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Socialist Construction

As Ceausescu consolidated his power, he was able to pursue his own agenda in economic and foreign policy. For the most part, he continued the classic Stalinist development strategy of his predecessor and mentor, Gheorghe Gheorghiu-Dej. The goal of that strategy was economic autarky, which was to be attained through the socialization of assets, the rapid development of heavy industry, the transfer of underemployed rural labor to new manufacturing jobs in urban centers, and the development and exploitation of the nation's extensive natural resources.

Romania's progress along the path of "socialist construction" was acknowledged in 1965 when the country's name was changed from the Romanian People's Republic to the Socialist Republic of Romania. The nationalization of industrial, financial, and transportation assets had been largely accomplished by 1950, and some 90 percent of the farmland had been collectivized by 1962. Whereas industry had produced only about one-third of national income on the eve of World War II, it accounted for almost three-fifths in 1965. Industrial output had risen by 650 percent since 1950. This dramatic growth had been achieved by channeling the lion's share of investment capital to heavy industry while neglecting light industry and agriculture. Industrialization had unleashed a massive migration from the countryside to the cities, creating the urban proletariat that, according to Marxist theory, was essential for attaining socialism and, ultimately, communism.

During the first twelve years of Ceausescu's rule, exceptionally high levels of capital accumulation and investment produced one of the most dynamic economic growth rates in the world. The metallurgical, machine-building, and petrochemical industries, which Ceausescu believed were essential for securing economic independence, showed the most dramatic development. Ceausescu mobilized the necessary human and material resources to undertake massive public works projects across the country. He resumed construction of the Danube-Black Sea Canal, abandoned by Gheorghiu-Dej in the mid-1950s. Finally opened to traffic in 1984, the canal was the costliest civil-engineering project in Romanian history. Meanwhile, agriculture continued to receive fewer resources than its importance to the economy warranted. The exodus of peasants from the countryside to better-paying urban jobs continued unabated, leaving an aged and increasingly poorly qualified labor force to produce the nation's food.

After 1976 the economy began to falter as Romania failed to make the difficult transition from extensive to intensive development. Although the highly centralized command system had served the country well in the bootstrap industrialization effort, it was poorly suited for managing an increasingly complex and diversified economy. The regime's Stalinist gigantomania had produced sprawling steel and petrochemical plants with capacities far exceeding domestic supplies of raw materials and energy. To repay the West for the technological and financial assistance it had provided in building the plants, Ceausescu had counted on increased export revenues. But even as the facilities were being built, world market prices for steel and refined oil products collapsed, making repayment of the loans difficult and painful. A combination of negative factors (a devastating earthquake in 1977, a prolonged and severe drought, high interest rates charged by Western creditors, and rising prices for imported crude oil) plunged Romania into a financial crisis.

During the 1980s, Romania's economic problems multiplied. A worsening labor shortage hindered growth, and worker dissatisfaction reached unprecedented levels. A persistent shortage of consumer goods made monetary incentives increasingly meaningless. Wage reforms penalizing individual workers for the failure of their factories to meet production targets proved counterproductive and in fact spurred the traditionally docile labor force to stage strikes and demonstrations. Largely because of labor's demoralization, Romania ranked last among the European members of the Council for Mutual Economic Assistance (Comecon) in per capita gross national product, and its agriculture ranked twentieth in Europe in terms of output per hectare.

During the 1980s, Ceausescu's top economic priority was the quickest possible repayment of the foreign debt. His regime took draconian measures to reduce imports and maximize export earnings. Food rationing was reimposed for the first time since the early postwar years, so that agricultural products could be exported for foreign currency. Electricity, heat, gasoline, and numerous other consumer products also were strictly rationed. The Western media began publishing reports of widespread malnutrition and suffering caused by these measures. But the regime's commitment to its policies remained unshaken, and in early 1989 Ceausescu announced that the debt burden had finally been eliminated. Blaming "usurious" Western financial institutions, including the International Monetary Fund (IMF) and the World Bank, for many of his country's economic difficulties, Ceausescu proposed, and the Grand National Assembly enacted, legislation banning any agency of the Romanian government from seeking or obtaining foreign credits. Ceausescu's obsessive drive to retire the foreign debt at virtually any cost was consistent with a centuries-old theme of Romanian history -- a longing for national independence and economic self-sufficiency.