CHAPTER 13
Ten years ago, in 1980, the USSR had recently sent an army into Afghanistan to prop up an incompetent and unpopular communist government (the Brezhnev doctrine at work). The USA had been humiliated by the Iranian hostage affair, and still more by the farcical failure of its rescue attempt. The USSR seemed to have at least parity with the USA in nuclear weapon systems, and significant superiority in conventional forces. The US-led boycott of the Moscow Olympic Games -- in protest at the invasion of Afghanistan -- was a failure. It seemed quite possible that, country by country, Western Europe would become "Finlandised" -- independent, but under Soviet hegemony and with a Soviet veto on many aspects of policy and some appointments. Concerned Australians were watching the Soviet Navy develop into a powerful blue-water force, able to project massive power into our region, especially with its access to the former American base at Cam Ranh Bay in Vietnam.
True, the USSR was seldom able to harvest enough to feed its own population despite its vast area of farmland, and it did not attempt to provide the range of consumer goods and the high living standards that Western, market, economies made possible for the large majority of their populations. But it was widely felt in the West that the USSR's very low controlled prices for the necessities of life, the free education, guaranteed employment, cradle-to-grave health care and social security went a very long way to make up for this. Oh yes, there were a few dissidents in labour camps or mental hospitals, but by and large the system worked, and in any case the Soviet Union, unhampered by public opinion and with the massive military power that the system certainly did produce, was too powerful for the West to do anything but placate as necessary.
Ten years later, the changes are enormous and their effects incalculable. The process of change started slowly after the rise to power of Mikhail Gorbachev, although the need for it had been apparent before. By late 1988, glasnost had reached a stage at which it was hard to imagine a return to the Brezhnev style ever being possible: the myths or lies that had legitimised the communist regime had been owned up to, and a return to the old style could now only be achieved by naked repression, by open gangsterism rather than, as before, gangsterism veiled by the myth of progress towards true communism. Glasnost also revealed to the Soviet peoples and the world that the economic situation was worse than any but a few, unpopular, Western experts had previously claimed.
In 1988 also, it became easier to envisage the process of "Finlandisation" as a partial liberation from Soviet control of central European countries, rather than as a partial subjugation of ones in the West. The USSR -- pre-occupied with economic restructuring but still a formidable power -- would allow Poland, Hungary, Czechoslovakia, perhaps one day even the Baltic Republics, gradually to open themselves to the West on condition they remained strictly neutral and on their best behaviour. Presumably the USSR would demand guaranteed passage for Soviet troops and supplies to the front line in a Germany that would long remain divided and occupied by the wartime Allies.
The change was faster than anyone expected. 1989 will not soon be forgotten. Early in the year, it was possible to speak of the Cold War as having been won, communism no longer posing a credible economic or political threat and having lost all its self-confidence. A corollary of this was that the liberation of central Europe, the Baltic and the Balkans was only a matter of time (in the case of German reunification, quite a long time). Francis Fukuyama wrote his famous essay on "the end of History", (1) when the world would settle down into a dull but prosperous democratic capitalism.
But within months, by the beginning of 1900, the countries of central Europe had liberated themselves. Once the Kremlin renounced the Brezhnev doctrine -- or at least its application outside the actual borders of the USSR -- every one of its client regimes in Europe crumbled. (This is not to say that every one of the successor regimes is, still less will remain democratic: Romania? Bulgaria?) Of the two non-client European communist countries, the decommunisation-cum-disintegration of Yugoslavia was speeded, and the archaic Albanian regime was shaken into introducing minor reforms that will almost certainly prove to be the first steps on its path to collapse. Vietnamese liberalisation continued, if slowly, and the Mongolian and Nicaraguan regimes fell. Only North Korea and, more defiantly if no more convincingly, Castro's Cuba kept up the rhetoric and rigidity of Sovietism as we knew it (and the Middle Kingdom went its own way as always).
