East-Central Europe: transition to market economy and democracy.

Nikolic, Milos

During the night of november 9, 1989, the gates of the berlin wall were opened and several hundred thousand people crossed from East to West. Days later, they pulled the wall down. Many analysts consider this historical event symbolic of the implosion of "real socialism" and the beginning of a transition to a new society in East-Central Europe, to democracy and a market economy, as it is usually expressed. What are the results of these five years of transition for the nations of East-Central Europe?

I

I shall first address the relation between theoretical thinking and the events in East-Central Europe during those five years. The events in 1989 and 1990 were a kind of a political revolution, but a revolution without a previous historical model and without a revolutionary theory or a theory of any other kind. According to Claus Offe (1985):

Its most conspicuous distinguishing characteristic is indeed the lack of any elaborated theoretical assumptions and normative arguments addressing such questions as: Who is to carry out what actions, under which circumstances, and with what aims, what dilemmas are to be expected along the road, and how is the new synthesis of a postrevolutionary order to be constituted, and what meaning should be assigned to the notion of "progress"?

The political revolutions of 1989 to 1990 did without theory and succeeded in their main aim of overthrowing the existing "real socialist" political regimes. The social developments following those political revolutions, usually called the "transition to democracy and the market economy," but which might be considered a kind of a social revolution, differ in relation to theory, in at least two important respects.

First, they have so far, for better or worse, been oriented and guided by some of the concepts of mainstream political and economic theory, let us say, by bourgeois thinking. Second, in my opinion, the last five years have shown and confirmed that the success of the "transition" cannot be realized without a proper theoretical base, without proper theoretical analyses and orientations.

In my firm conviction, this must be new theoretical thinking based on all relevant historical experience. It must start from all that is best in left and radical thinking, including Marx and his true followers, and from all that is best in the mainstream social sciences. As new theoretical thinking, it must create a new emancipatory normative foundation and legitimation, an emancipatory theory that cannot be formulated in advance and then be realized in practice as a kind of blueprint. New theoretical thinking may appear and be developed merely in practice, as a result of new kinds of emancipatory struggle; this practice would necessarily be characterized as "trial and error," to use Karl Popper's paradigm. At the same time, this nascent emancipatory theory would provide a general orientation for social development, a theoretical basis for empirical analyses and normative legitimation for emancipatory struggle.

II

I will set forth hypothetical judgments concerning the entire transitional process in East-Central Europe. The 1989 to 1990 revolution in East-Central Europe was a kind of political revolution that solved the question of political power. It opened the gates to a great social reconstruction implying not only the development of democracy, but also simultaneously the establishment of modern market economies both in East-Central Europe and in the West.

This fact reveals a very important difference between the current social process in East-Central Europe and the transition to democracy realized in Germany and Italy after World War II and subsequently in eight Latin American countries and four European countries in the 1970s. In those countries, it was a matter of changing political regimes since the pre- and post-transition social system remained essentially the same. The simultaneous transition to democracy and a market economy signals a change in political regime and a change in the social system as a whole, because the establishment of the market economy, theoretically and practically, means the development of new relations of production in Marxian terms. Therefore, in East-Central Europe this transition must be conceived as a kind of social revolution. The first five years of transition in East-Central Europe, despite lacking a sufficiently developed and deep social reconstruction, nevertheless confirmed, at least negatively, that the social revolution is in question and is needed.

My second hypothetical judgment concerning the process in East-Central Europe is, in the words of Clause Offe, a Pandora's box full of paradoxes. By this I mean that this development differs from and in many important respects is the opposite of the historical development of Western countries. In addition, this development must solve and has begun to solve some basic problems in the way in which it is, in fact, opposite to the corresponding theoretical standpoints; furthermore, it must carry out some basic tasks that presuppose contradictory factors, principles, and actions. I shall emphasize the following paradoxes:

1. The paradox of the transition to democracy and its corresponding politics;

2. The paradox of simultaneous transition to democracy and the market economy;

3. The paradox of the formation of the relations of capital;

4. The paradox of the social agencies of social forces that could and should lead and legitimate the whole process; and

5. The paradox of the final goal of the entire process.

My third hypothetical judgment is that the great social process underway in East-Central Europe has been fueled and developed mainly by political and even administrative means and acts of state authority, having been conceived and forged by a new political elite born in 1990 to 1991. The societies in transition have not yet created the objective factors enabling them to function spontaneously in support of the transition. This is particularly obvious with respect to economic transformation. Similarly, no social classes lead the transition process and it is even difficult to say that any social class or quasi-class, apart from the political elite, is acting consciously or spontaneously as an articulated social group in favor of the transition. Thus, we have the beginning of the social revolution without a leading social class.

