Neoliberalism's Fallout: The Case of Eastern Europe

Due to request by user fahim102 on youtube, I'll be posting a cursory essay I wrote for a freshman composition project :3

Due to time restrictions, the essay is not what I fully wanted it to be, and there is much I would change wording-wise, but I plan to expand on it later in my academic career, either as a thesis or dissertation; depends on how far I want to go. But the main topic I want to explore in the future is the wider effect of Neoliberalism worldwide, but here I specifically focused on the cases of economic shock therapy in the former Soviet Bloc and its adjacent allies through the 1990s and connected it to the modern political situation. I would call the conclusion the least satisfactory portion of my essay, but I had already written multiple essays worth of content for the socio-economic context (I wrote 4x what was expected of me for this assignment), but a later work will focus on the broader context, and provide a better history between the 90s to today's political situation.

This work is my own and was completed in 2024 as a final research paper in ENC1102 at Saint Petersburg College.

The Socio-Political Effects of Economic Shock Therapy on Eastern Europe
Word Count: 5,102

Beginning in 1989 with Poland and continuing through to the end of the 20th century, the Communist Bloc of the Soviet Union and its allies started to fall, marking the end of the Cold War. While the end of the ideological struggle is often declared “won” in the West by 1991 with the dissolution of the USSR, the new sovereign nations of Eastern Europe had another battle waged internally. Now that the supposed specter of communism was wiped from the face of Europe, Western economists flocked to the East in hopes of creating a new neoliberal¹ haven, a broad new range of enterprises ready to enter the free market awaiting them. Among signs of a struggling economy after the destruction of the old socialist system, foreign economists and domestic reformers hoped to establish “a neoclassical model of transition advocating the immediate implementation of the necessary reforms to establish a free market process” as quick as humanly possible, despite popular opposition or democratic processes (Marangos, 2002). The primary mode this process through which this economic “shock therapy” is carried out usually introduces or modifies the processes of “1) Price liberalization-stabilization. 2) Privatization. 3) Institutional structure. 4) Monetary policy. 5) Fiscal policy. 6) International and foreign aid. 7) Social policy.” (Ibid.)

            Through this essay, I will cover the experiences of three nations that underwent the economic shock therapy process, typically against the will of the people. Through the cases of Poland, the first testing ground of the process; the Russian Federation, one of the most devastating cases of this transition; and the German Democratic Republic, a “forgotten” example of shock therapy through German unification; the people’s experiences in the era of shock therapy will be detailed, from the social costs of the time to the political landscape of today.

Poland and the Bloodless Revolution, 1990-1993
            Poland served as a catalyst in the Communist Bloc for other nations to start voluntarily resigning from the Warsaw Pact and forming new governments, with Poland’s social revolution not being won through the barrel of a rifle, but at the ballot box. The people of Poland decided that the path for their country was not soviet-style socialism, but rather an embrace of the free market. Even before the “bloodless revolution” of 1989, the economy of Poland started making a slow shift towards capitalism, with “Legislation passed in 1987 and 1988 allowed SOEs [State Owned Enterprises] to transform themselves into joint-stock companies” without government intervention, creating a “so-called ‘spontaneous privatization’” of some polish firms (Rondinelli & Yurkiewicz, 1996). But as the new Solidarity government attempted to convert the economy from state socialism to a market-oriented capitalism, the situation quickly became dire; “Once the economy ‘opened up’ to the idea of the free market, unemployment increased drastically and continued to rise even more rapidly in the following years;” at the same time, “inflation [was] rising to a staggering 685%” (Rydlinski, 2017). These conditions, paired with the uncertainty of the political environment after sudden regime change, “meant that Poland was in the perfect weakened position to accept a radical shock therapy program” sanctioned by the west, a new experiment in Neoliberal economics to test whether or not non-market economies can be brought into the realm of laissez-faire capitalism in a short timeframe (Ibid). It was after the abject failure of Poland’s attempt at economic liberalization that “Jeffrey Sachs, then thirty-four, started working as an adviser to Solidarity,” as well as a new onslaught of Western economists and investors (Ibid.). Though Sachs wasn’t on the payroll of any Western firm or the new Polish government, it was here that the country would be subjected to the “Sachs Plan,” later to be dubbed Shock Therapy.

