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Socioeconomic Inequality of the Post-Communist Countries of Eastern Europe and Its Reasons: Essay
It is undeniable that the post-communist countries of Eastern Europe are now experiencing inequality. Assessing the causes of such a phenomenon is an intricate issue because of the very dynamic essence of the concept of inequality itself. Crucially, this essay will delve into the contrast between the ‘distributive conception’ of inequality and the ‘relational view’ of inequality and their implications. As such, this essay will explore the consequences of the metropolization experienced by such countries, the consequent social polarisation, and the impact of capitalism on inequality. The statistical data deployed in this essay are collected from the database of Eurostat: an institution that standardizes sets of data coming from different European states, as such, now that most processes of economic transformation in the CEE counties have been completed, comparison between different states can be meaningfully performed. Therefore, this essay seeks to show that capitalism itself is the ground of all the various causes of the socioeconomic inequality experienced by post-communist countries of Eastern Europe.
Even if describing inequality in economic terms might seem reductive, inequality is usually discussed in such interpretation because it is the only way to observe and assess intangible phenomena such as social contracts which, otherwise, cannot be empirically assessed. This perspective reflects the distributive conception which consists in the mere coincidence of what one person has with what others in the comparison class independently have, and need not entail that the persons being compared stand in any social relations with one another. Following such reasoning, inequality is caused by an unequal distribution of goods and is thus strictly related to economic growth, hence, I shall now consider the causes of growth disparities in different CEE regions and countries. Growth dissimilarities between confining countries can be attributed to the J-curve effect. Indeed, by analyzing the development paths of the CEE countries, we can see that at least to some extent in the first phase (1989–1995) they followed the J-curve, which says that the more radical the economic reforms, the deeper the initial economic crisis and the smaller the risk of stagnating growth at later times. This can be noticed if we compare two countries such as Poland and Romania; the first firmly employed radical reforms which started an initial economic recession quickly overtook by a prompt GDP recovery in 1990 and 1991, while the latter hesitation to initially reform their economies later headed to a slower GDP growth until it accedes to the EU. However, such an explanation can be considered superficial, since it does explain economic growth dissimilarities observed within regions of the same country, but only at national levels. It cannot, therefore, be the sole explanation of why post-communist European countries experience inequality. For a more accurate and truthful investigation of such phenomenon the new economic geography thesis, which since the 1990s has focused the attention of economists on the way that geography influences economic growth, in particular the spatial agglomeration of economic activity, needs to be carefully analyzed. Indeed, what they discovered is that such countries are increasingly affected by two main phenomena: globalization and metropolization. The latter is a key process responsible for the widening of disparities in the development levels between the best-developed and the worst-developed regions of individual countries. Indeed, such economic broadening happened because only the biggest metropolitan centers had the infrastructures and human capital resources necessary for the development of modern economic tertiary sectors such as finance, advertising, law, and insurance. They, therefore, developed and diversified their economies, while non-metropolitan regions were left to the less profitable agriculture as the main mean of revenue. This can be seen if we compare the GVA (gross value added) share in advanced services compared to a national average of 100, with cities such as Vilnius, Warsaw, Prague Budapest, and Bratislava averaging between 140-190, while southern regions of Latvia and central regions of Poland and Czechia averaging between 50-60 (Eurostat, 2012). But also if we consider that 174 regions of the CEE states had a GDP per capita below the national average, while 20 regions had more than double the national average (Eurostat, 2012). Indeed, the causes of regional divergence include exogenous, endogenous, and structural aspects, with exogenous referring to the accessibility of a region, endogenous to the diversification of the region’s economy, and structural referring to the presence and concentration of advanced economic sectors. Hence, it is evident that the beneficiaries of the economic transformation following the EU accession were the metropolitan areas. Indeed, due to greater economic diversification in sectors of greater value, possible due to better human capital and essential infrastructure such as airports, metropolitan areas were the main receiver of inward capital, meaning that they economically developed to the detriment of non-metropolitan areas which were left to rural agriculture as the cornerstone of their economies. Thus, metropolization drastically boosted economic disparities between regions, therefore, creating socioeconomic inequality.
