Transformations of Property in Post-Socialist Eastern Europe: Reconfigurations of Ownership and Alternatives to Private Property

Transformations of Property in Post-Socialist Eastern Europe: Reconfigurations of Ownership and Alternatives to Private Property

Joachim von Puttkamer / Florian Peters, Friedrich-Schiller-Universität, SFB 294 "Structural Change of Property", Jena
Vom - Bis
20.10.2022 -
Liselore Durousset, Zeitgeschichte und Archiv, Leibniz-Institut für Raumbezogene Sozialforschung

Fundamental transfers of property were a constitutive experience for Eastern Europeans throughout the 20th century. The introduction of state-socialism included large-scale expropriations for establishing so-called “people’s” property, essentially a state monopoly over the means of production. After the fall of the communist regimes in 1989/91, the profound and quick change of property order was considered crucial for the successful transformation into liberal democracy. Then, private property was seen as a guarantee for citizens’ participation in market economy and individual freedom. In light of recent developments in some Eastern European democracies, historians have again started to question predominant narratives presuming a harmonious interrelationship between liberalism and democracy.

The workshop – organized at the Collaborative Research Centre “Structural Change of Property” – aimed to contribute to this debate by bringing together latest research nuancing and historicizing common narratives on the property dimension of post-socialist transformations. It featured case studies from six different Eastern European countries. The presentations were structured in three thematic clusters – politico-economic debates on property and privatization concepts, privatization of industry and privatization of housing – and sought to address the following questions: Which conceptions of social order provided the base for the reconfiguration of property, and which institutional frameworks were needed to realize them in practice? Did alternative ownership configurations to both state-centered and liberal property regimes emerge? To what extent did property-related reconfigurations play a part in the establishment of new democratic orders during the post-socialist transformations? And finally, what were the social consequences of these transformations?

MATEJ IVANČÍK (Bratislava) opened the debate by presenting the evolution of property discourses in Slovakia within the ambiguous context of the dissolution of Czechoslovakia. Between the Velvet Revolution and the partition in 1992, a first wave of sweeping voucher privatization of state property was implemented. At the same time, a growing Slovak nationalist faction contested the privatization policies without offering a clear alternative vision of economic transformation. After the partition, the two independent countries followed different paths. Whereas the Czech leader Václav Klaus, a well-known supporter of a free-market economy, continued the rapid marketization through a second wave of voucher privatization, the nationalist Slovak Prime Minister Vladimír Mečiar promoted economic independence and left more room for debates about the preservation of strategic state property in services, heavy industries or arms production. Finally, Slovakia’s privatization turned out to be more gradual, plural, but unhinged through the weight of bureaucracy and clientelism.

TOBIAS RUPPRECHT (Berlin) depicted the long-term evolution of privatization debates in Russia. Since the early 1980s, small circles of Moscow-based elite academics reflected on ways to save the Soviet economy, mostly by recreating financial balance. Yet, informal “liberals” already evoked new forms of collective ownership, which would subsequently be included into Mikhail Gorbachev’s vision of democratic socialism. While Perestroika policies still rejected privatization, the deterioration of the economy after the collapse of the Soviet Union unleashed the spread of a popular vision of capitalism. Nonetheless, there was no consent on which model of privatization to follow: free distribution of assets according to the slogan of giving property „back to the people“, voucher privatization, or auctions. Despite criticism from nationalist and radical liberal economists, Russia underwent an unprecedented privatization leading to the self-enrichment of a small group of mostly industrial oligarchs. As Rupprecht concluded, this seemed to be more the result of political weakness and limited state capacity than of a clear neoliberal agenda.

FLORIAN PETERS (Jena) focused on the legacies of workers’ self-management in Poland. Such institutions, introduced during the Solidarność movement, had been canceled under martial law in December 1981, but continued to impact the later transformation of the property regime. Whereas the Balcerowicz Plan was complemented by a rapid “small privatization” in trade and service enterprises, the privatization of big state-owned factories in industry was protracted due to employees’ resistance. Indeed, the idea of collective property was still widespread, but it was shifted from the factory to the municipal level as a means of empowering local democracy. Still, alternatives to straightforward privatization, including the dispersion of ownership among workers, were considered and postponed the start of classical voucher privatizations until 1995. Although Poland failed to create an alternative to capitalism, these debates contributed to legitimate the privatization process through recurrent discussions over alternatives and considerable involvement of workers.

The first panel revealed the tight entanglement of political transition and property discourses. Depending on the changing institutional framework, property discourses employed by governments or societal actors took different shapes. The following panels illustrated, though, that intellectual and political debates should not divert attention from concrete complications during the implementation of privatization and its social consequences.

MICHAL ŠEVČÍK (Brno) and MAX TRECKER (Leipzig) analyzed the subsequent steps of the privatization of one Czech and East-German industrial enterprises respectively. Both enterprises experienced a long and changeful path from state ownership to private property. While the first went insolvent in 2009, the other became one of the so-called “hidden champions” of the 2000s. The comparison of these two cases allowed to identify factors that explained the opposite outcomes.

Under state socialism, the Czech engineering enterprise Adamovské strojírny had exported a variety of highly demanded products (mostly arms, printing machines and fuel dispensers) both to the COMECON market and to western countries. During the transition, external factors like the worldwide decline of arms production and the boom of laser printing led to economical disadvantages as well as technological failure, which was accompanied by a decrease of political support. The fall of the company was accelerated by internal problems. Under changing ownership constellations, from the state company over a foundation-owned firm with minor shareholders to a private company acquired by a new investor in 2002, the redefinition of strategy was mostly limited to the replacement of top management. Technology transfers to privatized subsidiary companies as well as tough international competition additionally weakened the company, finally leading to insolvency.