As a result of the foregoing, the process of transition has not yet taken hold of the inherent social structure in order to change it. Neither has it overcome some of the principal legacies of the former system and has no clear concerns or generally accepted goals. With respect to this defect, the normal political life of a modern society cannot be established in East-Central Europe because in socially and politically plural societies, it is necessary for a kind of volonte generale, a kind of generally accepted social agreement or general will, to exist with respect to the general orientation of social development, with its corresponding "rules of the game."

This relates to my fourth hypothetical judgment, that the first five years have confirmed the principal meaning of the expression post-"real socialist" countries. They have confirmed that this transitional development is characterized by many legacies of the previous system and that the transition, for better or worse, has had to and must in the future rely on elements of those legacies. Here I have in mind the inherited industrial structure, the paternalistic welfare system and, above all, the social psychology and mentality of the majority of the population.

My fifth hypothetical judgment concerning the transition refers to the change in the everyday life of the majority of the population, caused by the first five years of transition. The people in East-Central Europe unquestionably achieved political freedom, which is important from the historical point of view and from the standpoint of everyday life. What is not so certain is whether the mass of the population is able to use this political freedom to decisively influence the course of further development. These five years have undeniably brought about a great impoverishment of the majority of the population, which has strongly influenced all essential aspects of their individual and social lives, including some very negative and even dramatic demographic changes in the rate of births and deaths.

My sixth hypothetical judgment concerning the transition is that although all East-Central European countries share more or less identical structural dimensions of the transition, so far and for many reasons, the concrete process of transition has differed from country to country and will continue to do so in the future. We may distinguish those countries in which the transition proceeds in a "normal," i.e., peaceful way, from those that face the transition in such "abnormal" ways as conditions of war. Three groups of countries are undergoing a "normal" transition. The first, consisting of those showing the best results, includes the Czech Republic, Hungary, and Slovenia. The third group consists of countries with the worst results: Russia, the Ukraine, Bulgaria, Rumania, and Albania. The second group falls somewhere between the first and third groups: Poland, perhaps Slovakia, and the Baltic Republics. A group of countries in which the transition occurs in "abnormal" circumstances, involving them in war caused by aggressive nationalism and war politics includes: Serbia, Croatia, and Bosnia-Herzegovina. The main results of the past five years in these countries are unfortunately expressed in the number of dead, wounded, and refugees, and in the immense destruction of material and cultural wealth and civilized values.

My seventh and final hypothetical judgment concerns the international aspect. The Western capitalist countries directly organized, guided, and paid the principal financial costs of transition to democracy in Germany and Italy after World War II. They gave great, though sometimes ambiguous, support to the transition to democracy in certain Latin American countries and four European countries in the 1970s. In both cases, these engagements were determined above all by Cold War politics, namely, by confrontation with the Second World bloc led by the Soviet Union. After the collapse of the "real socialist" system and the destruction of the Soviet bloc, Western capitalist policies have generally changed with respect to their concrete engagement in the form of assistance. Most of them, starting from their own narrowly conceived national interests, are concerned only with making good political and economic use of the newly created situation and putting some East-Central European countries under their protection without giving them concrete economic assistance. Strong tendencies exist to organize the new world order as a system of concentric circles, with one leading center surrounded by a number of great power and hierarchically ordered peripheral countries playing only those roles in the world political-economy permitted by the center.

III

I will now make four hypothetical judgments concerning the transition to democracy in East-Central Europe. The first concerns realization of the principal tasks of modern politics and the functioning of the political system as a whole. Claus Offe's three-stage process seems to adequately explain all the complexity and challenges of transition in post-Communist societies. According to Offe, each political life or "operative political system" is the cumulative outcome of decision-making at three hierarchically distinct levels. At the first and fundamental level, such identity decisions are made as who "we" are, and where our social, cultural, and territorial borders lie with respect to others. In the tradition of early modern European political philosophers, this level is related to passions, courage, and patriotism and is probably best expressed synthetically in the category of nationhood.

