Preparatory document for the Second Visser 't Hooft Memorial Consultation 5-11 June 1995 by András Csanády, Research Fellow, Institute for Political Science, Hungarian Academy of Sciences, and András R. Csanády (Jr),  Policy Analyst, Hungarian Ministry for Environment and Regional Policy.

1. Decreasing employment around the world

Statistical representations of unemployment are only a visible sign, a measurable and outward part of the mass of people excluded from officially registered systems of labour i.e. outside the legal terms of commodity-production. But the data given by this definition, do not represent the real boundaries of productive activity in any society today. If we try to manage and prescribe authentic social processes according to this term it could cause grave errors and consequences in both the economy and in political life.

"Unemployment" was fit for the circumstances in which it was shaped, namely in highly industrialized western countries, around the time of the Second World War. At that time, full employment on these terms seemed within reach for these countries, so they did not inspect too closely the missing particles. On the other hand, today this expression is not useful to delineate some other societies in the world - still lesser developed - after those happy old post-war-times.

Despite these disparities, in the present great transition of Eastern and Central Europe the term "unemployment" was and is used both in the theory and in the praxis of economy. These our former socialist countries want to be rescued by capitalism, to which end we took the model from the best: the highest developed western states. But the structure of those economies we would model, and their labour force and its division are surely something quite other than the ours in Eastern Europe. It is inapt to reflect substantial components of our reality and inadequate to be used as a framework and method for clear understanding. More adequate models for us may be found at the other rim of Europe, in those Southern states with a relative backwardness similar to ours. Southern European countries have some troubles too. They are in the same relation to the West as we are, only a little further on the way to Western standards. Thus they have used - and suffered from - the very same models that we are supposed to use to free ourselves.

2. The fatal symptoms

Our common traits with South-European parallel as follows:

2.a) Low employment rates, whether the accounted unemployment rate is high (as in Spain 23.8% in 1994) or modest (Turkey 9.5% in 1994, or Greece 8.3% in 1994) or even low (Portugal 6% in 1994). This data is generally far more characteristic of weakly developed commodity production than a measure of nominal unemployment. It does not show the real working part of the society, of course, but only the part possessing full and official employment in the modern, capitalistic sector. For example in Naples (the largest city in the south of Italy), employment rates diminished from 57.8% (in 1871) to 35.0% (in 1971) during one hundred years of "modernization" (R.Ratto 1985). Unemployment rates show only the changes inside this modern stratum, not showing whether the greater, traditional part of the work force (65% in 1971), have jobs or not. (See Table 1/a, 1/b.)

The employment rate in Hungary diminished rapidly in the last 6-8 years, as the modern sector of our economy is swiftly and constantly shrinking. Unemployment rates were only 0.44% in `90, growing to and 13.33% in `94. (See Table 2.) These proportions and tendencies may be taken as general ones in Central and Eastern Europe. (See Table 3.)

2.b) The high proportion of the long term unemployed, among all unemployed, reveals that simple structural unemployment is not the case here. These people, who have lost their jobs, are unable to gain new employment with the help of direct training in another skill. Broad strata of workers are shut out of regular employment, most of them permanently.

2.c) A broad mass of insufficiently schooled and under-skilled people make up the long-term unemployed mentioned above. Yet their insufficiency pre-dates this moment, their fatally bad start beginning with a basic family socialization incompatible with commodity production and capitalistic mentality, as well as their civil schooling and its norms. This group makes up about one-third of the Hungarian labour force (Lakos L.1992).

2.d) The thick layer of informal, or shadow economy (Schattenwirtschaft, "economie clandestin") has admitted many who were closed out from the upper/modern sector. Here they can make a meager living by traditional activities and relations, principally by handicrafts practiced in the framework of familial and neighbourly division of labour, or in similar community forms. The extent of these shadow-economies we can't know exactly. Hiding themselves is part of their existence; they are fit for life only with minimalized expenditures. Thus, they must fend off all possible common costs (taxes, rents, etc.). Hungarian experts estimate the volume of the shadow-economy to be 1/3 of the whole GDP (Nepszabadsag, 18,04,1995, p:5), although this sum includes high-level lawbreaking as well (tax-fraud, rent-evasion), committed even by the most genuine capitalists. In the further eastern states this part of the economy is larger and larger. (See Table 4.)

2.e) The high proportion of smallholders (subsistence estates) and part-time husbandries are very complicated to document, because our system of land ownership has been in continual change over the past 5-6 years. But it was generally known already in the socialist times and before, that more than half of the population was engaged in agrarian small-production. Since then, it might have increased to meet new needs. Albeit expired, the former household plots of collective farm members, a substantial part of the small holdings, were propped up by the collective plantings and gave good income to their proprietors. Now the collectives are unable to bear the burden of such a surplus. (See Table 5.)

