Through the Back Door

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Foreword

Małgorzata Mazurek, Columbia University

The pursuit of profit, accompanied by acquisitiveness and avarice, has never been the exclusive domain of capitalism, as Max Weber pointed out almost a century ago, arguing that it could be found throughout the world in any epoch, whether among Chinese officials or Roman aristocrats, pirates or modern peasants. Jerzy Kochanowski tells the story of the pursuit of profit under state socialism, something that many would see as a contradiction in terms. And yet – argues the author – organized, profit-oriented black markets were an organic part of the communist era.

In the course of World War One, and later during World War Two, much of what had previously been considered the legitimate pursuit of profit became classified in Poland as spekulacja, or profiteering: a morally condemned, politically risky and illegal mode of enrichment at the cost of others. In many post-1918 European democracies, the specters of profiteering and hyperinflation loomed as large as those of radical right- and left-wing ideologies. Taking this lesson into account, during, and most of all, after the second world war, many European nation states introduced food rationing and price controls which, they hoped, would protect the consumer purchasing power of their citizens. In the occupied territories of East Central Europe, however, where the predatory extraction of human and material resources and the violence of war had led to mass starvation on a much greater scale than in the West, the black market offered salvation from the occupier’s state intervention.

In the Warsaw of 1945, as in many European cities of the time, the female street vendor symbolized the rebirth of life amidst the ruins and rubble, where the “wind carried russet dust from the ruins onto bread, sausages and fruit, and made street vendors wipe the foodstuff with an alarmingly dirty rag.” One should not forget that the postwar reconstruction went hand in hand with ethnic cleansing and anti-Semitism, historical themes which Jerzy Kochanowski explores elsewhere. In 1949, Załma Gerber, a butcher sentenced to a fine of 500 000 zloty – or a two-year work camp imprisonment – for overcharging, wrote in his appeal to the state Special Commission for Combating Fraud and Corruption: “I find it unjustifiable that I have been sentenced on the basis of an accusation by a single client. After all, everyone knows that Jewish shops are not welcome in local society. […] What makes the severity of the penalty so unfair is the fact that ← 9 | 10 → I have already lost my life’s work because of the war and the time I had spent in concentration camps.”

In Poland and other East Central European states, consumer self-welfare and the black market undermined the communist welfare state project well beyond the period of postwar reconstruction. As the food shortages dragged on, despite the repeated attempts of government to buy social peace through pro-consumer policies, profit-oriented activities continued to be part of daily experience. This was due not only to flaws in the planned economy, but also because, striving to hold onto their power, communist officials continually restrained and criminalized market mechanisms related to supply and demand as illegal profiteering. Thus, state socialism fought “speculation” as much as it reproduced it.

Jerzy Kochanowski portrays these profit-oriented, illegal self-welfare activities in defiance of state-imposed social welfare as a game. These shenanigans, he argues, lasted half a century, resulting in a pro- and anti-profiteering “sinusoid” that eventually peaked in 1989, when profit-making was confirmed not only as a social, but also political norm. The author of Through the Back Door: The Black Market in Poland 1944–1989 makes it clear that the institutions designed to deal with black markets were in fact helpless. They did not determine reality; they merely reacted to it. Yet in no way was this game a matter of resistance by a heroic society to a villainous one-party state. Rather, the black market was the result of a complex interplay, in which the boundaries between the public and the private, the state and the individual, the legal and the criminal, were often blurred. As Paulina Bren and Mary Neuburger have noted, elsewhere in socialist Eastern Europe, developments in the sphere of consumption proved that the “confounding binaries of ‘official’ and ‘unofficial’ were in many respects far more complex than under capitalism, and certainly more overtly political.”

Today’s historiography on state socialism still carries imprints of the Cold War mindset. Many normative assumptions, idealizations and negative stereotypes of communism or the free market remain unarticulated or taken for granted. History, especially in today’s East Central Europe, has been a hotbed of political claim-making. Historical narratives are created with the aim of establishing yet another edifice of the one-and-only truth, a new gateway to a righteous past. In this world of political passions, stories of everyday life that shed light on mundane details in specific contexts and which show a concern for historical precision are much needed. Jerzy Kochanowski’s is a book that delivers just such a complex and ethnographic representation of the ordinary. Its great virtue is its perspective: through the eponymous “backdoor”, we zoom in on the countless individuals who participated in everyday profiteering, smuggling, and ← 10 | 11 → barter. Rather than pinpointing the essence of the black market – a futile undertaking if we accept the idea of history as changing reality – Through the Back Door describes the myriad ways in which the profit-oriented informal economy shaped the lives of ordinary people.

