of East Europe Review 24, no. 2 (2006): 54–61; Jiří Knapík, “Czechoslovak Culture and Cinema, 1945–1960,” in Cinema in Service of the State: Perspectives on Film Culture in the GDR and Czechoslovakia, 1945–1960, edited by Lars Karl and Pavel Skopal (New York and Oxford: Berghahn, 2015), 58. 298  Stephen Merl, “Staat und Konsum in der Zentralverwaltungswirtschaft,” in Europäische Konsumgeschichte: Zur Gesellschafts- und Kulturgeschichte des Konsums

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(18. bis 20. Jahrhundert), edited by Hannes Siegrist, Hartmut Kaelble, and Jürgen Kocka (Frankfurt: Campus Verlag, 1997), 206–7; Merkel, Utopie und Bedürfnis. 299  O. Ozherel’ev, “The Interrelationship between Production and the Needs of Society under Socialism,” Problems of Economics 17, no. 12 (1975): 3–16; Phillip Weitzman, “Soviet Long-Term Consumption Planning: Distribution According to Rational Need,” Soviet Studies 26, no. 3 (1974): 305–21. 300   Andrzej K. Kozminski, “Consumers in Transition from the Centrally Planned Economy to the Market Economy,” Journal of Consumer Policy 14 (1992): 352–54. 301  Bradley Adams, “Buying Time: Consumption and Political Legitimization in Late-Communist Czechoslovakia,” in The End and the Beginning: The Revolutions of 1989 and the Resurgence of History, edited by Vladimir Tismăneanu and Bogdan C. Iacob (Budapest–New York: Central European University Press, 2012), 399–421. 302  Tibor Valuch, “A bőséges ínségtől az ínséges bőségig: A fogyasztás változásai Magyarországon az 1956 utáni évtizedekben” [From abundant need to a needy abundance: Changes in Hungarian consumption in the decades after 1956], in Metszetek: Válogatott tanulmányok [Cross-sections: Selected studies], edited by Tibor Valuch (Budapest: Argumentum and 1956-os Intézet, 2006), 222–52. 303  Merl, “Staat und Konsum,” 206–13. 304   Paulina Bren, “Mirror, Mirror, on the Wall... Is the West the Fairest of Them All? Czechoslovak Normalization and Its (Dis)contents,” Kritika 9, no. 4 (2008): 846–47; Tamás Dombos and Lena Pellandini-Simany, “Kids, Cars, or Cashews?,” in Communism Unwrapped: Consumption in Cold War Eastern Europe, edited by Paulina Bren and Mary Neuburger (Oxford: Oxford University Press, 2012), 335. 305  Árpád Tyekvicska, “Fridzsider szocializmus” [Frigidaire socialism], in Beszélő évek, 1957–1968: A Kádár-korszak történet, I. [The talking years, 1957–1968: A history of the Kádár era, part 1], edited by Sándor Révész (Budapest: Stencil Kulturális Alapítvány, 2000), 260–63. 306  Ferenc Kozma, Jólét szocialista módon [Socialist-style welfare] (Budapest: Kossuth Könyvkiadó, 1979), 102, 99–100. 307  Piotr Wróbel, Historical Dictionary of Poland, 1945–1996 (London and New York: Routledge, 2014), 72; Timothy Garton Ash, The Polish Revolution: Solidarity (New Haven, CT: Yale Univeristy Press, 2002), 41–72; Wojciech Lamentowicz, “Adaptation through Political Crises in Post-War Poland,” Journal of Peace Research 19, no. 2 (1982): 117–31; Grzegorz Ekiert, The State against Society: Political Crises and Their Aftermath in East Central Europe (Princeton: Princeton University Press, 1996), 222–56. 308  Mieczkowski, “The Relationship between Changes in Consumption and Politics in Poland,” 262–69. 309  Fehérváry, “Goods and States,” 432; Verdery, What Was Socialism?, 19–38. 310  Verdery, What Was Socialism and What Comes Next?, 28; Fehérváry, “Goods and States,” 432. 311  Malgorzata Mazurek and Matthew Hilton, “Consumerism, Solidarity and Communism: Consumer Protection and the Consumer Movement in Poland,” Journal of Contemporary History 42, no. 2 (2007): 316. 312  Mazurek and Hilton, “Consumerism, Solidarity and Communism,” 317.

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 Padraic Kenney, “The Gender of Resistance in Communist Poland,” American Historical Review 104 (1999): 399–425. 314  Ronald Inglehart, Miguel Basañez, and Alejandro Romero, Human Values and Beliefs: A Cross-Cultural Sourcebook (Ann Arbor: University of Michigan Press, 1998). 315  For consumer aspirations in a  different context, see Richard A. Easterlin, “The Economics and Sociology of Fertility: A Synthesis,” in Historical Studies of Changing Fertility, edited by Charles Tilly (Princeton: Princeton University Press, 2015), 57–133; Easterlin, “Worldwide Standard,” 7–26. 316  Wallace and Kovacheva, “Youth Cultures and Consumption,” 189–214; Pospíšil, “Youth Cultures and the Disciplining of Czechoslovak Youth,” 488–93. 317  Inglehart, Culture Shift, 74–83. 318  de Graaf, “Distinction by consumption,” 272. 319  Sampson, “The Second Economy of the Soviet Union and Eastern Europe,” 120–36. 320  For convergence clubs, see Monojit Chatterji, “Convergence Clubs and Endogenous Growth,” Oxford Review of Economic Policy 8, no. 4 (1992): 57–69; Panagiotis Artelaris, Dimitris Kallioras, and George Petrakos, “Regional Inequalities and Convergence Clubs in the European Union New Member-States,” Eastern Journal of European Studies 1, no. 1 (2010): 113–33. CHAPTER 4 1

 Offer, “Economic Welfare Measurements,” 371–99.  Alex C. Michalos, ed., Encyclopedia of Quality of Life and Well-Being Research (Dordrecht: Springer, 2014); Wolfgang Glatzer, Laura Camfield, Valerie Moller, and Mariano Rojas, eds., Global Handbook of Quality of Life: Exploration of Well-Being of Nations and Continents (Heidelberg and New York: Springer, 2015); Richard J. Estes and M. Joseph Sirgy, eds., The Pursuit of Human Well-Being: The Untold Global History (Dordrecht: Springer, 2017). 3  Ronald Inglehart, Modernization and Postmodernization: Cultural, Economic, and Political Change in 43 Societies (Princeton: Princeton University Press, 1997). 4  See, for example, Nordhaus and Tobin, “Is Growth Obsolete?,” 1611–84. 5  For comprehensive accounts of this subject, see Frank Ackerman et al., eds., Human Well-Being and Economic Goals (Washington, DC: Island Press, 1997); Veenhoven, “Quality-of-Life Research,” 54–62; Martha Nussbaum and Amartya Sen, eds., The Quality of Life (Oxford: Oxford University Press, 1993); Noll, “Wohlstand, Lebensqualität,” 431–73. 6  Sen, The Standard of Living. 7  M. Joseph Sirgy, Richard J. Estes, and Audrey N. Selian, “How We Measure Well-Being: The Data Behind the History of Well-Being,” in The Pursuit of Human Well-Being: The Untold Global History, eds. Richard J. Estes and M. Joseph Sirgy (Dordrecht: Springer, 2017), 135–57. 8  OECD, The Well-Being of Nations: The Role of Human and Social Capital (Paris: OECD, 2001), 10–11. 9  Tim Jackson and Nick Marks, Measuring Sustainable Economic Welfare: A Pilot Index, 1950–1990 (Stockholm: Stockholm Environment Institute, 1994); Ken2

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neth C. Land, “History of Social Indicators and Its Evolution,” in Encyclopedia of Quality of Life and Well-Being Research, edited by Alex C. Michalos (Dordrecht: Springer, 2014), 2875–82; Noelia Somarriba Arechavala and Bernardo Pena Trapero, “Synthetic Indicators of the Quality of Life in Europe,” in Encyclopedia of Quality of Life and Well-Being Research, ed. Alex C. Michalos (Dordrecht: Springer, 2014), 6550–54; Jan Luiten van Zanden et al., eds., How Was Life? Global Well-Being since 1820 (Paris: OECD, 2014), 23–36. 10  Offer, “Economic Welfare Measurements,” 372. 11  Zolotas, Economic Growth; Dimitrios Giannias and Eleni Sfakianaki, “Quality of Life Index,” in Encyclopedia of Quality of Life and Well-Being Research, edited by Alex C. Michalos (Dordrecht: Springer, 2014), 5276–80. 12  Michael Argyle, “Subjective Well-Being,” in In Pursuit of the Quality of Life, edited by Avner Offer (Oxford: Oxford University Press, 1996), 18–45; Ruut Veenhoven, “Happiness, also Known as ‘Life Satisfaction’ and ‘Subjective Well-Being,’” in Encyclopedia of Quality of Life and Well-Being Research, edited by Alex C. Michalos (Dordrecht: Springer, 2014), 63–77; Arthur A. Stone and Christopher Mackie, eds., Subjective Well-Being: Measuring Happiness, Suffering, and Other Dimensions of Experience (Washington, DC: The National Academies Press, 2013); John F. Helliwell, Richard Layard, and Jeffrey D. Sachs, eds., “World Happiness Report 2018” (New York: Sustainable Development Solutions Network, 2018). 13  For the database, see http://wdi.worldbank.org/tables. Accessed March 15, 2019. 14  van Zanden et al., eds., How Was Life?, 249–69. 15  Items taken into account by the GPI include the following: the value of household labor and child-rearing, volunteer and charitable work, and leisure time; costs associated with the depletion of non-renewable natural resources, family breakdown, environmental damage, commuting to work, crime, noise pollution, etc. See Cobb, Halstead, and Row, Genuine Progress Indicator, 13–39; Kemal Dervis and Jeni Klugman, “Measuring Human Progress: The Contribution of the Human Development Index and Related Indices,” Revue d’économie politique 121, no. 1 (2011): 73–92. 16  Jackson and Marks, Measuring Sustainable Economic Welfare, 5–6; See also the webpage of the Friends of the Earth organization, accessed January 26, 2015, at www.foe.org.uk/campaigns/sustainable_development/progress. 17  Niels Lind, “Human Development Index (HDI),” in Encyclopedia of Quality of Life and Well-Being Research, edited by Alex C. Michalos (Dordrecht: Springer, 2014), 3012–13; For the similar concept of Historical Index of Human Development (HIHD), see Leandro Prados de la Escosura, “World Human Development: 1870– 2007,” The Review of Income and Wealth 61, no. 2 (2015): 220–47. 18  During its short history, the concept of the HDI underwent several changes. In its 2010 Human Development Report, the UNDP began using a considerably different method for calculating the HDI in which the education index is based on the mean years of schooling and expected years of schooling. United Nations Development Programme, Human Development Report, 1998; Arne Melchior, Kjetil Telle, and Henrik Wiig, Globalisation and Inequality: World Income Distribution and Living Standards, 1960–1998 (Oslo: The Norwegian Institute of International Affairs, 2000), 23–32; Nicholas Crafts, “The Human Development Index

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and Changes in Standards of Living: Some Historical Comparisons,” European Review of Economic History 1 (1997): 299–322. 19  Daphne Ahrendt, Hans Dubois, and Erika Mezger, “An Overview of Quality of Life in Europe,” in Global Handbook of Quality of Life: Exploration of Well-Being of Nations and Continents, edited by Wolfgang Glatzer et al. (Heidelberg and New York: Springer, 2015), 625–61; Wolfgang Glatzer and Jürgen Kohl, “The History of Well-Being in Europe,” in The Pursuit of Human Well-Being: The Untold Global History, edited by Richard J. Estes and M. Joseph Sirgy (Dordrecht: Springer, 2017), 409–52. 20  Available at https://www.foe.co.uk/sites/default/files/downloads/wellbeing.pdf. Accessed November 4, 2017. 21  Offer, “Economic Welfare Measurements,” 374. 22  United Nations Development Programme, “Human Development Report, 1990” (New York: United Nations, 1990). For a discussion of this indicator, see Crafts, “Human Development Index,” 299–322; Nicholas Crafts, “The Human Development Index, 1870–1999: Some Revised Estimates,” European Review of Economic History 6 (2002): 395–405. 23  The formula currently in use is the following: HDI = (E + I + L)/3, where E = 0.67LIT + 0.33ENROL, I = (log y—log 100)/(log 40000—log 100), and L = (e0— 25)/(85—25). The variables in this equation are as follows: E = education, I = income, L = life expectancy, LIT = adult literacy rate, ENROL = average percentage proportion of the appropriate age cohorts enrolled in primary, secondary, and post-secondary education, y = per capita GDP based on purchasing power parity, and e0 = average life expectancy at birth. The value of the variables E, I, and L thus ranges between 0 and 1, as does the HDI itself. 24  D. L. Costa and R. H. Steckel, Long Term Trends in Health, Welfare, and Economic Growth in the United States, Historical Working Paper 76 (Washington, DC: National Bureau of Economic Research, 1995); S. Anand and M. Ravallion, “Human Development in Poor Countries: On the Role of Private Income and Public Services,” Journal of Economic Perspectives 7 (1993): 134; Roderick Floud and Bernard Harris, “Health, Height, and Welfare: Britain, 1700–1980,” in Health and Welfare during Industrialization, eds. Richard H. Steckel and Roderick Floud (Chicago: University of Chicago Press, 1997), 91–126. 25  The method for calculating the HDI has changed slightly over time. In 1990, for example, the education dimension included only literacy; enrollment rates were included the following year. More significant changes affected the way it accounts for GDP figures. From the beginning, analysts have used the principle of diminishing returns in accounting for GDP, particularly because doing so reduces the sometimes striking gaps between poor and more advanced countries. Without this adjustment, the huge differences in economic development would give this variable a decisive influence and allow it to dominate the values in the index. This, in turn, would call the entire project into question insofar as the hierarchy of countries established by these calculations—and the changes in this hierarchy over time—would, for the most part, correspond to per capita GDP rankings and the changes therein. These degressive methods of accounting for GDP have also changed several times over the years, but they have always