On the other hand, the ‘relational view’ advocates for a more sophisticated and contemporary analysis able to better explain modern egalitarian social movements. For example, feminists seek reproductive autonomy for women, there is no request for an equal distribution of goods, but it still is a request for equality. This is because the relational view is concerned with equality in social relations and considers equality in distributions as a consequence of it. It prioritizes normative demands arising from the newfound consciousness of objectionable inequalities based on age, sexuality, disability, and membership in less developed states. Therefore, it can be said that on the relational view, the only comparisons that fundamentally matter are among those who stand in social relations with one another and in which the goods of equality are essentially relations of equal (symmetrical and reciprocal) authority, recognition, and standing. As such, the ‘relational view’ of inequality is no longer focused on legal formalisms, claims of civic equality, or equal career opportunities, but rather it has evolved towards more contemporary egalitarian social policies such as equal opportunities of education and equal distribution of wealth, income, and public goods. Under this perspective of inequality, to identify what causes it, we need to look at the social interactions between habitants of the countries of Eastern Europe. Crucially, the stasis of regional structures could be observed, a process which was accompanied by increasing spatial polarisation, mostly driven by the development of metropolitan regions on the one hand and the stagnation of the least developed agricultural regions on the other. This has meant that while the more dynamic metropolitan centers attracted and developed highly educated and internationally successful professionals and entrepreneurs, the peripherical regions faced a high share of employment in agriculture and the collapse of the pre-existent economic base which worked as development barriers, therefore, resulting in persistent poverty and social exclusion. Furthermore, the presence of such highly qualified human capital and, at the same time, cheap labor, compared to the investor’s homeland, in metropolitan centers attracted inward capital investments. Such process developed and diversified metropolitan economies to the detriment of rural areas, hence further deepening imbalances between modern professional workers in the cities on one side and poor farmers in more rural regions on the other. Because social relations between individuals are empirically inaccessible, social polarisation can only be noticed when we compare the change in population employed in agriculture between 2000 and 2008 and the change in GDP per capita in the same years, assuming that a higher GDP per capita implies, on average, better social circumstances for the population. Therefore, we can see how countries such as Bulgaria or Lithuania, which respectively reduced agricultural unemployment by 21.1% and 7.8%, experienced a GDP per capita growth as high as 17.1% and 11.3, while countries like Poland and Latvia, which increased the agricultural share of employment by 7.6% and 1.1%, respectively experienced insignificant growth of 0.9% in the case of Poland or even negative growth of -4.4% in the case of Latvia (Eurostat, 2012). Thus, if inequality is understood through social relations parity between people, we can conclude that the economic transformation following the EU accession caused inequality in the post-communist East European countries since they mostly benefitted metropolitan centers, where habitants developed into modern professionals, to the detriment of rural areas, were farmers were socially excluded and left unable to modernize.
Even if, whether adopting a ‘relational view’ or a ‘distributive conception’, the main drivers of inequality can be identified, the problem lies in the fact that egalitarians have always been better at criticizing inequality than at devising a coherent and successful conception of a society of equals. Indeed, conceptions of social equality have often been utopian and unable to provide valid alternatives to the Western conception of social freedom and, as a result, inequality. A clear example can be the socialist project of a centralized state-controlled economy failing to develop a valid alternative to the free market prices’ role in determining an efficient allocation of scarce resources. It has even been argued that egalitarian policies are so inconsistent that egalitarian programs addressing one type of inequality sometimes reinforce inequality in the other. The result is that most modern states, CEE included, reverted to a capitalistic civilization, which, however, as I will now try to show, always leads to inequality. This can both be explained philosophically and empirically. The conceptual explanation of why inequality is a constant feature of capitalism can be attributed to Rousseau (1761). Indeed, he believes that the first who, having enclosed some land, thought to assert ‘this is mine’ was the true founder of civil society”. This means that when men get into contact, an infinite chain of desires starts as comparison takes the place of compassion or, in Rousseau’s words, ‘amour prope’, a sentiment characterized by egoism, futility, and vanity, overcomes his concept of ‘amour the soi’, characterized by empathy and freedom. Central to Rousseau’s argument is the belief in the corrupting force of private property since it steers men towards greed, inequality, and war, creating a civilization where men fight each other to get the maximum material possession, regardless of sustainability and compassion. Consequently, desires become needs creating a total dependency on material possessions. A negative society is therefore formed as bogus social contracts, which sacrifice human’s intrinsic benevolent freedom for the security of private property, are signed, and, hence, human life is now grounded on a property which is itself a construction of human greed. Under this perspective, it is evident how, since private property is the cornerstone of capitalism, inequality is a permanent feature of a capitalistic mentality. Empirically speaking, we can observe that whether we observe economic growth or economic recession, the outcome in a capitalistic system is always inequality. Indeed, because of the rapid structural changes following 1991, according to the literature, such countries face tensions between national and regional development. New, higher value-added activities tend to concentrate initially in particular regions so that regional disparities increase along with national growth. More generally, increasing social polarisation is particularly visible in periods of accelerated growth because fast economic growth boosts the metropolization process, which consequently broadens regional divergences. Capitalistic growth has produced socioeconomic inequality in the CEE regions in recent years as the development dynamics of the remaining regions, mostly problem regions, is visibly lower when compared with metropolitan areas. Indeed, after 2000, all the CEE countries, except for Latvia and particularly in Bulgaria, Romania, and Lithuania, experienced economic growth as measured by GDP per capita, however, there were many regions with dynamics lower than 90% of the country’s average, particularly in Bulgaria, Romania, Hungary, Lithuania and Czechia, and the fastest growth rates were mainly focused around capital cities and surroundings. On the other hand, also the 2008 financial crisis boosted socioeconomic inequality. Indeed, the crises were felt everywhere, adding to the long-term challenges of growth and recovery of the most rural regions of Europe, and undermining previous sources of growth. However, metropolitan regions, with the most diversified economies, suffered significantly less than other regions, particularly those with an underdeveloped model of economics, which got considerably more exposed to the symptoms of the crisis. Therefore, these empirical observations demonstrate how, whether capitalism properly functions and the economies grow, or whether it crashes, such as in 2008, the outcome is always increased socioeconomic inequality.
To conclude, segregation is a linchpin of socioeconomic inequality, and integration is required to create a more democratic and tolerant culture.
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