Eastern bloc is leery of capitalism

Hungary's national flag waves over Budapest


Scott Jagow: Let's say you've been appointed finance minister of a brand new country. You get to choose your economic model. With everything that's happened in the past few months, it'd be pretty hard to pick free market capitalism, wouldn't it? With that in mind, consider the plight of the former Eastern bloc countries of Europe. Stephen Beard has our story.

Stephen Beard: In his home overlooking the Hungarian capital, Budapest, opposition politician Jozsef Torgyan claims his country is in a bitter mood:

Jozsef Torgyan (voice of interpreter): Hungarians feel today so bad, they feel so unhappy. That have never felt so bad during their whole history, I would say.

Bailed out by the IMF, and sliding into recession Hungary has been brought to its knees by debt, says Torgyan. Having overthrown communism 20 years ago, Hungary has swapped one tyranny for another.

Torgyan (voice of interpreter): Russian tanks left, but foreign banks came. That banks even robbed us more than those Russians who stayed here.

That claim sounds bizarre in a country where living standards have soared. But analyst Kristian Szabados says there is a growing distrust among Hungarians of free market economics.

Kristian Szabados: They are absolutely afraid of the market. They are absolutely afraid of competition. Even the young generations think that, if I personally have a problem, I must turn to the state to solve it.

He says that sentiment is spreading throughout eastern europe. Even in Slovakia, a big free market success. Journalist Anca Dragu says Slovaks have been turned off by the inequality of American capitalism.

Anca Dragu: They just see, oh, that guy got millions, has a luxurious villa. And poor people were laid off now and they have hard time finding a job. This the part of capitalism that they don't like.

With free market reforms reducing the role of the state, much of Eastern Europe was catching up with the West. But that could come to a halt, says Tomas Valasek of the Center for European Reform in London.

Tomas Valasek: The population is turning away from the free market, liberal capitalist systems. It was doing that before, but the crisis is going to accelerate the trend.

Valasek says that's not surprising After all, he says, just look at the West. After preaching the virtues of balanced budgets and privatization, we're now running up record deficits and greatly expanding the role of the state.

This is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.


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