If your area of interest is Cold War, collapse of Soviet Union and restructuring of Europe as Cold war came to an end, this book will be a useful addition to your reads. Titled - The Triumph of Broken Promises: The End of the Cold War and the Rise of Neoliberalism is book by Fritz Bartel. The primary focus of book is centered around rewriting of social contracts on both sides of Iron curtain (Western world and Communist Bloc), the challenges both sides of Iron curtain faced in rewriting social contracts and their consequences.
The book explains critical period of 1970s oil shock (the period of breakdown of Philips curve and stagflation) and how it changed the political, economic & social thinking of governments in both West and East (by East, i mean Soviet Union & its satellites). The west reacted more readily to Oil shock & stagflation by changing its fiscal and monetary policy while the east temporized with the situation because of privileged access to cheap Soviet energy resources. Eventually by 1980s, the east had to confront the imbalances, stagnation and structural flaws in their economic system but it found it very difficult. Why? Bartel explains this in great detail.
What did it mean by rewriting social contract? In both West & East, post war economic and political thinking was based around making promises to people - higher standards of living, maximal employment, union rights, social security, public welfare etc. The west employed Keynesian economics with fiscal policy as an anchor to guide economy along with state regulated markets. In East, the Soviet regime also recognized by 1960s that a race for superiority of political-economic systems is the path to compete with western capitalist world. This meant that Soviets will demonstrate that their centrally planned economic system is more powerful in production and in distribution of material benefits to its people than the western world.
As long as Philips curve held, the western governments thought they could tinker with balance between unemployment and inflation in guiding the economy. But with Oil shock of 1970s, breakdown of Philips curve and stagflation; the west searched for new economic doctrines. The economic growth stagnated in west while the inflation became entrenched. This is when Volcker and Reagan stepped up in America and Thatcher and Hoskyns in UK. Before the 70s crisis, there was a certain balance between power of Capital and power of Labor but this was broken in favor of Capital and balance significantly tilted towards the Capital. Bartel explains this in the book.
This tilting of balance in favor of Capital meant imposing fiscal & monetary austerity, abandoning full employment, union busting, suppressing wages etc and all this translated into faster de-industrialization of America, bankruptcy of small businesses, off shoring of many types of jobs & factories etc. This came at tremendous social cost. Interestingly, this phenomenon of ‘breaking promises’ was also arriving in East (Soviets & its satellites) although just a little late. And when it arrived, Soviet Bloc had very hard time comprehending with new realities - austerity, price liberalizations, cutting pensions & welfare, rationing, closing unprofitable state enterprises and transforming into a market economy. All this Bartel describes as ‘Triumph of broken promises’ - the title of the book itself. The West was able to break promises while keeping their political system intact but East couldn’t. Reasons for it are explained by Bartel in the book.
Why the west was able to break promises more easily compared to the East which spiraled into anarchy and civil conflict? This is my favorite part of Bartel’s thesis - The Democracy became an instrument to legitimize the policy of breaking promises. First in West and then eventually in East, the Democracy helped legitimize the unpopular and destructive economic policies. Why is that? Bartel’s book explains this in detail. Bartel goes through situation of Poland, East Germany and Hungary and details their political and economic struggles in facing economic realities of 1980s. Bartel explains how Soviets became a mute spectator as Warsaw Pact nations fell into orbit of the west and joined the IMF.
I would suggest that this book is a useful precursor to reading another insightful book ‘Collapse: The fall of Soviet Union’ by Vladislav Zubok. Bartel’s book sets the stage by presenting a general picture of economic & political realities of the world in 1970s & 80s. Zubok’s book is focused on political dynamics of Soviet Union and role of Gorbachev on how he tried to deal with it. Zubok’s work explains the crisis of Nationalist politics, cacophony of dysfunctional democracy, Gorbachev’s struggles in dealing with all the problems and how everything fell apart in 1990-91.
A point where Bartel and Zubok’s thesis converge is the idea that there was a good possibility of incorporating Russia into western security architecture and common European economic project. Had the end of cold war been managed a little differently, Russia would’ve been a part of European security architecture and even possibly part of EU. This means that the current crisis of Ukraine war was very much avoidable. Russia was abandoned by the West in the most critical time after collapse of Soviet Union. This down the road translated into ‘Gangster capitalism’ and ‘Potemkin Democracy’ in Russia of which Putin became the dictator. This was avoidable.
Gorbachev and a large part of Soviet & Russian political forces were genuinely inclined towards the West, the market economy and democracy. But here the West never extended the olive branch to Russia as it did to East European states later after the end of cold war. Bartel’s book also underscores Zubok’s point that Gorbachev’s policy was also backed by Soviet military and establishment as they also came to recognition about exorbitant cost of empire and need for urgent reforms. The problem was that nobody knew that the policies would lead to dissolution of USSR itself. The end of Cold war was managed well at least in one aspect - it was a peaceful end. And economic realities were the dominant forces that shaped this path.
Finally, i would conclude with my own perspective. We live in continuum where everything is in ebb and flow - nothing is permanent. Fukuyama saw collapse of USSR as end of history - meaning end of ideological evolution with the ultimate triumph of liberal democracy & Capitalism. But liberal democracy and Capitalism is now facing major stresses and strains. West did win the cold war and USSR disappeared but down the road there are consequences - was the victory final? The grave crisis America faces today has its roots and seeds in Neoliberalism. Are we in another historical rearrangement where global power politics will shift away from American unipolar world order? Time will tell.
Musical coda
Mathilde's Theme - A Very Long Engagement