Civil Society and The Economy


Linz and Stepan list and describe a set of five elements
that determine a consolidated democracy. Civil society,
political society, rule of law, usable state of
bureaucracy, and an institution of economic society all
interact in complex ways to bring about democratic
consolidation in countries. This paper focuses and
emphasizes the interactions between the ^development of a
free and lively civil society . . . [and] an
institutionalized economic society . . . [which] must be
present, or be crafted, in order for a democracy to be
consolidated^ (Linz and Stepan pg. 17). Two former
communist countries, East Germany and Poland, will be tests
for sustainable democracy. Specifically, an analysis of the
civil societies in the countries and how they react to
their current economic situations will be used as a
determinant for their chances of sustaining democracy. Both
East Germany and Poland are considered success stories.
Both countries have undergone free elections that have
brought about new leaders in the country that have
represented the citizens needs and wants, but the
transition for these countries hasn^t been easy. Many
citizens in both of the former Soviet bloc countries feel
that their votes aren^t changing the social and economic
conditions, and are rejecting the system with this ^learned
helplessness^. An increasing number of citizens in both
countries are turning to right wing policies as a result of
the new and challenging social and economic order. Where
before workers were guaranteed jobs, allowances, and other
provisions from the state, now they face the cutthroat
competition that defines capitalism. The economic societies
in the countries have been approached from very different
angles. Whereas East Germany was immediately incorporated
into the strong economic and social conditions of West
Germany, Poland was forced to handle the transition alone.
While in East Germany labor and initiative collapsed and
flowed West, Poland had no where to go, and the capitalist
West flowed into their economy in the form of investments.
The result has been very positive for Poland, which is now
one of the fastest growing economies in Europe, but very
negative for East Germany which is dawdling in high
unemployment and low foreign investment. In societies where
the party aspired to control all aspects of life, including
persecution for unauthorized association, social life was
very weak. Martial law and danger of persecution for
unauthorized activities encouraged citizens in both
countries to restrict their social ties to kin and very
close friends. The result of this phenomenon has had a
profound effect on the quality of civil societies in these
countries. Susanne Spulbeck describes the state of East
Germany: ^In the course of my fieldwork, I came to realize
that communication in the public sphere was characterized
by much mutual fear . . . the deep ^ seated feeling of
insecurity that had been instilled by the experience of
fifty years of unpredictable state surveillance . . . [and
a]ccordingly there is a tendency to avoid the public sphere
altogether, rather than actively occupying it and claiming
it as one^s own . . . [the p]ublic sphere [is]
characterized by a fear of the other, where the
surveillance system! of a once all powerful state is still
widely thought to be at work, the concept of the citizen as
an active and politically responsible person is difficult
to realize.^ The Economies: From Socialism to Capitalism
East Germany To get a full picture of what the economy in
East Germany is doing, one must look at situations that
occurred around the time of the reunification in 1990. West
Germany^s Chancellor, Kohl, made a very rash decision. To
assure the East German votes for reunification, Kohl agreed
to exchange one duetschmark for the almost worthless East
German currency. The money supply was immediately flooded,
and interest rates rose. Higher interest rates discourage
entrepreneurs from taking loans and entering the market,
and discourage older businesses to expand, and thus high
unemployment quickly followed. In addition, if Germany were
unified, Kohl promised East Germans the same benefits West
German citizens receive including social services
(retirement benefits, welfare, etc.) and a $100 billion
annual subsidy to promote economic growth. East Germany
immediately began to rely heavily on the annual payments.
West Germany was still not done. To prevent the flow of
skilled laborers from East Germany to a higher wage paying
West Germany, East German wages had to be raised, which
further discouraged economic expansion. The GDR had poor
pollution regulations, and many areas are still laced with
toxic substances. The pollution will take billions of
deutschmarks to clean. The outlook for East Germany looked
weak, but West Germany was persistent on making the former
inefficient communist state into an economic asset. The
German government has installed over 2800 miles of new
railroad tracks, and over 5000 miles of highways. In
addition, to make up for the poor investment opportunities
in East Germany, the government also offers business
subsidies and tax breaks to companies willing to invest in
the east. Since 1990, companies have taken advantage of
such incentives, and invested over $625 billion dollars in
East Germany. Deutsche Telekom completed from scratch a
highly advanced fiber optic and digital telephone network.