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strongly suppressed the value of income indicators, especially at higher levels. This is also true of the significant revisions in 1999. The UN and the UNDP have since used this newer formula to revise their past calculations, that is, they have used it to recalculate older data. 26  Recent publications of the UNDP have addressed this issue by calculating a separate index including the inequality dimension. 27  Realizing this problem, the UNDP attempted to include a component of this sort in 1992. It soon abandoned the effort, however. Given the political sensitivities related to this question, the organization’s analysts could not come to a consensus about a method for assigning values to civil and political rights. 28  Melchior, Tell, and Wiig, Globalisation and Inequality, 29. 29  In the following section, the HDI data concerning the recent decades is based on UNDP publications. However, because the UNDP has published such indices only back to 1975, for the earlier periods Nicholas Crafts’s data will be used. Because Crafts’s numbers for East Central Europe are not always adequate, we had to perform our own calculations for that region. For instance, though Crafts does not indicate it, he compiles data for Hungary’s pre-1913 national territory, which hinders efforts to make comparisons with later periods. In every case, Crafts used Angus Maddison’s time series as his source for income and GDP data (Maddison, Monitoring the World Economy), while his figures for average life expectancy are derived from UN demographic yearbooks: United Nations, Demographic Yearbook (New York: United Nations, 1957). Figures for literacy and enrollment rates are more difficult to come by, especially for the first half of the twentieth century. For the former, Crafts based his figures on UNESCO publications: UNESCO, Statistical Yearbook (New York: UNESCO, 1963 and subsequent volumes); for the period up to 1913, he used estimates worked out by O’Rourke and Williamson: K. H. O’Rourke and J. G. Williamson, “Around the European Periphery, 1870–1913: Globalization, Schooling and Growth,” Working Paper Series WP 95/17 (Dublin: Centre for Economic Research, 1995). For estimates of enrollment rates, Crafts again used the work of O’Rourke and Williamson, along with an analysis by Brian R. Mitchell: Brian R. Mitchell, International Historical Statistics: Europe, 1750–1988 (Basingstoke: Macmillan, 1992). 30  Crafts, “Human Development Index,” 306. 31  Ibid., 306–307. 32  Sen, “Mortality as an Indicator,” 5. 33  Out of the enormous literature on this theme, see Stephen J. Kunitz, “Mortality since Malthus,” in The State of Population Theory, edited by David Coleman and Roger Schofield (Oxford: Blackwell, 1986), 279–302; Roger Schofield and David Reher, “The Decline of Mortality in Europe,” in The Decline of Mortality in Europe, edited by. Roger Schofield, David Reher, and Alain Bideau (Oxford: Clarendon, 1991), 1–17; Paul Demeny and Geoffrey McNicoll, eds., Encyclopedia of Population (New York: Macmillan, 2003); Graziella Caselli, Jacques Vallin, and Guillaume Wunsch, eds., Demography: Analysis and Synthesis, vols. 1–4 (Amsterdam: Academic Press, 2006); Dudley L. Poston and Leon F. Bouvier, Population and Society: An Introduction to Demography (Cambridge: Cambridge University Press, 2010).

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34

 Mitchell, European Historical Statistics, 1750–1975, 100–10; Oscar W. Gabriel and Frank Brettschneider, eds., Die EU-Staaten im Vergleich (Opladen: Westedeutscher Verlag, 1994), 498–99. 35  Daniel Noin, “Spatial Inequalities in Mortality,” in The Changing Population of Europe, eds. Daniel Noin and Robert Woods (Oxford: Blackwell, 1993), 46–47. 36  David Coleman, “European Demographic Systems of the Future: Convergence or Diversity?,” in Human Resources in Europe at the Dawn of the 21st Century (Luxembourg: Office for the Official Publications of the European Union, 1992), 175. 37  For a similiar indicator for pre–World War I Hungary, see Tamás Faragó, “Történeti mutatószám az ‘emberi fejlődés’ ábrázolására Magyarországon (1910– 2001)” [A historical indicator for describing “human development” in Hungary (1910–2001)], Demográfia 50, nos. 2–3 (2007): 7–19. 38  Cătălin Zamfir, “Quality of Life in Communist Regimes,” in Encyclopedia of Quality of Life and Well-Being Research, edited by Alex C. Michalos (Dordrecht: Springer, 2014), 1025–32. 39  Franz Rothenbacher, The Central and East European Population since 1850 (Houndmills: Palgrave Macmillan, 2005), 172; Willian C. Cockerham, Health and Social Change in Russia and Eastern Europe (New York: Routledge, 1999), 174. 40  László Hablicsek, Az első és második demográfiai átmenet Magyarországon és Közép-Kelet-Európában [The first and second demographic transitions in Hungary and Central and Eastern Europe] (Budapest: KSH, 1995), 15. 41  Guang Guo, “Mortality Trends and Causes of Deaths: A Comparison Between Eastern and Western Europe, 1960s–1980s,” European Journal of Population 9, no. 3 (1993): 287–312; Jitka Rychtarikova, Jacques Vallin, and France Meslé, “Comparative Study of Mortality Trends in France and the Czech Republic since 1950,” Population 44, no. 1 (1989): 291–321; Nicholas Eberstadt, “Health and Mortality in Eastern Europe,” Communist Economies 2, no. 3 (1990): 347–71; Ellen Nolte, Vladimir Shkolnikov, and Martin McKee, “Changing Mortality Patterns in East and West Germany and Poland, I: Long Term Trends (1960–1997),” Journal of Epidemiology and Community Health 54, no. 12 (2000): 890–98. 42  Péter Józan, “Epidemiológiai válság Magyarországon a kilencvenes években, I– II” [The epidemiological crisis in Hungary in the 1990s], Statisztikai Szemle 72, no. 1 (1994): 5–20 and 72, no. 2 (1994): 101–23. 43  Marek Okolski, “East–West Mortality Differentials,” in European Population II, edited by A. Blum and J. L. Rallu (London and Paris: John Libbey, 1993), 165– 89. 44  France Meslé, “Mortality in Eastern and Western Europe: A Widening Gap,” in Europe’s Population in the 1990s, edited by David Coleman (Oxford: Oxford University Press, 1996), 132–33. 45  William C. Cockerham, “The Social Determinants of the Decline of Life Expectancy in Russia and Eastern Europe: A Lifestyle Explanation,” Journal of Health and Social Behavior 38, no. 2 (1997): 117–30. 46  Tomka, A Social History of Twentieth-Century Europe, 28. 47  Béla Tomka, “Demographic Diversity and Convergence in Europe, 1918–1990: The Hungarian Case,” Demographic Research 6, no. 2 (2002): 17–48. 48  Mesle, “Mortality in Eastern and Western Europe: A Widening Gap,” 127.

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49

 Richard James Boys, Donald Peter Forster, and Péter Józan, “Mortality from Causes Amenable and Non-Amenable to Medical Care: The Experience of Eastern Europe,” British Medical Journal 303 (1991): 879–83. 50  Péter Józan, “A halandóság alakulása Magyarországon” [The evolution of mortality rates in Hungary], in Magyarország történeti statisztikája (896–1995) [Historical statistics for Hungary (896–1995)], edited by József Kovacsics (Budapest: KSH, 1997), 376. 51  Okolski, “East–West Mortality Differentials,” 165–89; Meslé, “Mortality in Eastern and Western Europe,” 140–41; Józan, “A halandóság alakulása,” 376; Cockerham, “The Social Determinants of the Decline of Life Expectancy,” 117–30. 52  Hablicsek, Az első és második demográfiai, 39. 53  Guo, “Mortality Trends and Causes,” 287–312; Cockerham, Health and Social Change, 174; Laurent Chenet, Martin McKee, Naomi Fulop, Ferenc Bojan, and Helmut Brand, “Changing Life Expectancy in Central Europe: Is There a Single Reason?,” Journal of Public Health 18, no. 3 (1996): 329–36. CHAPTER 5 1

 For an overview of this subject, see Adam Szirmai, “Explaining Success and Failure in Economic Development,” in World Economic Performance: Past, Present, Future, edited by D. S. Prasada Rao and Bart van Ark (Cheltenham: Edward Elgar, 2013), 227–67; Maddison, Monitoring the World Economy, 33–40; Angus Maddison, Explaining the Economic Performance of Nations: Essays in Time and Space (Aldershot: Edward Elgar, 1995), 7–131; Szirmai, The Dynamics of Socio-Economic Development; Anderson, Explaining Long-Term Economic Change. 2  For the role of technology, see C. H. Feinstein, “Capital Accumulation and the Industrial Revolution,” in The Economic History of Britain since 1700, vol. 1, 1700– 1860, edited by Roderick Floud and Donald McCloskey (Cambridge: Cambridge University Press, 1981), 128–43. 3  Landes, Unbound Prometheus, 193–537. 4  Anderson, Explaining Long-Term Economic Change, 41–47. 5  Szirmai, Dynamics of Socio-Economic Development, 117–40; Madsen, “Technology Spillover,” 464–80. 6  Tor Egil Førland, “‘Economic Warfare’ and ‘Strategic Goods’: A  Conceptual Framework for Analyzing COCOM,” Journal of Peace Research 28, no. 2 (1991): 191–204; James K. Libbey, “CoCom, Comecon, and the Economic Cold War,” Russian History 37, no. 2 (2010): 133–52. 7  Maddison, Monitoring the World Economy, 35. 8  John W. Kendrick, “How Much Does Capital Explain?,” in Explaining Economic Growth: Essays in Honour of Angus Maddison, edited by Adam Szirmai, Bart van Ark, and Dirk Pilat (Amsterdam: North-Holland, 1993), 129–45. 9  Gregory Clark, A Farewell to Alms (Princeton: Princeton University Press, 2007), 329. 10  Szirmai, “Success and Failure,” 239. 11  Wolfgang Keller, “Absorptive Capacity: On the Creation and Acquisition of Technology in Development,” Journal of Development Economics 49 (1996): 199–227;

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Wesley M. Cohen and Daniel A. Levinthal, “Absorptive Capacity: A New Perspective on Learning and Innovation,” Administrative Science Quarterly 35, no. 1 (1990): 128–52. 12  Joel Mokyr, The Gifts of Athena: Historical Origins of the Knowledge Economy (Princeton and Oxford: Princeton University Press, 2005), 1–27. 13  Theodore Schultz, “Investment in Human Capital,” American Economic Review 51 (1961): 1–17. 14  Maddison, Monitoring the World Economy, 37. 15  Sergio Lodde, “Human Capital and Growth in the European Regions: Does Allocation Matter?,” in Economic Growth and Change: National and Regional Patterns of Convergence and Divergence, edited by John Adams and Francesco Pigliaru (Cheltenham: Edward Elgar, 1999), 257–78. 16  L. Sandberg, “Ignorance, Poverty and Economic Backwardness in the Early Stage of European Industrialization,” Journal of European Economic History 11 (1982): 675–98. 17  Szirmai, Dynamics of Socio-Economic Development, 213–24. 18  Bas van Leeuwen and Péter Földvári, “How Much Human Capital Does Eastern Europe Have? Measurement Methods and Results,” Post-Communist Economies 20, no. 2 (2008): 189–201. 19  Evan Schofer and John W. Meyer, “The Worldwide Expansion of Higher Education in the Twentieth Century,” American Sociological Review 70 (2005): 898–920; Peter Scott, “Higher Education in Central and Eastern Europe,” in International Handbook of Higher Education, vol. 2, edited by James J. F. Forest and Philip G. Altbach (Dordrecht: Springer, 2007), 423–41. 20  Erik Buyst and Piotr Franaszek, “Sectoral Developments, 1914–1945,” in The Cambridge Economic History of Modern Europe, vol. 2, edited by Stephen Broadberry and Kevin H. O’Rourke (Cambridge: Cambridge University Press, 2012), 208–31; Stefan Houpt, Pedro Lains, and Lennart Schön, “Sectoral Developments, 1945–2000,” in The Cambridge Economic History of Modern Europe, vol. 2, edited by Stephen Broadberry and Kevin H. O’Rourke (Cambridge: Cambridge University Press, 2012), 333–59. 21  Jan Fagerberg, “Technological Progress, Structural Change and Productivity Growth: A Comparative Study,” Structural Change and Economic Dynamics 11, no. 4 (2000): 393–412; Berthold Herrendorf, Richard Rogerson, and Ákos Valentinyi, “Growth and Structural Transformation,” in Handbook of Economic Growth, vol. 2, edited by Philippe Aghion and Steven N. Durlauf (Amsterdam: Elsevier, 2014), 855–941. 22  Bruce F. Johnston and John W. Mellor, “The Role of Agriculture in Economic Development,” American Economic Review 51, no. 4 (1961): 566–93. 23  Maddison, Monitoring the World Economy, 40. 24  Berend, Central and Eastern Europe, 185. 25  Maddison, Monitoring the World Economy, 39. 26  Andrzej Korbonski, “Theory and Practice of Regional Integration: The Case of Comecon,” International Organization 24, no. 4 (1970): 942–78; Jozef M. van Brabant, “Production Specialization in the CMEA—Concepts and Empirical Evidence,” Journal of Common Market Studies 26, no. 3 (1988): 287–316.

