Sweat shop — With the end of state socialism in Central and Eastern Europe and the takeover of the Western market regime the informal economy, as well as its scientific and police investigation are booming. New patterns of trade and behavior thus emerge, determined as shadow economy, black market and undocu-mented employment or aiding people in their escape, which is being punished as smuggling or traffic in people. The 'desocialized' market economy of the post-communist states is searching for gaps to be filled in on the European market, which presents itself to those thus made dependent, as an early capitalist rather than a Western-type capitalist market. A distinctive bazaar economy is now emerging in the three continents, in Central/Eastern Europe, as well as increasingly in the Western border zones. At the event 'Over the Border' in Munich, which also served to launch the campaign "No One is Illegal", a collaborator of the 'Flight and Migration Research Community' (Forschungs- stelle Flucht und Migration FFM) from Berlin reported about a 'Russian market' in Warsaw, where a billion dollars in products and services are turned over annually. Around the huge sports stadium 'Dziesieciolecia' ('For the Tenth' Anniversary of the Founding of the People's Republic of Poland), besides the usual items, there is also dealing in workers from the Ukraine, Byelorussia or the Baltic states, and one can also buy textiles produced in Polish 'sweatshops'. This is where those people coming from 'cheap labor countries' beyond the Polish eastern border slave away with a dwindling hope of fleeing on.
"According to a decision of the federal administrative court, people entering Germany by the overland route have no right to asylum... The judges said that in view of a European regulation and as a contribution to a more just distribution of burdens the third-state agreement should prevent the foreigner from choosing his country of asylum." (Reuter/FAZ, 03.09.1997)
Trading their way to the West: 'Shuttle trade', short-term jobs, longer-term resettlement and migration further and further westwards have so far been the Central/Eastern European stages of flight and migration. Whereas until recently, transiting refugees could stop in the Polish "waiting room" on their way to Western Europe without major trouble, they are now persecuted on both sides of the border by militarized state organs. While Central/Eastern Europe is increasingly being used as a cheap-labor workbench, for real-estate investment or as a "developing economy" for the sale of consumer items, refugees fleeing from poverty are now also picked up, locked up and deported by Polish authorities within the context of the third-state agreement.
The cross-border and 'wild' capitalism establishing itself in both directions fosters the emergence of clandestine groups, as well as entrepreneurial self-help groups. Depending on the prevailing interests of politics and economy they are assessed as a new entrepreneurial class and privatizers, or as "organized criminals", Mafia or smugglers. Here is where the die-hard mantra seems to be set out: through de-guaranteeing, deprivation of rights and pro-secution, a broadly fanned-out new economy beyond documents, social welfare contributions and legislation emerges.
In all successor states of the Warsaw Pact the "shadow economy" makes up a high percentage of the economic activity so that it is probably best considered a completely normal sector of the economy. One should, however, distinguish between a survival strategy through small trade, and 'wild' privatization by the new technocrats who are transforming their existing political power into economic power. In particular, former state employees and their private companies have participated in the government’s 'gray' privatization of the renationalized "people's property". The "planning and clanning" is achieved through the transformation of state-owned companies into joint-stock companies, through money laundering or loans never to be repaid, using planned bankruptcies ("credit millionaires"). The main consideration here is a short-term financial accumulation rather than a lasting increase in production, whereby the rules are defined by legal loopholes kept open on purpose, and not by 'the market'.
But is the 'West' an appropriate model at all? In order not to reproduce the rip-off-merchant/human-trader terminology used for their political purposes by the Ministry of Interior and Europol or to admire the marching through of 'wild' capitalism, a look at these new European markets seems necessary to me. I cannot assess to what extent my knowledge, acquired without first-hand experience and through reading, may once more reflect only a 'picture' of the East as conveyed courtesy of the state.
Statistics of Potemkin households — In the Ukraine the rate of inflation amounts to 380%; two thirds of the people around Odessa live below the official poverty line; only 16% of the population in the countryside can live from their regular jobs; and the gross national product has fallen by 59% since 1989. However, and here the shortcomings of statistics become evident, precisely the gross national product is difficult to assess in an increasingly informal economy. According to the insights of the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung DIW) the Ukrainian shadow economy is about as strong as the official gross domestic product. The fact that the electricity consumption level has remained approximately constant since 1989, together with the high quantities of cash money in circulation, permit the conclusion that half the creation of surplus value bypasses the tax system, and does not contribute to public money which could be redistributed for culture, social insurance or health protection. According to the DIW the authorities circumvent the tax system and social security with up to 25% of the turnover for licenses or for payments to protect from inspections, so that the means of the state for transfer payments to the poor, unemployed or older people are extremely limited.
