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Mass Privatization Linked To Higher Death Rate In Postcommunist Transition

The rise in unemployment associated with rapid privatization contributed to alcohol abuse and poor health during the early 1990s.
The rise in unemployment associated with rapid privatization contributed to alcohol abuse and poor health during the early 1990s.
A new study has found a link between the economic "shock therapy" of mass privatization in postcommunist countries in the early 1990s and a surge in the death rate for working-age men.

Published by the prestigious British medical journal "The Lancet," the Oxford University-led study contributes to a growing body of research about the human cost of the rapid economic transition from communism to capitalism.

Researchers measured the relationship between death rates and the speed and scale of privatization in 25 countries of Eastern Europe and the former Soviet Union dating back to the early 1990s.

The researchers examined other factors also associated with hardships during the early 1990s -- including the collapse of the Soviet-era economic infrastructure, hyperinflation, and military conflicts.

They found that former communist countries that implemented the "shock therapy" of rapid mass-privatization schemes during the early 1990s saw an average surge of 13 percent in the number of deaths.

"During the transition to capitalism, one of the world's worst peacetime mortality crises occurred. The United Nations estimated that in the early 1990s, there were 3 million avoidable deaths that occurred over and above historical trends," says David Stuckler, a sociologist and public-health expert at Oxford University who led the research team.

"This has been a puzzle to the field of public health. No one expected so many working-aged men, in particular, to die in connection with the transition to capitalism," he continues. "What our study shows is that these deaths were not simply inevitable, but that they were connected with a specific strategy -- in particular, the 'big bang' rapid approach to building capitalism out of communism."

'Building A Case For Causality'

Along with other recent research, Stuckler says the study helps explain some of the widespread suffering associated with economic transition after the collapse of communism. Still, he says that it would be wrong to say that the research proves mass privatization was a direct cause for the rise of the mortality rate.

"As with any statistical study, it is nearly impossible to make the leap from association to causation. But what a good scientist will do is test as many implications of the theory or hypothesis as possible," Stuckler says.

"As a social scientist, I think of it as building a case for causality," he continues. "We were very careful in the paper to say that mass privatization was 'strongly linked' and 'associated' with these rises [rather than a direct cause]. We were able to isolate mass privatization from the other major policies on the table at this time -- which were [price] liberalization and [economic] stabilization. So we were able to hold constant those factors in the statistical analysis."

Co-author Martin McKee, a physician at the London School of Hygiene and Tropical Medicine, says previous studies have shown alcohol poisoning is one immediate explanation for the surge in deaths. Other contributing factors include poor diets and the collapse of the health-care infrastructure formerly provided at state-owned factories under communism.

Ultimately, the researchers say, rapid privatization schemes led to stressful unemployment that contributed to alcohol abuse and poor health during the early 1990s.

Stuckler says mass privatization in some countries also led to the destruction of social safety nets now seen as critical for helping people survive turbulent economic transition,

"Our study takes the next step and shows which specific transition policies could help explain why alcoholism and unemployment rose so much more greatly in Russia, for example, compared with a neighboring country like Belarus," Stuckler says.

"Both countries had to make a similar leap over to capitalism. Except Russia implemented a rapid approach whereas Belarus was much more gradual -- even criticized at one point by the radical, rapid reformers as being a Soviet theme park for moving so slowly."

Stuckler notes that wars or civil conflicts occurred in several regions during the period studied. He says that is why the statistical models specifically included and directly measured the potential effect of war on working-age male mortality rates.

"In Tajikistan, there was a devastating civil conflict during this period that led to a loss of about 11 years of male life expectancy," he says. "So we had to be careful in our analysis that our results weren't being driven by war, but that they were specifically linked to the policies we were studying. [Ironically,] Croatia, despite undergoing conflict during this period, was one of the best performers in terms of mortality."

But Stuckler also says the researchers tried to ensure that the impact of war did not skew their data and lead to erroneous conclusions about links between government economic policies and rising mortality rates.

"There are some considerations that war damages public-health infrastructure -- which can lead to an underreporting of death. For example, in the Chechnya region, there are missing death certificates. That could be problematic and could have biased mortality numbers downward," Stuckler says.

"Also, in Georgia, there have been problems with registration of death in connection with privatization, on one hand, where people suddenly were charged [money] for registering deaths, and also, some of the ethnic conflicts that were occurring."

Fast Vs. Slow

As a result of those controls, Stuckler says he is confident about the strong statistical significance of links found between plummeting life expectancy and economic policies in countries that had implemented rapid mass privatization -- like Russia, Kazakhstan, Latvia, Lithuania, and Estonia.

All of those countries implemented extremely rapid privatization programs during the early 1990s. At the same time, they suffered a tripling of unemployment, up to more than 30 percent, and a 42 percent increase in the mortality rate for working-age men between 1991 and 1994.

Meanwhile, other postcommunist countries that implemented a much slower pace of reform -- gradually phasing in free-market conditions and developing appropriate institutions -- had fared much better.

According to the study, the best five performing countries were Albania, Croatia, the Czech Republic, Poland, and Slovenia. Each of those countries actually experienced a 10 percent decline in male mortality and only a 2 percent increase in unemployment.

Another factor that contributed to a lowering of the mortality rate was the level of social support available to the population. If at least 45 percent of a country's population were members of at least one social organization -- such as a church or a trade union -- they were better protected from economic shocks.

Report co-author Lawrence King says the findings are important for countries that are now moving ahead with their own privatization programs, like China, India, and Iraq.

King concludes that reformers should be extremely cautious in the future about radically overhauling a society's economy. At the very least, he says, policymakers should assess the potential impact upon public health before trying to radically overhaul a country's economy -- particularly when they promise long-term gains at the cost of short-term harm.

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