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27

 Éva Ehrlich, “The Size Structure of Manufacturing Establishments and Enterprises: An International Comparison,” Journal of Comparative Economics 9 (1985): 267–96. 28  Szirmai, “Success and Failure,” 242–43. 29  Rynarzewski, Debt Crisis in Poland, 8. 30  Jeffrey D. Sachs, Andrew Warner, Anders Åslund, and Stanley Fischer, “Economic Reform and the Process of Global Integration,” Brookings Papers on Economic Activity 25, no. 1 (1995): 1–118. 31  Sanjaya Lall and Rajneesh Narula, “Foreign Direct Investment and Its Role in Economic Development: Do We Need a New Agenda?,” in Understanding FDI-Assisted Economic Development, edited by Sanjaya Lall and Rajneesh Narula (London and New York: Routledge, 2006), 447–64. 32  Szirmai, “Success and Failure,” 244. 33  András Köves, “Foreign Economic Equilibrium, Economic Development and Economic Policy in the CMEA Countries,” Acta Oeconomica 36, nos. 1–2 (1986): 35–53. 34  J. Sachs, “The Challenges Facing Landlocked Developing Countries,” Journal of Human Development 5, no. 1 (2004): 31–68; D. Rodrik, ed., In Search of Prosperity: Analytic Narratives on Economic Growth (Princeton: Princeton University Press, 2003); Hollis Chenery, Sherman Robinson, and Moshe Syrquin, eds., Industrialization and Growth: A Comparative Study (New York: Oxford University Press, 1986). 35  Berend, From the Soviet Bloc, 32. 36  Douglass C. North, Structure and Change in Economic History (New York: W. W. Norton, 1981), 17; Douglass C. North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990), 110. For an even more emphatic argument about the social embeddedness of the growth process, see Mark Granovetter, “Economic Institutions as Social Constructions: A Framework for Analysis,” Acta Sociologica 35 (1992): 3–11. 37  Douglass C. North, Understanding the Process of Economic Change (London: The Institute of Economic Affairs, 1999), 23. 38  A dam Przeworski and Fernando Limongi, “Political Regimes and Economic Growth,” Journal of Economic Perspectives 7, no. 3 (1993): 51–69; Moses Abramovitz, “The Search for the Sources of Growth: Areas of Ignorance, Old and New,” Journal of Economic History 53, no. 2 (1993): 217–43. 39  Douglass C. North, “Institutions,” Journal of Economic Perspectives 5, no. 1 (1991): 105–8; North, Understanding the Process of Economic Change, 132–34. 40  Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (London: Profile Books, 2012), 73–123. 41  Abramovitz, “Catching Up,” 385–406. For more on this subject, see Jonathan Temple and Paul A. Johnson, “Social Capability and Economic Growth,” Quarterly Journal of Economics 113, no. 3 (1998): 965–90; Cohen and Levinthal, “Absorptive Capacity,” 128–52. 42  Robert D. Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993); OECD, The Well-Being of Nations; Oscar W. Gabriel et al., eds., Sozialkapital und Demokratie: Zivilgesellschaftliche Ressourcen im Vergleich (Vienna: WUV Universitätsverlag, 2002); On

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social capital in East Central Europe, see Adam B. Seligman and Katalin Füzér, “The Problem of Trust and the Transition from State Socialism,” Comparative Social Research 14 (1994): 193–221. 43  For a notable example of this perspective, see Thomas McKeown, The Modern Rise of Population (New York and London: Arnold, 1976). 44  John Burnett, “Housing and the Decline of Mortality,” in The Decline of Mortality in Europe, edited by R. Schofield, D. Reher, and A. Bideau (Oxford: Clarendon Press, 1991), 158–76. 45  Robert Woods, “Public Health and Public Hygiene: The Urban Environment in the Late Nineteenth and Early Twentieth Centuries,” in The Decline of Mortality in Europe, edited by R. Schofield, D. Reher, and A. Bideau (Oxford: Clarendon Press, 1991), 233–47. 46  Abdel Omran, “The Epidemiologic Transition: A Theory of the Epidemiology of Population Change,” Milbank Memorial Fund Quarterly 49 (1971): 509–38; R. Spree, “Der Rückzug des Todes: Der epidemiologische Übergang in Deutschland während des 19. und 20. Jahrhunderts,” Historical Social Research 23 (1998): 4–43; James N. Gribble and Samuel H. Preston, eds., The Epidemiological Transition: Policy and Planning Implications for Developing Countries; Workshop Proceedings (Washington, DC: National Academy Press, 1993). 47  Ehmer, Bevölkerungsgeschichte, 38–41. 48  Robert Woods and Naomi Williams, “Must the Gap Widen Before It Can Be Narrowed? Long-term Trends in Social Class Mortality Differentials,” Continuity and Change 10, no. 1 (1995): 105–37. 49  Michael Anderson, “The Social Implications of Demographic Change,” in The Cambridge Social History of Britain, vol. 2: 1750–1950, edited by F. M. L. Thompson (Cambridge: Cambridge University Press, 1990), 23. 50  Höpflinger, Bevölkerungssoziologie, 161; Tapani Valkonen, “Social Inequalities in Mortality,” in Demography: Analysis and Synthesis, vol. 2, edited by Graziella Caselli, Jacques Vallin, and Guillaume Wunsch (Amsterdam: Academic Press, 2005), 195–206. 51  Eric Nygaard, Annette Madsen-Gleerup, and H. Christensen, “Endurance Capacity and Longevity in Women,” Health Care Women International 11, no. 1 (1990): 1–10. 52  Jacques Vallin, “Mortality, Sex, and Gender,” in Demography: Analysis and Synthesis, vol. 2, edited by Graziella Caselli, Jacques Vallin, and Guillaume Wunsch (Amsterdam: Academic Press, 2005), 177–80. 53  Ibid., 177–94. 54  For the concept, see https://ec.europa.eu/eurostat/statistics-explained/index. php/Amenable_and_preventable_deaths_statistics. Last accessed October 30, 2018. 55  Cockerham, Health and Social Change, 23; Péter Józan, “A halandóság alakulása Magyarországon,” 376. 56  For the East–West divergence and especially as regards cardiovascular and cancerous diseases, see Guang Guo, “Mortality Trends and Causes of Deaths: A Comparison Between Eastern and Western Europe, 1960s–1970s,” European Journal of Population 9, no. 3 (1993): 287–312.

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 Okolski, “East–West Mortality Differentials,” 165–189; Meslé, “Mortality in Eastern and Western Europe,” 140–41. 58  Coleman, “European Demographic Systems of the Future: Convergence or Diversity?,” 175; Graziella Caselli, France Meslé, and Jacques Vallin, “Epidemiologic Transition Theory and Exceptions,” Genus 58, no. 1 (2002): 9–52; Jacques Vallin and France Meslé, “Convergences and Divergences in Mortality: A New Approach of Health Transition,” Demographic Research: Special Collection 2, no. 2 (2004): 11–43. 59  Cockerham, Health and Social Change, 245–51. 60  Hablicsek, Az első és a második demográfiai átmenet, 39. 61  Jacques Vallin, “From the Globalization of Transition to the Return of Uncertainty (1940–2000),” in Demography: Analysis and Synthesis, vol. 2, edited by Graziella Caselli, Jacques Vallin, and Guillaume Wunsch (Amsterdam: Academic Press, 2005), 93. 62  Studies of economic convergence based on neoclassical theory include: Abramovitz, “Catching Up,” 385–406; Baumol, “Productivity Growth,” 1072–85; Robert J. Barro and Xavier Sala-i-Martin, Economic Growth (New York: McGraw-Hill, 1995), 26–39, 382–413; Barro and Sala-i-Martin, “Convergence,” 223–51. For criticism of the neoclassical literature on convergence, see R. E. Lucas, “Why Doesn’t Capital Flow from Rich to Poor Countries?,” American Economic Review 80 (1990): 92–96; Danny T. Quah, “Empirics for Economic Growth and Convergence,” European Economic Review 40 (1996): 1353–75; Danny T. Quah, “Twin Peaks: Growth and Convergence in Models of Distribution Dynamics,” Economic Journal 106 (1996): 1045–55. 63  Kaelble, A Social History of Western Europe, 141–49. 64  Colin J. Bennett, “What is Policy Convergence and What Causes It?,” British Journal of Political Science 21, no. 2 (1991): 215–33. 65  Béla Tomka, Családfejlődés a 20. századi Magyarországon és Nyugat-Európában [Family formation in twentieth-century Hungary and Western Europe] (Budapest: Osiris, 2000), 22–38. 66  Alan Milward, The European Rescue of the Nation-State (London: Routledge, 1993). 67  Kaelble, A Social History of Western Europe, 143–44. 68  Lutz, Der kurze Traum immerwährender Prosperität; Kaelble, A Social History of Western Europe, 144–45. 69  Among the classics of convergence theory, see Clark Kerr et al., Industrialism and Industrial Man (Cambridge, MA: Harvard University Press, 1960); Pitirim A. Sorokin, “Mutual Convergence of the United States and the U.S.S.R. to the Mixed Sociocultural Type,” International Journal of Comparative Sociology 1 (1960): 143–76. 70  Kaelble, A Social History of Western Europe, 147; Firebaugh, The New Geography, 185–86. 71  Kaelble, A Social History of Western Europe, 147–48. 72  Alex Inkeles, “Convergence and Divergence in Industrial Societies,” in Directions of Change: Modernization Theory, Research, and Realities, edited by Mustafa O.

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Attir, Burkart Holzner, and Zdenek Suda (Boulder, CO: Westview Press, 1981), 17; Kaelble, A Social History of Western Europe, 149. 73  Harold L. Wilensky, Rich Democracies: Political Economy, Public Policy, and Performance (Berkeley: University of California Press, 2002), 70–73; Brigitte Unger and Frans van Waarden, “Introduction: An Interdisciplinary Approach to Convergence,” in Convergence or Diversity: Internationalization and Economic Policy Response, edited by Brigitte Unger and Frans van Waarden (Aldershot: Avebury, 1995), 12–19. 74  Tomka, A Social History of Twentieth-Century Europe, 175–76, 329–33. 75  Luc Soete and Bart Verspagen, “Technology and Growth: The Complex Dynamics of Catching Up, Falling Behind, and Taking Over,” in Explaining Economic Growth: Essays in Honour of Angus Maddison, edited by Adam Szirmai, Bart van Ark, and Dirk Pilat (Amsterdam: North Holland, 1993), 101–27; Maddison, Dynamic Forces in Capitalist Development, 160–64. 76  Béla Tomka, Welfare in East and West: Hungarian Social Security in an International Comparison, 1918–1990 (Berlin: Akademie Verlag, 2004), 113–17. 77  van Ark, “Convergence and Divergence in the European Periphery,” 296–302. 78  Fischer, “Wirtschaft, Gesellschaft und Staat,” 74–83; Mitchell, European Historical Statistics, 786–814. Enrollment refers to the proportion of residents between the ages of 5 and 24 who took part in the educational system. 79  van Ark, “Convergence in the European Periphery,” 300–302. CHAPTER 6 1

 Crafts and Toniolo, “Aggregate Growth,” 323–31.  From the literature on globalization, which has become almost impossible to survey: John O’Loughin, Lynn Staeheli, and Edward Greenberg, eds., Globalization and Its Outcomes (New York and London: Guilford, 2004), 3–22; Paul W. Rhode and Gianni Toniolo, eds., The Global Economy in the 1990s: A Long-Run Perspective (Cambridge: Cambridge University Press, 2005). For the effects of globalization on Western Europe, see Kevin H. O’Rourke, “Europe and the Causes of Globalization, 1790–2000,” in Europe and Globalization, edited by Henryk Kierzkowski (London: Palgrave, 2002), 64–86; Alfred Steiherr, “Europe in the Global Financial Market,” 143–61; George Ritzer, Globalization: The Essentials (Chichester: Wiley-Blackwell, 2010). 3  For a characteristic formulation of this notion, see Alberto Alesina and Fran­cesco Giavazzi, The Future of Europe: Reform or Decline (Cambridge, MA: MIT Press, 2006), 1–14. For an opposing view with a typical focus on social questions, see Steven Hill, Europe’s Promise: Why the European Way Is the Best Hope in an Insecure Age (Berkeley: University of California Press, 2010). 4  B art van Ark and Jan Pieter Smits, “Technology Regimes and Productivity Growth in Europe and the United States: A Comparative and Historical Perspective,” in The European Economy in an American Mirror, edited by Barry Eichengreen, Michael Landesmann, and Dieter Stiefel (London and New York: Routledge, 2008), 41. 2

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 Riccardo Faini, “Europe, a Continent in Decline?,” in The Global Economy in the 1990s: A Long-Run Perspective, edited by Paul W. Rhode and Gianni Toniolo (New York: Cambridge University Press, 2006), 81. 6  The concept originally denoted the stagnation of the European integration process between 1973 and 1984: Herbert Giersch, “Eurosclerosis,” Kiel Discussion Papers, no. 112 (Kiel: Institut für Weltwirtschaft, 1985). 7  Martin N. Baily and Jacob F. Kirkegaard, Transforming the European Economy (Washington, DC: Institute for International Economics, 2004). 8  Stephen Nickell, “Unemployment and Labor Market Rigidities,” Journal of Economic Perspectives 11, no. 3 (1997): 55–74; Olivier Blanchard and Justin Wolfers, “The Role of Shocks and Institutions in the Rise of European Unemployment? The Aggregate Evidence,” NBER Working Paper no. 7282 (New York: NBER, 1999). 9  Out of the enormous literature on European integration, see Barry Eichengreen, “European Integration,” in The Oxford Handbook of Political Economy (New York: Oxford University Press, 2006), 799–813; Andrew Moravcsik, The Choice for Europe: Social Purpose and State Power from Messina to Maastricht (London: Routledge, 1998). 10  Aldcroft, European Economy, 270. 11  C. Randall Henning, “Systemic Conflict and Regional Monetary Integration: The Case of Europe,” International Organization 52, no. 3 (1998): 537–74; Nicolas Jabko, “In the Name of the Market: How the European Commission Paved the Way for Monetary Union,” Journal of European Public Policy 6, no. 3 (1999): 475–95. 12  Barry Eichengreen, Sterling’s Past, Dollar’s Future: Historical Perspectives on Reserve Currency Competition, NBER Working Paper 11336 (Cambridge, MA: National Bureau of Economic Research, 2005), 21; Gabriele Galati and Philip Wooldridge, “The Euro as a Reserve Currency: A Challenge to the Pre-Eminence of the US Dollar?,” International Journal of Finance & Economics 14, no. 1 (2009): 1–23. 13  Richard E. Baldwin, Frauke Skudelny, and Daria Taglioni, “Trade Effects of the Euro: Evidence from Sectoral Data,” ECB Working Paper, no. 446. (Frankfurt am Main: ECB, 2005); Pandej Chintrakarn, “Estimating the Euro Effects on Trade with Propensity Score Matching,” Review of International Economics 16, no. 1 (2008): 186–98; Helge Berger and Volker Nitsch, “Zooming Out: The Trade Effect of the Euro in Historical Perspective,” Journal of International Money and Finance 27 (2008): 1244–60. 14  Martin Heipertz and Amy Verdun, “The Stability and Growth Pact—Theorizing a Case in European Integration,” Journal of Common Market Studies 4, no. 5 (2005): 985–1008. 15  Francesco Paolo Mongelli and Juan Luis Vega, What Effects Is EMU Having on the Euro Area and Its Member Countries? An Overview, ECB Working Paper, no. 599 (Frankfurt am Main: ECB, 2006). 16  Costas Lapavitsas, Crisis in the Eurozone (London: Verso, 2012), 79–91; Marcello Minenna, The Incomplete Currency: The Future of the Euro and Solutions for the Eurozone (Chichester: John Wiley & Sons, 2016). 17  John O’Brennan, The Eastern Enlargement of the European Union (London and New York: Routledge, 2006), 38–52; Rachel A. Epstein and Wade Jacoby, “East-

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ern Enlargement Ten Years On: Transcending the East-West Divide?,” Journal of Common Market Studies 52, no. 1 (2014): 1–16. 18  Aldcroft, European Economy, 286–89. 19  Eichengreen, European Economy since 1945, 418. 20  Faini, “Europe, a Continent in Decline?,” 80–84. 21  The eurozone should be understood here to exclude Slovenia, Slovakia, and the other countries that joined at later dates. 22  Faini, “Europe: A Continent in Decline?,” 71. 23  These growth and productivity data come from IMF, OECD, and Goldman Sachs studies cited in The Economist, June 19, 2004, 65–66. For similar data, see Faini, “Europe: A Continent in Decline?,” 72. For long-term growth data, see Maddison, World Economy: Historical Statistics, 46–80. Germany’s performance depressed the average for the entire Eurozone. Its economic difficulties were largely attributable to the enormous resources required to re-integrate the territories of the former East Germany—transfers which amounted to roughly 1.4 trillion euros between 1990 and 2005. By 2005, the sums disbursed were roughly equivalent to Germany’s entire public debt of 1.447 trillion euros, which includes the debts of its federal, state, and local governments. See “Noch steigt die Staatsschuld weiter,” Frankfurter Allgemeine Zeitung, February 25, 2006, 11. Insofar as no other industrialized country has in recent years or decades had to confront a problem of such magnitude—and which, from the perspective of the economic and social system, was of an essentially external character—it is worth re-evaluating the performance of the Eurozone with Germany’s data omitted. In so doing, we find that the average growth rate of the per capita GDP for the other countries of the region looked substantially better: the economy of the Eurozone grew at the same rate (2.1 percent) as that of the United States between 1994 and 2003. The Economist, June 19, 2004, 65. 24  This data on working time comes from: Finance and Development (IMF) 41, no. 2. (2004): 12; Groningen Growth and Development Centre, “Total Economy Database,” accessed August 10, 2004, at http://www.ggdc.net. 25  This notion is also supported by the fact that American growth rates began to catch up to those of Western Europe—where growth had been more rapid throughout the decades following World War II—at the end of the 1970s, when the trend toward shorter working hours, which had been parallel in the two regions up to that point, stalled in the US. The average American employee has been working the same amount ever since, while average annual working times have continued to decline significantly throughout Western Europe, eventually producing the wide gaps cited above. 26  Eichengreen, European Economy since 1945, 382. 27  The Economist June 19, 2004, 65–66; Robert Gordon, “Comparing Welfare in Europe and the United States,” in The European Economy in an American Mirror, edited by Barry Eichengreen, Michael Landesmann, and Dieter Stiefel (London and New York: Routledge, 2008), 15–40. 28  Oliver Blanchard, “The Economic Future of Europe,” Journal of Economic Perspectives 18 (2004): 3–26. 29  E. C. Prescott, “Why Do Americans Work So Much More than Europeans?,” Federal Reserve Bank of Minneapolis Quarterly Review 28 (2004): 2–13.