With the West German subsidiaries, real estate investment
also rose. Huge office buildings and hotels are appearing
throughout cities. The economy isn^t strong enough to make
use of such structures, leaving them unoccupied, as the
cities become extremely overbuilt. With such major
renewals, it is no wonder that 17percent of the East German
work force are employed in the construction industry. Even
with all the stimulation and money pouring in from all
sides, unemployment in East Germany is soaring at 17percent
and 9.1percent in West Germany. Four million Germans
(10.6percent of the workforce) are unemployed. Such a
figure hasn^t been seen in Germany since post-WWII in 1945,
and the citizens are displeased. There are several causes
for the unemployment. As mentioned above, the high interest
rates make business investments in East Germany look
unattractive. In addition, with an average wage rate of $16
per hour, Germany has higher wage rates than the US, and
one of the highest rates in the world. The German workforce
enjoys many more holidays than the American workforce, and
receives a 13th month salary bonus at Christmas. Companies
increasingly invest in neighboring countries like Czech
republic, Hungary, and Poland where wage rates are
dramatically lower. Strong stubborn labor unions aid in
decreasing the flexibility of changing the wage rates. With
2.7 mi! llion autoworkers as members, IG Metall is
resistant to any wage cuts, and is actually currently
seeking a 6.5percent pay increase. East German citizens
claim that finding jobs in the communist GDR was much
easier than finding a job presently. The unification
brought the closing of thousands of GDR^s unprofitable
factories. Newly privitized companies could not afford to
hire as many workers, and do not provide as many benefits
to the worker as in the old communist regime. The free
market system has increased competition for jobs, and left
many unskilled laborers behind. The Rostock shipyard for
example employs half the workers than the GDR employed.
(Lynch) Most of the investments in East Germany have led to
highly automated factories, which supply minimal jobs. For
instance, the city of Schkopad is currently receiving $7
billion in aid from the government to tear down a Dow
Chemical power plant and replace it with a state of the art
system. In the old communist regime, the plant employed
18,000 people. Directly after the fall of the Berlin wall,
the plant employed 4000 people. After the renovatio! ns to
the plant are finished, the plant will employ 2200 workers.
This is not the only instance of technological advancement
interfering with the economy. A prescription drug company,
Salutas Phatma Gmblt, built a $200 million dollar factory
in 1997. Robots measure the dose, place the dose in the
mold, and package the pills. The factory employs a total of
320 workers. The Opel unit of General Motors has one of the
most advanced auto assembly plants in the world. Experts
claim that East Germany will have the most modern economy
and infrastructure in fifteen or twenty years. West German
citizens are growing impatient. While a large majority of
West Germans were willing to bear the burden of rebuilding
Eastern Germany in 1990, they are increasingly becoming
tired of supporting the weak East Germany. The East German
output per person is half what it is in West Germany, and
had an output in 1996 of only $230 billion. The 7.5percent
solidarity tax Germans pay to support East Germany doesn^t
seem to be doing anything, and leave West Germans to
question its role. It is doubtful that West Germany will
stop aiding the weak economy, though, since it has invested
so intensively in it since 1990. The dye is cast.
Chancellor Schroeder is working to create jobs throughout
Germany. ^Alliance for Jobs^ has already had its first
meeting. To increase employment, Schroeder proposes lower
labor costs (even though it may be political suicide),
reform the welfare system, create more flexible workplaces,
allow Germany to be accessed more easily by small
companies, and lower retirement age (which is currently at
65). The economic gap is not the only burden that separates
East from West Germany. DeMaiziere, the first freely
elected leader of East Germany in the short time after the
fall of communism, claims that ^the psychology of
everything done in East Germany is all wrong.^ He claims
West Germany is trying to undue what they think to be the
^bad communist ways,^ without realizing that 2.4 million of
11.5 million East Germans were members of the old communist
party in the GDR. These citizens have pride of what they
accomplished in the communist regime and feel like West
Germans are rapidly revising what took them a lifetime to
create. It^s as if what was accomplished under the
communist regime didn^t amount to anything. This factor
accounts for a lot of dissent felt by East Germans toward
West Germany. East Germans complain of being able to find
jobs in the GDR, are discontent with the ill economy, and
the 20percent average higher salary that West Germans have.
Former Chancellor Kohl, the ^reunification Chancellor,^ is
routinely booed when he visits East Germany. DeMaiziere
relates what is happening in East Germany to the parable in
the bible when Moses was leading the slaves out of Egypt.
The slaves wanted to return to Egypt where they had a roof
under their head, and something to eat and drink. Moses
went to pray and ask God why they were reacting like this
and how he could improve their condition, and God answered
that only when the last slave dies will the condition
change. East Germans are having a difficult time adapting
from a system where they were guaranteed employment to the
dog eat dog world of capitalism. Poland The main difference
between East Germany and Poland is that Poland wasn^t
spoiled by an immediate flow of money. The Polish
government created a situation where Polish laborers could
leave their job at the factory and have the opportunity to
create their own business. While German economy is
dominated by large scale endeavors like building huge
hotels, advanced energy systems, and fiber optic networks,
Poland has a large service oriented economy. While Germany
is employing more and more lower class laborers (mainly as
construction workers), Poland has created a situation where
a middle class could be formed, and it has worked
remarkably. Poland set out immediately to build a western
society, and its market economy is making leaps and bounds.
