Futures Past and Futures to Come: Communism in Latvia
Justin O'Hagan looks at the disastrous collapse of the socialist economy in the small Baltic country, Latvia
Anti-Communism in The European Parliament
Prior to the annual European Communist meeting in the EU Parliament building in Brussels in November 2024, there was an attempt by right-wing politicians to ban the meeting. In particular, Rihards Kols, a far-right MEP from Latvia’s National Alliance Party (officially titled, National Alliance "All for Latvia!" – "For Fatherland and Freedom/LNNK") wrote a letter to the President of the EU Parliament calling for the Communist meeting to be cancelled, declaring that, “this event, glorifying Lenin and promoting communist Ideology, has understandably outraged a number of Latvian and no doubt other employees of the Parliament”
“For nearly half a century,” he continued, “communism stood in opposition to Europe's core values of personal liberty, freedom of religion, free expression, and private enterprise—principles deeply rooted in Europe's traditions.”
The evidence indicates that the private enterprise that Kols elevates to a ‘principle’ has been of less benefit to most of the Latvian people than the previous Communist regime was. According to official 2024 statistics, in Latvia, a free-market economy with a population roughly similar to that of Northern Ireland, 50% of full-time wage earners earn 11,500 Euros (£9,500) or less per year after tax. Estimated monthly living costs for family of four in Latvia are 2,700 Euros before rent and 803.6 Euros for a single person. Rent for a one-bedroom apartment in the capital, Riga, is estimated at between 350Euros and 500 Euros per month.
Latvia in the 1950s
In the early 1950s Latvia was an industrial powerhouse, producing heavy industrial and consumer goods. Due to Latvia's well-established infrastructure and highly skilled workforce, Moscow located some of the Soviet Union's most advanced manufacturing in the country. This led to the creation of new industries in towns throughout Latvia, including large machinery plants, electrotechnical plants, chemical factories, as well as various food and oil processing facilities.
A partly declassified CIA report from July 1953 notes that “approximately two billion rubles were devoted to restoring Latvian industry and transport during the five years 1946-1950, and, in subsequent years, an average of 350,000,000 roubles per year. A whole series of new factories was built with this money, and old factories were considerably enlarged. and equipped with new machinery. It is undeniable that industry in Lavia is being well-organized and developed and shows signs of becoming big industry, where consumer goods are being produced, and output is more or less evenly maintained. According. to official figures, industry is now increasing by forty percent per annum.” (https://tinyurl.com/3mvh28db)
Wikipedia notes that “Latvia manufactured trains, ships, minibuses, mopeds, telephones, radios and hi-fi systems, electrical and diesel engines, textiles, furniture, clothing, bags and luggage, shoes, musical instruments, home appliances, watches, tools and equipment, aviation and agricultural equipment and long list of other goods. Latvia had its own film industry and musical records factory (LPs).” Because there were not enough Latvian workers to operate the factories, workers from across the Soviet Union migrated to Latvia. By 1990, the population of Latvia had reached its highest point at just under 2.7 million.
In addition to building industrial capacity, the socialist government was eager to prevent rural to urban migration and from the 1950s to the 1980s, efforts were made to modernise agriculture and urbanise- rural villages “with the aim of providing rural populations with an ‘urban-style’ standard of living”. which in part involved, “boosting social life and educational opportunities, and requiring that urban- educated professionals spend two years working in rural areas, which often led to marriage and settlement”.
The 1990s: Collapse
Anthropologist, Dace Dzenovska, herself no Communist, describes how in the early 1990s, rural Latvia was decimated by the introduction of the ‘free market’: “guided by foreign economic advisers, the Latvian government set out to reinstate the interwar (1918–40) property regime, privatizing state enterprises to correct the historical injustice [sic] of Soviet collectivization and to create the conditions in which a capitalist market could reemerge. … In a rush to regain property and distribute resources, the new capitalists impeded productive activity. Collective farms were dismantled piecemeal. …. Factories of nearby towns were privatized, but most did not manage to shift to sustainable production because privatization efforts had been botched”.
