Geographical Review of Japan Vol. 70 (Ser. B), No. 2, 126-143, 1997

Spatial and Social Inequality in Communist Countries and in the First Period of the Transformation Process to a Market Economy: The Example of

Peter MEUSBURGER Department of Geography, University of Heidelberg, D-69120 Heidelberg, Germany

Abstract: This paper argues that Marxism created new forms of inequality but was not able to abolish many of the old inequalities inherited from capitalism. The legacy of history, social and spatial division of labor, the hierarchy of control in large organizations and power relations proved to be stronger than the Marxist ideology, the abolishment of private ownership, the nationalization of the economy, central planning and all other instruments of Marxism that were meant to create equality and a "new socialist human being". The author claims that an authoritarian and dogmatic ideology such as Marxism inevitably creates structures of organi zation where power and decision-making are extremely centralized. Furthermore the so-called "administrative allocation" of scarce resources and the way in which the leading party members were recruited contributed to the centralization of power and high-ranking decision making. In this bureaucratic competition for scarce resources the "periphery" had almost no chance. The image of "greater equality in socialism" was constructed by propaganda and by the communist monopoly over mass media, scientific publications, statistics and public educa tion. In the empirical part the author discusses three examples of inequalities in communist systems: the spatial concentration of highly qualified jobs, gender disparities in the labor market and the inequalities experienced by gypsies. The third chapter deals with the new spatial patterns of inequality emerging in the first period of the transformation process to a market economy.

Key words: spatial and social inequality, Marxism, Hungary, centrally planned economy , female labor force participation, level of education, ethnic minorities

