Postwar

industrial goods was an impediment to growth. In short, they conceded—though not in so many words—that the blanket application to eastern Europe of the Soviet Union’s own forced industrialization and destruction of private property had been a disaster. And even more radically, they began to seek ways in which Communist economies might incorporate price signals and other market incentives into a collectivist system of property and production.

The Sixties debates on economic reform in eastern Europe had to walk a fine line. Some Party leaders were sufficiently pragmatic (or worried) to acknowledge the technical mistakes of the past—even the neo-Stalinist Czech leadership abandoned the emphasis on heavy industry in 1961, halfway through its disastrous Third Five- Year Plan. But admitting the failure of central planning or collective property was another matter. Reform economists like Ota Sik or the Hungarian Janos Kornai sought instead to define a ‘third way’: a mixed economy in which the non-negotiable fact of common ownership and central planning would be mitigated by increased local autonomy, some price signals and the relaxation of controls. The economic arguments, after all, were incontrovertible: without such reforms, the Communist system would degenerate into stagnation and poverty —‘reproducing shortage’, as Kornai put it in a famous paper.

In Hungary alone, Kadar did respond to his critics by allowing a measure of genuine reform: the New Economic Mechanism inaugurated in 1968. Collective farms were granted substantial autonomy and not just permitted but actively encouraged to support private plots on the side. Some monopolies were broken up. Certain commodity prices were tied to the world market and allowed to fluctuate via multiple exchange rates. Private retail outlets were authorized. The point of the exercise was not so much to construct a working middle way between two incompatible economic systems, but rather to introduce the maximum of market activity (and thus, it was hoped, contentment-inducing consumer prosperity) compatible with undiluted political control of the commanding heights of the economy.

In retrospect it is clear that the reformers were deluding themselves if they supposed that a ‘third way’ between Communism and capitalism was ever realistic. But this was not because of any formal shortcoming in their economic analysis. Their true error lay in a curiously naive misreading of the system under which they lived. What mattered to the Communist leadership was not economics but politics. The ineluctable implication of the economic reformers’ theories was that the central authority of the Party-State would need to be weakened if normal economic life was to be resumed. But faced with that choice the Communist Party-States would always opt for economic abnormality.

In the meantime, however, the regimes were interested above all in stability. For this there were three emerging models. The first, ‘Kadarism’, was not readily exportable—and it was very much part of the Hungarian leader’s own strategy to assure the Kremlin authorities that there was no Hungarian ‘model’, merely a limited practical solution to local difficulties. Hungary’s situation was indeed unique, with Kadar cynically dangling access to the prosperous West before his travel-starved fellow Hungarians as a sort of reward for good behaviour—a tacit confession of Communism’s own failure. The country was now run by and for the ‘New Class’, as the Yugoslav dissident Milovan Djilas had called it in an influential 1957 book: an educated technocracy of bureaucrats and professionals, pragmatically concerned above all with feathering its nest and ensuring its own survival. Genuine liberation was unthinkable, but a reversion to repression highly unlikely.

Kadar’s Hungary—‘the best barracks in the laager’—was much envied, though only fitfully emulated. The second model, Tito’s Yugoslavia, was even more obviously sui generis. This was not because Yugoslavia had managed to avoid the problems of its neighbors. Many of the economic dysfunctions of the Soviet satellites were just as familiar to Yugoslavs, a reminder that their country’s suspended animation between East and West was a product of historical chance rather than ideological choice. But in the course of the Fifties and Sixties Tito had introduced some decentralization in decision-making and allowed experiments with factory and worker ‘autonomy’.

These innovations were born of ethnic and geographical divisions as well as economic necessity. In a federal state whose constituent republics and peoples shared little beyond unhappy and mutually antagonistic memories, the imposition of uniform instructions from Belgrade looked a lot like a return to pre-war practices. The difficult topography of the region favored local initiative; and thanks to the break with Stalin, Tito’s own version of proletarian dictatorship was no longer under pressure to replicate in detail every error of the Soviet Union’s own path to industrial modernity. It was these considerations—rather than the creative, alternative Socialist blueprint with which his Western admirers wishfully credited Tito in these years—that shaped the Yugoslav model.