Indeed, the historical geography of profiteering in communist Poland is as complex as it is fascinating. While much has been said about the social inequalities created by the state socialist economy and its shadowy underbelly, the black market, we learn here a great deal about the regional diversity of postwar Polish society and its economy. Kochanowski’s spatial history of communist Poland leads us to that affluent mountain resort, Zakopane, where a dollar-based private tourist sector successfully challenged, if not supplanted, the official one. We visit port cities, those traditional hives of illegal money and commodity exchange. We also become acquainted with provincial socialist-era “speakeasies,” where illegal alcohol was produced and sold on a mass scale. Finally, we get a tour across East Central Europe, following cross-border trade routes including the “cosmetics-cum-clothing” pathway to Romania, the “crystal glass and hard currency” channel between Poland and Yugoslavia, and the “linen trail” to Hungary. In the 1970s and 1980s, these established routes flourished and were further extended. Towards the end of communism, cross-border trafficking, often one way to cover the cost of summer vacation, became a truly global affair with its own complex know-how and logistics, based on shared knowledge, which was passed on by word of mouth. Through the Back Door we uncover this fascinating, arcane world, gripped as if following a detective yarn. The transnational centers of tourist trading – the Polenmarkt on the Mexicoplatz in Vienna or Romanian beaches – turned into commodity exchanges for socialist goods reveal the true scale and wealth of the Soviet Bloc’s black markets.

It is always tricky to attempt a single-cause explanation of why communism fell, or why it lasted as long as it did. Jerzy Kochanowski chooses not to venture into these muddy waters, but he does leave us some clues. If we were to picture the East Central European counterpart of the Western “entrepreneur” (in the parlance of the 1980s neoliberals) – an individual both resourceful and creative, perhaps what would appear before our eyes might well turn out to be a woman laden with bags and swathed in a peasant shawl: the ubiquitous “baba with veal,” the villager that sold meat to urbanites. Although this familiar figure disappeared with the fall of communism, she remained an icon of popular and shrewd profit-making. This book gives the baba more than just an engaging contextualization – it gives her a face and a history, as well as affording the reader an informed and sympathetic view. ← 11 | 12 →

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1.  Terms and Methods

“During the war one could get anything at all”, reminisced the Polish painter Franciszek Starowieyski, “but once the socialist shambles began its reign, even trivial things became unavailable. Very quickly people realized that socialism was a force of “desertification.” “What will happen in the Sahara once the socialists arrive? They will run out of sand,” ran a popular joke that did the rounds in 1945, when it became clear how quickly everything was disappearing and falling apart, once socialism took hold.”¹ This book is dedicated to all the efforts undertaken by post-war Polish society to irrigate the “socialist desert” and squeeze from it as much as possible. Bearing in mind that most of the oases and water reserves and oases had been nationalized; Poles were obliged to engage in a complicated, and usually illegal, game playing with the state. This went on for almost half a century.

1.1  What Color was the Black Market?

This book does not aspire to be an economic, sociological or anthropological analysis. It aims at an interdisciplinary (albeit history-focused) reconstruction of various behaviors, mechanisms, phenomena, practices, processes and strategies united under the shared umbrella of the term “black market”. These mechanisms and strategies were unusually multilayered; they varied in time and geography. They reacted instantly to external and internal circumstances. Black market players spoke their own language and had a distinct set of values. They were involved in the black market sometimes purposefully and exclusively for profit, and sometimes under duress and against their will.² As with any other mass phenomenon, with this one also there are controversial and debatable issues, starting with the terminology and the methodology; these require some clarification.

No state can completely control its citizens and their economic life. No society consists solely of those who put the common good above the individual one. The economy of a state often brings to mind a river that at times dips under the surface, its flow becoming subterranean. Its depth, the strength of the current, the type of river bed, fauna and flora of the underground flows (to stay with the fluvial terminology) depend on many factors and look different in every ← 13 | 14 → country; this does not make it any easier for researchers. This much is clear both from the variety of terms used to describe it (Poland’s black market economy has been variously referred to as the “gray sphere”, or shadow, black, second, parallel, hidden, informal, unofficial, secret, unobservable, unregistered, or unquantifiable economy), and also from the absence of a universally satisfying definition. While trying to create one, some reach for moral yardsticks and others for legal, institutional, statistical (especially if they are able to register the black market activities) or, as a last resort, ideological criteria. Regardless of the perspective adopted, the term “black market” is used to refer to the production and exchange of goods or services conducted for profit (whether monetary or not) outside of formal institutions (also implying that it remains outside of legally binding regulations) and unaccounted for in the gross national product.³