At the second level, key constitutional decisions, or decisions on common rights, procedures, and rules are made, as well as decisions on the main institutional structure of political life. Following early political philosophers, this level is associated with reason and rationality. Only at the third and highest level does what is usually called normal political decision-making take place. It is viewed as the result of transforming particular interests into political decisions. This level corresponds to the categories of interests and power.

In the history of capitalism, the principal goals of these levels were generally realized at different times and over many centuries. The principal goals of the first level, which concerns identity decisions - formations of social, national, cultural, and territorial borders and units - were realized by strong authoritarian rulers and there was no place for democracy. It was a time of nation-state formation, from the 16th to the 18th century. The goals of the second level of today's political life were realized in the 18th and 19th centuries as a result of the realization of the goals of the first level. That was the time of the Enlightenment and of the birth of liberalism and socialism, the time of social revolutions. This period saw the first steps toward democracy, the greater role of parliaments, the formation of political parties, and the first institutions of public opinion. The goals of the third level, normal political decision-making to solve current problems of people's everyday lives, based on interests and relations of power, began only in the 19th century.

Constant realization of these goals alone has opened the way for the real people's struggle for democracy, as the democratic structure and practice of society. This struggle has lasted more than 130 years, from the Chartist movement until 1971, when women finally won the right to vote in Switzerland. The struggle for universal suffrage itself had two main dimensions: to abolish the property requirement - the limitation of the right to vote to the ownership of property - so that all the people, regardless of property, could have active and passive voting rights, and to abolish the gender barrier so that women could vote.

As Claus Offe correctly stresses, the East-Central European countries must realize the goals of all three levels simultaneously and more or less quickly. That is the main paradox and the main difficulty of the political dimension of the transition, but it strongly influences the whole transitional process. A theoretical and practical question is how it is possible to simultaneously realize the tasks and goals of all three levels, when modern history has shown that to do so demands different, even contradictory factors, principles, and actions. For instance, realization of the first-level goals grouped around identity is connected with passions and courage and demands a strong hand, not democracy; realization of the second-level goals must be based not on passions, but on reason, whereas the goals of the third level demand tolerance and democracy. In many East-Central European countries, particularly in former Yugoslavia, political regimes are still so deeply engaged with the idealized goals that the goals of the second and particularly third levels are repressed.

This has brought about an ethnification of politics, which is strongly antidemocratic, as well as ethnic-civil wars. So much for my second hypothetical judgment on practical restructuring. In many East-Central European countries, political restructuring, but primarily the national question and the politics of national identity, brought about the ethnification of politics. Such practices easily became war politics and have brought about the kind of war of which Yugoslavia is the worst example. There are several reasons for this. One has to do with the need of East-Central European countries in transition to find a form for their new identity. Ethnic characteristics have provided the easy way to that end. Elsewhere, I have explained other reasons for the national politics and practice of "real socialism" and the ethnification of politics as means of getting power or retaining it.

My third hypothetical judgment may be phrased as follows: in the past five years of post-"real socialist" history, formal elements of democratic social order (democratic institutions and principles) have been established constitutionally and more or less practically installed. However, a fuller democratization of political and sociocultural life, which might be comparable to some countries enjoying developed democracy, has not been achieved. There are weak points in the functioning of democratic institutions and in the efficacy of democratic principles. The main reason for this is that the East-Central European countries have not yet developed all three segments of the democratic order of society. To understand this hypothesis, it is necessary to explain the phrase, "the structure of the democratic order of society." Three main factors (re)produce the democratic order of society:

(1) Constitutionally established and guaranteed democratic institutions and principles, as formal constitutive elements of the democratic order (i.e., there is no democratic order without these formal elements). By democratic institutions, we understand the following: the citizen as the basic instance; free exercise of universal suffrage; parties, or a multiparty system; a state strongly based on law and the separation of powers (executive, legislative, judicial); institutions of citizen and employee participation in relevant decision-making; institutions that guarantee the rights of all minorities; free press and mass media; legally guaranteed independent civil associations, etc. By democratic principles we understand the principle of the sovereignty of the people, the principle of legality, the principle of legitimacy, principles of representation and delegation, the principle of the majority in decision-making, and the principle of consensus in particular cases, etc.

(2) The presence of the great new age's idea-values of democracy as the substantive element of democratic order, which has mainly a regulatory role (in the Kantian sense). These ideas are: the role, dignity, and (self-)respect of the individual and the protection of his or her privacy, freedom, quality, justice, solidarity, tolerance, safety, and welfare. Without a partly constitutive, but mainly regulatory role played by these idea-values, democracy could not function to the benefit of all citizens. These idea-values form the corpus of individual and collective human rights and the democratic political culture that are a prerequisite to the functioning of democracy.