"The black market appeared to be the real market… The needs were openly visible; the snake died… A people who supposedly knew nothing about the economy learned about trade in no time… The city had become a bazaar; very quickly, everything that belongs to a functioning market turned up: banks, stock exchange, agents, shops, lawyers, hotels, international connections, open exchange rates, the emblems and the aesthetics of the international world of commodities, the free movement of people." — Karl Schlögel on the 60th City Forum 'Stadtmitte' in Berlin
The image of "the end of the city as a state project and the rebirth of the citizens' city", as the historian sketched it in the spirit of the cold war, idealizes the constraints on a population beyond old and new elites, ejected from work and social security. Not "intuitive reason" (Schlögel), but sheer need created by hyperinflation, the collapse of the COMECON markets of the formerly socialist economic partners, suspended wage payments, secessions and national wars or racist persecution, drives those released from their previous daily lives to sell everything which is not of absolute necessity for life, in order to secure their existence. The boundaries between poor population and refugees from poverty, as well as between 'asylum seekers' and 'work migrants', are thereby increasingly blurred.
Schlögel's view on the black market as a 'privatization from below' idealizes the radical and forcible flexibilization of those who are predominantly under multiple employment with no prospect of vacation, health insurance, unemployment benefits: the 'working poor' are now here as well. At the same time it naturalizes Western capitalism which links to and takes the place of the bazaar economy with a 'privatization from below' with insignias from bank to stock exchange. Furthermore, Schlögel's after-the-change perspective on the cold war ignores that the so-called Polish markets (Polenmärkte) have existed since the beginning of the 1980ies and are likely to continue to exist in parallel to an imitation of Western European patterns. Thus, until shortly before the fall of the wall, a huge 'Polish market' of this kind existed on the Potsdamer Platz in West Berlin precisely where now Daimler Benz Inter Service AG inaugurates its headquarters as a 'high-level' service provider for trade, communication and real estate. In the Lichtenberg district of East Berlin a self-organized trade and service center in a Vietnamese apartment house was dismantled by the state, leading to violent street fights between the inhabitants and the police. In the meantime the association 'Rice Drum' (Reistrommel) has created a sort of buffer company which allows the former contract workers to be involved in small, intermediate and wholesale trade in textile, foodstuffs and consumer electronics in an old warehouse. This is where textile products mostly coming from Vietnam are sold to local traders and individual buyers. Fresh trading goods continue to be loaded into small trucks with Polish license plates in order to supply the markets beyond the border. The warehouse guarantees those threatened with deportation a job, which is a condition for the official 'toleration' (Duldung) of their stay. Besides this, the 'Rice Drum' offers legal advice and public relations work.
Shuttle traders — While the informal "Comecon markets" (Endre Siks) before 1989 were supplied by few 'specialists' with goods mostly transported on people's backs, they have now become widespread and normal since the end of state socialism: "The phenomenon is massive, one of masses", as the Bulgarian social scientist Yulian Konstantinov describes its current order of magnitude at the Berlin conference 'Cities in Transition'. For Poland alone the turnover is an estimated 5 billion dollars, higher than for most of the still remaining sectors of industry: "This border trade can be seen as 'big business' for Poland." (Claire Wallace)
At the conference 'Shopping Tourism and Traveling Objects in Postwar Central Europe' convened by the Viennese 'International Research Center for Cultural Sciences', Julia Zhdanova reported on so-called 'shuttle traders' ('chelnoki') who contribute more than one sixth of the total Russian imports with their professionalized railway tourism. The estimated 5 to 10 million shopping commuters with their monstrous hand luggage have guaranteed the supply of goods and foodstuffs after the collapse of state socialism. Only recently they too have come to the attention of the statisticians, which is why now the transfer profits are being siphoned off. According to Julia Zhdanova the traveling salespeople, most of them women, constitute a great part of the rising Russian middle class, since they accumulate capital for future investments.
The potential to reach Western standards in the 27 'countries in transformation' differs according to ethnopolitical conflicts, geostrategic exploitability and economic potentials. In general, the ever more tangible separation line runs between the EU or NATO-eastern-enlargement-candidates and the remaining CIS-states (Commonwealth of Independent States), and between the Central and the South-Eastern European countries. In Hungary, which was liberalized rather early on, 'small capitalists' with small enterprises, private farms or on street markets emerged even before 1989. But aggressive marketing, Protestant work ethics, excessive competition and strict cost-benefit analysis following the example of Western-type capitalism began to run through the Central European states only after 1989. Until then, 'cheap' had not been a dirty word, but a decisive incentive to buyers.
