In this well researched and plausibly argued book, Fritz Bartel examines the links between the end of the Cold War and the rise of neoliberal policies. It consists of two parts: first, an explanation of why state socialist polities collapsed when they were unable to manage structural economic reform, and second, detailed accounts of the failure of the communist governments of the USSR, the German Democratic Republic, Poland, and Hungary to maintain political power and transform their economies at the same time. Underlying the Cold War confrontation were claims that only communism or capitalism could fulfil citizens’ quest for a fuller, more meaningful, and prosperous life. In Bartel's view, the significant rise in energy prices in the 1970s and the development of globalized financial relations undermined the ability of governments to fulfil post-World War II “promises” of rising living standards and personal wellbeing. Such claims had to be replaced by policies of “economic discipline” that made life harder. Thus, similar political dilemmas confronted both western “democratic capitalism” and Soviet “state socialism.” Governments had to legitimate a decline in living standards associated with deindustrialization and economic stagnation. Neoliberalism provided “the ideological and political means” (13) to ensure economic recovery concurrent with political legitimacy. It proposed an economic order predicated on individual choice and individual satisfaction, on the one side, but greater “discipline,” which involved various forms of austerity and social costs, on the other. Bartel's objective is to explain why western liberal democracies were able to meet the challenge while the state socialist societies failed.
The author contends that western governments were able to adopt neoliberalism under conditions of electoral democracy. They could “break their promises,” not with impunity but without any serious systemic breakdown, whereas the communist states faced more intractable problems of legitimacy. Introducing a liberal competitive market economy would demolish the planned economy and the party-state apparatuses. A major achievement of the book is to detail the interconnections between the USA's state financial policy and its global impact on both eastern and western Europe. The book shows a real grasp of internal political realities in the communist states. For example, the chapter on the breakup of the GDR and the politics of German unification provides an excellent account of the motivations of both sides. The leverage of western finance and the difficulties imposed on the USSR by western rearmament as well as the fall in the price of oil and economic sanctions underpinned the very weak bargaining position not only of Mikhail Gorbachev but particularly of the central European socialist states. Western governments broke promises, whereas the east European socialist governments were reluctant, or at least hesitant and ambiguous, to do so. Margaret Thatcher's politics demonstrated that “democratic capitalism could produce a stronger and more legitimate state than socialist authoritarianism in the era of breaking promises” (164). The lack of political legitimacy led to state collapse.
The book inevitably raises a number of questions. The case study methodology on which the theoretical premises are devised brings out the effects of energy economics and financial power under contemporary capitalism and the affinity with Thatcherite ideology. But there are other conditioning factors that are found in the case studies: security issues, internal divisions within the socialist states, misunderstanding the effects of liberal economics; American claims for economic, political, and ideological hegemony in the world system; military build-up; as well as the interests of American- and European-owned global corporations. State economic planning also experienced severe problems. Western electoral democracy provided a shell for neoliberalism which cracked, but did not break, when the effects of deindustrialization became apparent. There was a lack of any credible ideological alternative to Thatcherism advanced by western social democracy or European state socialism. Margaret Thatcher converted not only Tony Blair but also Mikhail Gorbachev. Here Gorbachev's perestroika policies amplified rather than limited the destabilizing effects of markets and competition. An uncompromising opposition that had strong foreign backing confronted the incumbent communist powers. Neoliberalism, unlike classical liberalism, endorsed capitalist states to promote actively a globalized market economy. The shift to market competitive relations, consequent unemployment, deindustrialization, and the withdrawal of welfarist policies led to breakdown. Communist governments “willingly and peacefully gave up” (7). Bartel emphasizes that neoliberalism broke promises for many, but it also enhanced the wealth, status, and power of others, who became driving forces for a neoliberal economic order.
Perhaps the most important question that the analysis raises is whether the socialist states, despite the structural and geopolitical challenges that are outlined here, could have secured a reformed state socialism. Could the USSR have followed a Chinese path of state controlled capitalism that “broke promises” for some but maintained the hegemony of the Communist Party? Cuba has survived sanctions and the energy crisis; Romania did not experience any financial collapse but its political system was dismantled; Belarus has maintained a largely state-owned and state-coordinated economy. In western countries, not all have adopted the pro-liberal reforms of the UK. France and Norway, for example, have maintained high levels of state benefits, and France protected its industrial economy. That these questions remain unanswered or only partially addressed is not a criticism of the book, which is a fine example of political analysis. It can be recommended as a source for anyone wishing to understand the politics of transformation and the role of neoliberal forces in ending the Cold War. The book is exceptionally well referenced and substantiated by archival research. It is well written and deserves a wide readership.