Everywhere in the world the gray sphere faithfully accompanies the official economy. It always has its own, often endemic, characteristics dependent on the economic and social structure, tradition, and legal system. However, one can assume that in countries where the free market system is established and developed, the gray sphere is mostly about avoiding taxes and taking advantage of illegal labor. Criminal activities, such as selling drug and weapons, the trade in fissile material, and human trafficking are a different matter. These tend to hog the headlines and bring enormous profits but at the same time they barely influence the everyday life of an average Frenchman, German or Finn.

The average citizen of any “people’s democracy”, whether a Pole, a Russian or a Romanian, did not care much about the black market in tanks or uranium, but wanted to know how and where they could get shoes, gas, furniture, and pots (and what to put in the latter), since the supply of even the most ordinary goods could never be taken for granted. To have money in one’s purse or wallet was ← 14 | 15 → not enough to succeed in making a successful purchase; it was a common experience to stand in line in front of a store with no guarantee that the item of one dreams, or indeed anything else at all, would be there when one finally arrived at the front of the line hours later. Chronic shortages in the socialist economies are a well-known fact and much has been written about them. János Kornai’s work on this topic has become a classic (which, incidentally, does not mean that his conclusions are immune to debate).⁴ What matters more for our purposes is, rather than showing how the shortages came about, looking at how they were alleviated. There were two possible approaches: either the state rationed the goods and services, or society took over the (re)distribution. From the point of view of the totalitarian/authoritarian state, such an alternative was unacceptable and the liberal slogan “What is not forbidden is allowed” was generally substituted with the clear guideline: “What is not explicitly allowed is forbidden”.⁵

Citizens were disinclined to conform to the dictatorial economy and, especially where the shortages were particularly painful, they constantly perfected adjustment strategies. Through the “back door”, they would drain the state sector and develop social networks based on mutual but not exactly gratuitous help in acquiring goods and services that were absent from the market. Poles jokingly defined the worst possible punishment as “sentenced to two years with no cronies”. Similar sentiments had their equivalents in almost all socialist countries; in the Soviet Union they used to say “Blat is stronger than Stalin”; the Polish “cronies” and Soviet “blat” both meaning “good ol’ boy networks”. The whirlpool of the second economy sucked out the supplies from the first one thus creating shortages, which increased various informal economic activities.⁶ In the socialist countries this vicious circle not only produced the second economy, but also the ← 15 | 16 → “second society”⁷ guided by its own ethical rules, goals, models, and mentality. Its existence was probably most in evidence when viewing society from the economic angle.

When the entire economy not only depends on the state but also belongs to it, it is hard to call the “underground” economy a parallel one. Parallel equals independent, and independence was certainly not a characteristic of the socialist second economy. In the Soviet Bloc countries, the connections between the two economies were very tight and usually of a parasitic kind. The official economy provided money, natural resources and products for private (legal and illegal) artisans and merchants or smugglers. Private houses were built with state-owned bricks and cement; cars ran on state-owned gas.⁸ But there was also a certain symbiosis. The state enterprises could not operate, nor meet their production goals, without using the strategies of the grey sphere both in dealings with the state and private co-operants. The managers of state enterprises often knowingly flouted the law, because they knew that without the proverbial “nuts and bolts” supplied by canny artisans the factory would have not been able to function. Not too many questions were asked, such as enquiring too closely into the source of steel used for the production of parts. In this context, the shades used to define the informal economic arrangements of the time – ranging as they do from gray to black – are clearly insufficient. No wonder that researchers into the socialist second economy were obliged to broaden the palette considerably.

Although the model described below was evolved to apply to the Soviet Union, it nevertheless applies to a great degree also to other states of the eastern bloc (and not just in Europe).⁹ ← 16 | 17 →

1.1.1  Legal Markets

The market called, for more than one reason, red was in fact the inefficient and inflexible system of state distribution. It was aided by the pink market, in which privately, legally owned goods changed hands. The state created a network of komis (second-hand) stores (skupochnyie in Russian) where one could sell clothes, books, furniture and so on, for prices no higher than in regular stores. Komis stores were one of the few places where traces of market behavior occurred – for example, the price was negotiable, and the un-cleared stock was put on sale. However, there were not many skupocznyie and so their influence on the market was negligible.

