Deaths rose sharply in communist countries that rushed to privatise. Does that prove economic "shock therapy" kills?
For a communist nation wishing to show off its capitalist credentials, mass privatisation was a killer move. Literally. In Russia, when the sell-off of state-owned companies was at its height, the death rate of working adults rose by 18 per cent and the life expectancy dropped by nearly five years. Men of working age, suddenly bereft of both employment and the healthcare that frequently accompanies it, found themselves greeting the Grim Reaper well ahead of schedule, sometimes having downed a bottle or two of aftershave.
This is, in caricature, the controversial thesis offered by David Stuckler, Lawrence King and Martin McKee, in The Lancet recently. The scientists - Dr Stuckler and Dr King are sociologists at Oxford and Cambridge respectively, and McKee is Professor of European Public Health at the London School of Hygiene and Tropical Medicine - claim that hasty mass privatisation in several former Eastern bloc and Soviet states coincides convincingly with a spike in their death rates. They speculate the main link between the two is unemployment, a well established cause of ill health and stress, as well as a trigger for life-shortening behaviour, such as binge drinking.
The study has ignited an intriguing, and sometimes ill-tempered, debate about how swiftly - or slowly - a fledgeling economy should emerge from its chrysalis. In their analysis, the researchers gently wag a finger at Jeffrey Sachs, the world-famous economist and advocate of “shock therapy” - the sudden lifting of price controls and subsidies, coupled with the flogging off of state companies and assets - to catapult countries irreversibly into capitalism. “The need to accelerate privatisation is the paramount economic policy issue facing Eastern Europe,” the economist once wrote.
Unsurprisingly, Professor Sachs is none too keen to have up to a million communist corpses piled at his door. He counters that the link between privatisation and deaths is “zero”; that a rise in dangerous drinking among Russians was due not to unemployment but to the abandonment of an anti-alcohol campaign; and that the notoriously poor Soviet diet must bear some blame. It's a peculiar choice, that last one, for the cerebral professor: short of adulteration with poison, diet cannot explain sudden changes in death rates.
As well as pointing this out, the academics retort that “the countries Professor Sachs cites as successes (in terms of their transition to free-market economies) were only successful because they did not follow his advice”.
It's not so much velvet glove, this spat, as boxing glove, and it looks like going the full ten rounds. At the very least, we should admit the possibility that shock therapy has hit the ropes. and why it matters. Because China and India are poised to sell off many of their state-owned enterprises in the hope of ascending to the top of the economic heap. Stop and think about it. Two of the most populous nations on earth are heading down the path of capitalism, and there is half-decent evidence that the way this path is travelled could spell the difference between life and death for millions.
Dr Stuckler and Professor McKee say their paper is about epidemiology, not ideology. Their aim was to peer deeper into the high human price paid for the death of communism in Europe, a fact that is not in dispute. Unicef estimates it caused three million premature deaths. The United Nations calculates that ten million men disappeared during the transition. Life expectancy dropped in many affected countries (for Russian men, who especially suffered, it fell from 64 to 58 between 1991 and 1994). Unemployment and hazardous drinking (including the consumption of spirits and even aftershave) were found to be serious factors.
But why did some countries, such as Russia and Kazakhstan, suffer steeper rises in their death rate than other countries going through similar turmoil, such as Slovenia? Dr Stuckler et al decided to try to put numbers and a timeline to a hunch: that the way market reforms were carried out might be the key. As the authors summarise: “Any disruption to the established social order creates high levels of social stress.” Anecdotally, the countries that sprinted to capitalism appeared to suffer most; those that cantered emerged relatively unscathed.
They defined “mass privatisation” as the transfer of at least 25 per cent of large, state-owned enterprises to the private sector within two years. On average, the countries with mass privatisation programmes saw the death rate for adult men (aged between 15 and 59) rise by 13 per cent; in total, it represented nearly a million extra deaths. Across the five worst countries, which included Russia and Kazakhstan, the average death rate shot up by 42 per cent for a short period in the early nineties.
Other countries, such as Croatia and Slovenia, which dismantled the machinery of communism more slowly, did not see such a dramatic rise. Also, those countries where people belonged to social networks such as the Church, or trade unions were less badly affected; interestingly, it is this aspect that the authors regard as their key breakthrough.
“The Poles came out well (from communism),” Professor McKee told me. “Why? Because they meet each other at Mass every Sunday.”
The authors speculate that those countries undergoing shock therapy unwittingly swept safety nets away with the old order. Many Russians lived in “one-company towns”; when the companies and jobs disappeared, so did healthcare, childcare and the social hub.
The Economist has lambasted the paper and the research has provoked a torrent of invective in the blogosphere. But what should matter more is whether the paper represents decent science; here, we must note the opinion of Professor Sir Michael Marmot, perhaps the biggest name in the field of how social circumstances affect health: “With all the caveats, Stuckler and colleagues' study is relevant beyond Eastern Europe...”
The paper has been wrongly viewed by outsiders as an ideologically motivated attack on capitalism; its authors have fallen victim to an occupational hazard of social science. “We are not stark raving Leninists,” sighs Professor McKee, who confesses to being flabbergasted at the critics. Of course capitalism is a good thing, he says, but we should pursue it with human welfare - as well as political and economic considerations - in mind. Privatising at a prudent pace, while ensuring the jobless have social support, is the ideal scenario.
China and India are embracing free markets. China alone has a population of 1.4 billion, roughly ten times that of Russia. If there is an inkling of truth in the analysis, then “shock therapy” could jeopardise tens of millions of lives. And there's nothing therapeutic about that.