6 - Crisis and erosion of state socialism, 1973–88

Summary

What was the reason for the spectacular decline after 1973 and then the universal collapse of state socialism in Central and Eastern Europe at the end of the 1980s? What was the prelude to 1989? How did the crisis became manifest and how did the system decline into an unstoppable process of erosion?

Economic and international factors of the crisis

Emerging economic crisis

To answer these questions, one has to delve into several different layers of a rather complex historical phenomenon. The first layer may be found in the region's economic performance. If an impressive growth rate, a catching up process, and increased income in most cases provided a sort of legitimization and acceptance, the decline began when these aspects dried up. This did not happen at once, but economic trends in Central and Eastern Europe dramatically changed in about 1973.

Angus Maddison's calculations offer a broad view of the process: between 1913 and 1950, the Central and Eastern European countries comprised one of the slowest growing regions of the world. Their average 1 percent per capita GNP growth rate remained behind the growth of the advanced European ‘Core’ countries (1.3 percent), the non-European ‘Core’ countries (1.4 percent), Latin America (1.4 percent), and even Africa (1.2 percent); only Asia had slower growth (with its – 0.1 percent).

In contrast, between 1950 and 1973, Central and Eastern Europe could boast the best performance: its unprecedented 3.9 percent average annual per capita growth surpassed the growth rate of the European and non-European ‘Core’ (3.8 and 2.2 percent respectively), and was also better than the very rapid Asian (3.7 percent) and the less impressive Latin-American (2.5 percent) and African (1.7 percent) growth rates.