At what point does a period of time become an epoch in history? When does it leave the present and become historical? Though contemporary history can be defined as the “epoch of the still living,”6 the death of pertinent actors can also be a reference point. Margaret Thatcher and Ronald Reagan, the earlier protagonists of neoliberalism, have died. So has Milton Friedman, the economist who paved the way for their policies. The ranks of 1989’s revolutionaries are thinning out. The prominent civil rights activists Václav Havel, Jiří Dienstbier, Bronisław Geremek, and Tadeusz Mazowiecki have all passed away in recent years. The political leaders who allowed the turnaround to happen are also passing into history. Mikhail Gorbachev is over eighty; many other former reform communists have already died. Younger generations are, of course, also affected by the inexorable passing of time. Those who filled the streets of Warsaw, Budapest, East Berlin, and Prague in fall 1989, and Kyiv (as the Ukrainian capital has been named since the country gained independence) and Moscow in 1991, have now entered middle age. The demonstrations in fall 1989, the rejoicing when the communists stepped down, the excitement at the first free elections—this all seems very distant, not least because so much changed during the nineties, not only in the lives of the over 330 million citizens of postcommunist countries in Europe but ultimately for all Europeans.
Fig. 1.1. Fall of the Berlin Wall on November 9, 1989: people celebrating by the Brandenburg Gate. Photo: ullstein bild / imageBROKER / Norbert Michalke.
The gaps left by actors’ passing and memories fading are filled with political interpretations of history. At the 2009 celebrations marking the twentieth anniversary of the revolution, the political elites across Europe paid respect to the courage of the dissidents and demonstrators in 1989 and their achievements of liberty and democracy. In Berlin, a symbolic wall was created out of polystyrene blocks, decorated by artists, that were then knocked down consecutively like falling dominos. In this way, 1989 was staged as a foundational moment for united Germany and a united Europe.7
Some years ago, academic discussion of the events of 1989 and the subsequent reforms entered the realm of historical debate. Twenty years after the Iron Curtain was torn down, scholars began discussing whether the changes thus initiated could be considered a revolution at all. They also asked which approach to reforms had been more successful: “shock therapy” or the gradual reorganization of economy, government, and society. These historical inquiries have gained contemporary relevance because the same repertoire of reforms has been revived by the European Union, the International Monetary Fund (IMF), the World Bank, and local experts for use in crisis-torn Southern Europe. Germany’s cotransformation began as early as 2001, when social-democratic chancellor Gerhard Schröder was in power.
As a university lecturer, I have noticed the topic’s transition into history because of my students’ questions and backgrounds. Almost all of my students in recent years were born after 1989. They do not remember the Berlin Wall, the border lined with spring guns, the hundreds of thousands of secret service spies, or a political system to rival liberal democracy. Although the subsequent neoliberal reforms changed Europeans’ lives in many ways, bringing freedom to travel, open borders, increased—though unequally distributed—affluence, and stronger economic competition in many fields, historical research on the epoch is still in its infancy.
This book starts by tracing the chronological development of neoliberal Europe. The ground was prepared for 1989 by the reform debates of the eighties in Eastern and Western Europe. The book proposes that the combination of these debates, the failure of gradual reforms in the Eastern Bloc, and the end of system rivalry resulted in a hegemony of neoliberalism, first among economic experts, and later in a wider political arena. The Cold War and its end in Europe are explored in a separate section. The revolutions that occurred in 1989–91 are analyzed in the light of their specific qualities and causes (see chapter 3). Next, the focus is placed on the course and results of the subsequent transformation—a term that is usually used in the singular even though the postcommunist countries evolved in quite different ways. This is not surprising in view of their number, their varying precommunist histories, and the differences in the duration and character of communist rule within them. It is more surprising that the area referred to as Eastern Europe or the “Eastern Bloc” during the Cold War is still often treated as a cohesive unit in the social sciences.
The fifth chapter of this book explores the growing differences within the postcommunist countries caused by the new neoliberal order.8 The urban economic growth centers and the rural areas that fell far behind as a result of the reforms are literally worlds apart. This discrepancy is considered in a section titled “Rich Cities, Poor Regions.” Even today, one need only drive fifty miles beyond Berlin, Warsaw, or Budapest into the country to see the differences. But appearances can be misleading. By way of comparison, the book also refers to extensive statistical material, including information from the EU statistical agency Eurostat, the World Bank, the Organisation for Economic Cooperation and Development (OECD), the IMF, and various government agencies and national banks. A list of all the databases consulted would outstretch the book’s scope, but they are referenced in the endnotes, mostly with keywords to facilitate further research on the internet.9 Processing the—sometimes conflicting—information from these databases is complicated by the fact that they are based on different premises, and tend to be constructed along strictly national lines. In any case, statistics do not say much about people’s everyday lives. Hence, they are combined here with archival material (from city administrations, for example), expert opinions, newspaper reports, and other media sources, as well as personal observations by the author.10
Regional divergence has been accompanied by convergence on an international level. This is demonstrated by a comparison of the cities of Warsaw, Prague, Budapest, Berlin, and Vienna. Bratislava (despite its smaller population of around four hundred thousand) and the Ukrainian capital Kyiv are also considered, as post-Soviet examples. West Berlin and Vienna were not part of the Eastern Bloc but are included here nevertheless. More than twenty-five years after the end of the Cold War, the mental mapping it generated should be revised and new spatial perspectives allowed. It is time to jump the wall that divided Europe for many decades.
The city comparison also reveals that the German capital, which believed itself to be fast evolving from “a city to a global city to a metropolis,”11 was outpaced in the East Central European economic stakes by Prague and Warsaw in 2007–8. This is shown by various indicators such as per capita gross domestic product, unemployment rates, and population development.12 Yet the same indicators show that in the early nineties Berlin had been well ahead of the capital cities in Eastern Europe. Why did it fall behind for two decades? What does this tell us about Germany’s Sonderweg, or special path of transformation? Berlin-bashing, a popular sport in unified Germany, is not a concern of the present author. Rather, the aim of this book is to critically examine this transformation. As developments in the various capital cities are analyzed, a picture emerges of very different consequences of neoliberalism from country to country, region to region, and even town to town. It also emerges that the impact of reforms was by no means confined to Eastern Europe, but caused major changes west of the former Iron Curtain as well.