Dzebivska paints a stark picture of actually existing capitalism in contemporary rural Latvia and the stories its apologists tell themselves: "abandoned collective farm buildings, unfinished apartment blocks, and roads paved only through the village center are seen by many of Latvia’s residents, especially urban elites, as monuments to the inefficiency and failure of the Soviet state. For those expelled from the circuits of global capital and care of the state in the post- Soviet period, however, Soviet ruins stand as reminders of futures past. Buildings, however poorly constructed, had been inhabited. They produced sociality, whether through attempts to maintain and repair them or through their everyday use."
Dzenovska notes that since 1990, the population of Latvia has decreased by three quarters of a million people, or 28 percent, and states that the causes are “low birth rates and out-migration, the latter including the migration of Russian-speaking residents to Russia after the fall of the Soviet Union”. In 2022. the population of Latvia was estimated to be 1.84 million of whom 62% identify as Latvian and 24% identify as Russians. Unsurprisingly, right-wing parties attempt to exploit and exacerbate differences between these groups.
Rising Inequalities
The graph tells a story of the relative collapse of working-class income in Latvia and the appropriation of income of by a small percentage of the population. Eurostat data show, that in 2018, the income ratio of the richest 20% of households and the poorest 20% of households in Latvia was 6.8, which is one of the highest in the EU.
In other words, the income of the richest quintile (one-fifth) of the Latvian population is more than 6 times the income of the poorest one-fifth. In terms of wealth (i.e., the value of what people own as opposed to what they earn), figures from World Inequality Database show that by 2022 10% of Latvians owned 61% of the national wealth, while among these the top 1% owned 28%. Half of the people in Latvia own 6% of the wealth of the country.
In a 2020 academic paper , two Latvian academics and a director from the Ministry of Economics ask and answer the question, “What are the main causes of income inequality and poverty in Latvia?” They answer that while “there is no clear, unique factor that drives the inequality observed in Latvia”, among the factors determining distribution of social returns that most important are unequal regional access to educational resources; migration; the distortive effects of the informal economy. The critical factors differences in private returns are: private rents generated by corruption and the large grey economy; limited redistribution through the tax and welfare system; legacy effects on the skill profile of the labour force by age group”.
From a communist perspective, the capitalist system is the ‘clear, unique factor’ behind income inequality and poverty in Latvia. The other issues, important in themselves, can be seen as products of a system that benefits only a small class within the country and beyond.
As with Northern Ireland, low value-added sectors dominate the economy in capitalist Latvia, and just as Finance Minister Conor Murphy promotes a state-promoted free market economy of flourishing high-tech entrepreneurs and ‘green’ capitalists, Latvian Economy Minister Viktors Valainis said earlier this year that Latvia is at a “crucial moment” when, in the phase of persistently low growth in external markets, the main stimulus for the economy must come from the state.
But this is not a people-centred state directed plan for the economy. As with Northern Ireland, and the EU as a whole, the role of the state is presented as enabling the market. In a speech that could have come from the IDA in Dublin or Conor Murphy in Belfast, Valanais said “it is our responsibility to quickly channel EU funding into circulation, reduce bureaucracy, alleviate administrative burdens on investments, and address the issue of financial accessibility for business development. I am confident that by fulfilling these three conditions, Latvia has the prospect of returning to solid GDP growth in the near future.”
Latvia and NATO
Meanwhile, although irrelevant on the global economic stage, as a country with significant borders on Russia and Belarus, Latvia has obvious strategic value to NATO imperialists. Nato recently declared that is has enhanced its ‘forward presence’ by establishing multinational battlegroups in eight central and eastern European states including Latvia. In July 2024, Latvia became the first country to scale up its NATO forward presence, forming NATO Multinational Brigade Latvia and in October 2024, the existing multinational battlegroup was transferred to this brigade.
The clear failure of the free market to produce an economy centred on the requirements of the majority of the Latvian people, indicates the need for a fundamentally different economy in this small country and throughout Europe and the world. Regardless of Rihards Kols’ ‘outrage’, the need for communists to meet to chart a way forward is greater than ever.