turns into painting socialism...This juxtaposi Spatial and Social Inequality in Com tion of the real and the imaginary is not con munist States-A Capitalist Legacy, fined to the exceptional. It is part and parcel of an Historical Accident or a System factory life, the union elections, the production Immanent Feature of Marxism? conferences, competition among socialist bri gades, and the communist shifts. Because it is Research on the effects of the transformation embedded in real practices, the pretense un process from a centrally planned to a market wittingly assumes a life of its own...Painting economy is complicated by the fact that the real over ,the sordid realities of socialism is situation at the beginning of the process is not simultaneously the painting of an appearance known well enough. Since the reduction of ine of higher brightness, efficiency, and justice. So qualities is an important principle of Marxism cialism becomes an elaborate game of pretense - Leninism and plays a great role in Marxist that everyone sees through but that everyone is ideology and communist identity, existing in compelled to play. It is an intermingling of a equalities in communist systems were tabooed, desultory reality and fabricated appearance in denied, kept secret as long as possible (Bleek which the appearance takesona reality of its and Mertens 1994) or were explained as a own" (Burawoy 1989: 15-16). legacy of capitalism. In all communist coun A second difficulty lies in the fact that most tries there was an incredible discrepancy be inequalities in the communist systems have tween reality and ideology. "Building socialism been studied by comparing states or large prov- Spatial and Social Inequality in Communist Countries 127 inces and that public statistics were aggregated and the bureaucratization of labor relations. in a way that concealed the real range of dis The vertical and horizontal division of labor parities. leads to a spatial concentration of power and knowledge in all political and economic sys Layers of spatial inequalities in communist tems (Meusburger 1995a). It causes central countries peripheral and urban-rural disparities and There are four layers of spatial patterns to be determines the hierarchy of the settlement analyzed when studying social inequalities in system. Smith (1979:353) was one of the first former communist countries. The first layer to recognize that "large, hierarchically struc comprises the disparities created by physical tured organizations can generate their own mo geographical factors (climate, soils, mineral re mentum towards uneven development, under sources, etc.) which favor some regions and dis socialism as well as capitalism". advantage others. Uneven development in the The fourth layer represents the impact of the USSR was explained "with enormous internal communist period. Inequalities created by variations in resource endowment...Distance Marxism or centrally planned economies have exacerbated by severe winter climate makes for hardly been discussed, neither theoretically nor the isolation of some areas and the sheer phys empirically. This is why this paper gives great ical difficulty of obtaining goods and personnel er attention to the fourth layer than to the other where they are needed" (Smith 1979: 156). three, which are more well known. The second layer consists of all disparities cre When the first details of social inequalities in ated by historical influences in pre-communist the communist states became public in the times. Various historical facts determine 1970's (Andorka 1976, Mickiewicz 1973; Smith how regions, locations and sites are perceived 1979, Schroeder 1973; Zwick 1976), it was and evaluated by society and whether or when widely accepted that these inequalities either these places have had contact with important belonged to the historical legacy of capitalism innovations. Since most of the epoch-making or were the result of the distortion or perver social and economic innovations in Hungary, sion of Marxism by Stalinism. The presump such as Christianity (economic and cultural tion prevailed that disparities in living stan influence of monasteries), Roman law, enlight dards might be equalized by central dictate or enment, abolition of serfdom, spread of liter an efficient and just allocation of resources. acy, industrialization and foreign investment Very few authors (e.g. Gentsch 1992) argued (especially since 1989) came from the west, that marxist ideology itself creates inequalities. Hungary traditionally experienced a westeast Today, we know that Marxism created new dichotomy and was crossed by zones of forms of inequality but was not able to abolish centuries-old cultural and economic borders. many of the old inequalities. The former centers Historically speaking, some of the western of power (control hierarchies) and the former regions of Hungary (northern part of Trans rural peripheries more or less kept their func danubia) including the later capital of Buda tions in the communist system. Expensive pest, adopted many important innovations and residential areas of the former upper class kept developments much earlier than the eastern their status and housed the new communist "elite" parts of Hungary because they had early expo . The new impacts of communist plan sure to them. The early or late adoption of ning policy (large industrial combines, new innovations was connected to unequal spatial "socialist cities") followed the already existing distribution of human resources, economic spatial pattern, some of them even strengthen traditions and differing spatial extensions of ing the central-peripheral disparities. contact fields. These relationships are difficult Could social and spatial inequality be avoided to analyze quantitatively, but they can be un in a "truly" Marxist system? derstood and explained hermeneutically. The third layer of inequalities results from Academic discussions about the basic con the division of labor, from prof essionalization cepts of Marxism are difficult for various 128 P. Meusburger reasons. First, there is no generally accepted of whether it is communist or capitalist. "Just as Marxist theory. If somebody relies directly on under capitalism, the highest-level control func the writings of Marx which contain a large tions will be exercised from the capital city. number of internal contradictions and false This is where the highest-status (and best-paid) prognoses he or she will be accused of adhering jobs will be found" (Smith 1979: 341). No Marx to a naive Marxism by "modern" Marxists (e.g., ist theorist was ever able to explain how a large R. Peet, 1977a, 1977b, 1991; Harvey 1973, 1977, industrial enterprise could be managed without 1985). The majority of Marxist scientists pre a vertical division of labor, without a control ferred to analyze the capitalist system but they hierarchy and without highly qualified experts. remained remarkably vague as to how the ideal My first argument is that the legacy of histo communist society of the future or a truly ry, social and spatial division of labor, long Marxist developed economy should look and standing cultural and economic traditions, function. ethnicity, civic norms, social values, time lags Nevertheless, most Marxist authors claim in the diffusion of industrialization and literacy, that social and spatial inequalities, social in differences in the spatial extension of contact justices and social classes are inherent in the fi elds and regional differences in economic and capitalist mode of production (feet 1977b: 112) political history had a much stronger influence and that they will disappear in a truly Marxist on the persistence of spatial inequalities than society. They maintain that certain features of a Marxism expected. Decades of Marxist policy capitalist economy are instrumental in promot such as expropriation, abolition of private own ing uneven development and that some form of ership, nationalization of the economy, central socialism is a necessary condition for an equal planning, central allocation of resources, in society (Smith 1979: 337, 340). Many Marxists doctrination (monopoly of information and edu still argue that great inequalities of power are cation) and all other instruments of Marxism mainly caused by ownership of capital and that were meant to create equality and a "new land. "Those who own capital and land (includ socialist human being" had little impact on the ing its natural resources) control the means of traditional spatial structures of social and production" (Smith 1979: 338). In their opinion economic inequality. Smith (1979: 157) was one the "State Socialism" (= another term for the of the first to recognize "that there may be quite political-institutional structure of former com a resemblance between both the reality of munist countries) experienced in Central and regional inequality and the reasons for it under Eastern Europe has nothing to do with "pure" capitalism and socialism". Marxism. My second argument is that at least two The false notion that inequalities will fade categories of social and spatial inequalities in away in a purely Marxist system results from communist countries cannot be dismissed as some of Marx's main errors. Marx and even the historical legacy of capitalism or a distor modern Marxists (e.g. Braverman 1974) ex tion of "pure" Marxism. As soon as Marxism pected a reduction in the division of labor and a abandons the academic playground and seizes de-qualification of the labor force in the future. power it inevitably becomes dogmatic and For the same reasons Marxist theory under authoritarian. The caretakers of dogmas, "revealed k estimated the importance of knowledge, skills nowledge" and "historical truths" and competence in developed economies, and always tend to the centralization of power. An the persistence of local knowledge, local values, authoritarian and dogmatic ideology such as contact fields and cultural traditions. On the Marxism inevitably creates structures of organ other side, they overestimated the importance ization in which decision-making and skills are of private property for uneven development extremely centralized. L. Gentsch (1992: 133 and social inequality. Contrary to Marxist ex -147) has presented convincing arguments that pectations, the division of labor, which leads to extreme centralization of decision making and numerous social and spatial inequalities, is un the authoritarian and dogmatic structures of avoidable in any developed economy, regardless the communist system can be traced directly Spatial and Social Inequality in Communist Countries 129 back to Karl Marx. His claim to have an abso and cultural decisions were placed in the hands lute, historical truth allowed no discussion of of one single hierarchy, the party. There was Marxist dogmas and no alternative interpreta only one single access to resources, namely via tions. It opposed individual thinking and alter the party. "The continuous party control keeps native solutions. No leader could be selected for the goal-setting and goal-completing functions any important position without the permission together, protects the priority of politics over of the party. The authoritarian behavior pat the economy and the administration, and re tern of Marx and Lenin led to authoritarian strains the expert intelligence who would nor organizational structures in the party's statutes, mally seek expansion of their own power" in the party's laws, and in all political organiza (Konrad and Szelenyi 1978: 273). Never before tions and institutions, from the day-care center in history was so much power concentrated in and the organization of an industrial state firm the hands of so few than in the communist to the central committee of the party. period. Even in feudal times approximately 4 There was a strong centralization of power 6 percent of the Hungarian population (outside within the communist party in the days of Croatia) belonged to the nobility (Gorlich 1965: Marx and Engels and long before the distortion 297). of Marxism through Lenin and Stalin. The In the communist centrally-planned econo cadres and planners in the top ranks of the my, the monopolization of political, economic, communist hierarchy had to decide about administrative and cultural power through a almost everything, including the recruitment of very small leadership, the way in which the nomenclature was recruited, and the so-called party members, the distribution of goods, in "administrative allocation" of (always scarce) vestment, infrastructure and resources. Marx was fully aware of this centralization of power. resources led to an extreme spatial concentra He believed that the conflict between proletari tion of workplaces for high-ranking decision at and bourgeoisie would first require a strict makers and highly qualified experts in the cap centralization of decisions, but that the state ital city and in a few provincial capitals (Figure would wither away once power was attained by 1). Marxist theorists have traced spatial con the proletariat. Marx was heavily criticized by centration processes primarily to the capitalist his anarchist opponents for his naive conclu mode of production (competition in the market sions. Bakunin clearly predicted that a classless economy, centralization of capital, development society under Marx's state communism was not of monopolies) without considering that the possible. According to Bakunin (1984, 12) the centralization of power is typical and unavoid centrally planned economy will lead to a new able in Marxism. class (nomenclature) and to a new hierarchy. He A second group of system-immanent in predicted that a small minority, claiming to equalities were a result of the goals of com possess the absolute knowledge and historical munist regional policy, which privileged large truth, will rule over a large majority, but he urban agglomerations, large industrial com never explained the way in which the system of bines and "new socialist cities" for ideological anarchy proposed by him would manage reasons. Large cities, heavy industry and large modern industrial enterprises. enterprises were regarded as symbols of social Bakunin was remarkably prophetic concern ist progress and as showpieces of the superior ing the so-called nomenclature. In communist Marxist system, while the rural periphery Hungary the nomenclature, which made all the was a symbol of the past and the backyard of important decisions in politics, economy, ad socialism, neglected and disadvantaged by the ministration and culture, comprised only 0.29 administrative allocation of resources. The "center" not only planned and decided percent of the total labor force (1983) and the , but also fi rst level of the communist cadres included collected the surplus and regulated the distribu only 2,300 persons, or 0.05 percent of the work tion of goods and resources. The initial indus force (Haresa 1995). All strategically important trialization "was accomplished very much at political, economic, administrative, scientific, the expense of the countryside, from which the 130 P. Meusburger

