The toll of privatization and the ideology of “there is no alternative”

No ideology lasts forever, and nothing of human creation lasts forever. Margaret Thatcher embodied the idea of stasis in thought and structure with her infamous statement that “there is no alternative,” which was given further form in her second most notorious utterance, “there is no such thing as society.”

There is no stasis, and five years and counting of economic crisis has chipped away at the idea that there is no alternative to present-day capitalism. It has perhaps also begun to undermine the former prime minister’s second quote, a stark encapsulation of the underlying ideology of everyone for themselves — that pitiless competition is the primary way that human beings relate to one another. Humans surely can be competitive. But they are at least as capable of cooperating, as the reactions to any natural disaster demonstrate.

Time plays its part as well. The bogeys of one generation fail to have the same effect on the next; now that two decades have passed since the disintegration of the Soviet Union, a powerful bogey is becoming less of a talisman for capitalists and the politicians who love them. Thus it is not surprising that polls show that young people are more open to socialism than their parents — the concrete realities of the debt-saturated, limited vistas that today’s economy offers them can not fail to grab their attention.

An often-cited April 2011 survey by the Pew Research Center found that the opinions of respondents in the United States ages 18 to 29 had virtually identical opinions of capitalism and socialism — both were viewed as favorable by 43 percent, while the unfavorable responses differed by one percentage point. An interesting aspect of this poll, much less noticed, is that among respondents who described themselves as Democrats, regardless of age, 44 percent had a positive response to the word “socialism” while 43 percent had a negative response. (Republicans and those who not identify with either major party responded strongly negatively.)

Opinions seem to be evolving, as a later poll, conducted in November 2012 by the conservative Gallup organization, found that 53 percent of “Democrats/Democratic leaners” were favorable to socialism (and 55 percent were favorable to capitalism). Perhaps most interestingly, 23 percent of “Republicans/Republican leaners” were favorable to socialism. Although three times as many of the Republican/Republican-leaning respondents answered positively to the word “capitalism,” nonetheless such a response would have been unimaginable a few years ago. Minds do seem on the move.

The toll from “shock therapy” is, well, shocking

If we are to believe “there is no alternative,” the result should be, if not paradise, then at least rapid improvement in countries in which capitalism was re-instated two decades ago, such as in Russia. But, alas, that has not been so.

Take, for example, a 2009 study published by The Lancet, one of the world’s leading medical journals and hardly a bastion of socialist boosterism. The study, conducted by a team of professors from institutions like Oxford and Cambridge universities, concluded that the mass privatization in the former Soviet bloc — a critical aspect of economic programs often referred to as “shock therapy” — resulted in one million deaths. If you haven’t heard of this study, that is not surprising as it received almost no attention in the corporate media after its issuance.

An Oxford University press release announcing the publication of the study (“The public health effect of economic crises and alternative policy responses in Europe: an empirical analysis”) said:

“The Oxford-led study measured the relationship between death rates and the pace and scale of privatisation in 25 countries in the former Soviet Union and Eastern Europe, dating back to the early 1990s. They found that mass privatisation came at a human cost: with an average surge in the number of deaths of 13 per cent or the equivalent of about one million lives.”

The study used World Health Organization mortality statistics corrected for a series of factors, including population aging, past mortality and employment trends, and country-specific differences in health-care infrastructure. The study found a definitive link between increased mortality and shock therapy:

“David Stuckler, from Oxford’s Department of Sociology, said: ‘Our study helps explain the striking differences in mortality in the post-communist world. Countries which pursued rapid privatisation, or ‘shock therapy’, had much greater rises in deaths than countries which followed a more gradual path. Not only did rapid privatisation lead to mass unemployment but also wiped out the social safety nets, which were critical for helping people survive during this turbulent period.’ ”

The whip was applied earlier than critics assert

Naturally, this sort of ideologically inconvenient research did not lack counter-studies. The Lancet, in January 2010, published “Did mass privatisation really increase post-communist mortality?,” which, this set of authors admit, was motived by an unwillingness to accept the study led by Professor Stuckler. The authors of the counter-study, led by Christopher J. Gerry, made, inter alia, the following complaints:

“[T]he data show that the health trends driving the association noted by Stuckler and colleagues pre-date the introduction of mass privatisation programmes in the post-communist world. … [T]he Russian privatisation programme, announced in December, 1992, and completed in June, 1994, cannot plausibly be claimed to have affected mortality rates at all in 1992 and at most weakly in 1993.”