(3) A true democratic order of society comprises a democratic praxis (as a synthesis of the formal and substantial elements of democracy indicated above), a praxis of people as citizens and as a working population in decision-making on all societal levels and in all spheres of society, directly or indirectly. Participation of employees in the economy is a constitutive part of a modern democratic social order.

Structural Reasons for the Malfunctioning of Democratic Social Organization

The malfunctioning of democracy in East-Central Europe results primarily from the fact that the second and third segments of a democratic order have not yet been developed. Democratic idea-values are developing and taking root very slowly and with great difficulty, such that the functioning of democratic constitutions and effective democratic principles are losing the very important regulatory role of their idea-values. For instance, new democratic institutions, particularly the executive authorities, do not operate in accordance with the great idea-values of democracy. These idea-values are likewise not internalized or integrated into the consciousness and everyday behavior of the majority of the population. The main expression of this fact is the persistent lack of a feeling of self-respect for the existence and role of the citizen, the feeling and respect for citizenship, and the lack of a corresponding democratic political culture and the acceptance of the idea of democracy in a very abstract and simplified way. Ralph Dahrendorf (1990) may be exaggerating somewhat when he stresses that the creation of the rule of law would require six months, the introduction of the market six years, and the development of a democratic political culture and civil society 60 years.

The experience of democratization in East-Central Europe, and perhaps in Mexico and some other countries, supports theoreticians who, in the long controversies over formal and substantial elements of democracy, have argued that democracy, besides its formal elements, must have substantive elements as well if it is to function properly, and that democracy cannot be reduced (as Joseph Schumpeter argued, for instance) simply to a method of solving social issues. In the third level of the democratic order of society, excluding the praxis of voting, the democratic praxis of citizens exists mainly in the form of "acclamatory" or "plebiscitary" democracy.

My fourth hypothetical judgment concerning the political dimension of the transition relates to features of the general political situation. There are obvious signs that a degree of normalization of the structure of political forces in some East-Central European countries has been underway in recent years, though the process is still incomplete. By the term "normalization" I have in mind the process of overcoming the great fragmentation of political parties that characterized the beginning of the transition, and the first signs of the presence and articulation of social interests in the field of politics.

There has been a recomposition of relevant political forces. However, it cannot be said that more or less long-lasting stability has been achieved. Umbrella political organizations that gathered people in during the historical moment of the collapse of "real socialism" on the basis of anticommunism and on abstract ideas of democracy have disappeared (Civic Forum, Czechoslav Solidarity Citizens' Committee, Hungarian Democratic Forum, Demos in Slovenia, and Depos in Serbia).

A general survey of the majority of the population is today primarily characterized by disappointment due to unrealized expectations, discontent with the new regime, and frustration with the difficult conditions of the transition. Such a view has brought about declining interest in engagement in political life. These facts have also brought important benefits to left-oriented parties, which is evident in the results of the last elections in Poland, Hungary, and Bulgaria.

IV

I will briefly enumerate seven hypothetical estimates of the economic dimensions of the transition in East-Central Europe, the transition to a market economy.

(1) The process of transition in East-Central Europe has already confirmed the opinion of many scientists (Jon Elster, Clause Offe, and others) who argued that the transition to democracy and its consolidation along with radical economic reforms (i.e., the transition to a market economy) cannot be successfully realized simultaneously because these two transitions make contradictory demands and encourage different expectations. I have in mind the satisfactory functioning of established democratic institutions and the slow process of economic restructuring.

(2) In the first five years of transition, the people have been obliged to pay a high price for their standard of living and everyday life in general; the economic transition has given them nothing in return.

(3) Despite the many practical state strategies adopted for economic transition and measures taken to implement them, they have not realized most of their main goals.

(4) The entire program for economic transition, liberalization, marketization, and particularly privatization, conceived and realized as organized state activities, has not yet brought about a real opening for the formation of new relations of production within the logic of capital-labor relations. This leaves the whole economic transition in an artificial light, transforming it into a more or less administrative, technical construct.

(5) The program for economic transition has been conceived and realized with only the "exchange value" and not "use value" in mind; that is, the program and its realization have taken insufficient (or no) account of the only existing real economic factors: human agency and material productive forces and their "character."