2.f) The high proportion of rural/agrarian population living in villages, rural towns and suburbs, however the active population employed in the agrarian sector has steeply decreased in the last years (See Table 6.): about 23% 1970; and 10% in 1993. This decrease in activity is accelerating, as seen by recent registered unemployment registrations in which the proportion of agrarian was 16.2% in September, 1994; and 21.2% in December. (Munkaeropiaci Informaciok 1994/13, OMK, p:6.) Simultaneously those losing agrarian jobs remained in rural settlements and kept living somehow in agriculture - without official employment. Moreover, there are increased numbers moving from towns to rural settlements after losing their urban jobs.

What all these data convey is that former socialist countries in Europe have a tremendous bulk of underdeveloped labour force which cannot fulfil the efficiency level prescribed by the world market. This labour force cannot stay in the contest by quickly adapting to the new sophisticated requirements. Unripe for capital, they are essentially peasants with a traditional attitude and constitution, mentally and communally.

3. The struggling peasant

This is not the consequence of the socialist preliminaries - just the opposite: This backwardness of ours should be taken as a cause and basis of our big historic adventure in socialism. This was the way we tried to break out of our backward social system and grow closer to the West. After the Second World War, when this adventure began, 60-80% of the population in our countries on the rim of Europe were working in agriculture and living in the countryside. The socialist power strived with every means to alter this position. They started gigantic industrialization programs, building big plants and huge housing estates, moving into them the army of peasants from the countryside made superfluous by the collectivization and modernization of the agriculture.

This immense restratification, carried out by force, seemed finished successfully. But it came to light in the world of competition with capitalism, that it didn't posses real strength, and in the big finish of the arms race, it crashed.  It was generally supposed, that the decisive cause of the crash was bad motivation: the absence of the private interest, being substituted by political force. We don't say this explanation is not true - only a bit simple. The roots go deeper! Certainly to this stubborn backwardness - not exterminated really and totally.

Our peasantry was enlisted successfully in the industrial army as well. But it was never broken away from and definitively freed from village traditions. At present in the broad literature of social-anthropology - above all from Karl Polanyi - we may read that the peasant way of life must not be interpreted as the mere absence of some civic/bourgeois values and patterns, but as having a coherent and authentic system of its own for the life of village peoples over a long period of human history.

4. Heterogeneity of humankind and the global economy

Since the Enlightenment and the Bourgeois Revolutions a firm tenet of European society is human equality. We quite agree with the moral leaning of this thesis, but we have severe difficulty with it as a statement of fact. Biological homogeneity -common origin of all people - seems very likely to us, but by no means social and historical homogeneity of mankind. Different social forms are not mere external additions but reflect something borne inside the people, given to them historically as common character in every community. Even further: human development doesn't remain only on the surface, reshaping the outward objectified elements and social institutions, but it intrudes continually into individuals and creates ever new subjective forms inside their conscious acts and thoughts. Afterwards these different historically developed human forms live together.

Similarly, in the economy: unequal development is a multifold feature of European society. For several hundreds of years, the north-western countries of Europe have held a central position, a leading role in development. Generally the farther out from this central zone, we find less and less developed countries. Theoretically described by I. Wallerstein in the seventies, the phenomenon is discussed abroad and fundamentally can no longer be denied. As opposed to the central zone, he defines another pole around the peripheral ones and between the semi-peripherals. Nowadays in Hungary it is a widespread view among intellectuals that we belong to the semi-periphery.

Nay, we should recognize this fact is not only related to countries, but inside regions as well. The transition phenomenon of recent years clearly shows, in its quantitative dispersion, a West-East slope inside Hungary. Unemployment in western counties was 7-11% in 1994; at the same time in the eastern ones it was 14-18% (Munkaeropiaci Informaciok 1994/13 OMK p:30.). Of course, this uneven state of development may be found in every aspect of social existence.  And if we go further - e.g. beyond the border of Romania - we find a structure of employment fallen apart even more, but not very comparable in unemployment numbers, because Romania and Hungary have very different kinds of national economic and social policy.

The case of the black market is quite similar. Market-places in Hungarian cities, many big streets and squares too, are filled with foreign people vending (mostly smuggled) goods. A great part of these come from Romania (others from the Yugoslav countries, Poland, China, Bulgaria, etc.). At the same time, Romanian cities have their own foreign markets, filled with the vendors from Moldova and Ukraine.

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