A good society is unlikely to flourish in central-eastern Europe unless the EU partnership shifts away from an agenda that mainly benefits multinational companies.

There’s no doubt that ‘Building the Good Society’ could represent a fresh start for pan-European social democracy. The concept of a ‘good society’ has been rendered a cliché in many countries, and is heavily overused by politicians. Yet the idea that society has its own requirements and priorities, independent of principal economic actors, has far-reaching and radical implications in 2009.

The document refers to the need to maintain public utilities as socially provided goods. However, it doesn’t talk of the systematic way in which these have been privatised. Particularly in the states of central-eastern Europe, the process has aimed to create what the late Professor Peter Gowan referred to as a ‘passive support hinterland for West European multinationals’.

This application of neoliberal economic policy to the EU accession states has had ruinous social and political consequences. It has given weight to the cynical Russian proverb from the 1990s, that ‘everything the Communists said about Communism was a lie, but everything they said about capitalism turned out to be the truth’.

In 1989 the PHARE programme of technical ‘assistance’ began, initially aimed at Poland and Hungary, and then at other countries in the region. The countries became recipients of European money aimed at supporting the transition process. How this money was routed and distributed became a crucial question. The answer, simply, is that no one organisation knows. There was no co-ordination of how the money should be spent, and different institutions were responsible for administering different parts of the fund.

What is clear, however, is that billions of euros were directed towards consultancies based in western Europe. These consultancies acted as a ‘Trojan Horse’ for the interests of Western multinationals. A pattern was established. Consultants would advise foreign private investors to invest into certain, cheap, plant. The consultancy would then recommend to the EU that money should be invested into the same facility. The investors, whether corporate or private, would profit massively. Programmes to improve infrastructure also relied on these consultancies to identify and design projects. The consultancies, by design, would ensure that certain clients in multinational companies would win the related contracts. The question of what represented the public interest was usually ignored.

These companies and consultancies required opacity. Therefore it became necessary to establish and maintain a network of political contacts, and reward the most helpful politicians with various forms of patronage. This ensured that debates about how to conduct a transition economy were rendered obsolete. The administration of these funds corrupted the young democracies of the region. Suddenly, the electorate mattered less, and society mattered less. Politics became a business, to be conducted in the twilight.

In the late 1990s, multinational investors descended to buy swathes of stock. The assets they bought were usually in companies which had maintained a massive market share by virtue of their previous existence as state monopolies. Captive markets, a de-unionising workforce, and a relatively undemanding consumer base, meant that profit margins were healthy. Large amounts of money and work were being invested into a thin layer of ‘boutique capitalism.

’Even in the ‘good times’ this led to severe regional imbalances. In the industrial areas of Hungary, unemployment hit nearly 50 per cent. There was no trickle-down of wealth. Tax-avoidance and casualisation erode the fiscal basis for any ‘good society’.

So far, the depression has resulted in three of these ‘peripheral’ EU states approaching perilously close to bankruptcy. For a social-democratic programme to be credible, we need to have a vision of what an enlarged Europe should look like. Partnership with new EU countries must be genuine, and resources provided that will enable these countries to claim a degree of economic sufficiency, whilst acknowledging our interdependency. Social ownership must be high on the agenda.

If anyone has any remaining doubts about the status of the accession states, they should check the website of the London-based European Bank of Reconstruction and Development. In addition to helping to ‘privatise’ the Hungarian railway system, the EBRD promises to ‘support the involvement of the private sector in the provision of public services’. That is the bankers’ agenda for Europe. It’s nothing to do with efficiency, or saving money. It’s about dangling cash, and raking a profit.