But Yugoslavia was different all the same: not necessarily kinder to its critics, as Djilas and others found to their cost when dissenting from Titoist orthodoxy,[181] but more flexible in handling the needs and wants of the population at large (not least thanks to Western aid). When the Yugoslav essayist Dubravka Ugresic writes of her nostalgia for the lost Yugoslavia of her youth, what comes to mind are ‘real “winkle-pickers”, plastic macs, the first nylon underwear… the first trip to Trieste.’ Such a checklist of cheap consumer goods would have been much less to the fore in Bulgarian or Romanian memory, for example—and the ‘first trip to Trieste’ would have been quite out of the question. Yugoslavs were not prosperous and they were not free; but nor were they imprisoned in a hermetic system. ‘Titoism’ was oppressive rather than repressive. At the time this distinction mattered.

A third route to stability was ‘national Stalinism’, This was the Albanian option—a closed, impoverished society under the absolute rule of a local Party autocrat, paranoid and all-powerful. But it was also, increasingly, the Romanian model too. Nikita Khrushchev, who actively disliked Romania (a sentiment widespread in his generation of Russians), had sought to assign it a uniquely agricultural role in the international Communist distribution of labor. But the Bucharest Party leaders had no intention of being reduced to supplying raw materials and food to more prosperous and advanced Communist economies.

Having played an accommodating role in the imprisonment and suppression of the Hungarian revolt, the Romanians secured the withdrawal of Soviet forces from Romanian territory in 1958 and took an increasingly independent path. Under Dej and (from 1965) Ceausescu, Romania declined to get involved in Moscow’s quarrels with China and even refused to allow Warsaw Pact maneuvers on its territory. The Romanian leaders made overtures to Tito (whose own relations with the Warsaw Pact were formal rather than friendly), Dej even addressing the Yugoslav National Assembly in 1963; and they underwrote Romania’s neo-Stalinist industrialization with money and machinery obtained from Western Europe. Romania’s dealings with the West steadily increased; while trade with Comecon countries fell—from 70 percent of Romania’s overall foreign trade at the start of the 1960s to 45 percent ten years later.

This much trumpeted ‘Romania-first’ strategy was not unpopular at home—indeed, one of the ways Romania’s Communist Party had compensated in office for its distinctly un-Romanian origins was to wrap itself in the mantle of nationalism. Dej began this, and Ceausescu merely went further still. But the strategy was even more successful abroad. Whereas Albania, China’s European surrogate, held no attraction for anyone save nostalgic Stalinists and ultra-besotted Maoists, the international image of Communist Romania was curiously positive. Simply by distancing themselves from Moscow, the men in Bucharest gleaned a host of unlikely Western admirers. The Economist, in August 1966, called Ceausescu ‘the De Gaulle of Eastern Europe.’

As for De Gaulle himself, on a visit to Bucharest in May 1968 he observed that while Ceausescu’s Communism would not be appropriate for the West, it was probably well suited to Romania: “Chez vous un tel regime est utile, car il fait marcher les gens et fait avancer les choses.” (“For you such a regime is useful, it gets people moving and gets things done.”). De Gaulle was doubtless right that Romanian Communism would not have been appropriate for the West. Communism in Romania was peculiarly vicious and repressive: by distancing themselves from the Soviet Union after 1958 Dej and Ceausescu were also freeing themselves of any need to echo the de-Stalinization and reforms associated with the Khrushchev era. In contrast to other satellite states Romania allowed no space for any internal opposition—Bucharest intellectuals in the Sixties, cut off from their own society, played no part in domestic debates (there were none) and had to be satisfied with reading the latest nouveaux romans from Paris and participating vicariously in a cosmopolitan French culture for which educated Romanians had always claimed a special affinity.

But far from condemning the Romanian dictators, Western governments gave them every encouragement, After Romania breached the Soviet veto and formally recognized West Germany in January 1967, relations grew warmer still: Richard Nixon became the first US President to visit a Communist state when he went to Bucharest in August 1969. National Communism—‘He may be a Commie but he’s our Commie’—paid off for Ceausescu: in due