The white markets were of greater importance. They included the town marketplaces where one could sell used goods (barakholki were often closed down due to their taking liberties with the interpretation of the term “second-hand items”), and also the kolkhoz markets which sold food. The prices in both markets were not regulated by the state (apart from times of exceptional shortage, when maximum prices were introduced but rarely respected).

1.1.2  Semi-legal Markets

The gray market included apartment and holiday cottage (dacha) rental services (and also house renovation, car repair, tailoring and shoe services) carried out after – or sometimes during – working hours by shabashnikovs. Income acquired from tutoring or medical advice was also included in that group. The illegal but commonly accepted barter between enterprises (without which production goals were often impossible to meet) was part of the grey market. The authorities usually turned a blind eye to the grey market, especially in the areas where the supply of goods and services was insufficient.

1.1.3  Illegal Markets

The brown market dealt with goods theoretically available on the red market but in reality subject to chronic shortages. In the case of meat, dairy products, clothes, refrigerators, cars, mechanised equipment, and building materials, the demand was vastly greater than the supply. As a result, numerous means of back ← 17 | 18 → door distribution became available. Producers, employees of trade headquarters and warehouses, transport drivers and salesmen, all took part in these dealings. People engaged in such actions in order to create social capital, hoping for a reciprocated “service” in other shortage areas. A separate segment of the brown market dealt with coveted imported items, considered as luxuries in the Soviet Union – mostly clothes, and in the 1980s, also video cassettes or cars, vast numbers of which were brought into the country, often legally, by sailors, athletes, and artists. Theoretically, these were to be distributed by the small network of komis stores but since the vendors did not want to leave a paper trail (their IDs had to be shown and their details recorded during each transaction), more discreet and less formal channels of distribution were soon created.

Factories and enterprises also took advantage of the brown market. For example, the management of the kolkhozes, the collective farms, were constantly obliged to grapple with lack of parts and being in possession of illegally acquired cash (lewa kasa) obtained the needed items through informal channels by buying items that had been stolen or produced as side jobs.

Although the participants in the brown market were tolerated, both the state and a large part of society viewed those engaged in the black market as criminals. Draining the red market for profit (via shoplifting, theft from warehouses and factories or from transport and generating a fake surplus, usually by lowering the quality of the product) was also considered a black market activity. Alcohol played an extremely important role on the black market. Its retail distribution was under special state control, which on the one hand led to a growth in the production of moonshine, and on the other to the private distribution of state alcohol, of course at higher prices.

Soviet luxury items (jeans, wigs, etc.) legally imported and distributed on the brown market were but a drop in the ocean of need. It is hard to estimate how many were smuggled into the Soviet Union and how many were purchased from tourists (this was the domain of fartsovshchiks, who also sold tourists local souvenirs or hard-to-get-items such as caviar). The higher caste of the black marketers, valutchiks (from Russian valuta – currency), monopolized the illegal trade in hard currency and gold, which, along with precious stones, were used as a store of value and were thus the main items subject to hoarding. This kind of illegal trading carried the most severe punishment, including the death penalty. ← 18 | 19 →

1.2  The Black Market in Communist Poland: Problems with Definition

We can assume that, following World War II, and in particular in the late 1940s and early 1950s after the communist regime had established itself, the structure of the internal market in Poland was not very different from that outlined above. At the same time, thanks to a singular coincidence of historical, political, economic, and social factors, the Polish second economy had its own characteristics and indeed endemic traits, compared to other Soviet bloc countries.¹⁰

Among the historical factors, a significant role was played by the instrumental and pragmatic attitude that a large part of society had toward the state and its institutions, which they perceived as something external and unconnected to them, an attitude that was a legacy of the Second World War and, earlier, of the partitions of Poland. This was particularly prevalent in the part of Poland formerly under Russian occupation. The average Polish citizen identified first of all with his family and his close-knit social network, for example in a work place or a neighborhood, next – with the nation (in its 19^th century sense), and finally – with the state. “This ambivalent attitude,” wrote the Polish historian Andrzej Friszke, “with its strong undertow of rebelliousness and contrariness weakened the executive abilities of the totalitarian state”.¹¹ As a result, compared with other countries in the bloc, institutional control was much weaker both in the sphere of national symbolism and the economy.