Although, during the first several years, inflation,
unemployment, poor standards of living, and a ^centrally
controlled economy run by discredited communists^
(Weinstein) plagued the Polish economy, Poland fought back
with fundamentals. They sought western aid, and used it to
pay for economic reform. Weinstein writes that ^[the k]ey
to Poland^s success have been two policy decisions. . .
[f]irst Poland adopted what might be called the Balcerowicz
rule. . . [t]he second major decision was scarier. Poland
forced insolvent firms into bankruptcy, preventing them
from draining resources from productive parts of the
economy.^ The Balcerowicz rule, named after Deputy
Financial Prime Minister Leszek Balcerowicz, liberates
entrepreneurs to sell basically whatever product they want
for basically whatever price they want. This competition
couldn^t take place in East Germany because of its
obligation to conform to the laws of West Germany. The
Balcerowicz rule aids capitalism in many realms. It allows
entrepreneurs to undermine state owned firms with lower
prices, and encourages many low financed businesses to
enter the market. Thus, privatization and competition ^ the
capitalist way - in Poland is well on its way. The second
step was crucial in alleviating the government from
supporting incompetent businesses. While Germany is
providing subsidies and tax breaks to incapable businesses,
Poland lets the cutthroat competition of capitalism have
its way with them. Many workers left the factory to create
their own store or manage banks, and thus ^Poland drained
workers out of worthless factories into units that could
produce the goods that people wanted to buy.^ (Weinstein)
Once a communist dominated economy, Poland has emerged as
the most entrepreneurial country in the ex-communist region
with over two million new businesses since the old regime
fell ranging from banking to health care to tourism and
leisure activities. Poland easily gained investments from
Europe (particularly Germany) and the US who both
acknowledge their stable middle class, the improvement of
Poland^s currency, the zloty, and the highly educated
workforce. Poland^s GDP has been rising this year by about
six percent, and has been estimated to be over five percent
in 1999. Inflation is estimated be down 10 percent by the
end of the year as prices drop rapidly. The Tradeoff of
Economy and Right Wing Politics East Germany Attitudinally,
a democracy becomes the only game in town when, even in
face of severe political and economic crisis, the
overwhelming majority of the people believe that any
further political change must emerge from within the
parameters of democratic procedures. (Linz and Stepan pg.
15) Many East Germans, dissatisfied with the economic
situation, have looked to the simpler forms of government
in the midst of the economic and political transformations.
As taboo as it may be, a large number of Germans are
leaning toward right wing politics. Many Germans are
concerned with losing their jobs and status to foreigners,
and xenophobia is very high in the Lander. Outbreaks like
Hoyerswerda, Rostock-Lichtenhagen firebombing, and the
assaults in Solingen, indicate a need for government
attention. As economic situation worsens, the parties are
sure to gain more support. Currently, two parties exist in
Germany promoting right wing policies: the German People^s
Union (DVU) and the Republikaner which denies any
affiliation with fascism. In 1993, the Hamburg Office for
Protection of the Constitution estimated a total of 65,000
right wing extremists. 64,000 of these extremists are
considered to be militant. The surprising fact is that half
of the right wing extremists are in East Germany, which
would make sense, but only a quarter of the entire German
population is located in East Germany. In the last
elections, the right wing votes didn^t come close to
seating anyone in the Bundenstag. The parties work within
the framework of democracy to stop the ^overload of
government and decay bourgeois culture and values.^
(Michael Minkenberg pg. 73) The majority of the right wing
violence doesn^t stem from these parties, though. The
extremity appeals to many youths. The offenders are
surprisingly young men, ranging in the ages of 14 to 32 but
the average ages are 17. Millionaire Gerhard Frey, a chief
contributor to the GPD, claims, ^Voting for the right is as
much a part of youth culture today as techno and
skateboarding.^ These unorganized youths with rudimentary
political ideas strike out spontaneously at foreigners,
gays, Jews, and non-whites with the belief that they are
speaking for the majority. Many neighborhoods have skinhead
gangs that have adopted illegal nazi flags and symbols.