Figure 1. Factors creating social and spatial inequalities in Marxist systems (Design: Peter Meusburger) . surplus for investment was extracted with a power deliberately and persistently to weaken degree of ruthlessness that matched the worst (underdevelop) the periphery" (Corbridge 1989: excesses of capitalist exploitation" (Smith 1979: 227). In an economy of scarcity, the administra 166). tive allocation of resources was a question of The central administration of the state power relations; it showed a trickle-down effect controlled and dominated the state enterprises, from the top to the bottom of the settlement and the state enterprises exercised dominance hierarchy. Most financial resources remained and control over the communities. Local com in the higher ranks of the central place hierar munities, particularly the smaller ones and chy and for prestigious projects of the com those near large state enterprises were munist system. Very few resources arrived at paralyzed and dominated in this hierarchy of the bottom of the settlement system. Cities and power (Pickles 1995: 118). In orthodox socialist villages had no political and financial autono systems and under such power relations and my and were completely dependent on the conditions of one-sided dependency, indigenous party and the central administration. development in rural areas was unthinkable . A spatial centralization of power and knowl The dependencies of the periphery on the edge is also well known in market economies center existing in communist systems can be (Meusburger 1995a), but the forces centralizing described with the same words used by Marxist power and knowledge differ in the two political authors analyzing the relations between systems. In a market economy any enterprise is industrialized and developing countries. "In more or less free to choose the locations of its Wallerstein's model of surplus transfer (wal production units, sales offices and headquar lenstein 1979), actors in the core.. . use state ters. It can buy spare goods wherever it wants Spatial and Social Inequality in Communist Countries 131 and can hire personnel from the labor market. tral planning institutions (Lengyel 1995: 256). These decisions depend on well-known location In the reform period, when the economic disas factors and market mechanisms: wage differ ter of orthodox communist policy was openly ences, consumer location, transport costs and admitted, the relationship between the two the importance of face-to-face contacts with de recruitment criteria "political responsibility" cision makers of other institutions. In branches and "professional competence and skills" facing high competition and uncertainty (e.g. altered slightly (Lengyel 1995). banking), headquarters (places of knowledge As long as persons are promoted primarily and power) are strongly centralized in a few according to their loyalty and faithfulness to an large cities, and in other branches the location ideology, the relevant person is very dependent of the decision-making is more dispersed. In a on networks within the party confirming his or market economy the independence and the au her loyalty. In order to keep one's position or to tonomy of a firm depends largely on its eco get promoted, these networks (the most valu nomic success, competitiveness and financial able social capital in a socialist system) had to resources. The greater the system's compe be cared for very intensely by frequent face-to tence, knowledge, information, experience, face contacts and a constant, mutual exchange skills and resources, the higher its autonomy. of favors and privileges. In market systems, In a market economy many successful and com frequent face-to-face contacts between impor petitive firms are independent from the govern tant decision-makers are only necessary in ment or the political parties. some branches in order to cope with the uncer On the contrary, in an orthodox communist tainty of competition. In centrally planned system or a centrally planned economy, all economies close face-to-face contacts and good social systems such as firms and institutions relations to the powerful cadres were necessary are integrated in one single hierarchy, the com for all party members, leaders of state enter munist party. The goals and plans for all sys prises, cooperatives and cultural institutions to tems are formulated in the "center", and the maintain their status, to prove their loyalty and distribution of resources is regulated by the to have access to the administrative allocation "center" . In an orthodox communist system, of goods. In market economies power is divided state-enterprises, cooperatives and other insti between various institutions and a large tutions had almost no autonomy to formulate number of powerful social networks which their goals or to change their products or plans. compete with each other. The individual has a All important decisions were made in the choice, he or she is not completely dependent on highest echelons of the party and planning one system and can found his or her own firm institutions. If a state-enterprise was given a or establish his or her own network. In com certain degree of autonomy, it could be taken munist states there was only one hierarchy away by the nomenclature on short notice. of power. Fractionalism was condemned and The forces leading to a spatial centralization outside the party there was no way to access of power and knowledge in communist systems resources, promotion or privileges. Both sys worked not only on the system level but also on tems tend towards a spatial centralization of the individual level (Figure 1). In the orthodox high-level decision makers, but the extent and communist system loyalty to the Marxist reasons for centralization are different. Leninist ideology, faithfulness to the party and Szelenyi (1978: 63-66; 1983: 6) offered ample embeddedness in powerful networks were the empirical evidence to show that in state social most important criteria for personal promotion ist societies the administrative allocation of and allocation of resources. Leaders of state scarce goods and services (financial resources, enterprises were almost exclusively recruited houses, jobs, infrastructure, health services, by their loyalty to the party and by their prole recreation) favored the more well-to-do. Com tarian origin. A certain amount of "indispens munist redistributive mechanisms created new able reactionaries" were needed for their skills social and spatial inequalities which increased and competence only in the ministries and cen during the socialist period. A number of inves- 132 P . Meusburger