On the other hand, already during the interwar period, the state had exerted a firm grip on the economy, which caused a sizeable part of the population to consider it a force capable of solving economic problems; the perceived degree of its ability to do that colored society’s evaluation of the government and its legitimacy. After the war, this point of view was reinforced, especially in the context of fervent egalitarian propaganda, which inflated the aspirations and expectations of society in regards to consumption. However, when the economy, underachieving on all possible fronts, especially since the 1970s, became increasingly less and less capable of solving the economic problems, with increasing pain for ← 19 | 20 → the population, citizens changed their attitude to the state and its institutions by taking the initiative to battle on their own against the shortages.¹²

Polish society was already well prepared to undertake independent, if unofficial, economic activities. It was the crisis of the 1930s that had inspired the multitude deprived of jobs and the means of survival to engage in trade. “Higher categories of workers (lower rank state officials, railroad workers, employees of local government and social services) are being absorbed on a massive scale into the ranks of the petty bourgeoisie,” wrote Stanisław Rychliński, “which does not directly ‘enhance’ the cultural and social position of the middle class […]. The petty bourgeoisie has lost its static character of a middle stratum, separating the upper echelons of society from the underprivileged. It has become a makeshift bridge with a dynamic undercurrent.”¹³ During the German occupation, the range of acceptable social behavior became stretched. The ability to adjust to a new situation and to survive became more important than social status. Trade, smuggling, and cottage industry made survival possible both for those from the social margins and the intelligentsia.¹⁴ The ghettoization of the Jews, followed by their annihilation, created a blank space on the economic map, which quickly filled with Poles. “New kinds of enterprises emerged,” wrote Jan Szczepański, “run by people without professional qualifications, from different social classes. It was a particular kind of small manufacturing functioning usually in breach of the then current law, all kinds of ‘shady businesses’ that disregarded the official regulations, bribed the German authorities and focused on quick profit. At that time, new models of operating a business appeared, and remained after the war.”¹⁵ After returning from England, the lawyer and economist Stanisław M. Korowicz noted the poignant joke circulating in the late 1940s which encapsulated the new reality with the comment that in post-war Poland “a large number of Catholics are doing business and a large number of Jews wear army uniforms. It’s a crazy world!”¹⁶ We cannot overestimate the influence of private property in agriculture (from 1956), ← 20 | 21 → private trade, artisanry and services on the shape and size of communist Poland’s second economy. In 1979, the private economy (including agriculture) employed 23.9% of the labor force. Polish peasants, who already during the German occupation had proved that they were capable of adapting to difficult circumstances, adapted to the new reality and actively participated in all kinds of economic activities, usually at the shadier end of the market. On the one hand, they skillfully and creatively took advantage of food shortages, particularly of meat, in the cities. On the other, as representatives of the private – that is, the disadvantaged sector, they were constantly struggling with shortages in the means of production, often acquiring them in an unofficial way. Private trade and artisanry were strongly tied up with the state in a parasitic/symbiotic way. At the same time, small-time entrepreneurs were some of the most important clients of the gold and hard currency black market.

As an aside, the Polish hard currency black market was sustained and stimulated (an unprecedented situation in the Soviet Bloc) by the state currency policies, for instance on foreign currency bank accounts and internal export. Thus, a dual currency system effectively existed in Poland in the last several years before the fall of communism. Also, beginning with the late 1950s, Polish authorities presented an attitude that differed from that of the authorities of other countries of the Bloc towards emigration, with the exception of political emigration of course. The extent of permitted contacts was relatively wide, which meant a greater flow of hard currency, goods, and technology as well as a wider penetration of models of consumption. Beginning in the 1970s, Polish regulations regarding travel outside the Iron Curtain countries were much more liberal than those in the rest of the Soviet Bloc (except Yugoslavia, with its special status). All this had various consequences: from smuggling and the tourist trade to copycat activities emulated by those who keenly watched the goings-on. This mattered – since as in all poor countries, the ability to access goods and services offered in developed western countries was a synonym for wealth.¹⁷ The long-term isolation of the Soviet Bloc states produced in its citizens the so-called “fire-victim syndrome”, of those who had “lost their belongings in a fire and who were now trying to rebuild their life in the mode of developed societies with mass consumption. ← 21 | 22 → Those patterns reach us through films, TV, newspapers and magazines, tourism, family visits, etc.”¹⁸ The difference between the reality of the Soviet Bloc and the western ideal could to a large extent (or sometimes only) be eliminated using black market strategies.