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 Linda A. Bell and Richard B. Freeman, “The Incentive for Working Hard: Explaining Hours Worked Differences in the US and Germany,” Labour Economics 8 (2001): 181–202. 31  Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, “Work and Leisure in the US and Europe: Why so Different?,” NBER Working Paper, no. 11278 (Cambridge, MA: NBER, 2005). 32  Eichengreen, The European Economy since 1945, 388. 33  Ibid., 400. 34  Bart van Ark et al., “ICT Investments and Growth Accounts for the European Union,” Research Memorandum, no. GD-56 (Groningen: Groningen Growth and Development Centre, 2003). 35  Christopher Gust and Jaime Marquez, “International Comparisons of Productivity Growth: The Role of Information Technology and Regulatory Practices,” International Finance Discussion Paper, no. 727; Board of Governors of the Federal Reserve System (Washington, DC: Federal Reserve System, 2002). 36  Eichengreen, European Economy since 1945, 398–404. 37  For the broader context of this issue, see Karl Aiginger and Michael Landesmann, “Long-Term Competitiveness of the Wider Europe,” in The European Economy in an American Mirror, edited by Barry Eichengreen, Michael Landesmann, and Dieter Stiefel (London and New York: Routledge, 2008), 62–103. For a more optimistic view, see Jonas Pontusson, Inequality and Prosperity: Social Europe vs. Liberal America (Ithaca, NY, and London: Cornell University Press, 2005). 38  It must be noted, however, that the extraordinarily high proportion of foreign investment in Ireland meant that its gross national product was substantially lower, and thus its consumption level did not keep pace with the spectacular growth in its GDP. 39  Crafts and Toniolo, “Aggregate Growth, 1950–2005,” 300–303; Volker Bornschier, Mark Herkenrath, and Patrick Ziltener, “Political and Economic Logic of Western European Integration: A Study of Convergence Comparing Member and Non-member States, 1980–98,” European Societies 6, no. 1 (2004): 71–96. 40  Petra Böhnke and Ulrich Kohler, “Well-Being and Inequality,” in Handbook of European Societies: Social Transformations in the 21st Century, edited by Stefan Immerfall and Göran Therborn (New York: Springer, 2010), 629–66. 41  Zolotas, Economic Growth; Offer, “Economic Welfare Measurements,” 371–99. 42  Jackson and Marks, Measuring Sustainable Economic Welfare; Cobb, Halstead, and Rowe, The Genuine Progress Indicator, 1–50. 43  For comprehensive international perspectives on the transition period, see János Kornai, “The Great Transformation of Central and Eastern Europe: Success and Disappointment,” Economics in Transition 14, no. 2 (2006): 207–44; László Csaba, The New Political Economy of Emerging Europe (Budapest: Akadémiai Kiadó, 2005); Tomasz Mickiewicz, Economics of Institutional Change Central and Eastern Europe Revisited (Houndmills: Palgrave Macmillan, 2010); László Csaba, Válság, gazdaság, világ: Adalék Közép-Európa három évtizedes gazdaságtörténetéhez, 1988–2018 [Crises, economy, world: Remarks on the economic history of Central Europe, 1988–2018] (Budapest: Éghajlat Könyvkiadó, 2018). 44  For arguments against the use of the concept “transition economy,” see László Csaba, A fölemelkedő Európa [Europe rising] (Budapest: Akadémiai Kiadó, 2006),

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28–31. Nevertheless, the term is commonly used by the World Bank, for example. See World Bank, Transition: The First Ten Years: Analysis and Lessons for Eastern Europe and the Former Soviet Union (Washington, DC: The World Bank, 2002). 45  World Bank, Transition: The First Ten Years, 11–13. 46  Michael Bruno, “Stabilization and Reform in Eastern Europe: A Preliminary Evaluation,” in The Transition in Eastern Europe, edited by Olivier J. Blanchard, Kenneth A. Froot, and Jeffrey D. Sachs (Chicago: University of Chicago Press, 1994), 19–49; Karel Dyba and Jan Svejnar, “A Comparative View of Economic Developments in the Czech Republic,” in The Czech Republic and Economic Transition in Eastern Europe, edited by Jan Svejnar (London: Academic Press, 1995), 21–45; World Bank, Transition: The First Ten Years, 3–9. 47  Mickiewicz, Economics of Institutional Change, 37–52. 48  Grzegorz W. Kolodko, From Shock to Therapy: The Political Economy of Postsocialist Transformation (Oxford and New York: Oxford University Press, 2000), 30–43; Nauro F. Campos and Fabrizio Coricelli, “Growth in Transition: What We Know, What We Don’t, and What We Should,” Journal of Economic Literature 40, no. 3 (2002): 793–836. 49  For a  comprehensive account of the second phase of the transformation, see László Csaba, “A rendszerváltozás második szakasza—funkcionális áttekintés” [The second phase of the system change: A functional survey], in Gazdasági rendszerek, országok, intézmények: Bevezetés az összehasonlító közgazdaságtanba [Economic systems, nations, and institutions: An introduction to comparative economics], edited by Zoltán Bara and Katalin Szabó (Budapest: Aula, 2006), 361–92; László Csaba, “Átmenet vagy spontán rend(etlenség)?” [Transition or spontaneous (dis)order?], Közgazdasági Szemle [Economic review] 54, no. 9 (2007): 757–73. 50  Ian Jeffries, Socialist Economies and the Transition to the Market (London: Routledge, 1993), 333–41. 51  Johannes Stephan, Economic Transition in Hungary and East Germany: Gradualism and Shock Therapy in Catch-up Development (Houndmills: Palgrave Macmillan, 1999), 251–56; Vladimir Popov, “Shock Therapy versus Gradualism Reconsidered: Lessons from Transition Economies after 15 Years of Reforms,” Comparative Economic Studies 49, no. 1 (2007): 1–31; Doris Fischer, “Comparing Transitions: Insights from the Economic Transition Processes in Former Socialist Countries for Sustainability Transitions,” Osteuropa-Wirtschaft 55, no. 4 (2010): 289–310. 52  Jeffrey Sachs, “The Economic Transformation of Eastern Europe: The Case of Poland,” in Stabilization and Privatization in Poland: An Economic Evaluation of the Shock Therapy Program, edited by Kazimierz Z. Poznanski (New York: Springer, 1993), 197–212; Kazimierz Z. Poznanski, “Poland’s Transition to Capitalism: Shock and Therapy,” in Stabilization and Privatization in Poland: An Economic Evaluation of the Shock Therapy Program, edited by Kazimierz Z. Poznanski (New York: Springer, 1993), 15–42. 53  Berend, From the Soviet Bloc, 62; Aldcroft and Morewood, Economic Change in Eastern Europe, 214–15. 54  Dyba and Svejnar, “A Comparative View of Economic Developments in the Czech Republic,” 21–45; Ivan Tšujan and Milota Tšujanová, “The Macroeconomic Situation in the Czech Republic,” in The Czech Republic and Economic Transition in

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373

Eastern Europe, edited by Jan Svejnar (London: Academic Press, 1995), 119–35; Nicolae-Dragos Bilea, Economic Growth in Slovakia: Past Successes and Future Challenges (Luxembourg: Publications Office of the European Union, 2015), 1–11. 55  J. Barkley Rosser and Maria V. Rosser, Comparative Economics in a Transforming World Economy (Cambridge, MA: MIT Press, 2004), 363–75. 56  Gábor Karsai, “Ciklus és trend a magyar gazdaságban 1990–2005 között” [Cycles and trends in the Hungarian economy, 1990–2005], Közgazdasági Szemle 53, no. 6 (2006): 515–19. 57  László Csaba, “Growth, Crisis Management and the EU: The Hungarian Trilemma,” Südosteuropa Mitteilungen 53, nos. 3–4 (2013): 155–69. 58  János Kornai, “Transformational Recession: A General Phenomenon Examined through the Example of Hungary’s Development,” Collegium Budapest Discussion Papers, no. 1 (Budapest: Collegium Budapest, 1993), 23. 59  Kornai, Transformational Recession, 23–24; János Kornai, “The Affinity between Ownership Forms and Coordination Mechanisms: The Common Experience of Reform in Socialist Countries,” Journal of Economic Perspectives 4, no. 3 (1990): 131–47. 60  Kornai, Transformational Recession, 25–31; David Begg and Richard Portes, “Enterprise Debt and Financial Restructuring in Central and Eastern Europe,” European Economic Review 37 (1993): 396–407. 61  Richard Portes, “Structural Reform in Central and Eastern Europe,” European Economic Review 36 (1992): 661–69. 62  Kornai, Transformational Recession, 28–31. 63  L ászló Csaba, “Optimal Transition Trajectories?,” in Transition and Beyond: Essays in Honor of Mario Nuti, edited by Saul Estrin, Grzegorz W. Kolodko, Milica Uvalic (Houndmills: Palgrave Macmillan, 2007), 268–72; Csaba, Válság, gazdaság, 252–53. 64  Edgar L. Fringe, “Underground Activity and Institutional Change: Productive, Protective, and Predatory Behaviour in Transition Economies,” in Transforming Post-Communist Political Economies, edited by Joan M. Nelson, Charles Tilly, and Lee Walker (Washington, DC: National Academy Press, 1997), 21–34. 65  Rumen Dobrinsky, Dieter Hesse, and Rolf Traeger, “Understanding the Longterm Growth Performance of the East European and CIS economies,” Discussion Paper Series, no. 2006-1 (Geneva: UN ECE, 2006), 15–21. 66  Kornai, Transformational Recession, 33–37; Mickiewicz, “Economics of Institutional Change,” 174–89. 67  Magyar Nemzeti Bank, Éves jelentés, 1990 [Hungarian National Bank, Annual Report, 1990] (Budapest: Magyar Nemzeti Bank, 1990), 97; OECD, Factbook 2007 (Paris: OECD, 2007), 37. 68  A lexei Izyumov and John Vahaly, “New Capital Accumulation in Transition Economies: Implications for Capital-Labor and Capital-Output Ratios,” Economic Change and Restructuring 39, nos. 1–2 (2006): 63–83; László Molnár and László Skultéty, “A beruházások alakulása 1992–1998 között” [The evolution of investment between 1992 and 1998], Közgazdasági Szemle 46, no. 12 (1999): 1043. 69  Éva Kiss, “Foreign Direct Investment in Hungary: Industry and Its Spatial Effects,” Eastern European Economics 45, no. 1 (2007): 6–28.

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70

 Közvetlen tőkebefektetési statisztika: Magyarország, 1995–2005 [Direct-investment statistics: Hungary, 1995–2005] (Budapest: MNB, 2007), 30. 71  Gergő Medve-Bálint, “The Role of the EU in Shaping FDI Flows to East Central Europe,” Journal of Common Market Studies 52, no. 1 (2014): 46. 72  Petr Pavlínek, Bolesław Domański, and Robert Guzik, “Industrial Upgrading Through Foreign Direct Investment in Central European Automotive Manufacturing,” European Urban and Regional Studies 6, no. 1 (2009): 43–63. 73  Dobrinsky, Hesse, and Traeger, “Understanding the Long-term Growth Performance,” 16; Katarzyna Anna Baran, “The Determinants of Economic Growth in Hungary, Poland, Slovakia and the Czech Republic During the Years 1995–2010,” Equilibrium 8, no. 3 (2013): 7–26. 74  Jan Svejnar, “Labor Markets in the Transitional Central and East European Economies,” in Handbook of Labor Economics, vol. 3B, edited by David Card and Orely C. Ashenfelter (Amsterdam: Elsevier, 1999), 2809–57. 75  Janice Bell and Tomasz Mickiewicz, Unemployment in Transition: Restructuring and Labour Markets in Central Europe (London and New York: Routledge, 2013), 20. 76  Statisztikai Évkönyv, 1989 [Statistical yearbook, 1989] (Budapest: KSH, 1990), 2; Magyar Statisztikai Évkönyv, 2007 [Hungarian statistical yearbook, 2007] (Budapest: KSH, 2008), 12; Hedvig Horváth, “Munkaerőpiaci helyzetkép” [The state of the labor market], in Európai társadalmi jelentés, 2008 [European social report, 2008], edited by István Gy. Tóth (Budapest: TÁRKI, 2008), 54. 77  Michael Landesmann, “Structural Change in the Transition Economies, 1989– 1999,” in Economic Survey of Europe, nos. 2/3 (Geneva: United Nations Economic Commission, 2000), 95–123. 78  John Williamson, “Why Did Output Fall in Eastern Europe?,” in The Political Economy of the Transition Process in Eastern Europe, edited by László Somogyi (Aldershot: Edward Elgar, 1993), 28. 79  Jan Winiecki, Transition Economies and Foreign Trade (London and New York: Routledge, 2002), 57. 80  OECD Factbook 2008: Economic, Environmental and Social Statistics (Paris: OECD, 2008), 65. 81  OECD Factbook 2014: Economic, Environmental and Social Statistics (Paris: OECD, 2017), 77. 82  Magyarország nemzeti számlái, 1988–1991 [Hungary’s national accounts, 1988– 1991] (Budapest: KSH, 1993). 83  Aldcroft and Morewood, Economic Change in Eastern Europe, 209. 84  Kornai, Transformational Recession, 12. 85  Peter Havlik, “Patterns of Structural Change in the New EU Member States,” Danube 6, no. 3 (2015): 133–57. 86  OECD Factbook 2008, 53; OECD Factbook 2014, 51. 87  Ira W. Lieberman, Ioannis N. Kessides, and Mario Gobbo, “An Overview of Privatization in Transition Economies,” in Privatization in Transition Economies: The Ongoing Story, edited by Ira W. Lieberman and Daniel J. Kopf (Amsterdam: Elsevier, 2008), 28.