tigations have shown that new state housing economy and the power monopoly of the com was allocated systematically to the higher munist party did not abolish social and spatial income groups and not to the proletariat . The inequalities, they just changed some of the housing policy also increased effective in main forces creating inequality . come inequalities, "making the real income The image of "equality in socialism" was con inequalities greater than the wage-fixing au structed by propaganda and the communist thorities thought necessary for purposes of pro monopoly over mass media and over scientific ductive incentive and reward" (Szelenyi 1983: publications, statistics and public education. 74). "White collar workers received almost 50 The change of the political system made it percent more per capita from non-cash benefits possible to deconstruct the artificial and un than industrial workers; high managers and justified image about equality in communist professionals received more than twice as much countries. As soon as it was no longer danger as agricultural workers" (Szelenyi 1978: 69) . ous for a social scientist to talk about poverty , During the socialist period social stratification income inequalities, gender inequalities or in increased, expressed by differential access to justice in socialism, they were openly discussed. free or subsidized "fringe" benefits which were Three categories of social inequalities which associated with occupational stratification are not to be expected in communist systems and positions in the nomenclature. The upper because they contradict the claims of Marxist strata increasingly received "surplus" incomes ideology will be analyzed in the following em (Hamilton 1995: 71). Paradoxically, the intro pirical chapter: the extreme spatial concentra duction of economic (market-oriented) reforms tion of power and knowledge in the "center" , such as market regulated prices of certain gender disparities in the labor force and the goods served the interests of the working class inequalities of ethnic minorities . more than the nomenclature. "While under capi talism the market creates the basic inequalities Spatial and Social Inequalities in a and the administrative allocation of welfare Communist Labor Market modifies and moderates them slightly , under socialism the major inequalities are created by administrative allocation, and the market can The spatial distribution of highly qualified be used to reduce inequalities" (Szelenyi 1983: jobs 11). The introduction of a centrally planned In 1980, , the capital of Hungary ,