Vandalism is commonly found throughout Germany. Swastikas
and neo-nazi graffiti sprayed on walls in cities,
defacement of Jewish cemeteries, and holocaust memorials
vandalized. Kristallnacht, a somber remembering those Jews
deported by nazi storm troopers back in 1938 and the
commencement of the genocide, was also a night for the
right wingers. A memorial commemorating the mass
deportation of the Jews in Berlin was found lamed with
three swastikas were scratched into the metal Star of David
atop the monument. The outbreak in East Germany is believed
to have stemmed from confusion surrounding the collapsing
political and social values East German citizens once had.
Right wing extremist participation is a result of East
German citizens^ reaction to new government with closed
mindedness, and their inability to cope with the cultural
and economic developments taking place around them. With
the collapse of the communist regime, adults find it hard
to explain to their children why they participated in such
a system. When confronted East German parents are
questioned about the communist regime, they don^t know
whether to answer that they were nave to the fact that it
was bad system, thus making them look stupid, or if they
did know, why they didn^t rebel. The deterioration of
family values is a key factor in why so many youths are
turning to right wing extremism. Another factor that brings
on the high rate of right wing support in East Germany is a
German term called vergangenheitsbewaltigung. It means
coming to terms with the past. East Germany had been under
dictatorship basically since 1933. West Germany has come to
terms with the nazi past, and has strong feelings against
such absurd beliefs. With forty years of democracy under
their belt, West Germany approaches the issues with more
maturity than their eastern counterpart. Meanwhile, East
German communism bottled up such beliefs and mentalities,
and they may be reemerging. The leader of German^s Jewish
community, Ignatz Bubis, warns, ^One cannot only look to
the glorious sides of history and suppress the unpleasant
ones. Those who are not prepared to address this aspect of
history and try to look away or forget, must accept the
fact that history can be repeated.^ Having history repeated
in Germany is the last thing anyone wants. The right wing
extreme values that are being adopted are an example of the
poor civic fabric in East Germany. The outlook for Germany
is bleak with youths accepting such ridiculous values.
Luckily, there are things being done to curb the extremity.
Chancellor Schroeder, the first Chancellor not to have been
alive during WWII, led the proceedings of Kristallnacht
this year as 70,000 Jews marched through Berlin on November
ninth. He proclaimed, ^sixty years later, we look forward,
without forgetting the past.^ Jewish leaders didn^t think
the proceedings were getting across to citizens, and
decided to parade in rememberance. Other positive gains in
the fight against racism, anti-Semitism, ^gay bashing^, and
xenophobia have been made by bands. Anti-racist bands like
WAR (white Aryan resistance) have made their stand clear
through their lyrics. Hopefully these rock bands will help
to curb the problem. Poland The right wing extremism in
Poland doesn^t gather nearly as much support as do
Germany^s parties. There are a number of possible reasons
for such outcomes. First, unlike Germany, the workers are
content with their economy. They don^t feel as big a need
for change in the current system. Second, Poland has a huge
religious affiliation with the Catholic Church. The
Catholic Church plays a major role of enforcing Christian
values in the writing of laws. The Church looks down upon
violence and acts against humanity. Third, the right wing
parties that are alive in Poland are very extreme, which
discourages many Poles from joining. There are two major
right wing parties in Poland: the Polish National Party and
Polish National Commonwealth (PWS-PSN), and the Polish
National Front (PNF). Both parties have a strong skinhead
core (Szayna: 120). Both parties are also
ultra-nationalistic. They want a ^pure Poland^, and believe
only where economic and political rights are reserved
solely for Poles will the Polish culture flourish. The
leader of PWS-PSN is Boleslaw Tejkowski. He was ordered to
a psychiatric exam by Polish courts in 1992. The party is
strongly anti-Semitic and believes Jews to be the route of
all their troubles. They claim there is a Jewish conspiracy
to gain wealth for themselves. They believe Jews have taken
over the Solidarity movement, have always controlled
communism, and even go as far to proclaim the Jews direct
the Catholic Church. PWN-PSN is approximately 15,000
strong. In the 1993 elections, though they had much trouble
getting on the ballots, they accounted for .11 percent of
the total votes. In polls conducted in May of 1992, 24
percent of the polish population reported to be familiar
with the party, and 60 percent of those people chose to
have the party prosecuted. The NFP is an extreme right wing
party that believes in militarism and holds deep
hostilities to all ethnic minorities. Their
ultra-nationalistic beliefs go as far as to claim that
everything non-Polish should be eradicated. They also had
trouble getting on the ballots in the 1993 election. The
votes totaled to a meager 565, a .004 percent of the
country^s votes. It is a good sign to see that despite
unemployment levels of about 15 percent and even reaching
as far as 20 percent in some regions, that the Polish are
not resorting to these ridiculous organizations. The Poles
are reacting to their new democracy with a maturity and
knowledge that extremism is going nowhere


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