30.01.1997

Capitalism’s pipe dreams

First Serbia, then Bulgaria - now Albania? This is how many people are viewing the current meltdown in Albania, which has been racked by violent protests, with angry crowds burning down town halls and the riot police roaming the streets of Tirana. The rage of the masses is intense, as hundreds of thousands face instant pauperisation. Albania has recently been described as the IMF’s “best pupil”, which would no doubt amuse the Albanian masses.

The catastrophic collapse, or implosion, of the pyramid-selling scheme is the immediate cause of the misery. Albanian workers were encouraged by the government - which used the slogan, ‘With the Democratic Party, everybody wins’ - to ‘invest’ their life’s savings in speculative ‘get-rich-now, money-go-round’ schemes, bribed by offers of 30% interest a month, which would make everyone a millionaire in the space of months. Predictably, as these pyramid schemes amount to nothing more than a very fancy chain letter, the money disappeared into the ether - goodbye $1 billion: almost a third of Albania’s total GDP. To rub salt into the wound, a number of government ministers are closely connected with the foundations which operate the pyramid deals.

Albania is not the first country to suffer from the pyramid curse, which has swept Eastern Europe like a modem day plague. Russia, Romania and Bulgaria have also been victims of this vicious form of ‘primitive capitalism’, which amounts to nothing more than state-approved gangsterism. For some, this is all part of the growing pains of capitalism – “Give it a chance, will you?”

Russia gave it a chance - with the result that some 30 million Russians lost considerable sums of money in more than 800 pyramid schemes. One of these schemes, the so-called Magic Money Machine, sucked in millions of investors. The MMM boss, Sergei Mavrodi, got himself elected to parliament soon after. In Romania, four million were similarly conned.

Not that such schemes are restricted to Eastern Europe - the British can be just as gullible. A foundation called Inner Sanctum sent out literature claiming to be affiliated to the Universal Life Church, while simultaneously issuing dud cheques drawn on a non-existent Swiss bank registered in the Dominion of Melchizedek, a non-existent offshore location.

Given the poverty and desperation evident in societies like Albania, it is only to be expected that those who peddle false dreams and hopes will find a receptive audience - initially. The fantasy that the countries of Eastern Europe could achieve Western European/Scandinavian levels of development has been cruelly exposed. Albania is destined to get capitalism a la Central America: squalor, deprivation, massive inequality and political repression will be the name of the game.

From the misery of bureaucratic socialism to the living death of actually-existing capitalism. This is the reality that lurks behind the ‘transition’ to democracy. The fallout from the reactionary collapse of 1989-91 is really beginning to make itself felt.

Paul Greenaway