            This plan of shock therapy became the model for all of the soon to be ex-communist countries of the East, from the colossal Soviet Union and its republics to the small nation of Latvia. A key aspect of this doctrine of economic transition was its speed, often to the detriment of the working-class populations. In Poland,

The macroeconomic reform program, devised and implemented rapidly, freed almost all administrative price controls, devaluated the zloty [Poland’s currency] almost to the level of the black market rate, increased taxes substantially, limited wage increases, relaxed restrictions on trade and payments, cut government spending, limited monetary and fiscal expansion, and restricted credit. (Rondinelli & Yurkiewicz, 1996)

These reforms meant that goods that were once state-subsidized were now left to the musings of the free-market. So while the government of Poland (similar to the USSR) previously maintained a baseline level for the price of goods/commodities, ensuring that most could afford their basic necessities no matter their income, these social programs were dissolved in the wake of a new doctrine of free market policies. This policy of cutting fiscal expenses and introducing new monetary policy towards free-market ideology was paired with a strengthened program of privatizing publicly owned property. The first wave of privatization in Poland started with a campaign by Solidarity to “return assets confiscated by the government from 1944 to 1962” in the form of “capital bonds, cash, or the return of assets” (Ibid.) This first wave of privatization enshrined the anti-communist policy of Poland’s modern political scene, presenting land reform for the masses as a supposed crime of socialism. The “reprivatization” campaign posed some issues, however: “By 1991 […] more than 70,000 claims had been filed for confirmation of property ownership,” which ended up placing “huge burdens on the state budget and jeopardized the outcome of the restitution plan” (Ibid.). When the process of returning assets to capitalists and landholders of the pre-communist era became too burdensome, the shock crew searched for foreign investment to kickstart the economy. But even this program met disappointing dividends despite numerous pieces of legislation enacted to encourage foreign actors to step into Poland, as only “twenty companies were offered to one or two large, primarily foreign, investment groups” due to a lack of confidence in the Polish economy (Ibid.).

While there were other campaigns of privatization (namely the liquidation of enterprise assets), the 1993 elections brought in a social-democratic government amidst the rising social costs of extreme economic reforms². Before the elections, the Solidarity government (1989-1993) saw unemployment as “a temporary issue affecting 400,000 people” during the very initial stages of transition (Rydlinski, 2017). As the Western economists stepped in and instituted their shock doctrine, “unemployment reached 11.4% (over one million people)” in 1991, and “in 1993 it hit 16.4% (three million people)” (Ibid.). Even though the purpose of economic shock therapy is to increase economic growth in the transition to a market economy, the Polish economy only grew to be 1/3 larger than the previous socialist economy from 1989 to 2007, all while “nearly 2/3 of [their] society lives at or close to the poverty line” and “between one and two million children are undernourished or starving” (Ibid.). While Poland is generally regarded as a successful case of economic shock therapy, the measurable benefits of privatization only manifested after the turbulent nineties. The more radical transition governments were voted out the minute it became possible to do so, but the turmoil of semi-frequent economic crises allowed certain aspects of the shock doctrine to be further implemented as the process of Poland’s integration into the neoliberal order through the 21st century.

Russia and the Fall of the USSR, 1992-2000
            Just a couple years after Poland’s “bloodless revolution,” the Soviet Union was dissolved at the hands of Mikhail Gorbachev in 1991, with Boris Yeltsin being elected as president of the new Russian Federation in 1992 despite the masses of soviet citizens who were hoping for a reformed socialism through an intact union³. After dissolution, Russia found itself in a similar situation to Poland; In the Gorbachev era, there was a set of reforms, perestroika and glasnost, with the aim of liberalizing the Soviet economy in a form of “market socialism.” After the transition from the Russian Soviet Republic into the Russian Federation, however, Yeltsin stated that “the [Soviet] political system had to be overturned, not just changed,” and thus nearly a decade of arguably the most extreme campaign of shock therapy started in what was once the stronghold of socialism in Europe (Desai, 2005). Upon his entrance into office, Yeltsin immediately brought in a team of Western economists just as Poland did a couple years before, but this new shock team was now equipped with experience from Poland, as well as multinational institutions such as the IMF. A lesson learned very quickly from the Polish experiment was the fact that, if democracy is introduced in the early stages of transition, “a reformist government was very likely to win the elections” (Marangos, 2002). This led to a series of campaigns to restrict the democratic process by Yeltsin’s administration, consolidating power alongside a cabal of technocrats and oligarchs, as well as writing a new constitution in 1993 to serve these interests, “[abandoning] the notion of checks and balances, and created a democracy for the bureaucracy and by the bureaucracy” (Desai, 2005)

