Postwar: A History of Europe Since 1945

by Tony Judt

Following the establishment in January 1949 of Comecon (the Council for Mutual Economic Assistance4), the rules for inter-state Communist trade were laid down. Each country was to trade bilaterally with the Soviet Union (another echo of Nazi-era requirements, with Moscow once again substituting for Berlin) and was assigned a non-negotiable role in the international Communist economy. Thus East Germany, Czechoslovakia and Hungary would supply finished industrial products to the USSR (at prices set by Moscow), while Poland and Romania were to specialize in producing and exporting food and primary industrial products. In return the Soviet Union would trade raw materials and fuel. Except for the curious inversion we have already noted—with the imperial power furnishing raw materials and the colonies exporting finished goods—this structure is reminiscent of European overseas colonization. And as in the case of non-European colonies, so in eastern Europe: the indigenous economies suffered deformation and under-development. Some countries were prevented from manufacturing finished goods, others were instructed to make certain products in abundance (shoes in Czechoslovakia, trucks in Hungary) and sell them to the USSR. No attention was paid to the economics of comparative advantage.