Table 1. Job concentration for university graduates in Budapest and the capitals of the 19 Hunga rian P rovinces

Source: Unpublished special analysis of the Hungarian census 1980 . Spatial and Social Inequality in Communist Countries 133 offered approximately 23 percent of all Hungar place of work (Figure 2). ian jobs, but almost 50 percent of all Hungarian The larger the city size, the larger the propor jobs for university graduates and more than 80 tion of university graduates and the smaller the percent of jobs for university graduates in the proportion of the lowest educational levels key branches of the communist system. If the among the work force. In Budapest the propor capitals of the 19 provinces are included, then tion of university graduates among the male these 20 cities at the top of the urban hierarchy work force was 7.9 times higher than in the (0.64 percent of all Hungarian cities and vil communitysize up to 500 inhabitants; in the lages, 35.4 percent of the population) almost female work force it was 25.7 times as high. had a monopoly of decision making and skills The largest central-peripheral disparities (gra (Table 1). dients) were found in branches important to the Thirty-two percent of the total Hungarian system, such as public administration, law and population (3.4 million people) resided in 2,838 public order, and banking and finance. communities having less than 5,000 inhabi The slogan "place matters" had an even tants (90.9 percent of all cities and villages). higher rating in communist countries than in This community-size class comprised only 7.4 market economies. Most social benefits were percent of all Hungarian jobs for university distributed via place of work in communist sys graduates. Most of these jobs were in agricul tems, and only a small proportion of private ture and forestry (44.2 percent), health services households possessed a motor-car in rural areas. (13.6 percent), education (10.6 percent), eco Therefore, the spatial distribution of jobs nomic services (5.0 percent), retail trade (4.9 contributed significantly to the existence of percent) and mining (4.3 percent). Prestigious, various other forms of injustices and social highly qualified jobs important for the commu inequalities. nist system were nearly absent in this sizeclass Gender inequalities in the labor force (Table 2). On the other hand, the sizeclass of less than Gender segmentation Social and spatial dis 5,000 inhabitants offered jobs for 46.2 percent parities in female employment rates are of spe of all Hungarian casual workers (outside agri cial interest because the existence of gender culture), 60.2 percent of all those employed in inequalities was denied by official publications agriculture, and 70.9 percent of all jobs for day until the end of communism in Eastern Europe laborers in agriculture. (Meusburger 1995b). Contrary to the com In addition to this spatial polarization of munist propaganda about achievements in knowledge and skills, large central-peripheral gender equality, great gender segmentation ex gradients were found with regard to the propor isted in the Hungarian labor market. In the tion of university graduates or elementary communist period women were extremely school leavers among the labor force at their underrepresented in positions of power and

Table 2. The concentration of highly qualified jobs in villages and cities up to 5,000 inhabitants

