Socialist Worker

From state capitalism to neoliberalism

Issue No. 2087

The end of the Eastern European regimes in 1989 was not inevitable. They fell because people did not want them. Strikes and mass demonstrations – and clashes with the security forces – finished them off.

As a result elections could be held, trade unions could function legally and there was a right to hold meetings and demonstrations. All this was an amazing achievement.

People expected that these changes would bring better living standards. But the ruling class had done a trade off – giving people democratic rights but introducing “shock therapy” to the economy.

Millions were thrown out of work

and massive cuts were introduced in health and other services. Western banks and corporations were encouraged to come in – the old rulers and some opposition leaders became their partners.

The tragedy was that this opposition worked to convince people that this was the way forward. This collapse of the Eastern Bloc followed a severe economic slowdown in the 1980s.

The old regimes were not socialist, they were capitalist – state capitalist to be precise. They squeezed as much as possible from workers and peasants in order to compete militarily and economically with the West.

The growing economic problems meant that there were divisions among the rulers about what to do. This eventually provided a space for political oppositions to operate.


Fears of a similar uprising to the Solidarity movement that rocked Poland at the beginning of the 1980s forced the regimes to bring in reforms, which then led to more demands for change.

Poland’s first partially free elections took place on 4 June 1989 – the day of the Tiananmen Square massacre when China’s rulers butchered thousands of democracy protesters. In Eastern Europe the rulers were already too weak to go down this road.

The Berlin Wall fell in November and the East German secret police headquarters was trashed. At the same time the Bulgarian leader Zhivkov was overthrown.

Not long after, in Czechoslovakia, mass demonstrations were enough to topple the regime. In December, Romania’s regime collapsed after courageous revolts in Timisoara and the capital Bucharest forced the army to join the revolution.

These regimes described themselves as “Communist” – a label enthusiastically taken up by Western leaders to discredit the left. Unfortunately much of the left also viewed these regimes a “socialist” in some form.

But why did anybody think they were socialist? The Russian Revolution in 1917 meant that workers began to run a whole country for the first time in history. Many people thought that the East European countries had their roots in this revolution.

In fact they were born of Joseph Stalin’s bloody counter-revolution, and the formation of a state capitalist system in Russia. Stalin created smaller clones of his regime after the Russian army liberated eastern Europe from Hitler’s Nazis.

This bloc faced the US and its allies in the Cold War. It was not anti-imperialist, but a weaker imperialist alliance.

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