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375

88

 Zsuzsa Ferge, Endre Sik, Péter Róbert, and Fruzsina Albert, “Social Costs of Transition: International Report” (Vienna: Institute for Human Sciences, 1995), accessed October 12, 2017; Jan Adam, Social Costs of Transformation to a Market Economy in Post-Socialist Countries: The Cases of Poland, the Czech Republic and Hungary (Houndmills: Palgrave Macmillan, 1999), 87–170. 89  Anthony B. Atkinson, The Changing Distribution of Earnings in OECD Countries (Oxford and New York: Oxford University Press, 2008), 48–51. 90  Tomka, A Social History of Twentieth-Century Europe, 102; Ödön Éltető and Éva Havasi, “A hazai jövedelemegyenlőtlenség főbb jellemzői az elmúlt fél évszázad jövedelmi felvételei alapján” [The chief characteristics of Hungarian income inequality according to the income records of the past half-century], Statisztikai ­Szemle 87, no. 1 (2009): 15. 91  Večernik, “Earnings Distribution in Czechoslovakia,” 237–52; Jiří Večernik, “Changing Earnings Distribution in the Czech Republic: Survey Evidence from 1988–1994,” Economics of Transition 3 (1995): 355–71. 92  For convergences in East Central Europe, see Mick Dunford and Adrian Smith, “Catching Up or Falling Behind? Economic Performance and Regional Trajectories in the ‘New Europe,’” Economic Geography 76, no. 2 (2000): 169–95; Christian Amplatz, “The Economic Convergence Performance of Central and Eastern European Countries,” Economics of Planning 36, no. 4 (2003): 273–95; Ian Begg, “Real Convergence and EMU Enlargement: The Time Dimension of Fit with the Euro Area,” in Enlarging the Euro: External Empowerment and Domestic Transformation in East Central Europe, edited by Kenneth Dyson (Oxford: Oxford University Press, 2006), 71–89; Reiner Martin and Adalbert Winkler, eds., Real Convergence in Central, Eastern and South-Eastern Europe (New York: Palgrave Macmillan, 2009); Stilianos Alexiadis, Convergence Clubs and Spatial Externalities: Models and Applications of Regional Convergence in Europe (Heidelberg and New York: Springer, 2013), 119–93. For the conditions of catching up, see Tibor Erdős, Fenntartható gazdasági növekedés [Sustainable economic growth] (Budapest: Akadémiai Kiadó, 2003), 482–87. 93  László Muraközy, “Magyarország felemelkedése és hanyatlása” [The rise and fall of Hungary], Közgazdasági Szemle 55, no. 2 (2008): 149–68; György Matolcsy, Éllovasból sereghajtó: Elveszett évek krónikája [From the leader of the pack to the back of the line: A chronicle of the lost years] (Budapest: Éghajlat Kiadó, 2008), 166–74. 94  Urmas Varblane and Priit Vahter, “An Analysis of the Economic Convergence Process in the Transition Countries,” University of Tartu, Faculty of Economics and Business Administration, Working Paper, no. 37 (June 2005), 19. 95  Gábor Oblath and Béla Szörfi, Macroeconomic Convergence and Regional Divergence in Central and Eastern Europe: Some Conceptual, Empirical and Policy Issues, accessed September 15, 2010, http://www.mktudegy.hu/?q=system/files/ Oblath.pdf; Oblath and Szörfi, Makrogazdasági konvergencia, 204–25. 96  Péter Halmai, “Felzárkózás és konvergencia az Európai Unióban” [Catching up and convergence in the European Union], Statisztikai Szemle 87, no. 1 (2009): 46. For similar findings, see Juncal Cuñado and Fernando Pérez de Gracia, “Real Convergence in Some Central and Eastern European Countries,” Applied Economics 38 (2006): 2433–41; Marek Tiits et al., “Catching Up, Forging Ahead or Fall-

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ing Behind? Central and Eastern European Development in 1990–2005,” Innovation 21, no. 1 (2008): 65–85. 97  The base year is 1988 in the case of the two successor states of Czechoslovakia. See Branko Milanovic, Income, Inequality, and Poverty during the Transition from Planned to Market Economy (Washington, DC: The World Bank, 1998), 34. 98  István Harcsa, Gábor Papp, and György Vukovich, “Magyarország a társadalmi jelzőszámok tükrében” [Hungary as reflected by social indicators], in Társadalmi riport, 2006 [Social report, 2006], edited by Tamás Kolosi, István Gy. Tóth, and György Vukovich (Budapest: TÁRKI, 2006), 460; Családi költségvetés, 1999 [Family budgets, 1999], Adattár [Dataset] (Budapest: KSH, 2000). 99  Martin Lux, “Changes in Consumption of Households during 1990–1997,” Czech Sociological Review 8, no. 2 (2000): 211–32; Tomáš Cahlík, Tomáš Honzák, Jana Honzáková, Marcel Jiřina, and Natálie Reichlová, “Convergence of Consumption Structure,” Working paper UK FSV-IES (2005), 4; Jukka Gronow and Dale Southerton, “Leisure and Consumption in Europe,” in Handbook of European Societies: Social Transformations in the 21st Century, edited by Stefan Immerfall and Göran Therborn (New York: Springer, 2010), 356–62; Hanna Dudek and Grzegorz Koszela, “Comparison of Households’ Expenditures Structures in Selected Countries of the European Union,” Acta Scientiarum Polonorum: Oeconomia 12, no. 3 (2013): 5–15. 100  John S. Earle, Roman Frydman, Andrzej Rapaczynski, and Joel Turkewitz, Small Privatization: The Transformation of Retail Trade and Consumer Services in the Czech Republic, Hungary and Poland (Budapest–London–New York: Central European University Press, 1994); Liesbeth Dries, Thomas Reardon, and Johan F. M. Swinnen, “The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood Sector and Rural Development,” Development Policy Review 22, no. 2 (2004): 525–56; Grzegorz Karasiewicz and Jan Nowak, “Looking Back at the 20 Years of Retailing Change in Poland,” The International Review of Retail, Distribution and Consumer Research 20, no. 1 (2010): 103–17. 101  Matild Sági, “Elégedettség az átalakuló társadalmakban” [Dissatisfaction in transforming societies], in Társadalmi riport, 2006 [Social report, 2006], 157. 102  Pasquale Tridico, “Institutions, Human Development and Economic Growth in Transition Economies,” European Journal of Developmental Research 19, no. 4 (2007): 581. 103  France Meslé, “Mortality in Central and Eastern Europe: Long-term Trends and Recent Upturns,” Demographic Research 2, no. 3 (2004): 45–70; Stanisława Górecka, “Mortality and Longevity in Central and East Europe: Changes in Years 1990–2005,” Bulletin of Geography/Socio-Economic 9, no. 9 (2008): 79–94. 104  Ellen Nolte, Martin McKee, and Anna Gilmore, “Morbidity and Mortality in Transition Countries of Europe,” in The New Demographic Regime: Population Challenges and Policy Responses, edited by Miroslav Macura, Alphonse L. MacDonald, and Werner Haug (New York and Geneva: United Nations, 2005), ­153–76. 105  Cockerham, Health and Social Change, 123–91; Rothenbacher, European Population, 51, 68–73; Rudolf Andorka, “A társadalmi jelzőszámok tükrében” [In the mirror of social indicators], in Társadalmi riport, 1996 [Social report, 1996], 40.

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Index

Abramovitz, Moses, 55, 65, 237 Acemoglu, Daren, 236 accumulation, 51, 56, 72–78, 93–94, 148–51, 190, 197, 201, 229, 235, 239, 275–76, 294–95. See also capital accumulation, capital formation ∙∙ ratio, 93 advertising, 127, 136–37, 140–42, 184 after-work activity, 179. See also leisure, leisure time “age of degenerative and man-made diseases,” 239 “age of pestilence and famine,” 239 agriculture, 26, 38, 61, 71–74, 79, 123, 177, 202, 232, 234, 278, 280 ∙∙ agricultural population, 161 agricultural sector, 102, 231–32, 273. See also agriculture ∙∙ agricultural workforce, 55, 156, 163. See also peasantry air-travel, 138–39 Albania, 45, 106–107, 110 alcohol, 100–102, 120, 156–57, 201 ∙∙ abuse of, 102 ∙∙ consumption of, 144, 226 ∙∙ monopoly of, 175 Aldcroft, Derek H., 6, 67 Algarve, 138

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Alps, 138 Alton, Thad P., 6, 27, 32–34 Americanization, 54, 127, 146, 243, 247–48 Anderson, Michael, 240 anthropometric research, 101 antibiotics, 225 anti-trust and competition laws, 236 Ark, Bart van, 39, 64, 264 aspirations, 121, 162, 171, 190, 194– 200, 267 athletics, 180 Atkinson, A. B., 117 austerity, 73, 147, 187, 195, 269, 272 Austria, 42, 44, 47, 49–51, 54–57, 59, 76–78, 80, 84–86, 93, 98, 105–107, 109–10, 112–14, 116, 122, 132–33, 136, 149, 207, 211–14, 217–22, 242, 255, 262, 284, 307, 309, 311 automobiles. See cars average life expectancy at birth. See life expectancy Bairoch, Paul, 6–7, 36–37 Balcerowicz plan, 270 Ball–Albert report, 256 banks, 125, 186, 263, 269, 270, 273–75 ∙∙ two-tiered banking system, 82, 273

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432

AUSTERITIES AND ASPIRATIONS

bathroom, 106–107 Belgium, 42, 44, 47–49, 51, 54, 57, 59, 75, 77, 80, 98, 106–107, 109–10, 112–13, 117, 128, 132–33, 138, 166, 211, 213, 217–20, 262, 266, 285, 307, 309, 311 beverages, 100–101. See also alcohol, consumption of beta-convergence, 62–63, 65. See also convergence Bílá Labut, 170 black market, 14, 26, 29, 170, 173–75, 279. See also second economy Blackpool, 138 blue-collar workers. See workers Bon Marché, 126 boom. See economic boom Bourdieu, Pierre, 10, 119 Berend, Iván T., 7, 67 Bretton Woods system, 56, 59 Brewer, John, 10, 124 Brighton, 138 brown market, 174–75. See also black market, second economy Brus, Włodzimierz, 67 Bulgaria, 19, 45, 106–107, 110–11, 113– 14, 133, 172, 282, 284 bureaucracy, 10, 67, 78, 131, 170, 246, 251, 267. See also coordination ∙∙ party, 37, 164 ∙∙ planning, 162 cafeterias, 102 Campbell, Colin, 10–11, 141 Canary Islands, 138 capability approach, 204 capital, 43, 52, 54–56, 61, 65, 72, 93, 152–53, 160, 193, 229–30, 233, 250, 257–58, 287 ∙∙ accumulation, 51, 56, 74, 75–77, 93–94, 148, 190, 229, 235, 275–76, 295 ∙∙ cultural capital, 161 ∙∙ flow, 29, 65, 72, 152–53 ∙∙ formation, 93, 95, 148–54, 189, 200–201, 275–76 ∙∙ human capital, 42, 52–56, 69, 152, 229–30, 237, 248–50, 276

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∙∙ import, 153, 249, 276 ∙∙ import, 152–53, 249, 276 ∙∙ market, 228 ∙∙ social capital, 237 ∙∙ stock, 65, 69, 231, 269 cardiovascular disease, 240 car(s), 39, 108, 111–13, 119–20, 127, 145, 147, 154, 158, 162, 164, 169, 171– 75, 184, 199. See also motorization ∙∙ number of, 119 Carrefour, 127–28 catch-up, 61, 228. See also convergence ∙∙ effect, 53 ∙∙ growth, 228 Celtic Tiger, 59 Central Statistical Office, 38 CIA, 27, 32–34 childcare, 155, 176, 201, 205, 208, 295, 359. See also daycare childrearing. See childcare, daycare China, 35, 74, 257 cinema, 120, 135, 180 ∙∙ attendance, 183 class(es), social, 10, 91, 104, 118–19, 159–64, 183, 196, 240. See also petite bourgeoisie ∙∙ middle class, 126, 155, 170 ∙∙ status, 104 ∙∙ upper, 103, 119, 141 ∙∙ upper middle, 116 clothing, 96, 100, 102–104, 120, 128, 144, 155–59, 162, 168, 184, 197, 199, 287, 348 Club of Rome, 204 CoCom system of export control, 228 coefficient of variation, 62–64, 149, 214, 222, 265–66, 301–302 coffee house, 135 collective bargaining, 55 collectivization, 72, 74, 161, 168, 231, 237 Comecon market, 176 commerce, 37, 72, 82, 125–26, 128, 142, 169, 175–76, 233, 273 commercialization, 125–26, 135, 142, 179, 183, 202, 296 communication, 96–100, 135, 140, 155, 158, 227, 245, 247, 254, 264, 348