Source: Unpublished data of the Hungarian Census 1980. 134 P. Meusburger decision-making, and the largest proportion branches that belonged to the protected labor of women worked in the lowest income and market, such as education and public adminis skill levels. Among the 14,416 most powerful tration. persons belonging to the communist cadres or Female labor force participation rates Contra the so-called nomenclature in 1987 , the propor ry to official reports of communist systems and tion of women was only 16.7 percent (Table 3; widely accepted assumptions in western coun Harcsa 1995: 274-275). tries, female employment rates in socialist The way in which men and women were countries varied strongly according to educa distributed among the economic branches and tional achievement, family status, number of the development of gender segmentation in the children and area of residence. In socialist Hun 1980s benefited women when Hungary intro gary (1980), the employment rates of female duced a market economy. Women were highly university graduates were, depending on their represented in branches that experienced a age, 14-26 percent higher than those of females large expansion in the transformation period , who only completed primary school and 30 to such as banking, retail trade and computing 40 percent higher than those who never (Table 4). They were also well represented in attended or completed primary school (Figure

Figure 2. The percentage of compulsary school leavers and university graduates in relation to the size of the communities where the job was located-according to economic sector (1980) . Spatial and Social Inequality in Communist Countries 135

Figure 2 (continued). The percentage of university graduates in relation to the size of the communities where the job was located-according to selected economic branches (1980).

3). The so-called "child-rearing" phase was and the economic squeeze in communist coun much more accentuated in the employment tries, married women had a higher employment curve of those women who only completed rate between 35 and 45 years of age than single primary school than in the curve of female women (unpublished data of Hungarian Census university graduates. Similar to the situation 1990; Meusburger 1995b). in western countries, the number of children In communist times female employment rates born greatly influenced the age-specific employ showed unexpectedly large regional and ment curve of women. Due to the low salaries central-peripheral disparities. The smaller (and 136 P . Meusburger

Table 3. The proportion of women among selected levels of the Hungarian nomenclature in 1987

Source: Harcsa 1995, 274-275.

Table 4. Gender segmentation in the Hungarian Labor Force in 1980

Source: Unpublished data of the Hungarian Census 1980 .

more rural) the place of residence, the lower the (Figure 5). female employment rates and the deeper the Contrary to the self-representation of social so-called "trough" of the child-rearing phase ist systems, large regional and urban-rural dis (Figure 4). This retreat from gainful employ parities existed with regard to female employ ment was often accompanied by child care sup ment rates. The highest female employment port. The proportion of women receiving child rate (15-55 year-old age group) was in Budapest care support in 1980 varied with their educa (77.9 percent) and the lowest percentage of tional attainment level and showed large gainfully employed women was in the east central-peripheral disparities. Among female ern of Hungary, such as Vamosperes university graduates, a smaller share took child with 45.4 percent (Figure 6). The disparities care leave than among those women with lower shown in figures 3-6 and tables 3-4 indicate educational attainment. The smaller the city or that the communist claim of gender equality , village of residence, the higher the share of 20 which appeared in the media until the end of 30 year-old women receiving child care support the 1980's, was far from true, especially in rural Spatial and Social Inequality in Communist Countries 137

Figure 3. Female labor force participation Figure 5. The proportion of women in Hun rates in Hungary (1980) according to gary (1980) receiving child care sup age and educational attainment of port according to age and commu women. nitysize class of their place of residence.

among gypsies with regard to labor force par ticipation rates. In 1990 labor force participa tion rates among female gypsies were 30-50 percent lower than those for the average of Hungarian women and 30-40 percent lower than those for male gypsies (Figure 7). The child-rearing period is short and clearly visible for Hungarian women as a whole, according to their age-specific employment curves. The gypsy women's low labor force particia tion is due primarily to their low educational Figure 4. Female labor force participation attainment, to high fertility and to their usually rates in Hungary (1980) according to young age at the birth of their first child. The age and communitysize of their place child-rearing period of gypsy women begins at of residence. 16-17 years of age and does not end until 45-50 years of age. The gypsies have not reached the areas and in regions with an unfavorable eco last post-transformative period of the demo nomic structure. graphic transition, characterized by low birth and mortality rates seen in Hungary in the Ethnic minorities-the case of the gypsies beginning of the 1930's (Seewann 1987: 426). The range of social and spatial inequalities in The fertility of gypsy women is similar to that communist systems can best be shown by of women in developing countries. They general studying the situation of highly discriminated ly have their first child at a much younger age minorities. During the orthodox communist and have many more children than other Hun period it was very difficult to publish on the garian women. In 1990 16.9 percent of all 16 discrimination of minorities. Only the change year old gypsies and 29.8 percent of all 17 year of the political system made it possible to old gypsies had at least one child. Among 19 deconstruct the artificial and unjustified image year old gypsy women, 56.7 percent had a child about "equality in communist systems". The while only 13.9 percent of the total female key indicators to prove existing inequalities are population had a child (Table 5). Among the 50 labor force participation, occupations and edu year old gypsy women, 50.9 percent had five or cational achievement. more children, but only 3.1 percent of the total There were large gender-specific disparities female population of the same age had as many 138 P. Meusburger