One of the first acts of the Yeltsin administration in the process of privatization was to take all of the state-owned enterprises and place them on the stock market. This was carried out by the distribution of “[vouchers] with a face value of 10,000 rubles, which theoretically could be exchanged for shares in the newly privatized enterprises.” (Goldman, 1997) However, as “Inflation at the end of 1992 ran at 2500 percent” (Desai, 2005), the “market value of those vouchers fell to under 4,000 rubles (about $5),” making them essentially worthless amid further economic hardships associated with inflation (Goldman, 1997). When these vouchers were instead sold for necessities, such as feeding one’s family for another week or keeping up with rent amid the removal of social welfare programs, they were “an easy buy for speculators and factory directors who eagerly bought up vouchers to bolster their enterprise control,” creating a massive consolidation of wealth into a few hands while the masses suffered under these new social and economic conditions (Ibid.). This corruption associated with privatization started well before the 1992 shock doctrine when “Gorbachev’s reforms of the 1980s dramatically weakened the power of the central government,” which created a new environment of corruption and the expansion of organized crime (Sokolov, 2004). While private business holders scalped as many assets as humanly possible from the former Soviet enterprises before they were fully privatized, various criminal groups “quickly moved to become business partners in the newly formed commercial enterprises while maintaining their role as extralegal enforcers” (Ibid.). In this new Russian society, “It appears that to become very rich and run an asset-rich enterprise, you must have a high-level protector in the government” or receive protections from the mafia below (Goldman, 1997). In previous campaigns of shock therapy, every participating nation (including Poland) “came already equipped with a private sector and commercial codes,” but after 70 years of socialist property relations, almost none were present in Russia (Ibid.). The mix of the mafia flooding the streets and the “corporate mafia” holding control of the big banks and businesses created an environment to which:

many firms are privatized in the sense that they are not state run, Russia’s industrial structure is dominated by monopolies in a largely unregulated environment rather than by competitive, rule-bound companies. (Desai, 2005)

Despite the rising unpopularity of Yeltsin’s radical liberal reforms, he won another election in 1996. Realizing that his election would not be won without interference and wanting to maintain their political (and economic) power, “a cabal of seven bankers acknowledged that they actively mobilized to raise millions of dollars to ensure a Yeltsin victory” (Goldman, 1997). One of these bankers, Boris Berezovsky, later “disclosed that he is one of seven bankers and businessmen who combined to control 50 percent of Russia’s assets” (Ibid.). However, within 10 years of the program being initiated, spearheaded by the IMF, Western economists, and the coalition of wealthy bankers and industrialists, “Popular support for Yeltsin and his economic reform program […] had collapsed to less than 5 percent popularity when Yeltsin resigned in December 1999” (Desai, 2005). To understand why Yeltsin stepped down and Putin took his place, the social costs and desperation of the 90s for the Russian worker needs to be understood.

            While Poland’s economic transition had widely disastrous consequences, the Russian people were subjected to the same (or, in some cases, worse) treatment over a period of 8 years, as opposed to the three with Poland’s experiment. Throughout this period, “The freeing of prices caused prices of essential goods to rise dramatically, in a way that essentially wiped-out people’s savings accumulated during the Soviet days,” giving way to a whole new level of desperation for the working-class Russian (Desai, 2005). There are dozens of criticisms to make for the former Soviet economy, both during the war economy days to the later focus on light industry from the 50s to the 80s, but it can be observed that, before its dissolution, the Soviet Union cared for most of their people at a baseline level. So, while there were not as many consumer goods as were available in the west, during the transition from state socialism to free-market capitalism, “Bread lines disappeared, but bread prices rose higher than wages” (Desai, 2005). That removal of price controls meant that common groceries became instantly unaffordable, housing prices that were previously state-subsidized were now being gouged by private landlords, and the entire economy fell behind, taking nearly 20 years to surpass the Soviet level of production⁴. Amid the worsening conditions for the average Russian, “the death rate among working age men in Russia [increasing] by 74 percent, from 759.2 to 1323.7 deaths per 100,000 population,” from 1990 to 1994, which amounted to a decrease in life expectancy by six years: “from 63.8 years to 57.6 years” (Brainerd, 2001). This trend was made partially by a staggering increase in male suicide, “with the suicide rate among men aged 50-54 [reaching] 139.6 per 100,000” in Russia, among the highest in the world (Ibid.). These social factors, namely the desperation induced by this period of radical liberal reform, brought upon the conditions for Putin’s rise to power. Through “the breakdown of political cohesion, and the urgency of restoring stability in Russia,” Putin was elected in 2000, remaining in a high position of power up to this day (Desai, 2005). Putin, while still enacting liberal reforms, was a conservative as compared to Yeltsin, but “Russians were ready to settle for a mild dose of authoritarianism promising further stability and steady economic gains rather than opting for a Yeltsin-type liberal order” (Ibid.). Since Putin’s rise to power, the aspects of corruption in the Russian economy persist today, and the governing apparatus is still bogged down with bureaucracy, Russia entered the 2010s with relative stability as contrasted to their turbulent nineties.