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Index communism, 23, 169, 180, 187–89, 197, 199–200, 251 ∙∙ fall of 10, 12 commuting, 14, 206–207, 266, 359 comparison, 4–5, 16–20, 23–24, 33, 49, 58, 69, 83–84, 86, 180, 293, 295, 297–98, 300–301 ∙∙ asymmetrical, 20, 90, 290 ∙∙ units of, 16, 18–19, 84 competitiveness, 60, 81, 233, 253, 255, 256–57, 259–60 computers, 108–109, 145 consumer(s), 10, 13, 30, 79, 96, 120, 124–25, 137, 143, 145, 159, 162, 164, 167–70, 193–94, 196, 200, 270 ∙∙ aspirations, 194–95, 197, 200, 267 ∙∙ choice, 89, 124, 154–55, 159, 169, 297 ∙∙ culture, 9, 89–90, 95, 126, 141, 147, 168, 170, 173, 184, 187, 189, 194, 200 ∙∙ demand, 10–11, 79, 150, 187, 189– 92, 232 ∙∙ dissatisfaction of, 193–94 ∙∙ durables, 96, 108–15, 142, 145, 154, 156, 168–69, 173. See also durable goods ∙∙ politics, 13, 193–94 ∙∙ preferences, 119, 157, 169 ∙∙ protection, 10, 129, 196 ∙∙ socialism, 296 consumer society, 10, 13, 89–91, 124, 126, 130, 140–43, 155, 167, 172, 177, 184, 187–88, 191, 193, 198–99, 202, 287, 296–97, 299. See also consumerism ∙∙ typology of, 172 consumerism, 121, 167, 188, 192–93. See also consumer society consumption, 2–4, 8–13, 15–17, 21, 30, 38, 54, 60, 71–73, 81–82, 89–96, 100–104, 115–20, 123–25, 129, 134, 140–59, 161–62, 164–70, 172–76, 179, 184, 187–97, 199–204, 206, 226, 235, 242, 247, 249, 279, 286–87, 289–91, 294–97, 300 ∙∙ beef, 145 ∙∙ beer, 144 ∙∙ blue jeans, 104, 096

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433

∙∙ butter, 144, 193 ∙∙ changes in, 94, 147 ∙∙ conspicuous, 3, 168, 196 ∙∙ collective, 155, 348 ∙∙ fish, 144–45 ∙∙ fluctuations in, 154 ∙∙ government, 155, 348 ∙∙ hidden inequality, 164 ∙∙ history, 10–12, 90, 95, 147, 151, 172, 176, 187–88, 199, 295–96 ∙∙ level of, 89, 91–92, 94–95, 145, 147– 48, 150, 153–54, 167, 169, 190–91, 197, 200–201, 286, 295 ∙∙ mass, 9, 90, 119, 142, 187 ∙∙ meat, 92, 101, 145 ∙∙ olive oil, 144 ∙∙ patterns, 8, 10, 17, 21, 30, 54, 90–91, 115, 119–20, 123, 141, 143–46, 150, 161, 166, 168, 173, 188, 190–91, 194, 199, 202, 242, 244, 290, 295–97 ∙∙ personal, 120, 125, 155, 348 ∙∙ physical indicators of, 92 ∙∙ plans, 190 ∙∙ politicization of, 151, 194 ∙∙ pork and poultry, 145 ∙∙ practices, 90, 101, 118–19, 123, 146, 169–70 ∙∙ private, 92, 95–96, 154–55, 158–59, 201, 279, 295, 348 ∙∙ public, 75–77, 92–93, 95–96, 124– 25, 145, 155, 201, 279, 295, 348 ∙∙ qualitative aspects of, 89, 169, 187, 201, 295, 297 ∙∙ ratio, 93 ∙∙ structure, 95–102, 111, 144–45, 156–57, 159 convergence, 2–3, 6, 15, 17–22, 41, 58, 61–65, 85, 143–46, 200, 202–11, 216, 222, 225, 227, 242–49, 251, 257, 265–67, 283–84, 286, 288–89, 291– 92, 298–99, 301–302. See also betaconvergence, economic convergence, homogenization, sigma-convergence ∙∙ causes of, 242–51 ∙∙ club, 64, 200 ∙∙ in Western Europe, 20, 41, 58, 61– 65, 143–47, 211, 216, 222, 265–67

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434

AUSTERITIES AND ASPIRATIONS

∙∙ between East Central Europe and Western Europe, 83–87, 200–202, 225, 283–86, 288–89, 291–92, 298–99, 302 convertible currency, 83, 174, 184, 186 cooperation, 55–56, 230, 235, 237–38, 259 ∙∙ overgrown, 40 coordination, 32, 66–67, 269 ∙∙ market, 78 ∙∙ mechanisms, 272–73 ∙∙ bureaucratic, 79, 81, 272 corruption, 173, 268, 273–74 Costa Blanca, 138 Costa Brava, 138 Costa del Sol, 138 Council for Mutual Economic Assistance (Comecon), 72, 232 Crafts, Nicholas, 64, 214 crisis, crises, 3, 41, 48, 58–60, 64–65, 67–68, 71, 81–83, 86, 156, 167, 197– 98, 224, 245, 254, 256, 258, 265, 267, 271, 273, 275–77, 279–80, 283, 288, 292–93, 296, 298. See also recession cultural capital, 69, 161 cultural protectionism, 181 cultural industry, 120 culture, 9, 96, 155, 158, 274, 287, 300. See also consumer culture ∙∙ bourgeois, 103 ∙∙ car, 173 ∙∙ counterculture, anti-materialist, 203 ∙∙ high-brow, 118, 120 ∙∙ popular, 135, 137 ∙∙ youth, 166, 199 Czechoslovakia, 8–9, 45–47, 50–51, 57, 66, 68–70, 72–74, 78–81, 83–87, 106–107, 109–14, 133, 149–50, 152– 53, 156–61, 165–66, 169–74, 176–82, 184–86, 191, 191–92, 200–202, 218– 25, 241, 268–69, 271, 279, 281, 288, 291–93, 296–300, 302–305, 308–309, 314–15, 324 Czech Republic, 12, 45, 47, 50, 67, 111, 212–13, 218–19, 221, 262, 276, 278– 88, 303–305, 309, 315

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dacha, 171 Dacia, 172 Dallas, 137 Davis, Fred, 104 daycare, 158, 162, 176. See also childcare, childrearing debts, 42, 83, 153–54, 268, 273. See also indebtedness ∙∙ foreign, 81, 154, 200–201, 268, 294 ∙∙ government, 3, 257 ∙∙ crisis, 82 delivery quota, 71, 73 Delors, Jacques, 256 demand, 10, 14, 29, 48, 55–56, 60, 96, 105, 111, 138, 141, 146, 162, 173, 179, 269, 275, 277, 280 ∙∙ consumer, 79, 150, 155, 187–92, 232 ∙∙ elasticity of, 91, 100, 108 demographic transition, 226, 242 Denmark, 44, 47, 49–51, 54, 57, 76–78, 80, 99, 106–107, 109–10, 112, 114, 116–17, 132–33, 157, 165, 211–14, 217–22, 245, 257, 262, 284, 307, 309, 311 department stores, 126–27, 141, 170, 176 depression (economic), 62, 84. See also economic crisis diphtheria, 225, 238 distribution, 24, 108, 128, 164, 170, 172–73, 190, 195, 234, 264 ∙∙ centralized, 69 ∙∙ GDP, 75 ∙∙ income, 115–17, 159–60, 162, 164, 191, 206, 235, 265 investments, 189 divergence, 2–3, 6, 11, 15, 17–18, 20–22, 41, 61–63, 83–86, 159, 165, 197, 202, 211, 216, 225–27, 241–43, 245–47, 249, 251, 265, 283, 286, 288, 292, 299, 300, 302. See also convergence, economic divergence ∙∙ causes of, 242–51 ∙∙ in Western Europe, 20–21, 61–65, 143–47, 211, 216, 247, 265–67 ∙∙ between East Central Europe and Western Europe, 17, 83–87, 159,

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Index 197, 202, 211, 225–26, 241–43, 245–47, 249, 251, 283–86, 288, 292, 299–300, 302 division of labor, 10, 146, 196 domestic chore, 166 domestic market, 39, 244, 269, 278–79 Dooge Committee, 256 durable goods. See consumer durables DVD player, 109, 115 dwellings. See housing East Germany, 12, 36, 162, 172, 240 EasyJet, 139 Ehrlich, Éva, 7, 27 economic boom, 48–49, 58, 61, 63–64, 70, 142, 146, 203, 243–44, 247–48, 263 Economic Commission for Europe, 31, 63 economic convergence, 2–3, 19, 62–65, 83, 86, 244, 246, 248–49, 265. See also convergence economic coordination, 32, 66–67, 78, 81, 269 ∙∙ mechanisms of, 272–74 economic crisis, 3, 58, 68, 71, 81, 83, 86, 258, 276, 292. See also depression economic cycle, 245 economic growth, vii, 1–8, 13, 15–16, 21–24, 40–43, 48–49, 52, 55, 63, 68, 70, 74, 78, 83–85, 87, 90, 93–94, 117, 120, 141, 149–52, 188–89, 192, 203– 204, 206–208, 214, 227, 230–31, 233, 235–37, 242, 248–49, 251, 253–56, 263–66, 276–77, 288–93, 297–300 ∙∙ determinants of, 22, 227–38 ∙∙ extensive, 78, 231, 249, 251 ∙∙ factors of, 55, 227–37 ∙∙ forced, 71 ∙∙ measurement of, vii, 5 ∙∙ sources of, 52–53 ∙∙ sustainable, 208 economic output, 1, 4, 6–7, 13–14, 16, 23–24, 26, 29–31, 37–38, 40–41, 63, 70–71, 83–85, 92–94, 145, 147–48, 152–54, 200–201, 203, 205, 207–208, 211, 231, 244, 250, 261, 266, 269, 289, 291–92, 294, 300, 303, 306, 308, 310.

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435

See also gross domestic product, gross national product, national income ∙∙ calculations of, 7, 26–27, 29–30, 32–33, 34–37 ∙∙ domestic use of, 81, 93–94, 152–54 economic policy, 55, 60–61, 73, 81–82, 151, 153–54, 189–91, 194, 200, 244, 257, 259, 269, 271 economic reform, 68, 78, 191, 202, 232, 238, 295 economic structure, 269, 280 economic transition, 268, 271 economic welfare, 204 economies of scale, 52–53, 56, 231–32 economy, 48, 93, 233, 245, 250, 254, 259, 269, 280, 300. See also command economy, shortage economy ∙∙ absorptive capacity, 229, 237–38 ∙∙ command, 38–39, 66 ∙∙ centrally planned, 26–27, 30–31, 38–39, 70, 72, 85, 149, 151, 154, 190, 237, 254, 295 ∙∙ informal, 14, 174, 202 ∙∙ market, 56, 176, 253, 269–70, 272, 287 ∙∙ planned, 40, 74, 81, 185, 197 ∙∙ second, 82, 202, 296 ∙∙ sectors of, 5, 32, 38, 287 ∙∙ service, 245 ∙∙ structure of, 280 ∙∙ war, 4 ∙∙ world, 48, 58, 71, 228, 233, 254, 256, 258–60 education, 29–30, 38, 48, 55, 96, 118, 120–21, 125, 131, 152, 155, 158, 165, 209–10, 215, 229–31, 235–37, 239–40, 243–45, 250, 264, 272, 277, 297, 348, 359–60 ∙∙ educational level, 48, 229, 250 ∙∙ higher, 165, 231, 250, 264, 277 ∙∙ primary and secondary, 250 egalitarianism, 195 electricity, 107 employees, 35, 54, 72, 131, 160–61, 175, 176, 178–79, 185, 277, 296 ∙∙ female, 119, 165, 178 ∙∙ non-manual, 119, 161, 164–65 ∙∙ salaried, 118, 134

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AUSTERITIES AND ASPIRATIONS

∙∙ white-collar, 118, 131, 156, 160, 163 employment, 60, 79, 108, 118, 131, 165, 178, 202, 226, 255, 259, 264–65, 276–78, 296 ∙∙ agricultural, 296 ∙∙ full, 60, 79 Engel’s law, 100, 157 enrollment rate, 210, 360–61 ∙∙ school, 207, 210, 214 ∙∙ student, 207, 209–10, 214, 277 entertainment, 115, 120, 134–36, 155, 166–67, 179, 181, 184, 247, 287 environmental damage, 13, 128, 204, 207, 267, 359 environmental protection, 125, 203, 208 epidemic, 238 epidemiological transition, 239 Epstein, Philip, 65 Essen Summit, 259 Estonia, 44, 284–85 Euro-optimism, 263 European Central Bank (ECB), 258 European Coal and Steel Community, 56 European Community, 257 European Commission, 137, 256 European Comparison Programme (ECP), 26, 30, 33–34 European Economic Community (EEC), 56, 63–64, 146, 243–44, 256 European Free Trade Agreement, 146 European Free Trade Association, 56 European integration, 62, 146, 243–44, 247, 253, 256 European Payments Union, 56 European Union, 2–3, 19, 100, 129, 139, 208, 220, 226, 253, 255, 257, 259–60, 264, 284. See also European integration Eurosclerosis, 255 Eurozone, 3, 255, 258–61, 370 exit visa, 186 expectations, 55, 60, 65, 79, 297 external indebtedness. See indebtedness external market, 278 fashion, 9–10, 12, 68, 103–104, 127, 135, 138, 142, 150, 166, 191, 199

Tomka 00 könyv.indb 436

Federacija Konsumentów (Federation of Consumers), 196 female employment. See employment film industry, 181 financial sector, 23, 235–36, 273, 275 financial services, 264, 274 fine distinctions, 10 Finland, 44, 47, 49–51, 54, 57, 76, 80, 84, 99, 101, 106–107, 109–14, 116–17, 132–33, 160, 165, 211–14, 217–22, 242, 245, 262, 285, 291, 307, 309, 311 fiscal imbalances, 267 five-year plan, 78 food, 10, 69, 96–103, 118, 120–21, 124, 127, 129, 138, 143–46, 154–59, 168, 170–71, 176, 187, 193, 201, 239, 286, 295 ∙∙ consumption, 10, 101, 144, 146, 154, 156–57, 168 ∙∙ rationing, 156 ∙∙ shortage, 69 ∙∙ supply, 156–57, 101 France, 42, 44, 47, 49, 51–55, 57, 63, 75, 77, 80, 97, 105–107, 109–17, 127–29, 132–33, 136–39, 144, 166, 211, 213– 14, 217–20, 224, 229–30, 240, 255, 257, 261–62, 285, 307, 309, 311 Frankfurt School, 9 furnishing, 105, 158, 168. See also furniture furniture, 108, 125, 127, 147, 348. See also furnishing Gardes, F. 144, 146 Gdańsk, 182, 193 GDP. See Gross Domestic Product Germany/FRG, 44, 50–54, 57, 75, 80, 107–10, 112–13, 132–33, 211, 213, 217, 219, 221, 262 Gross Domestic Product, GDP, 1, 5–7, 13–14, 23–27, 29–35, 37–38, 41–44, 46, 48–49, 51–54, 56, 58–59, 61–64, 67, 69, 71, 74–75, 77, 81, 83–86, 92–96, 105, 139, 147–50, 155, 162, 200–201, 203, 205–10, 212, 215, 233, 254, 260– 62, 264, 266, 270, 275–76, 278–85, 288, 291–95, 297–98, 303, 306–11