Unfortunately for this argument, privatization began well before December 1992. Elements of capitalism were introduced into the economy of the Soviet Union as early as 1987, following the uneven adoption of Mikhail Gorbachev’s Law on State Enterprises, the net result of which was to impose wage cuts and other measures of market discipline on workers but not on managements or bureaucracies. A series of liberalization measures in the following years, including a 1990 law that institutionalized privatization, caused more job insecurity and increased shortages, unraveled the dense network of threads that bound together the Soviet system and cut the social safety net.

Moreover, shock therapy was implemented on the second day following the end of the Soviet Union — January 2, 1992 — with complete liberation of prices (except for energy), the concomitant ending of all subsidies of consumer products and for industry, and allowing the ruble to float against international currencies instead of having a fixed exchange rate. This was a strategy to reduce demand significantly, a devastating hardship considering that most products were in short supply already, and it would also lead to hyper-inflation, wiping out savings.

Privatizations and takeovers had already begun; that the government’s formal program, in which enterprises would be sold off at minuscule fractions of their value, did not start until months later is no argument that shock therapy was not already well under way.

The counter-study authors led by Professor Gerry goes so far as to conclude:

“If anything, there may be some evidence of a positive link between market reforms and health outcomes.”

Poverty, alcoholism and sexism as health indicators

The preceding statement seems to be based more on ideology than facts. By the end of 1998, Russia’s economy had contracted by an astonishing 45 percent. The World Bank — a powerful institution of the advanced capitalist countries — estimated that 74 million Russians were living poverty by then, as opposed to two million in 1989. Russia’s murder rate become one of the world’s highest. During Soviet times, we were assured by Western commentators that high levels of alcoholism were a sign of despair, yet alcohol per-capita consumption rates in 2007 were three times that of 1990. The toll on health from these factors can’t be separated from “market reforms.”

The breakdown of a society under the sudden onslaught of unbridled capitalism, neoliberal style, is exemplified in a study by University of Rhode Island Professor Donna M. Hughes, “Supplying Women for the Sex Industry: Trafficking from the Russian Federation,” in which she demonstrated how unemployment, skyrocketing levels of violence at the hands of male partners, the elimination of the Soviet-era social safety net, the pervasiveness of organized crime, and ubiquitous television and other mass media images glamorizing prostitution and the consumption of the rich of the West resulted in hundreds of thousands of Russian women trafficked into prostitution. Professor Hughes also noted the dramatic social shifts unleashed:

“A much reported 1997 survey of 15-year-old schoolgirls found that 70 percent of schoolgirls said they wanted to be prostitutes. Ten years before, 70 percent said they wanted to be cosmonauts, doctors, or teachers. Some people have claimed this finding is an indication of the decline in moral standards or the social acceptability of prostitution. This finding is more likely an indication of how the media has glamorized and romanticized prostitution.” [page 14]

The point here isn’t to suggest that the Soviet Union was some sort of paradise. It was far from that. But it is necessary to challenge assumptions, particularly when when those assumptions rest on ideological foundations. How could the larger social disintegration documented in Professor Hughes’ study, and other indications, not be indicative of a decline in health and well-being?

If market forces improve health outcomes as Professor Gerry believes, then we need only compare the country in which market forces drive health care more than anywhere else, the United States, with other countries. In an average year, 22,000 people die and 700,000 go bankrupt as a result of inadequate, or no, health insurance, while the U.S. is well below average in life expectancy and infant mortality in comparison to other developed countries. And the U.S. spends, by far, the most money on health care of any country.

When “market forces” are allowed to govern health care, then the result is that the system will be geared toward maximizing corporate profit, not providing health care. When society — social bonds — break down, we are reduced to a scramble for survival.

Surely there is an alternative. Crises are overcome with cooperation, not competition. Future alternatives won’t be anything like the Soviet Union, but the number of people newly open to socialism is a sign of the open-mindedness, and strong societies, the world needs.