The German Democratic Republic and Unification, 1990-1994
            While it’s often missing from discussions surrounding the implementation of economic shock therapy, the German Democratic Republic (GDR) was placed into a very similar situation to Poland through the process of unification with the Federal Republic of Germany (FRG). When the Berlin Wall fell on November 9th, 1989, it came as a surprise to both those in the East and the West, as the decree made for its destruction was nonchalant and sudden. What followed was a rush of Germans and Berliners from both sides of the wall to “the other Germany” in hopes of reuniting their families and seeing their unified nation. Shortly after the fall of the Wall, the Socialist Unity Party (SED)⁵ resigned, and a “new government was formed including all five GDR parties and worked closely together with the ‘Central Round Table’” by the December of 1989 (de la Motte & Green, 2015). During this period, similar to the peoples of the USSR before its dissolution, “86 percent of the GDR population wanted a reformed socialism” in the united Germany, hoping to continue their experiment in socialism and creating a more egalitarian society with democratic reform while retaining the social gains brought upon them by the GDR⁶; however, in the FRG, “Only 13 days after the Wall was opened, the governing board of the West German central bank proposed the rapid introduction of the West German currency in the GDR” (Ibid.). During this period of political debate and uncertainty, with the tension between Western capitalism and Eastern socialism rising, most of the leading parties of the Eastern coalition government aligned with the West, pushing “the dogma of privatization and the early introduction of the West German currency” for the now vulnerable Eastern region of Germany (Ibid.). As the shock doctrine is typically carried out, the democratic will of the people was disregarded, and “On 1 July 1990, even before formal unification between the GDR and FRG had taken place, a hasty currency union was pushed through,” which led to “GDR export products [rising] in price by 400-500 percent overnight” due to the West’s stronger currency, in turn pushing most of the East German industry into bankruptcy (Ibid.). This aptly named “currency catastrophe” set forward the notion that the GDR now did not have “any chance of them keeping their own markets, both at home and abroad,” to the point that “a restructuring of the GDR economy by its own efforts was rendered nigh impossible,” and so the process of unification and economic restructuring was to be placed entirely into the hands of the Federal Republic (Ibid.).

            When the currency unification was carried out, the East German transition government created the Treuhandanstalt, a “loyal hand” to manage the transition through unification; its original purpose was to “protect what was rightfully the people’s property from vulture capitalists,” considering “the country had more than 12,000 [state-owned] enterprises with four million employees,” all valued at 650 billion Deutsch Marks (Ibid.). In other words, the Treuhand was supposed to protect 80% of the GDR’s production capability from being undemocratically tampered with, but the rhetoric of a speedy unification (and the influence of millions of Deutsch Marks spent on political campaigns) held the hearts of the East German, so a new conservative government was elected in 1990 and “the mandate of the Treuhand was changed and the emphasis was now placed on a speedy privatization of all enterprises,” most of which were public property (Ibid.). In essence,

Handing the Treuhand over to West German appointees was seen as a green light to sell off all the GDR’s publicly owned enterprises at breakneck speed and at knockdown prices – some factories which were perfectly viable were sold for as little as 1 Deutsch Mark. […] the Treuhand, once in Western hands, saw its task as overseeing the rapid dismantling of GDR state assets so that no potential competition with West German companies would arise. (Ibid.)