(6) In most East-Central European countries, privatization of state property is considered by leading politicians and most scientists as the first and main task of the transition to a market economy. A prevailing view is that there can be no be market economy without radical and more or less complete privatization. This position reflects the real unprofitability of most state enterprises under "real socialism" and is widely spread by the influence of Western advisors and their ideology. Privatization is one of the most important tasks of the economic transition. However, the thesis that a modern market economy demands complete privatization is not valid; it is a product of ideology.

(7) The realization of economic transition has not yet found a proper balance between state organized and directed activities and spontaneous economic processes. There is a tendency to treat programs for economic transition as a blueprint that must be simply and completely followed; practice does not validate such a tendency and it is characterized by confusion and even anarchical features.

The majority of the population has paid a great price for economic transition in the form of great impoverishment, a massive reduction in welfare systems, increased unemployment, and increased crime rates, to the extent that it threatens the very life of the citizenry in some countries. Some East-Central European countries now even fit into the group of the world's poorest countries. Eastern Europe could become a Third World in Europe.

V

Civil society in East-Central Europe is one of the most important prerequisites for building a democratic order and developing a market economy. Associations within civil society in almost all East-Central European countries played a very important role in the struggle against the political regimes of "real socialism" and in their final collapse.

At the outset of the process of transition, as new political regimes were established, these associations and the existing, weak structure of civil society with its principles lost influence throughout society. Thus, although the number of associations in civil society is now a hundred times greater than before, their social influence is not at all commensurate with their number. Many reasons account for this. First, the onset and development of new political regimes have understandably shifted the focus of social interest and decision-making in the nascent political sphere. However, real political life, which has for better or worse been determining the development of their societies, has been enclosed in new emerging political circles, without proper social foundations.

Second, civil society, as a structural sphere of society situated between the political and economic systems, did not exist under "real socialism." Conversely, associations in civil society formed in the last decade of real socialism have been too weak to shape civil society as a structural sphere of society, and the new political regimes in most of these countries have not felt the urgent need for a developed civil society. Further, the emergence of a new economic structure has not required a civil society either, because new economic structures in East-Central Europe are emerging from state political and administrative decisions and measures.

Third, civil society is based on a life world, a structural element of society, and its development is determined by features of the existing life world. This notion I took from Habermas (1989), but as reconstructed by Cohen and Arato. For this reconstruction, two moments are particularly important. Instead of a two-part, state vis-a-vis civil society model as a framework for understanding civil society (found in almost all writings on civil society in the 1980s), Cohen and Arato introduce a three-part model: politics, economy, and civil society (which implies that economy is outside civil society). Instead of Habermas' three structural components of the life world (culture, society, personality), they introduce two main components: the life worm as "the reservoir of implicitly known traditions, the background assumptions that are embedded in language and culture and drawn upon by individuals in everyday life" and the life world as a sum "of institutions specialized in the reproduction of traditions, solidarities, and identities" (Cohen and Arato, 1992: 427-428, 429).

After the collapse of "new socialism" in almost all East-Central European countries, the pre-"real socialist" traditions that formed the pre-real-socialist "life world" have been awakened and reaffirmed. Those pre-"real socialist" legacies exist in many East-Central European countries due to the late, specific, and unfinished modernization, characterized by traditional, conservative, and prepolitical consciousness and behavior, and all that is usual in the sociocultural and political scene.

The quest for a new identity, which also has its origins in the "life world," has brought the ethnification of politics and a kind of nationalism that accords with the basic elements of socialist legacies. Those characteristics of the old pre-"real socialist" life world are contrary to the establishment of a modern society. For instance, Serbia has many more or less influential associations in civil society if viewed only structurally, but many of them are conservative and nationalistic.

Fourth, certain theoretical and ideological misunderstandings and confusions affecting associations of civil society, its activities, and the relations between these activists have contributed to the social marginalization or disorientation of some activists in the new situation. The concept and practice of civil society in the 1980s (accepted in "real socialism" and in Western Europe and based on a model of civil society vis-a-vis the state) have shown serious analytic and strategic weaknesses in the new circumstances, after the collapse of real socialism. The opposition between civil society and the state has produced an "anti-politics" strategy and behavior that after the fall of "real socialism" contributed to the marginalization of civil society. Under new circumstances, this two-part model has uncritically accepted even neoliberal strategies for the economic transition. The three-part model of the political system, civil society, and the economic system, which is developed in the writings of Habermas, Offe, and particularly Cohen and Arato, is not yet widely accepted in important East-Central European circles.