Figure 6. Female labor force participation rates in Hungary (1980) .

children. Every fourth 45-50 year old gypsy women and every third gypsy women over fifty had seven or more children. A bottle-neck for the socio-economic develop ment and the vertical social mobility of gypsies are their high rates of illiteracy and the large proportion of gypsy women who never attended or completed elementary school. In cities and villages below 20,000 inhabitants, two thirds of female gypsies never completed compulsory schooling (Tables 6 and 7), and in peripheral rural areas the share was almost three quarters (72.7 percent). Consequences of the Transformation Process to Market Economy on Spatial Inequalities The fall of the iron curtain, the reintroduc tion of democracy and of a market economy, and exposure to the global economy altered some of the factors creating social and spatial inequality, the value system of individuals , the value of commodities, the perception and Figure 7. The labor force participation rates of evaluation of space, the value and prestige of gypsies in Hungary (1990) compared locations, the power relations between center to the total Hungarian population and periphery, the goals of regional policy , the - according to gender and age. economic relations between firms, the system of state subsidies and the recruitment of elites . "Socialist values" such as production ir- Spatial and Social Inequality in Communist Countries 139

Table 5. The number of children born to Hungarian women with regard to the mothers age and ethnicity

Source: Special analysis of the Hungarian Census 1990.

Table 6. The educational attainment of Hungarian gypsies above 14 years of age in 1990 with regard to the size of their place of residence

Source: Special analysis of the Hungarian Census 1990; Oesterer and Meusburger 1998.

Table 7. The proportion of Hungarian gypsies (14 years and older) who have not completed compulsory schooling with regard to the size-class of their place of residence

Source: Special analysis of the Hungarian Census 1990; Oesterer and Meusburger 1998. 140 P. Meusburger

