FEE in Eastern Europe

Eastern Europe Must Foster Private Property and Individual Initiative to Create Economic Recovery

In the autumn of 1994, FEE’s President, Dr. Hans Sennholz, sent me to Eastern Europe on behalf of FEE. I visited Poland, Lithuania, Russia, Romania, Hungary, and the Czech Republic. These countries of Eastern Europe had been devastated and impoverished for decades by the Communist regime. For 45 years the inhabitants had lived under the control of the U.S.S.R. Most of the people have forgotten what it means to be individually responsible. They expect government to make decisions for them, to provide them with housing, jobs, and medical care. Since the dramatic rejection of Communism in 1989, however, their people have been trying to decide how best to transform their old command economies into private property orders. That is why Dr. Sennholz sent me to Eastern Europe; he wanted me to tell them about the Foundation, The Freeman, and FEE’s other publications so as to give them some help in learning about private property, individual rights, savings, investment, and entrepreneurship.

My entree in each country was through individuals who were already familiar with the Foundation and who could arrange for me to meet and speak with like-minded persons. I met informally with small groups and I gave lectures. I spoke to some groups in English, to others sentence-by-sentence through interpreters. I talked about a broad range of subjects—what is necessary for economic development, what people living in the formerly Communist countries could learn from the United States, and what they should not learn from the United States. I talked about the free market, about government regulations, and inflation. And at two colleges I spoke to classes on the history of economic thought about the Austrian “school” of economics and Ludwig von Mises.

The people in the Eastern European countries I visited have many of the same complaints as we do in the United States. They are saddled with high taxes, burdensome controls, costly government pension schemes, and central banks that consider inflation and/or credit expansion the proper way to meet the government’s expenses. The message I tried to present in the countries of Eastern Europe I visited was that they should avoid copying the big government spending programs that have led to these consequences in the United States. On the other hand, they should do their best to limit the role of government and adopt the principles of individual freedom and personal responsibility which fostered economic development and technological improvement here in the United States.

The people of Eastern Europe should come to recognize the importance of protecting private property and private voluntary contracts. They should create an economic climate in which people will feel relatively secure so that they will be willing to work, not only to produce enough to survive, but to produce more, so as to save and invest. Generally speaking, people in the United States have felt relatively confident that their property would be protected and that they would be free to use the products of their efforts as they chose. Thus, they were encouraged to be industrious. Entrepreneurs dared to innovate, experiment, and take risks in the hope of profit. The economic and technological development of the United States has been the result of decades of accumulated savings and investments by many persons and of countless enterprises undertaken by many entrepreneurs.

Now that these Eastern European countries are on their own, they have a chance for economic recovery. It is essential that the people come to recognize the importance of protecting private property. Individuals who own property can become independent, responsible for themselves and their families, and need not rely on government to supply their needs. The people must ask their governments to replace the old Communist controls and regulations with a legal and judicial system recognizing and protecting private property and contracts. Individuals should be free otherwise to live as they wish, to pursue their own peaceful ends and to cooperate and trade voluntarily with others.

The governments of the countries of the old Communist bloc have removed some of the old interferences and controls on economic activity, and government enterprises are being partially denationalized. These changes have opened up some opportunities which individuals have been pursuing. Some entrepreneurs are daring to undertake new ventures. Small private shops now line the streets of many cities. Fresh produce is regularly brought to city markets from far off places. More trades are taking place across national borders and foreigners are beginning to invest in these countries. Billboards advertise foreign products, even cat and dog food. And TV satellite dishes may be seen anchored on the roofs and balconies of many high-rise apartments. As more imports appear on the market, workers will have more incentive to produce, and producers will have to enhance the quality of their exports, so as to compete in world markets. Yet much remains to be done, primarily in changing the attitudes of the people. Few realize what it means to be fully responsible for themselves and their families; most of them still expect government to take care of their basic needs. Nevertheless, if the countries of Eastern Europe can continue to move toward creating an economic climate that fosters individual initiative they will be on the road to economic recovery.