And it was here that the GDR began the process of unification into the world capitalist order, where German socialism, a struggle launched over the course of nearly a century, was killed. With the advent of this western-backed administration, “3,400 factories, 520 large construction companies, 465 state farms, and thousands of other smaller companies were privatized, and soon thereafter many were closed” since the Western German enterprises often found it too inconvenient to integrate these competing firms into their own (Ibid.). Over the course of four years, the new Treuhand administration “managed to convert GDR assets valued at 650 billion Deutsch Marks into a debt mountain of 260 billion Deutsch Marks,” spending a total of 860 million marks on privatizing the industry of the East (Ibid.). To compound onto the plight of the East German corporation, they were set up for failure by the West by the forcible application of “old debts” on former GDR industries. These so-called old debts were utilized as a tactic to lower the buying price of industries to the aforementioned single Mark when “West German banks were allowed to buy the (state-owned) GDR banks at a cost well below their actual value” shortly after the currency union of July 1st (Ibid.). This created a situation where,

Suddenly, all credits that had been provided to by the GDR government to enterprises or local authorities were now counted as debts to the banks on West German terms and a high interest rate was slapped on them. […] This offered a lucrative income for the banks but it spelled disaster for the many factories, cooperatives and local authorities who were, all of a sudden, not only considered to have debts but also faced huge interest payments. (Ibid.)

This new monetary policy meant that East Germany was effectively sold on the auction block to the West, destroying East German industry for the benefits of the few. While this process matches very closely to the shock doctrines of the other Eastern European countries, especially though the processes of privatization and new monetary/fiscal policies, the social fallout of shock therapy in Eastern Germany is unique compared to Poland and Russia.

            The German Democratic Republic was a society based upon the central ideas of “solidarity, cooperation, peace with other nations and socialism” at its core (Ibid.). Despite its flaws, it provided an experiment in a modern, developed socialism, one of progressivity and modernity. Despite this, the process of German unification found the East hemorrhaging its population, with “two million citizens [leaving] the territory, above all young people” (Ibid.), with the “East German labor force potential [decreasing] 21% (2.3 million) between 1991 and 2013” as a result (Schwob, 2022). This was not due to the oppressiveness of a supposed Stasi State or the lack of consumer goods, but rather a lack of job opportunity after the rapid destruction of GDR industry and the Eastern economy. Through unification, “the number of jobs in industrial manufacturing [in the east] fell by 75 percent,” with those remaining in the east experiencing “stressful and intensive work conditions, massive overtime, and reduced wages” under new corporate ownership from either West German or foreign firms (de la Motte & Green, 2015). Even nearly 20 years after unification, “4 out of 10 [East Germans] were officially deemed to be living in ‘economically precarious circumstances,’” being left behind by the more prosperous West (Ibid.), with the “GDP per capita of Eastern Germany equaling only 70% of the GDP per capita in Western Germany” (Schwob, 2022). One of the largest losses that faced the East is the decapitation of the former GDR’s intellectual workforce. Being a nation committed to societal progress and studying the sciences, the GDR had a comprehensive and equitable education system with a large population of intellectuals that would be abolished and returned to the Federal Republic’s discriminatory educational system upon unification. This purge of educational facilities was primarily carried out in the higher education system, where “the intellectual elite was stigmatized, marginalized, and dismissed, so that it could be replaced by personnel from Western Germany” (de la Motte & Green, 2015). These intellectuals, as well as government officials of the former GDR, were treated just as horribly as (if not worse than⁷) the former Nazi officials of the Third Reich during unification, being shunned out of public positions in government or universities and enduring an extensive campaign of political purges. On top of women losing many of the gains that they had achieved throughout the GDR’s 40 years of history, the FRG imposed a new set of restitution laws that allowed those who fled the West pre-1945 to claim Eastern property as their own:

In fact, 2.2 million requests were lodged for legal repossession of houses and blocks of plats. Because several people usually live in a single home, it meant that about half the GDR population was affected by such claims. […] By 2007, almost half a million properties had been handed back to (relatives of) former owners and the current owners were forced out. (Ibid.)

The process of German unification left the former residents of the GDR with the ruins of a society they attempted to build after the Nazi beast ravaged their country, punishing the people with the crime of attempting to build an alternative to the capitalist order. The social costs of unification in the Eastern regions of Germany still leave scars on German society today, the process of economic shock therapy killing a dream that was a century in the making.