respective of cost and consumer preferences, needed labor (20 percent) could not be dis full employment, etc. were abandoned in favor missed during the socialist period. After the of capitalist values such as efficiency, quality, introduction of the market economy, formerly profit and competitiveness. Ideological liability hidden unemployment ("unemployment behind and faithfulness to the party lost their value as the factory doors") became real and more in recruiting instruments of the elite in favor of tense (Fassmann 1995; Dovenyi 1995). skills, qualification, experience and competence. However, there is a positive trend occurring, Furthermore, the fall of the "iron curtain", the consisting of new firm formation, reorganiza introduction of the market economy, the aboli tion and privatization of competitive state tion of central planning, and the restitution of firms, joint venture formation, foreign capital political and financial autonomy to the cities investment, expansion of the service sector, cre and communes fundamentally altered the ation of new and preservation of existing jobs, evaluation of space, place, city and region with modernization of industry and agriculture and respect to the location, functioning and re the creation of new institutions (e.g. banking organization of productive activities (Csefalvay system), all of which are necessary for a market 1995a, 1995b; Hamilton 1995: 69). Cities and economy. This positive change first took place regions no longer waited for the allocation of in those areas where the necessary knowledge, resources by the central administration, but skills, creativity, experience and information competed with each other for national and for were available and not where neoclassical econ eign investment. Previous policies hindering omic theory would have expected. Human re indigenous development were removed and sources which were able to cope with the new subsidies preventing the collapse of uncompeti situation were concentrated in the capital city tive firms were reduced. Contacts with and of Budapest and in the largest 3-5 provincial relations to foreign firms and institutions were capitals, where the competent decision-makers no longer the exclusive monopoly of central of the old system were working and where the institutions of the state. Any region, city or nomenclature used their good connections and fi rm could take advantage of opportunities. international relations to profit from the new This indicates that the transformation pro developments. Members of the old nomencla cess combines two diverse trends, a positive ture took advantage of their privileged posi one, creating jobs, and a negative one, destroy tions and their networks to assume private ing jobs. The negative trend started in the ownership of state property and to turn them northeastern and eastern regions of Hungary selves into "capitalists". They easily found which were even classified as crisis regions in either a loophole in the newly established econ socialist times. This trend is characterized by omic law or a legal way to accept privatization the crisis of the state sector, the decline of loans from the government to buy up their own heavy industry and mining, the collapse of or other state enterprises. state-owned and heavily subsidized firms, the The second areas to profit from the transfor collapse of the formerly safe export markets in mation process were the northwestern parts of the COMECON, de-industrialization, the de Hungary, especially the northern parts of crease of industrial and agricultural produc Transdanubia, which had historically been the tion, the dissolution of the "state-controlled door for various innovations, as was mentioned labor market", the dismissal of unneeded labor before. Re-industrialization, mostly through and the fast growth of unemployment until foreign investment and joint ventures, started 1993. Some of the "new socialist cities" which in the metropolitan area of the capital and in were heavily supported by state subsidies the western parts of Hungary, predominantly during the socialist period were also affected by in the industrial districts of Szekesfehervar, high unemployment. For political and financial Gyor, and Szentgotthard. In the reasons, the structural problems in heavy in cities and regions of Northern Transdanubia, dustry, mining and unproductive agriculture civic traditions and entrepreneurial skills could not be solved and the surplus of un partly survived the communist period and Spatial and Social Inequality in Communist Countries 141 became a stimulus for indigenous development. modest (Hamilton 1995: 73). The western As soon as the rigid communist system intro regions of Hungary were also at an advantage duced the first economic reforms and became because apart from a few exceptions during the more liberal, the capital of Budapest and the communist period, border zones along the iron northern parts of Transdanubia immediately curtain did not attract major industrial invest took advantage of the new opportunities ments. They were considered strategically vul created by liberalization. In the 1980s, these nerable, bristled with defense installations and areas had the highest density of "voluntary facilities, and the government did not want to economic associations", an officially tolerated attract migrant labor close to the western form of semi-private organizations. These "vo border for fear of large-scale "defections" to the luntary economic associations" produced on west (Hamilton 1995: 74). Therefore, in the market terms, but were allowed to use the 1980's and 1990's these areas did not suffer as equipment and machines of the state firms and much from de-industrialization as the state cooperatives where they were employed. In subsidized cores of heavy and chemical in this way they gained experience with a kind of dustries in central and eastern Hungary proto-market economy. After the fall of the (Dunaujvaros, , Ozd, etc.). iron curtain the agglomeration of Budapest and Csefalvay (1995c) showed that the marked parts of Transdanubia attracted many joint separation between western and eastern Hun ventures and the greatest proportion of foreign gary was caused by internal and external capital. Therefore, in 1995 they had the lowest factors. By combining positive and negative rates of unemployment and the highest density internal and external factors, he classified four of limited liability companies, indicating that regional types. Type I had positive internal and the reorganization and privatization of the external factors and was restricted to the north economy progressed quickly in these regions. ern part of Transdanubia along the transport After the fall of the iron curtain, these parts axis to Vienna. Type II enjoyed favorable inter of Transdanubia profited a great deal from their nal factors, but was not attractive to the first close proximity to Austria (Vienna), from week wave of foreign investment. Type III showed a end tourism of Austrian citizen, from cross negative internal situation, but seemed to be border shopping and cross-border commuting attractive to foreign investment. Type IV was caused by the large wage and price gaps along handicapped by unfavorable internal and exter the border. A number of Hungarian towns and nal influences and suffered from the devalua villages in Transdanubia had a German minori tion of the eastern border areas. ty (some of them even a majority), since the end Since these two controversial trends started of Turkish occupation in 17th century. They in different areas, they increased the longstand could use their old contacts to relatives and ing economic and social dichotomy between former German refugees in order to establish western and eastern Hungary and strengthened joint ventures with Austrian or German entre the primate city effect of Budapest during the preneurs or to establish sales offices in foreign fi rst years of transformation (Csefalvay 1995b). countries. The advantages which large cities The gap or dichotomy between western and and western border areas had was also eastern Hungary can be illustrated by foreign supported by the fact that cities in the western investment, density of joint ventures, density of half of Hungary (one or two hours from Vienna) limited liability companies, unemployment attracted foreign firms who wished to establish rates, per capita taxable income, an increase or sales offices or services in a newly emerging decrease in the number of jobs, the qualification market. These cities also profited from more of the labor force, the high proportion of self rapid and easier privatization in the service employment and many other indicators. sector (retail shops, tourism, business services, consulting), primarily because the capital and Conclusion space requirements for modernizing existing or introducing new services were relatively The transformation process towards a mar- 142 P. Meusburger

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