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Index Geary, R. S. 36 Geary-Khamis method, 36 gender, 119–20, 142, 159, 164–66, 183, 196, 206, 224, 267 ∙∙ differences, 165 ∙∙ differences in leisure time, 166 ∙∙ equality, 142, 183 General Agreement on Trade and Tariffs, 56 generations, 120–22, 134, 159, 166–68, 277 generational gaps, 120, 123, 159, 199 Genuine Progress Indicator (GPI), 206 Gerschenkron, Alexander, 228 Gerschenkron effect, 39 Gini coefficient, 117, 160, 281 global warming, 204 globalization, 61, 253–54 GNP. See Gross National Product Golden Age, 41, 48, 50, 55, 181 Good, David F., 6 gradualism, 269, 271 gray market, 174–75. See also informal economy Great Depression, 4, 43, 48, 63, 66, 68, 86, 112, 124, 148, 153, 155, 169, 181, 236, 292 grocery chains, 127 Groningen Growth and Development Center (GGDC), 6, 41 Gross National Product, GNP, 24–25, 33–34, 36–38, 92, 124, 147, 149, 153, 200, 203, 205, 208 ∙∙ per capita in East Central Europe and Western Europe, 46–47 ∙∙ per capita in European countries, 44–45 ∙∙ per hour worked, 261–62 Gross National Income (GNI), 24–25, 38 growth. See economic growth growth theory, 5–6, 23, 61, 230, 237 Gyáni, Gábor, 12 Győr, 178 hard currency, 83, 174, 184 Havlik, Peter, 27, 33–34

Tomka 00 könyv.indb 437

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health, 96–100, 102, 214, 226, 239, 241–42, 295. See also healthcare healthcare, 38, 125, 152, 155, 158, 163, 173, 209, 223, 226, 241, 287, 338, 348. See also health herbicides, 102 Heston, Alan, 34–36 holidays, 130–31, 133–34, 178 ∙∙ paid, 130–31, 178 homebuilders’ associations, 105 homogenization, 62, 84, 143–44, 146, 169, 226, 243, 246, 286. See also convergence household(s), 8, 73, 91–92, 96–101, 103, 108, 112, 115, 118, 136, 145, 155–59, 165–66, 171, 182, 187, 201, 205, 207– 208, 286, 295 ∙∙ appliances, 96–100 ∙∙ budget, 96, 101, 103, 108, 157, 165, 285–86, 295 ∙∙ energy, 97–100, 158–59 ∙∙ expenditures, 97, 100, 145, 156, 158, 286 ∙∙ labor, 165–55, 205, 207, 359 housing, 52, 69, 96–100, 104–108, 128, 142, 144, 152, 154–56, 158, 162–64, 167–68, 171–72, 176, 180, 239, 278, 295. See also dwellings ∙∙ communal, 108 ∙∙ conditions, 105, 239 ∙∙ construction, 105 ∙∙ investments in, 152 ∙∙ living space per person, 105 ∙∙ rental, 108, 163 ∙∙ shortages, 105 ∙∙ standard, 106 ∙∙ stock, 69, 105, 108, 171 human capital. See capital Human Development Index (HDI), 206– 207, 209–11, 212–16, 222–23, 266–67, 288, 297–98, 359–61, 408 ∙∙ ranking list, 214 Hungary, 2, 7–8, 12, 19, 30, 33, 35–38, 45–47, 51, 57, 66, 68–70, 72–74, 77– 87, 100, 106, 109, 111, 113–14, 133, 148–50, 152–53, 156–62, 165–66, 168–69, 171–82, 183–86, 188, 191–

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438

AUSTERITIES AND ASPIRATIONS

93, 196, 199–202, 212–13, 218–19, 221–26, 231–34, 237, 240–42, 262, 267–69, 271–73, 275–88, 291–94, 296, 298–300 hypermarkets, 126 Ibiza, 138 import, 25, 152, 162, 234, 250, 270, 277 ∙∙ liberalization, of 82 income(s), 5, 8, 29, 55–56, 58, 64–65, 79, 82–83, 91–92, 96, 100–104, 112, 115– 19, 136, 138, 145, 156–57, 159–65, 178, 187, 191, 195, 203–204, 206–207, 209– 11, 214, 235–36, 240, 255–56, 263, 265, 279, 281, 284, 286–87, 296–97 ∙∙ disparities, 115, 118–19, 160, 284 ∙∙ disparities in European Union, 284 ∙∙ distribution, 115–17, 159–60, 162, 164, 191, 206, 235, 265 ∙∙ inequality, 115–19, 162 ∙∙ personal, 115–16, 118, 157, 159–60 ∙∙ tax, 82, 96 indebtedness, 81, 153, 201, 267–68, 294. See also debts, foreign debts ∙∙ external, 153, 267 Index of Sustainable Economic Welfare (ISEW), 206–208, 216 individualism, 103–104 industry, 26, 38, 55, 72–73, 78, 93, 120, 125, 131, 139–39, 179, 190, 229, 231, 234, 255, 263–64, 276. See also manufacturing ∙∙ heavy, 72–73, 190, 229 industrialization, 71–72, 134, 141–42, 178, 189, 197, 243–47, 249, 268, 275 industrial relations, 55–56 Industrial Revolution, 8, 105, 115, 141, 159, 228 industrial society, 140, 159, 207, 214, 241, 300 inequality, 58, 115, 117, 160–62, 164, 168, 189, 204–207, 281, 287, 297 infant mortality, 216, 222–23, 225–26, 240, 288, 299. See also mortality inflation, 50, 58–60, 70, 82–83, 105, 123, 155, 208, 256–58, 267, 270–71, 274, 281

Tomka 00 könyv.indb 438

∙∙ hyperinflation, 270 ∙∙ rate, 51, 83 information asymmetry, 275 information and communication technologies (ICT), 254, 264 infrastructure, 42, 69, 72, 96, 125, 152, 154, 185, 229, 248, 267, 295 innovation(s), 4, 10, 48, 54, 60–61, 65, 80, 232, 234–35, 238 ∙∙ medical, 238–39 ∙∙ technological, 54, 228 institutions ix, 23, 56, 67, 69–70, 72, 129, 163–64, 176, 179, 206, 226, 230, 235–38, 243, 246–51, 253, 259, 265, 268–69, 272–74, 291, 295, 299 International Comparison Programme (ICP), 5, 26, 28–29, 34–36 International Labour Organization (ILO), 92 International Monetary Fund (IMF), 82 internet, 140, 142, 264 inventions, 227–29 inventory, 92, 151 investment(s), 3, 42, 48, 51, 54–55, 60–61, 65, 72–74, 79–82, 92–95, 125, 128, 145, 148–54, 189, 192–94, 197, 200–201, 205–206, 230, 233, 235–36, 238, 249–51, 258, 263–64, 274–76, 294–95 ∙∙ foreign direct investment (FDI), 233, 250 ∙∙ foreign portfolio investment, 250 ∙∙ volatility of, 149 institutional change, 66 Ireland, 44–45, 47, 49–50, 55, 57, 59, 63, 76–77, 94, 98, 101, 109–14, 117, 131–33, 143, 149, 157, 211, 213–14, 217–21, 261–62, 265–66, 284, 307, 309, 311 Italy, 42, 44, 47, 50–51, 54–57, 59, 77–78, 80, 93, 99, 100, 106–107, 109–12, 114, 116–17, 128, 132–33, 138–39, 157, 165, 207, 211–14, 217–22, 240, 245, 255, 258, 262, 265, 285, 307, 309, 311 Jánossy, Ferenc, 57, 61 Japan, 230

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Index Kaelble, Hartmut, 144, 146, 243 Karlsbad (Karlovy Vary), 184 Kaser, Michael C., 6 Keynesianism, 55 Kochanowski, Jerzy, 174 Kojak, 137 Kornai, János, 162, 170, 272–73 Khruschchev, Nikita, 188 Korea, 230 Kuczynski, Jürgen, 92 kulaks, 73 Kuznets, Simon, 4–5 Kuznets curve, 115 labor force, 43, 48, 55, 130–31, 229, 261–62, 276–79 ∙∙ mobility, 278 ∙∙ participation, 278 ∙∙ unpaid household labor, 207 ∙∙ skilled, 118, 161, 163, 198, 228 ∙∙ unskilled, 118, 161, 163 labor market, 60, 119, 134, 195, 230, 255, 259, 263–64, 277 Lada, 172 Lagerfeld, Karl, 104 Latvia, 45, 285 leisure, 13–14, 89, 96–100, 111, 120, 124, 127, 129–30, 134–35, 139–40, 147, 165–66, 171, 177, 179–80, 182– 84, 202, 205, 208, 296–97 ∙∙ activity, 182 ∙∙ alternative clubs, 122 ∙∙ differentiation of, 202 ∙∙ habits, 111 ∙∙ patterns, 177 ∙∙ time, 14, 124, 127, 129–30, 134–35, 139–40, 147, 165–66, 177, 179–80, 182–84, 202, 208, 296–97, 359 life expectancy, 14, 115, 34, 161, 206– 207, 209 214–17, 222–25, 240–41, 267, 288, 299, 360 life satisfaction, 205–206 lifestyle, 91, 111, 115, 119–20, 123, 135, 141, 167, 184, 193, 197, 226, 241–42 liquor 144, 175. See also alcohol Lisbon Strategy, 260 Lisbon Summit, 259

Tomka 00 könyv.indb 439

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literacy, 209–10, 213–14, 230, 250, 360–61 ∙∙ adult literacy, 207 Lithuania, 45, 285 living expense, 35, 91 living standard. See standard of living Lorenz curve, 340 Lucas, Robert, viii, 319n1, 367n62, 409 luxury goods, 9–10, 141, 157, 159, 162, 201, 295. See also luxury consumables Maastricht, 263 ∙∙ criteria, 257 macroeconomic policy, 232 macroeconomic stabilization, 269 Maddison, Angus, 6, 28, 33–36, 41, 65, 231 Mallorca, 138 malls, 127–28. See also shopping centers Malthus, Thomas, 234 managers, 37, 78, 175, 280 manufacturing, 54–55, 72, 81, 125, 161, 177–78, 228, 231–32, 234, 244–45, 255, 268, 273, 276, 278, 280. See also industry marketing, 102, 140–42 Marer, Paul, 6, 27, 32–34 Marienbad (Mariánské Lázně), 184 Marshall Plan, 56 Marx, Karl, 8 Marxism, 193, 232 mass-produced goods, 55, 125 mass production, 108, 112, 125–26, 141–43 Material Product System (MPS), 37, 39 material security, 121–22, 199 McKendrick, Neil, 10, 141 media vii, 102, 120, 140, 142, 183, 191, 208, 247 ∙∙ mass, 140, 245 Mediterranean, 138 Mercedes-Benz, 169 middle class, 103, 116, 126, 143, 155, 160, 167, 170, 183. See also class, white-collar employees Mieczkowski, Bogdan, 193–94 Miller, Michael B., 126

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AUSTERITIES AND ASPIRATIONS

Mladá Boleslav, 172 mobile phone, 109, 145 Monetary Union, 2, 257–58 Montenegro, 45, 282 ∙∙ mortality, 209, 214–16, 220–26, 238–42, 267, 281, 288, 297–99. See also avoidable deaths, infant mortality ∙∙ avoidable deaths, 226, 241 ∙∙ factors of decline, 238 rate, 214–16, 220–22, 224–26, 240, 267, 281, 288, 298 mortgage, 274 motorcycle, 120, 167 motorization, 127, 158, 172–73, 234. See also cars movies, 135, 137, 140, 142, 179–81, 183–14, 198. See also cinema Nagyító (Magnifying glass), 196 national accounts, vii, 4, 7, 24, 32, 37, 91, 148 national income, 1, 4, 24, 26, 32, 37–40, 69, 77, 92, 147–48, 150, 153, 338. See also economic output nationalization, 71–72, 202, 237, 296 natural resources, 206, 233–35, 359 ∙∙ depletion of, 13 needs, 123–24, 171, 175, 189, 195, 197 ∙∙ basic, 187, 195, 197 ∙∙ human needs, 121, 205 ∙∙ material, 121, 196–97 ∙∙ physical, 103 the Netherlands, 6, 36, 42, 44, 47, 49– 54, 56–57, 75, 77–78, 80, 97, 106–107, 109–13, 116–17, 122, 131–33, 138, 144, 157, 165, 207, 211, 213–14, 217–21, 240, 261–62, 266, 285, 307, 309, 311 Net Material Product (NMP), 32, 37–38 New Course, 67 New Economic Mechanism, 79, 296 New Economy, 58 newspapers, 120, 135, 198 newsreels, 181 nomenclature, 164, 173–74

Tomka 00 könyv.indb 440

North, Douglass C., 235 Norway, 19, 42, 44, 47, 49–51, 57, 59, 63, 77–78, 93, 99–100, 103, 106–107, 109–14, 116, 132–33, 136, 212–14, 217–21, 245, 262, 265–66, 307, 309, 311 nutrition, 101–102, 223, 238, 240 ∙∙ caloric intake, 101–102 ∙∙ nutritional deficiencies, 101 Oblath, Gábor, 284 occupational group, 118, 160–61 occupational structure, 244–45 OECD, 65, 95, 206, 279 oil crisis, 41, 48, 59, 83, 265 Olomouc, 178 Omran, Abdel, 239 Opatija, 184 Organization for European Economic Cooperation, 56 Osnabrück, 178 Ostend, 138 passport law, 186 pauperization, 8 peasantry, 168. See also agricultural workforce pension(s), 134, 167, 277 ∙∙ entitlements, 168 Penn World Table (PWT), 28, 33–36 perinatal deaths, 241. See also mortality personal computer, 108–109 pesticides, 102 petite bourgeoisie, 193. See also class Pewex, 174 Philips, 169 phonograph, 135 Physical Indicators Method (PIM), 7, 27, 30–31, 33–34 piped water, 106–107 Plan Econ Research Institute, 33–34 planning, 40, 68, 71–72, 78–79, 151, 190–91, 202, 231, 233, 264, 275, 295 ∙∙ central, 72, 78, 233, 275 ∙∙ planning bureaucracy, 162 Plumb, J. H., 10, 105 plumbing, 105, 107