VI

My last group of hypothetical judgments concerns a possible prognosis for further development of the transition in East-Central Europe. It is explained in the form of an abstract-theoretically and concrete-historically based hypothesis. The former relies on many aspects of Marxist work and the scientific work of many others. The latter refers to similar or analogous historical experiences and to the experience of the history of "real socialism" and the five years of transition in East-Central Europe.

Hypotheses Concerning Possible, Desirable, or Non-Desirable Transitions

Almost all social and political forces accept the imperative to realize the transition to a society characterized by a democratic political order, a strong civil society, and a developed modern market economy. However, the influence of various internal and international social and political forces and circumstances can bring about very different societies, primarily in terms of the everyday lives of the people. The past five years of transition in East-Central Europe do not make it possible for me to definitively answer the question of where the countries of this region are going. However, the direction depends not only on the new "political class" and international factors, but also on the mood of the populations themselves.

Hypotheses Concerning the Direction of the Transition

Desirable transitional development in East-Central Europe would be one in which under certain favorable circumstances following radically directed and spontaneous structural changes in the former "real socialist" countries, they could bring about a "mixed society" as a more lasting historical form of the global organization of society. By "mixed society" we understand a society characterized by adherents to institutional (structural and dynamic) factors: plurality of property ownership, classical private property, and various forms of public, collective ownership, legal recognition of the rights of labor and capital, a modern market economy with developed commodity, labor, and capital markets, the accumulation of capital subordinate to social (national and international) goals and principles and to environmental imperatives; it is a state based strictly on law, Rechtsstaat, and guarantees of all human (individual and collective) rights and a "social or welfare state" with important tasks in economic life; the political system is a parliamentary, multiparty democracy on the model of a consensus democracy, including forms of participative democracy (in politics and economics); it has developed and efficient institutions, principles, and conventions of civil society, and a system of neocorporatist dynamic balance and conflictive cooperation between the main social classes or semi-classes, strata, which presuppose among other things strong trade unions; finally, there is the international opening of society and its economic, technological, political, and cultural integration into European and world space and order, but not in a "semi" or "quasi" colonial status.

Such a mixed society, as a more lasting historical form for the global organization of society, would have some basic characteristics of capitalism and some important features of the socialist project. Capital as a social relation (between capital and wage labor) will remain the "organizational principle" of this society. Following Habermas, this principle is a "very abstract rule," which is dependent on the development of productive forces, defines the main goal of the reproduction of society, and determines the space inside which the evolution and changes of a social system could occur without loss of the system's identity. At the end of the third volume of Capital, Marx stresses that there are two distinctive characteristics of the capitalist mode of production: first, the "commodity is the dominant and determinant character of its products," which means that labor power is a commodity; second, "the production of surplus value is a direct purpose and the determining impulse of production" (Marx Engels Werke, Vol. 23: 731). That is precisely an organizational principle of the capitalist mode of production.

Hypotheses of Undesirable Results

Radically directed and spontaneous structural changes could bring about a society characterized by privately owned national, international, or other enterprises and financial institutions that make use of diverse legal and illegal privileges to hire cheap labor without a developed system of labor protection and developed workers' practice, such as trade union rights. Conversely, authoritarian governments can use state ownership mainly for political purposes; this results in an authoritarian or semi-authoritarian paternalistic, populist regime without a developed Rechtsstaat (legal system), regular violations of human rights, a kind of "acclamatory democracy," accumulation of capital and economic development subordinated mainly to egotistic and particular interests of individual capitalists or groups of domestic and international capitalists, and a "semi-colonial" political and economic status for the country. This scenario assumes that at least some East-Central European countries would become a kind of periphery in Europe, a Third World on the European continent.

A "mixed-society" presupposes the realization of capital in its double form, as a social relation of production and as a form of productive force as the main organizational principle of the "mixed society." However, such realization of capital must not create a capitalist society, that is, a capitalist social formation. With the corresponding action of relevant social forces, it could bring about a "mixed society" as a new transitional historic social formation that incorporates some structural and dynamic elements of capitalism into the socialist project. The development of a "mixed economy" would create new possibilities, new objective factors and subjective forces of, and new ideas about, class and human emancipation, which we have called socialism. Below I will elucidate only the main abstract-theoretical arguments in favor of a "mixed society."