The Political Fallout of Shock Therapy / Conclusion
            As a general model, one’s material circumstances play a large factor into their political decisions or one’s mentality towards certain social movements, with the precarity of their situation influencing how they are affected by sweet promises made by those who try and prey on their material conditions. Due to the social upheaval in places like Poland, Russia, and the former GDR as a result of economic shock therapy, the far-right has played a key role in the modern political scene in these countries. These far-right political actors are comprised of “informal and formal groups that demand the exclusion of other individuals from public life, civil rights or national territory on ‘the basis of ascribed differences between human beings’” (Varga, 2008). This trend is particularly striking in the cases of Eastern Europe, as these nations typically came out of a socialist social formation, which encourages social cohesion on the basis of class rather than race or nationality. But while the socialist structure encourages cooperation and unity, the capitalist social structure thrives off of individualism and competition, something that is enshrined into law and practice in the new transition economies⁸. Pairing the social and economic upheaval of the shock doctrine, “the Right has been more resonant among economic ‘losers’ – workers who had steady jobs under socialism, but have been outcompeted in the market economy that rewards education and human capital,” converting the “unorganized economic anger” that the average worker has pent up throughout the process of transition “into issues of identity” (Swindal, 2011). The rise of the Right in Eastern Europe is characterized by the utilizing of anger and fear produced by economic precarity and directing it towards a political/social scapegoat.

            In Poland, the “2005 parliamentary elections ushered into power a coalition of conservative right-wing parties advocating traditional family and catholic values” while continuing the economic liberalization program (Ibid.). A special force in the rise of the Right in Poland’s case is the prevalence of the Catholic Church as a method of co-opting political support: The Church provided the “means for right-wing political leaders to organize anger on a social or ideological basis,” utilizing cultural heritage and conservative appeals to old values to gain political power (Ibid.). Instead of criticizing the present economic system or seeking alternative solution, “social problems that arise will merely be attributed to its inadequate application or to other ‘scapegoat’ sources,” the scapegoat in Poland being “homosexuals, non-Catholics, nontraditional women, and other markers of cosmopolitan Europeanism” instead of the inequality produced by the neoliberal reforms and shock therapy imposed upon the Polish worker (Ibid.). While the Polish Right preys on the precarity of the working-class and their disdain for the market reforms imposed upon the country, they instead blame these issues onto an easy scapegoat while continuing economic reforms to maintain their political power.

            Russia’s case is less that of large political gains by the Right, but more of one characterized by large displays of overt fascist militancy in the streets that is left unchecked by the governing apparatus of Russia. The Russian far-right scene is dominated by “skinhead and hooligan subcultures, ‘nationalist associations’, political parties and intellectual circles,” otherwise known as think-tanks (Varga, 2008). While Poland’s Right is not characterized by strongman figures, Russia’s Right is widely represented by chief ideologue Aleksandr Dugin, having prevalence in the media and finding massive success “in lobbying mainstream politicians, including those belonging to the party of power” (Ibid.). While most terrorist attacks by the Right were by fringe groups without a large support base, large demonstrations of militancy were made through examples like, in Moscow, the creation of a new holiday that promoted Russian ethnocentrism had “attracted an unprecedented 3,000 skinheads” to the streets in 2005 (Ibid.). Despite the right-wing remaining mostly in their own circles, Russian governmental policy such as “a) Creating Russian Unity Day; anti-Georgian campaigns. b) Skinhead-recruiting. c) Repeated failure to enforce law and punish hate crime perpetuators. [and] d) Failure to punish hate crime instigators” created an environment in Russia where the far-right may not achieve much direct political influence but emboldens their movement and encourages them to test the limits of their terror (Ibid.). The centralized power of Putin’s conservative government prevents the direct rise of the far-right in places like the Duma, but the prevalence of decentralized fascist tendencies in Russia is a growing and concerning trend, with anti-foreign and bigoted language becoming more and more mainstream in Russian media as time progresses.

            After German unification, the neo-fascist party,  Alternative for Germany (AfD), found a significant following in the Eastern regions of the country following the Eurozone crisis of 2013. When Greece’s economy came under fire during the crisis of 2013, Germany poured money into the struggling nation’s treasury in an attempt to save it from collapse, but domestically, “East Germans felt indignant towards Berlin and the Bundestag,” which “produced the anti-euro sentiment on which the AfD capitalized to rise to popularity” (Schwob, 2022). Specifically in the East German states of Germany, “the AfD won 12.2% of the vote in Brandenburg, 10.6% in Thuringia, and 9.7% in Saxony” during the 2014 state elections, “[presenting] their party as a rare political alternative in Germany” (Ibid.). While initially founded as a single-issue party advocating for the abolition of the Euro in Germany, the AfD made a notable shift in policy after securing a wider voter base, turning to anti-immigrant, nationalistic, and conservative rhetoric around 2015. The AfD’s rise in Eastern Germany “can be attributed to an aging eastern population,” who are “more susceptible to populism and nativism,” as well as “a struggling eastern economy, and economic grievance” due to the extreme social and economic costs of German unification in the 1990s (Ibid.). By banking off of economic grievances of the East, the AfD cultivated a sense of ethnonationalism that reached its peak in 2017 when “the AfD was voted into the Bundestag with 12.6% of the vote,” becoming “the first party to the right of the Christian Democratic Union to gain federal representation since the parliament of Western Germany was established in 1949” (Ibid.). 