2020. 07. 17. 14:54:51

Index Poland, 8, 12, 19, 35, 45–46, 50–51, 57, 66–74, 78, 80–81, 83–85, 87, 106, 109, 111, 112, 114, 132, 148–50, 152–54, 158, 160–62, 165–66, 168, 171–72, 174–75, 177–79, 181–82, 184–87, 191– 93, 196–97, 199–202, 212–13, 218–19, 221–23, 225, 232–33, 241, 262, 267–70, 273, 276–87, 292, 294, 296–300 Polish market, 176 political institutions, 206, 236–38, 249, 251 pollution, 206, 359price(s), 3, 5, 7, 10, 26–27, 29–30, 32, 35–36, 38–39, 50, 59–60, 65, 69, 73, 79–80, 82, 92, 95– 96, 103, 105, 108, 112, 123, 126–27, 136, 138–39, 146, 153, 155–59, 162, 174–75, 185–86, 191, 193–94, 205, 234–35, 255, 257–58, 260, 268–69, 270–71, 274, 279–80 ∙∙ control, 268 ∙∙ energy, 105, 158 ∙∙ food, 101, 193 ∙∙ housing, 104 ∙∙ oil, 59–60, 260 ∙∙ reform, 78–79, 269 ∙∙ structure, 31–32, 159 ∙∙ subsidies, 105, 158, 162–63, 268, 270, 279 ∙∙ system, 159 private sector, 79, 82, 96, 268–69, 273, 280 privatization, 269–71, 275, 280 productivity 59–61, 65, 78, 96, 130, 145, 190, 229–31, 205–51, 254, 256, 261, 263–64, 266, 283 ∙∙ gap, 65 ∙∙ growth, 3, 48, 61, 96, 229, 251, 254, 263 ∙∙ labor, 58, 61, 96 ∙∙ total factor productivity, 52–53, 229, 250 professionals, higher, 118. See also class property rights, 235–37, 274 Pryor, Frederic L., 6 purchasing power vii, 4, 25–26, 28–32, 34–35, 36, 120, 124, 145, 159, 169, 207, 209, 212, 262, 278, 284, 287, 289

Tomka 00 könyv.indb 441

441

purchasing power parity (PPP), 26, 29–30, 35 ∙∙ method, 29–30 quality of life, 1–4, 13–17, 21, 24, 121, 129, 203–11, 214–16, 222–23, 237–38, 242, 244, 249, 254, 265–67, 286, 288– 90, 297–300. See also well-being ∙∙ research, 13, 15, 208 radio, 108–109, 114, 120, 135–37, 140, 142, 167, 169, 180–83 ∙∙ broadcast, 135, 140, 181–82 ∙∙ diffusion of, 114 ∙∙ number of sets, 109 ∙∙ stations, 182 ∙∙ transistor, 167 Radom, 193 ration-coupon system, 83, 124, 164 recession, 58, 60, 67, 74, 78, 272, 278, 281, 283, 286, 297. See also crisis reconstruction, 43, 62, 64, 66, 69, 70– 71, 130–31, 178 ∙∙ postwar, 41, 43, 48, 156, 197, 248 recovery, economic, 64, 68, 86, 268, 272, 276, 292 redistribution, 117, 124, 163, 255 reforms, 68, 71, 78–79, 82, 171, 191–92, 202, 232, 236, 238, 257, 268–70, 275, 295–96 refrigerator, 108, 142, 154 regime change. See system change regional disparities, 2, 86 regrettable necessities, 14, 205, 266 research and development (R&D), 228, 264 resorts, 137–39, 163–64, 176, 184–85 retail sector. See also commerce retirement funds, 274 Ricardo, David, 234 Riesman, David, 9 Rimini, 138 Robinson, James A., 236 rock concerts, 167 Roma population, 277 Romania, 36, 45, 106–107, 110–11, 113–14, 133, 172, 240, 282, 284

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AUSTERITIES AND ASPIRATIONS

rural areas, 23, 163, 168, 171–72 rural population, 168, 172. See also agricultural workforce, peasantry Ryanair, 139 Sachs, Jeffrey, 270 Sainsbury’s, 127 sanitation, 239 saturation of markets, 91 Scheveningen, 138 shock therapy, 269–70 Schultz, Theodore, 230 second economy, 82, 202, 296. See also black market sector(s), economic, vi, 5, 26, 32, 38, 55, 61, 72–73, 96, 130, 152, 164–65, 170, 177, 227–28, 255, 263–64, 268, 270, 278. See also agriculture, industry, manufacturing, services, ∙∙ agricultural, 102, 177, 231–32, 273 ∙∙ financial, 273 ∙∙ industrial, 245 ∙∙ private, 79, 82, 96, 268–69, 273, 280 ∙∙ retail, 142 ∙∙ shifts, 231 ∙∙ state, 271, 278 ∙∙ structural change of, 72, 231 ∙∙ structure of, 189, 276 ∙∙ tertiary, 26, 30, 38, 55, 178, 231, 276, 280 secularization, 121–22 self-provisioning, 171, 175 self-service shops, 126, 176 Sen, Amartya, 204, 215 Serbia, 45, 114, 282 services, 8, 13–14, 25–27, 29–31, 37–40, 43, 55, 72, 83, 89, 91, 95–96, 104, 111, 118, 120, 124–25, 126, 129, 134, 138– 40, 143, 159, 162–64, 166, 170–71, 173–76, 178–79, 185, 190–191, 193, 195–98, 201–202, 205, 209, 231, 233, 245, 255, 257, 264, 266, 270, 272, 274, 276, 287, 295–96 sewage system, 239 shopping centers, 127–29, 264. See also supermarkets Shopping City Süd, Vösendorf, Austria, 127

Tomka 00 könyv.indb 442

shortages, 69, 168, 170–75, 180, 192–93, 195–97, 202, 280, 296 shortage economy, 158, 164, 170, 174, 242, 296 sigma-convergence, 62–64. See also convergence side jobs, 178 Siemens, 169 silent revolution, 121 Simmel, Georg, 9, 103 Single European Act, 257 single European market, 257 skilled workers. See workers Škoda, 172 Slovakia, 45, 47, 50, 67, 106–107, 111, 133, 212–13, 218–19, 221, 271, 276, 278, 280, 282–83, 285–88, 303–305, 309, 315 smallpox, 238 smoking, 102, 226, 240, 242 soccer, 179 social benefits, 155, 159, 201, 295, 348 social capabilities, 55, 237 social capital, 237 “social contract”, 55 “social compromise”, 55 social costs, 269, 281 social differences, 115, 147, 159 social insurance, 125, 162, 215, 236, 246 social institutions, 235, 237, 265. See also institutions socialist consumer society, 187–88, 293 socialization hypothesis, 121 social mobility, 142 social movements, 122 social policy, 243–44 social roles, ∙∙ masculine and feminine, 241 social status, 9, 91, 103–104, 142, 161, 171 Sokol movement, 180 Sombart, Werner, 9, 141 Soviet Union, 12, 74, 190–91, 206, 233, 278 Spain, 19, 36, 44, 114, 117, 138–39, 218–21, 240, 285 Stability and Growth Pact, 258 stagflation, 58, 60, 256

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Index Stalinism, 67, 191, 196 standard deviation, 266, 290, 293, 301, 302 standard of living, 1, 8, 15–17, 24, 74, 81–82, 89, 91–92, 94–96, 102, 105, 117, 129, 140, 143, 154, 167–69, 189, 191, 194, 196, 198–99, 203, 207, 214, 240, 287, 290, 297 state-owned enterprises, 271, 273 statistics, 4–6, 12, 20–21, 26, 29, 32–34, 37, 40, 154, 164, 277, 279, 301 ∙∙ budget, 178 ∙∙ comparability of, 216 ∙∙ mortality, 216, 225 Stiglitz-Sen-Fitoussi Report, 14 stock exchange, 236 stockpiling, 40 stress, 162, 185, 204, 226, 242, 248 structural change, 23, 55, 58, 60–61, 74, 104, 120, 124, 154, 231, 245, 271, 286, 295, 297 subsidies. See price subsidies Summers, Robert, 34–37 supermarket(s), 126–27. See also shopping centers ∙∙ chains, 287 symbolic goods, 104, 119 system change, 8, 31, 66–67, 171, 187, 190, 194, 267–68, 273–75, 279, 281, 286–88, 291, 293, 296–99 System of National Accounts (SNA), 4, 24, 32, 35, 37 Sweden, 42–44, 47, 50–51, 54, 57, 63, 76–78, 80, 93, 98, 103, 105–107, 110, 112–13, 115–16, 132–33, 136, 149, 165, 173, 207, 211–13, 217–21, 245, 257, 262, 266, 285, 307, 309, 311 Switzerland, 19, 43–44, 47, 49–51, 55, 57, 59, 63, 76, 98, 109–14, 117, 132– 33, 136, 173, 211–14, 217–21, 262, 266, 307, 309, 311 Szelényi, Iván, 163 Szörfi, Béla, 284 tariffs, 56–57, 243, 256, 270 Tatra region, 184

Tomka 00 könyv.indb 443

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tax rates, 274 tax revenues, 96 technology, 55–56, 65, 111, 233, 235, 238, 248, 250, 268, 276 ∙∙ change, 48, 52, 176, 227–29, 234, 237, 249–50, 276 ∙∙ communication, 158, 264 ∙∙ information, 128, 264 ∙∙ innovation, 54, 65, 228 ∙∙ transfer, 54 ∙∙ Western, 81 television, 108–109, 142, 145, 147, 173 ∙∙ broadcast, 114, 135–36, 182–83 ∙∙ channel, 136, 140 ∙∙ commercial, 136 ∙∙ diffusion of, 114 ∙∙ local, 140 ∙∙ number of sets, 110 ∙∙ ownership, 115, 172 ∙∙ public, 135, 184 ∙∙ satellite, 136 ∙∙ soap operas, 136 ∙∙ talk shows, 136 telephone, 109, 142, 169, 171 ∙∙ number of sets, 112 tenants-rights, 108 terms of trade, 80, 235 theaters, 127, 135, 180–81 “The Great U-Turn”, 117 Therborn, Göran, 172 time budgets, 137, 165, 178, 182 ∙∙ surveys of, 137, 165, 178, 182 tobacco, 100, 102, 118, 120, 156–57, 201, 241, 338, 348 Toniolo, Gianni, 64 Torun, 178 tourism, 137–39, 179, 184–86, 202 ∙∙ domestic, 138 ∙∙ green, 139 ∙∙ international, 138 ∙∙ mass, 137–38, 184 ∙∙ rural, 139 ∙∙ urban, 139 trade, 32, 56, 60, 152–53, 233, 244, 250, 256–58, 260, 269, 278, 287, 297 ∙∙ deficit, 60, 74 ∙∙ foreign trade, 52–53, 56, 65, 72,

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AUSTERITIES AND ASPIRATIONS

75–77, 81–82, 93–94, 146, 148, 152– 54, 233, 250–51, 269–71, 278–79 ∙∙ foreign trade balance, 75–77, 82, 93–94, 148, 152–54 ∙∙ foreign trade deficit, 81, 94, 153 ∙∙ international, 48, 56, 61, 143, 146, 231–34, 249–50, 257, 260, 279 ∙∙ regimes, 233 trader tourism, 186 trade unions, 61, 131, 185, 235, 262–63 transaction costs, 258 transformational crisis, 67, 167, 272–73, 275, 277, 279–81, 286, 293, 296 transportation, 29, 37, 69, 96–97, 100– 101, 137, 143, 155, 158, 162, 227–28, 234, 245, 348 travel, 118, 120, 124, 127, 138–39, 146, 175, 180, 185–86, 197 ∙∙ agent, 138 ∙∙ foreign, 185, 197 ∙∙ law, 186 ∙∙ regulations, 175 Treaty of Amsterdam, 259 Treaty of Rome, 256 trente glorieuses, 48 triple approach, ix, 1, 3, 16, 22, 289–90, 300 Trouville, 138 Tuzex, 174 Új Írás (New Writing), 192 UK. See United Kingdom underdevelopment, 209, 273, 275 UN Economic Commission for Europe, 31 unemployment, 48–49, 58, 60, 101, 117, 253, 255–56, 259, 265, 269, 271, 277, 279–81 ∙∙ rate, 49–50 United Kingdom, 42, 44, 47, 49–53, 54–57, 59, 63, 75, 77–78, 80, 94, 97, 100–101, 105–107, 109–15, 117, 119, 127, 132–33, 144–45, 211, 213, 217– 21, 214, 218, 223, 229, 257, 265–66, 285, 307, 309, 311 United Nations, 4–5, 24, 29–31, 35, 207–209, 211

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United Nations Development Programme (UNDP), 209, 326, 359, 361 United States, 4, 42, 48, 54, 60, 65, 128, 146, 207, 228–29, 232, 247–48, 254, 257, 260–61, 263–64, 266 urbanization, 13, 105, 128, 142, 179, 245, 247 vaccination, 225, 238, 240 Váci, Mihály, 192 Valuch, Tibor, 12 value(s), 121, 123, 167 ∙∙ change, 121, 123, 199; ∙∙ long-term change, 121, 167, 199 ∙∙ materialist, 121, 123, 143, 167–68, 171, 197, 199 ∙∙ index of postmaterialist values, 122 ∙∙ post-materialist, 121–23, 143, 167– 68, 197, 199 ∙∙ value orientations, 121, 123, 167 ∙∙ value preferences, 289–90 Veblen, Thorstein, 9 venture capital, 263, 274 video players, 115 Vries, Jan De, 141 wage moderation, 55 Warriner, Doreen, 6 washing machines, 108, 145 Weber, Max, 9 well-being, 1, 13–16, 24, 89, 92, 121, 167, 199, 203, 205–207, 210–11, 215, 227, 267, 289, 300 ∙∙ indicators of, 11, 14, 206 ∙∙ material, 89, 92, 121, 167, 199 ∙∙ subjective, 1, 204, 206 welfare programs, 95, 117, 176 welfare state, 55, 155, 201, 245, 255, 295 welfare transfer, 201, 295 Wiener Institut für Internationale Wirtschaftsvergleiche, 31 wine, 144 Williamson, Jeffrey, 92 Wirtschaftswunder (economic miracle), 64 work ethic, 235

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Index workers, 55, 61, 74, 78, 118, 131, 160, 164, 175–77, 185, 189, 204, 230, 256, 261, 264, 277–79 ∙∙ blue-collar, 118, 240 ∙∙ female, 196 ∙∙ industrial, 134, 161 ∙∙ male, 241 ∙∙ manual, 119, 160–61, 165 ∙∙ non-manual, 119 ∙∙ skilled, 118, 161, 163, 256, 277 ∙∙ unskilled, 161 working class, 8, 120, 155–56, 161, 189, 193–94, 202, 242. See also class ∙∙ industrial 156, 161, 202 working conditions, 82, 226, 239, 242

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445

working time, 21, 53, 58, 91, 130–32, 134, 177–79, 202, 261–63, 296 ∙∙ average number of hours worked, 58, 130 ∙∙ differentiation of, 202 ∙∙ eight-hour workday, 130, 177 World Bank, 27, 32–34, 35, 206 World Development Indicators (WDI), 206 World Values Survey, 203 Yugoslavia, 35, 45, 106, 110–11, 113–14, 138, 184 youth culture. See culture Zlín, 180

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