Regarding the USSR itself, the question in 1989 ceased to "How would Gorbachev achieve perestroika? The new questions were "Can the system restructure itself at all?", and "How long before the component parts of the USSR split up?" The economic, social, political and environmental problems are appalling. Giving a prestigious lecture at Glasgow University in July 1990, a professor of economics and Soviet academician -- an occasion and a person that a few years ago could have been trusted to produce the Party line -- summed up the situation like this:
There are two solutions to the crisis. The realistic one is that little green men in spaceships will land and tell us what to do. The fantastic one is that we will manage it for ourselves. (2)
He was barely joking. Not only has communism collapsed, but communist countries are near to collapse. What are the implications for Australia of these world-shaking events?
They may be less than at first sight seems likely. We should distinguish here between questions like "What can or should Australia do to help?" and ones like "What effect will the opening and eventual revival of central Europe have on the Australian economy?" or "What does the end of the Cold War imply for our defence and security interests?"
The answer to the first kind of question is basically "very little", and this absolves us from having to discuss in detail whether and on what terms we should help. In the now free or nearly-free countries of the outer rim of the Soviet empire, the biggest problem is that of rebuilding shattered economies -- while simultaneously learning, on the job, about liberal society and democratic politics. Within the USSR, the political situation still makes effective economic reform impossible, but sooner or later, and probably from a worse starting-point than today, economic reconstruction will be needed there too. The scale of the task is comparable to that of rebuilding Western Europe after 1945: a ten or fifteen year task even with immense injections of American capital and (except in some countries at the very beginning) functioning political systems. This is an area in which Australia cannot make a significant contribution. Thanks to our governments' past mismanagement of our own economy, we simply cannot afford to pour huge amounts of capital into projects in the decommunising countries. (This is not to say that there should be no Australian investment there -- it is already happening -- just that it can only be a drop in the ocean.)
The actual economic task facing these countries is twofold: to switch from a centrally-planned command economy to a decentralised, market-based economy, and to modernise a protected, uncompetitive industrial structure.
The switch from full central planning to markets has seldom been tried. West Germany did it with resounding success -- except that it involved world war, total defeat, and a virtual economic collapse. Although war-time Britain had as much of a command economy as Nazi Germany, its first (Labour) postwar government wanted not a return to the market, but a progression from the war economy to a planned, socialist peacetime economy, and its Conservative successors could not be described as "free-market" (and remember that rationing did not finally end until well into the 1950s). Very much the same can be said of Australia. There is nothing in the Australian experience that is of particular relevance to the problem.
Modernisation of an uncompetitive industrial structure (plant, management, skills, attitudes, industrial relations ...) is also not an area in which Australia is well placed to offer advice. "Those who cannot do, teach" is not the appropriate attitude. Again, this is not to say that no Australians have useful expertise, merely that as a nation we have nothing very useful to offer.
Nothing, that is, except perhaps our mistakes. We can to some extent give the central Europeans the benefit of our hindsight. (We're not the only ones: the Swedish Association of Free Enterprise has circulated a study of that country's attempt to find a "third way" between capitalism and a command economy, hoping to discourage the new democracies from going down that superficially attractive blind alley.) (3) One way of doing this is of course to send delegations of Australian politicians, academics, unionists and businessmen on missions to central Europe; a much better one would be to bring Europeans here, to let them watch liberal democracy and a semi-market economy at work (not a pretty sight, but better than the alternatives), pick Australian brains, and with luck go home to devise better constitutions and institutions than we have managed for ourselves.
Questions of the second kind referred to above are more important, because they relate to things that will affect us whether we like it or not. For one thing, it will become harder for Australia to attract the foreign capital that we use to live beyond our means. With the development of a global financial system, governments must increasingly compete to provide environments attractive to increasingly internationally-mobile business. (4) As central Europe opens up, this competition for investment will become stiffer, and Australia will have to match up to it. The most important implication for Australia of the collapse of communism is that Australian economic reform is even more important and urgent than it was before. This means further deregulation, especially of domestic and international transport; much more flexible employment practices, and more effective education and training; tax reform; and lowering our import barriers. (5) The last of these -- buying more of their goods -- is also of course a genuine, direct way of helping decommunising countries, and developing countries too.