Works Cited

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de la Motte, B., & Green, J. (2015). Stasi State or Socialist Paradise? The German Democratic Republic and what became of it (pp. 119–167). Gomer Press.

Desai, P. (2005). Russian Retrospectives on Reforms from Yeltsin to Putin. Journal of Economic Perspectives, 19(1), 87–106. https://doi.org/10.1257/0895330053147903

Goldman, M. (1997). The Pitfalls of Russian Privatization. Challenge, 40(3), 35–49. https://doi.org/10.1080/05775132.1997.11471973

Marangos, J. (2002). The Political Economy of Shock Therapy. Journal of Economic Surveys, 16(1), 41–76. https://doi.org/10.1111/1467-6419.00159

Rondinelli, D. A., & Yurkiewicz, J. (1996). Privatization And Economic Restructuring in Poland: An Assessment of Transition Policies. American Journal of Economics and Sociology, 55(2), 145–160. https://doi.org/10.1111/j.1536-7150.1996.tb03193.x

Rydlinski, B. M. (2017). Economic Crisis as a Factor of the Neoliberal Policy in Poland. Prakseologia, 1(159), 39–62. Academic Search Complete.

Schwob, A. (2022). Unprecedented Success: How the Alternative for Germany Party Capitalized on Eastern German Economic Grievance and Euroscepticism in 2013 and 2014. Gettysburg College Headquarters, 1(5), 42–65. https://cupola.gettysburg.edu/gchq/vol1/iss1/5/

Sokolov, V. (2004). From Guns to Briefcases: The Evolution of Russian Organized Crime. World Policy Journal, 21(1), 68–74. https://www.jstor.org/stable/40209904

Swindal, M. G. (2011). Ideology and Social Position in Poland: The Determinants of Voting for the Right, 1991-2005. Social Science Quarterly, 92(1), 185–205. https://doi.org/10.1111/j.1540-6237.2011.00763.x

Varga, M. (2008). How Political Opportunities Strengthen the Far Right: Understanding the Rise in Far-Right Militancy in Russia. Europe-Asia Studies, 60(4), 561–579. https://doi.org/10.1080/09668130801999854

Footnotes

¹Neoliberalism is a capitalist ideology that proposes that “human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade,” also stating that “if markets do not exist (in areas such as land, water, education, health care, social security or environmental pollution) then they must be created, by state action if necessary. But beyond these tasks the state should not venture.” (Rydlinski, 2017)

²It should be noted that, when speaking of the economic shock doctrine, “There is no example of a gradual reform government being replaced by a radical one, after the first term; a gradualist government was always replaced only by another gradualist one.” (Marangos, 2002) This is something that will very quickly be learned by the proponents of shock therapy after Poland’s rapid shock therapy program lasted but three years.

³https://soviethistory.msu.edu/1991-2/march-referendum/march-referendum-texts/russian-referendum-results/

⁴https://www.stlouisfed.org/publications/regional-economist/january-2016/rising-productivity-declining-population-impact-russias-economy

⁵In German, “Sozialistische Einheitspartei Deutschlands”

⁶Among those gains were: women’s rights, educational opportunity, job security, cheap housing, good welfare support and a subsidized culture (de la Motte & Green, 2015)

⁷In the Federal Republic of Germany, “The 1951 amnesty law granted all those who had served under the Nazi regime the right of re-instatement in their previous jobs. This enabled 90% of those Nazi civil servants sacked in 1945 to return to public service,” whereas civil servants of the GDR were kicked out of their posts, suffering reduced pensions and political isolation after unification. (de la Motte & Green, 2015)

⁸Individualism is strongly backed by free market forces that make their money by following an individualistic model of life. In contrast, social and civic values, solidarity and co-operation, cannot rely on such support. They are ‘inefficient’ from the point of view of economics. (Rydlinski, 2017)