"Why is there so much money around for studying privatization, but a lot less for studying poverty in Eastern Europe… The Western aid programs that supervise the material resources have a great influence on the topics chosen… How can I sell my ideas to the West?" (Csepeli/Örkény/Scheppele in Replika) Central/ Eastern European social scientists who study the laws governing informal markets are themselves subject to a cross-border trade of knowledge, which in its turn is subject to similar regional patterns of priority setting. It is thus that not only politics and the economy, but also the Western academic activity linked to these has developed an interest for the 'interesting' states of the former Warsaw Pact. Western databases are being filled with the raw material 'facts', whose processing/ refinement, and thus the creation of value, happen in the West. If as a Western scientist arriving in Central/Eastern Europe one does not have personal access to the study of the region, local assistants will help out in the 'data safaris' as translators: "Local sociologists have become employees of data export companies" (György Csepeli/Antal Örkény). Hungarian scientists make approximately $300 a month, i.e., on average, one tenth of their US-colleagues' income, but on the other hand spend 50% more on imported technical literature. Just like the small traders, Eastern scientists have to look for extra jobs since their scientists' wages do not cover their living expenses. Universities, just like other public institutions of the former state socialism, are out of money, so that many scientists move on to the private sector, and some privileged scientists to Western institutions ("brain drain"). Hence many Central/Eastern European scientists were soon faced with joining the international conference tourism and its flows of money. Western aid money however goes less to supporting Eastern European infrastructure (computers, libraries, support to young scientists) than to financing Western institutes. With the end of the state subsidies for research or conferences, it is Western institutions that choose the topics through their funding. In the field of social sciences the priority goes to elite research and market analysis which reflect the interest of Western producers and states in Eastern markets and powers. The hegemony of the English language and of US funding is thus transferred into Central/Eastern Europe. Besides the World Bank with its headquarters in Washington, D.C. and the US-Hungarian Soros Foundation, institutions formerly involved in research on the cold war have adapted their aid programs to the new world order: "Funders have changed their priorities and overnight converted their call for applications from the field of nuclear deterrence and conflict management to that of democratization and privatization." (Kim Lane Scheppele). This research, now called 'transition studies', which supposedly must lead to 'normality', positions the 'East' outside of modernity and the world economy. The funding practice of the Western 'donor countries' is reminiscent of the 'granting' of 'development aid', even if rhetorically a difference is made between the 2nd world and the three continents.
"Building coalitions with the aid of communication and trade is becoming more and more necessary; in this process consumption, the electronic media and the press serve as a stage." 'Market' by Group Material, Kunstverein München, 1995
How can a description avoid ascribing the 'underdeveloped', since informal shuttle trade can also mean mobility and emancipation? Both in its terminology and its stated aims the two-year research project on 'Shopping Tourism', supported by the Austrian state, contrasts sharply with the hitherto common scientific-colonial practice. The project, initiated and coordinated from Budapest by Anna Wessely and Tibor Dessewffy, is set up as a research network, tied together through e-mail, of cultural and social scientists from Romania, Slovenia, Russia, the Czech Republic and Hungary, i.e., the Central European successor states of the former Austro-Hungarian empire. While maintaining a clear autonomy of the Central/Eastern European scientists, Austria is included as a point of contrast: "Vienna was the shop-window for Western goods, the first city on the other side of the 'iron curtain'". Within the thematic framework chosen, the researchers involved develop their respective focus while supportingly getting young scientists involved in the process, who are for once not used only for dull assistance work and data collection. 'Ethnic group', 'class' or 'difference', as well as the visible differences between rich and poor had and still have a different meaning in the formerly class-less Central/Eastern Europe than for instance in the Great Britain of the Birmingham Center for Contemporary Cultural Studies or in the Paris bourgeoisie described by Bourdieu. "We feel a need to develop our own culturally sensitive theories, attentive to the particularities of our own time and our own place", the introduction of the transnational research project on 'Shopping Tourism' describes the critical distance to Western standards of social science. The 'own' does not here bear the slip of the tongue of nationalistic peculiarities. Rather, it seems like it is precisely the "politics of consumption" which as a parameter usable almost worldwide for a 'contemporary history', lends itself to comparing radical sociopolitical changes, erosion of nation-states, as well as cultural re-evaluations "on the way to Europe" (Miklós Vörös). The project