(1) The principal, starting (hypo)thesis of the first argument is as follows: capital (as a social relation, a relation of production with its logic) is not identical with the capitalist social system, i.e., with capitalist society. This (hypo)thesis proceeds from certain of Marx' theoretical-methodological stands. Marx bases the existence and the role of theory on the difference between essence and appearance (Marx Engels Werke, Vol. 23: 261-680). In Grundrisse and Capital, there are two conceptions of this difference, although they are not clearly articulated. In most places, Marx describes appearance as illusion, apparition (der Schein) in opposition to essence as true reality, "the peaceful kingdom of laws" (Hegel). In this respect Marx writes in Grundrisse about "the apparent equality and freedom" in capitalist society (Marx Engels Werke, Vol. 19: 133, 134). We do not follow this.

The second conception of this difference is a developmental one, which "genetically develops the various forms" of the metamorphoses of capital (Marx Engels Werke, Vol. 26: 384). This conception appears implicitly in the expositions in the three volumes of Capital (and in the criterion of the division of the whole subject of capital into three volumes) and is explained by Marx in the first sentences of the third volume. By describing the content of the first and second volumes, Marx stresses that in the third volume, "the forms of capital...coming nearer, step by step, to this form in which they are stepping, on the surface of society, in the interaction of various capitals, in competition..." (Marx Engels Werke, Vol. 23: 27). Important here is Marx' emphasis that all this is "a real development of capital." In our argument, we shall follow this "understanding" of Marx.

In this and the next hypotheses, we rely upon another of Marx' insights in Capital. According to Marx, "it is necessary to differentiate between the general and necessary tendencies of capital and the forms in which they are expressed" (Marx Engels Werke, Vol. 21: 284). Marx often stresses this idea elsewhere in Capital, making clear that there are differences between the laws and the logic of capital, as they are explained in Capital, and their real functioning in capitalist society. These differences, as will be shown, are the result of the influence of the mediators in the process of transformation of capital into capitalist society.

(2) The second (hypo)thesis is as follows: Capital, as a relation of production, produces and reproduces mediations. Mediations are very important for at least four reasons. First, they are an active factor in (re)producing capitalist society; second, some of them more or less contradict the very logic of capital (and that constitutes the inner contradiction of capital, its "inner limit"); third, contradictions between the logic of capital and these mediations lead to various types of capitalist society and therefore make a "mixed society" possible. Fourth, these mediations are structural from the point of view of the realization and functioning of capital and from the standpoint of capitalist society. However, at the same time, they are circumstantial, that is, they are historically determined. Thus, they are at the same time a constant and a variable.

To explain the possibility of a "mixed society" at the abstract-theoretical level, it is useful to describe these mediations. The first metamorphosis of capital and its mediations takes place in the sphere of economy. The first step in the realization of capital, in its process of reproduction, is a "circular course" that subsumes the unity of the process of producing capital (Capital, Volume II) and the process of exchange (Marx Engels Werke, Vol. 22: 291). The process of exchange is at the same time a product and prerequisite to the production of capital ("circular course"). This unity brings into the process of (re)production of capital two very important elements: the competition of individual capital (which means individual capitalists) in capital's commodity and labor markets and the relationship between capitalists and workers, because "the very introductory act which is an act of exchange is a buying and a selling of labor power" (Marx Engels Werke, Vol. 22: 320). This relationship between capital and labor is realized in the society as a class struggle between capitalists and workers, that is, the capitalist and working classes.

Capitalism can realize itself as a social factor only through competition between individual capitalists and through class struggle. In this respect, these two phenomena are structural elements of the reproduction of capitalist society. At the same time, they are also circumstantial, i.e., historical elements that can be and really are different in their intensity and, particularly, in their influence upon the whole of society. This structural historical fact also speaks in favor of the possibility of a "mixed society," showing that workers' struggles can direct development toward such a society.

