The Power of Freedom. Mart Laar

export earnings surged ahead while Poland’s stagnated. So, after starting from a similar point in the mid-1950s, Spain shot ahead of Poland over the next 35 years. Spain began to catch up with the rest of Western Europe, while Poland fell farther behind. The central reason for Spain’s success was its shift from isolation to integration within Europe and the democratisation process that allowed the country to become a full member of the European Community.

      A similar picture can be in found in Northern Europe when comparing developments in Estonia and Finland. It would be harder to find two countries more similar than these two Lutheran countries situated on Europe’s Eastern border. Because of their shared heritage as Finno-Ugric nations, Estonia and Finland have similar languages and cultures. Both countries were largely agricultural, although some industrialisation began early in the 20th century. Moreover, Finland and Estonia paralleled each other in terms of socio-economic development during the inter-war period (1920-1938). In some respects, Finland’s economic development was greater, but this was not true for all measures of growth. In sum, there were few real differences between the two countries by 1940. At this time, however, Finland and Estonia experienced disasters that set them on different courses for the next 50 years; Estonia lost its independence and one-third of its population, while Finland succeeded in keeping its independence but suffered a loss of territory and population. Life under the two different political systems resulted in vastly different economic structures and behaviour patterns that created a huge disparity in the development of Finland and Estonia.113

      During the 1950s, living standards in Estonia and Finland were more or less the same. Finland had to pay war reparations to the Soviet Union, which significantly decreased living standards in the country. Gradually, however, Finland opened itself up to the world, while Estonia remained locked away under the control of the command economy. From this point onwards, Finland’s GDP grew several times faster than Estonia’s until in 1988, its GDP per capita was at least four times that of Estonia. Indeed, this may even prove to be too optimistic a picture as the calculations were based on an official exchange rate that was far from realistic. Other observations present a level of household income per capita in Finland that was 4.6 times higher than the Estonian level in 1988. If we base these calculations on a more realistic exchange rate, then Finland’s income per capita can be estimated to be 8.4 times higher. On the basis of these calculations we can conclude that in 1988-89, the Estonian GDP per capita was some 15-17 % of the Finnish GDP per capita, which was then at the level of the European average. This puts the Estonian GDP per capita at the end of the Communist period at a much lower level than most international studies would suggest. But even on the basis of the most optimistic official figures that estimate the Estonian GDP per capita to be four times smaller than Finland’s, it is clear that Finland totally surpassed Estonia during the country’s extended period of Communist domination.114

      Table 10

      Source: Lugus and Vartia, 1993

      Table 11

      Source: Lugus and Vartia, 1993

      The slower economic growth in Estonia lowered the country’s living standards relative to those of Finland. In 1939, they had been very similar. When we consider the amount of goods that can be bought with the hourly wage, we see that out of 24 items of foodstuffs for which we have comparable data, the price per hour of work (PPW) by an industrial worker for 13 items was higher in Estonia, while for 10 items, Finland had the edge. In comparison with 1938, the PPW for a Finnish employee appeared, by 1988, to be between 1.45 and 2.1 times higher than the PPW for an Estonian employee, though there were two products that were relatively cheaper for an Estonian employee: rye bread and white bread. In general, however, it should be conceded that a Finnish employee would be considered clearly better off. The extreme case is coffee, which was 13.1 times more expensive for an Estonian worker than for a Finnish employee. The gap widens even further if we consider the quality of products available in the two countries, many of which, it must be remembered, could not always be purchased in Estonian shops (Table 9).

      It is also possible to compare the PPW for employees with respect to certain manufactured goods and services. In 1938, this was also broadly similar for Finnish and Estonian employees yet by 1988, the Finnish workers were significantly better off. The differences in the PPW with respect to manufactured goods were even greater than they were in the case of foodstuffs. An Estonian employee had to work approximately six times longer to buy a colour TV, about four times longer to buy a refrigerator and 2–2.4 times longer to buy a pair of socks or a bar of soap than his Finnish counterpart did (Table 10). The difference in living standards is also reflected in greater Finnish ownership of consumer durables (Table 11).

      Differences in living standards can also be found in the living conditions in the two countries. The average living space per person (the floor space of the dwelling divided by the number of household members) is a simple and frequently used indicator of housing conditions. In Finland, there were 31m² of housing space per inhabitant in 1988, while in Estonia this figure was only 21m². At the same time, the quality of housing in Estonia was much worse than in the Nordic countries.115

      It can, of course, be argued that none of this means anything. That the capitalist system might be able to offer higher standards of consumerism, but the free education and healthcare, full employment and equality among people offered by the Communists might, ultimately, make people happier. However, this is not so. Communism did not only fail economically, it also failed socially. International statistics on human development document the widening gap between social indicators for Estonia and Finland too: in the mid 1930s, the life expectancy of 56 years in Estonia was higher than the expected 53 years in Finland, yet by the end of the 1980s, the two countries had changed places, with life expectancy in Finland now 4 years longer than in Estonia. Consider also the next widely used figure – the infant mortality rate: before the Second World War, Estonian and Finnish infant mortality rates were broadly comparable, but they began to diverge after the war. The infant mortality rate in Finland fell by more than 50 % – from 13.2 per thousand births in 1970, to 6.4 in 1986 – and is currently among the lowest in the world. Immediately after the war, the infant mortality in Estonia also fell, but there has been little improvement since 1970. Infant mortality in Estonia reached its lowest level in 1988, but was still twice as high as the figure for Finland. Serious health problems in Estonia were at least partly caused by the high level of pollution. A comparison of sulphur emissions in Finland and Estonia reveals that levels were much higher in Estonia. For example, the annual mean concentration of sulphur dioxide in Tallinn was 5-6 times higher than it was in Helsinki. The quality of the water is also significantly better in Finland, where 80 % of investigated lakes are in good condition, compared to only 20 % in Estonia.

      We could continue to draw comparisons between Estonia and Finland, but the result is already clear: the level of development and the standard of living in Finland far exceeds that of Estonia despite the two countries having started from largely similar positions prior to the Second World War. The main reason for Finland’s success was its shift to a modern, export-oriented market economy and its swift integration into Europe. The same is true of many other countries: East and West Germany, Czechoslovakia and Austria. In sum, prosperity eluded the Soviet Union and its satellites. The economies and societies of the socialist camp stagnated, causing real hardships for their citizens. The socialist countries failed to respond to developing trends with the result that the technological revolution passed them by, while it brought the rest of the world closer together. In the age of modern mass media, the growing gulf in living conditions between the East and the West became increasingly evident. This created tensions in the Soviet bloc that could no longer be concealed. Having completely lost its legitimacy, the Soviet system was falling apart. Fear was the only factor keeping it together, and even this began gradually to fade away. And even this began gradually to fade away. When this happened, the time for Communism was over.

      Towards Freedom! The Fight against Communist Domination

      The fight begins:

113

Olev Lugus and Pentti Vartia 1993.

114

Dellebrandt 1992.

115

Lugus O & Vartia P, 1993; p. 363-376.