is dedicated less to the elites, and more to the mass phenomenon of small trade, when for instance Russian sparkling wine is moved to Vienna, or porn magazines from Yugoslavia or contraceptive pills towards Romania. Social or cultural developments, and not so much the economic aspects of cross-border trade in goods among formerly state socialist countries, are at the center of the scientific exploration. In the "class-less society" of state-regulated consumption the access to Western or banned products played an important role in the distinction — in many circles, owning at least one Kundera novel was simply considered fashionable. Differentiations came about through the cultural status (leisure and cultural activities, education) and less through the material situation (income, professional position). Books, records, ideas, travel opportunities and consumer items not part of everyday use had, in addition to their utility value, especially (sub)cultural significance: in 1960 the trend-conscious intellectual from Budapest drove to Prague because of the jazz records, and there got to know the films of the Beatles, and watched experimental theater in Wroclaw or Kraków. After the invasion by the soviet troops in 1968 the Czech came to watch movies in Budapest, while the Austrians soon after enjoyed cheap vacations and services (dentist, glasses, health cures) in the Eastern countries. One could get a hold of banned literature in Polish translation or the Havel essays in a Samizdat pirated edition on the Warsaw flea market. For a long time in the GDR one could hear of the surprising cult value of smuggled Genesis records. While in the formal economy of state socialism ethnic or cultural peculiarities were negated, the identification and representation of national differences, as well as exchange rates and purchasing power experienced in shopping tourism, played a great role for the local minorities who for the most part lived near the border. While Hungarians could in the 1970ies still buy their jeans cheaper in Yugoslavia, one can now get four pairs of jeans for the price of one in the formerly Yugoslav Slovenia. Depending on the supply situation the significance of the shopping tours differ considerably — while Hungarians predominantly wanted to acquire banned products, or financed their freedom to travel by selling products, for Romanian Roma, for instance, the cross-border trade and the exploration of new territories is of existential necessity. For the most part stored blood, old stocks, dismounted parts of factories or goods coming out of the ongoing production are transferred across the border, but not without first having bribed the customs officers on both sides of the border with alcohol, goods or money. The informal market economy of the small traders is organized along family relations, friendship or ethnic ties. On the Central European East-West crossings in comparatively liberal Hungary there were regularly German-German family reunions without state supervision by the GDR organs, which is why at these junctions informal markets emerged. Refugees from former Yugoslavia keep up their trade contacts with widely scattered relatives partly through the internet, while Polish traveling salespeople, as pioneers of the informal cross-border exchange of goods have very early on relied on a widespread Diaspora of exiles as a social capital. However, the Polish trade in goods has evolved since then — now small traders from other states enter Poland in order to buy the goods specially produced for such export in the numerous sweatshops. The emergence of a middle class is contrasted by the news of a mass flight of Czech Roma in the direction of Canada. In this way they hoped to escape the daily persecutions and racist-motivated violence in the "secure third country" called the Czech Republic. More than 70% of the Roma living there are excluded from the official job market and due to the lack of language training, their children are shoved into special schools. Deals or flight are their prospects.
First published in Spex 12/1997 under the title 'Fortress Europe' (Festung Europa)
* FFM 'Polen. Vor den Toren der Festung Europa' (Poland. In front of the gates of the Fortress Europe) Verlag Schwarze Risse/Rote Strasse, 1995, out of print.
* FFM 'Ukraine. Die Vorverlagerung der Abschottungspolitik' (Ukraine. Displacing the segregation politics outwards) Verlag Schwarze Risse/Rote Strasse, 1997, price 12 DM.
* no one is illegal c/o Forschungsgesellschaft Flucht und Migration e.V., tel: +49.30.6935670, fax: +49.30.6938318, ffm@ipnb.comlink.apc.org * grenze@ibu.de * <www.contrast.org/borders/kein>.
* Reistrommel e.V. 'Zweimal angekommen und doch nicht zu Hause. Vietnamesische Vertragsarbeiter in den neuen Bundesländern' (Twice arrived and still not home. Vietnamese contract workers in the new federal states) 1997, Brochure 4.80 DM, tel: +49.330.54957447.
* Miklós Hadas/Miklós Vörös (eds.) 'Colonization or Partnership? Eastern Europe and Western Social Sciences' Special issue 1996 Replika, tel: +36.1.2174482, fax: +36.1.2175172, e-mail: szoc_hadas@pegasus.bke.hu
* Inales Forschungszentrum Kulturwissenschaften Wien, tel: +43.1.5041126, fax: +43.1.5041132, ifk@ifk.ac.at
Bundesinstitut für ostwissenschaftliche und internationale Studien (ed.) 'Der Osten Europas im Prozess der Differenzierung. Fortschritte und Misserfolge der Transformation' (The East of Europe in the Process of Differentiation. Progress and failure of the transformation) Hanser Verlag, 1997, price 49.80 DM.
Jochen Becker
translation: Alain Kessi,
kessi@bitex.com