The differences between the North and South of Europe are usually drawn by a political line. For that reason being, let us look into the cultural aspect of this political division in order to understand the economic outcome. The period of 1989-1991 will forever be commemorated as the period of the downfall of socialism in Eastern Europe. That was when the West first got a glimpse of the eastern European civil persona. If you have grown up in the western part of the world it is essential that you understand the social consequence of communism.
One must understand that in a capitalist free market economy the working individual has three possibilities to obtain wealth:
- To produce a superior or innovative product which would satisfy consumer needs and desires;
- To produce a previously existing product at a lower price by establishing innovation in the production cycle;
- To assist in the production cycle of the two above mentioned possibilities.
So how did our dear “comrades” get access to premium goods or services in order to produce? In short, they didn’t. Socialism established a system of mass bureaucracy that was not designed to produce innovation but rather to satisfy the basic needs of the common people. They eliminated every economic stimulus. By doing this, individualism in the economic sense practically seized to exist.
After 1949 a new type of society was born in Eastern Europe. Planned economies were established by communist governments. Microeconomic freedom was cut off and forceful industrialization occurred. Mass executions backed by corrupt juries cleansed the newly formed socialist nations from the old capitalist “aristocracy”, as they were called. The communist party agenda controlled all aspects of civil and economic life. Nations were pushed to function out of obligation instead of a desire for upward mobility. This conflicted with every founding principle of entrepreneurship, the backbone of the modern western European economies. Individualism seized to exist, substituted by collectivism.
What was the consequence of the socialist society?
- Out-of-date production cycles;
- Non-competitive industries;
- Slow service & low-quality goods;
- Dependency on state funding;
- Irregularities in pricing.
The list goes on and on in the books of economic theory. The devastation from such policies is still felt by Eastern Europeans. Socialism has robbed them of economic logic and destroyed their slim chance of developing a competitive business mentality. Their economic contribution to the markets of Europe is weakened to this day. It has disrupted the fruits of labor and will continue to play havoc with future generations to come.
The present-day reality..
The great European divide. A cultural divide. On the western side of Europe, societies filled with confidence and eagerness to produce and grow. On the other, nations filled with historical pride, desperation, and confusion on how to undertake the democratic path to economic success. The many years of political & economic hardships have made the working-age generation noncompetitive and susceptible to corruption. Beethoven’s ‘Oda of Joy’, the organizational anthem of Europe brings hope to some but the scary old echo of communism can be heard by many.
Zlatin Kurshumov reported from Chicago, Illinois.