There is scope for large increases in agricultural production in central Europe, and enormous ones in the USSR, because of the extreme inefficiency of traditional communist collective farms and the very large losses in transport and storage. To achieve them would at a minimum require: returning the land to private ownership; making the new owners confident that they had long-term, secure titles (which requires that they also have confidence in the stability of the new constitution and legal system); and substantial amounts of capital; no small order. But if it can be brought off, the USSR could become a major exporter of agricultural commodities rather than an importer, and hence another major competitor for Australia on world markets -- which makes economic reform yet more urgent.
A second implication is that the Socialist Left in the Labor Party, and similarly-aligned groups outside it, will continue to decline. The economic system they have so long trumpeted as fundamentally more efficient than ours has been pronounced a failure by the people who had spent their lives trying to make it work. The political system they lauded as fairer and a better respecter of "true" human rights has been denounced, by the people who operated it, as based on lies, force, privilege, and more rigid societal barriers than any modern Western society. The Left has no chance of reviving until it is happy with notions such as "market forces" and "competition". Since the residual influence of the unregenerate Left is one of the biggest obstacles to economic reform in Australia, this is good news.
Except for its economic implications -- for a sound economy is an essential element of national security -- the opening of central Europe as such does not impinge directly on our defence and security interests. But the end of the Cold War and turmoil and possible disintegration in the USSR do, although the effects are much harder to predict. As Saddam Hussein of Iraq has shown, the end of the Cold War did not bring peace. It seems clear -- this is of course a sentence that I may not survive to regret! -- that the chance of Australia being destroyed in a nuclear holocaust, which previously was very small, is now negligible (although it would not be surprising if nuclear weapons were used in a civil or nationalistic war in a disintegrating Soviet Union). The chances of non-nuclear war in the Balkans, parts of the USSR and the Middle East have probably increased with the end of the cold war. Of these, only conflict in the Middle East immediately threatens major Australian security interests, but all would have repercussions here through various ethnic communities, and most would also reduce demand for the commodities we export.
The good news is that with the end of the Cold War has come the possibility of a new lease of life for the United Nations. Now the superpowers are learning to cooperate, the UN may learn to play the peacekeeping role originally envisaged for it but denied it by Stalin and his successors and by third world despots. At the time of writing, Saddam Hussein had set a stiff test for the organisation, which was performing much better than expected. Australia has been a strong, often complacent, supporter of the United Nations during its 45 years -- not something that should be counted to our credit during most of that period -- and this fortuitously puts us in a position to push quite hard to reform the organisation now there is a chance of it becoming a genuine force for peace.
Finally, the response of Australians if not of Australia to the events of 1989 must be sheer happiness at seeing tyrants toppled, dictators deposed, secret policemen spurned, and some tens of millions of people newly able to enjoy the same freedoms and aspire to the same goodies that we take for granted.
EDNNOTES
1. Francis Fukuyama, "The End of History?", The National Interest, Summer 1989.
2. The author's notes of A. Anikin, Stevenson Lecture, Glasgow University, 18 July 1990.
3. Published in English as Littorin et al., "The rise and decline of the Swedish welfare state", Företagareforbundets Rapporter (Stockholm), May 1990; also published in Swedish, German and Russian. This study is valuable reading for anyone still tempted by the prescriptions for Australia contained in the ACTU's Australia Reconstructed.
4. Cite Kasper.
5. None of these prescriptions are exactly novel; they are along the lines recommended in, inter alia, Kasper et al., Australia at the Crossroads (1980); Nurick (ed.), Mandate to Govern (1987); the Garnaut Report (1989); Nurick & Ulyatt (eds) After the Election ... (1990).
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