The second step appears in capital as a relation of production and combines with the productive forces that assume the function of capital as well. This unity forms the capitalist mode of production. Capital as a social factor can function in its full capacity (when a "formal subsumption of labor under capital" is replaced by a "real subsumption") only if it is realized as a capitalist mode of production. Moreover, capital begins to function in its full capacity, having formed the capitalist mode of production, when (thanks to the first Industrial Revolution) it has taken the form of the "system of great machinery" (Marx), as productive forces adequate to themselves (Marx Engels Werke, Vol. 20: 66). In this respect, adequate productive forces are also a constitutive structural element of capitalist society. At the same time, however, productive forces like the industrial system are circumstantial elements, i.e., concrete historical variables. Indeed, the entire capitalist mode of production has such a historically variable dimension because "class struggle is not a simple consequence of the mode of production," but is always inside it, a part of "the very definition" of the mode of production, as E. Balibar said. The third step in the economic metamorphosis of capital, a step that departs from the sphere of economy and enters the sphere of social (i.e., sociological) relations is the transformation of capital and wage labor into their "personifications" (Marx), the capitalist and the laborer, and their class struggle, which (re)produces the capitalist and working classes.

The second group of mediations concerns civil society and is based in the life world. The entire history of capital has shown the very important role civil society, i.e., the "life world," has played in the formation of capitalist society. This structural element and concrete historical variable has brought about very different types of capitalist systems. One of the newest arguments in favor of this thesis is the Japanese economic "miracle" of the 1970s and 1980s and the economic development of the "four tigers" in Southeast Asia in the 1990s.

In the third group of mediations that participate in the formation of the capitalist system based on the logic of capital, and which bring about very different types of this system, are democracy and the state as well as the whole political structure. Concerning the relation between capitalism and democracy, capitalism as a social system in developed Western countries was unquestionably established without democracy and its influence. The introduction of democracy in these countries has been primarily the result of the struggle of the labor movement.

With respect to the contemporary functioning of the capitalist system, many scientists on the Left reasonably argue that the development of democracy contradicts the very logic of capital. Some post-Marxist authors interested in the struggle against capitalism therefore argue that the main struggle against capitalism must be performed in the field of democracy. The (neo)Marxist discussion about the state in the 1960s and 1970s reasonably emphasized that a capitalist state, if it is democratic, is not a simple weapon in the hands of the ruling class, but is also a field of constant class struggle between the ruling class and the working class (and many factions within the ruling class as well). Democracy and democratic states are the most important mediations in the transformation of capital and its results, the society emerging out of these mediations.

The fourth group of mediations is the environmental problem. The essence of the environmental problem in our context is that nature, both external nature and the nature of man, limits the development of capital and its logic. Nature in both meanings contradicts the very logic of capital. Therefore, it may also be a factor in the struggle for a "mixed society."

The fifth group of mediations consists of the complex of international relations. This complex has become increasingly important, particularly due to the globalization taking place in the world today. Consequently, the development of individual countries is more and more dependent upon the strength of the international and national capital of developed countries, and not directly upon capital as an economic power, but also on capital as political power. This complex is directly linked to the production of the world's peripheries and to the possibility of transforming certain East-Central European countries into a new kind of world periphery.

We began this section with the thesis that capital is not identical with the capitalist system, i.e., with capitalist society. Capitalist society is (re)produced through the five mediations we have described. Due to these mediations, capital can bring about very different kinds of capitalist society, from Nazi Germany to social democratic Sweden, from some underdeveloped countries in Africa to fundamentalist countries like Iran and Austria. The mediations we are considering may have still other results because many of them are, or may be, opposed to the very logic of capital. They may be the most important factors for overcoming the excesses of capitalism.

After 50 years of practical and theoretical struggle against capitalism, I believe a successful struggle against capitalism might be accomplished not by direct attacks on capital, aimed at its destruction at once and from outside. Rather, it will take place in the long historical process of articulating and attacking its internal limits through precisely the five groups of mediations outlined above. It can only be done from within. In this respect, the former "real socialist" countries must start at the beginning if the democratic, socialist oriented, social and political forces are to acquire power through democratic elections. The first goal before these forces is neither a socialist nor a capitalist society, but a "mixed society."

The abstract-theoretical level is the highest possible level of generalization or abstraction one can achieve and use in the social sciences. Setting aside philosophy, some scientists would argue that the objective social factors concerning human agency and activity cannot be considered in the social sciences at the same high level of abstraction and generalization as are social structures and laws. Marx' theoretical work has confirmed this position. Nevertheless, we must also consider human agency at the abstract-theoretical level. In that necessary generalization, however, we shall make a compromise in terms of the objective structural factors and implicitly of some basic philosophical insights, as well as in terms of historical experience.

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DR. MILOS NIKOLIC is a Professor in the Faculty of Philosophy, University of Novi Sadf, Kneza Milosa 17, 11000 Beograd, Yugoslavia. Revised by John Page.