The East-German mid-sized company Schweißtechnik Finsterwalde was initially judged highly innovative and potentially competitive by the federal privatization agency Treuhandanstalt. Nevertheless, the production was not efficient and the company lacked capital for investment. The first two privatization attempts failed – not least because of double games by the investors and the prewar mother company from Sweden. In 1997, the trade union, the city council, and the state government of Brandenburg created a foundation that took over the company. In this institutional setting, the company developed successfully thanks to its numerous contacts in the market and the preservation of its research department. Trecker argued that this successful transformation was only made possible through multiple interventions and financial support from public actors. According to him, the Treuhandanstalt appeared easily influenceable as well as ideologically flexible in this case. He also emphasized that the establishment of the new property regime in Eastern Germany was far from completed in 1994, when the state agency officially announced the completion of its mission.

The final session focused on property relations in housing. In many socialist countries, private or cooperative housing were legal, but fairly limited. In the early 1990s, social housing was widely judged inefficient and unjust. Hence, experts discussed and tested different paths to privatize housing assets. In East-Germany, management companies of housing complexes were privatized with the help of public subsidies. In Romania and Bulgaria, also related public services – including the heating system – were privatized, so that households had to rely on individual efforts to renovate and maintain those co-owned buildings. IVÁN TOSICS (Budapest) analyzed two Hungarian experiments designed to avoid market-driven privatization. In Szolnok, rents in municipal housing were increased to real market values, while housing subsidies were granted to households in need and competition in housing maintenance was introduced to cut high operating costs. In Ferencváros, a district of Budapest, the municipality financed urban renewal, after having relocated lowest status groups living there. Both programs became meaningless after the Hungarian government introduced a “right to buy” in 1994, which fundamentally undermined municipal ownership. Within a few years, the ratio of public housing, as in many other post-socialist countries, dropped below the average of the ratio in Western Europe.

OLGA SUSLOVA (Paris) demonstrated how the St. Petersburg city authorities dealt with the long-term results of largely uncontrolled privatization of housing in the 1990s. Implemented since 2008, the Renovatsiya program constituted another instrument of advancing post-Soviet property transformations combining neoliberal and post-socialist elements. This urban renewal program was funded and designed by private developers and encouraged marketization through mortgage for private owners. It also facilitated the completion of the fragmentary registration of ownership rights. However, it differentiated (re)housing distribution rules according to social criteria. Paradoxically, apartment owners protested against the program, because they had already renovated their flats on their own and would not benefit from it, whereas social renters supported it as a social project improving housing conditions inside the private market. Recently, these conflicts have been sidelined by a throwback to administrative urban planning in line with the authoritarian transition in Russia.

As JOANNA WAWRZYNIAK (Warsaw) summarized, the workshop questioned simplistic visions of the post-socialist transformations by highlighting spatial, temporal and political disparities within the former Eastern Bloc. Already in the late 1980s, substantial fractions of Eastern European elites agreed on the necessity of reconfiguring the state-socialist property regime, but continued to debate diverging property concepts and the right way to implement them. After 1989, real alternatives to privatization like private, public and collective forms of ownership (shareholders, local self-governments or workers’ cooperatives) were implemented on different levels and including various actors (workers, state, municipalities, foundations, trade union, banks). Yet, these small-scale experiments were often complicated by conflicting goals and remained unable to question the neoliberal hegemony effectively. In some cases, radical privatization and the subsequent increase of social inequalities were more the result of political weakness, or insufficient capabilities of the post-socialist state, than of political agenda. Contrary to current assumptions, Western privatization models were not the only source of inspiration. Eastern European countries ended up with new property regimes combining neoliberal and socialist elements.

All in all, the limitation on three thematic clusters and the comparative perspective of the workshop turned out fruitful for a thorough analysis and historicization of the complicated processes of reconfiguration of property regimes throughout post-socialist Eastern Europe. It also served to recall that the concept of property has always been plural and adjustable. The political-economic macro-perspective prevalent in this workshop could be expanded to objects of property in other sectors. What about reconfiguration of property regimes in fields such as art, health, or justice? There are plenty of ways to further this innovative research approach, including philosophical, legislative or anthropological perspectives. It seems worthwhile to continue the paths proposed by this workshop, as property transformations in post-socialist Europe still constitute an under-investigated field.

Conference overview:

Section 1: Property concepts in privatisation debates

Matej Ivančík (Bratislava): Institutionalising property discourses in an unhinged privatization. Economic transformation in post-socialist Slovakia

Tobias Rupprecht (Berlin): The Russian privatization debate, 1981-2003

Florian Peters (Jena): Remnants of workers’ self-management. Employee ownership and local self-government in Poland’s privatization

Section 2: Privatizing “people’s property” in industry: Factory-level case studies

Michal Ševčík (Brno): The decline of a large traditional industrial enterprise in the context of turbulent institutional changes: A case study of Adamovské Strojírny in the Czech Republic

Max Trecker (Leipzig): The long road to freedom? The example of „VEB Schweißtechnik Finsterwalde“

Section 3: Transformations of property in housing

Iván Tosics (Budapest): The transition of the housing sector in the post-socialist countries. Ideas and the realities

Olga Suslova (Paris): The materiality of post-Soviet transformation seen through the lens of an urban renewal program in St. Petersburg (Russia)

Closing remarks
Joanna Wawrzyniak (Warsaw)