The paper compares the political economic systems under German (1915–1918) and Soviet (1940–1941, 1944–1990 m.) occupations in Lithuania. During the World War I, Lithuania was part of the German occupation zone Ober Ost, ruled by the higher commando of the German Eastern front (Oberbefehlshaber Ost). The German military command of Eastern front under Paul Hindenburg and Erich Ludendorff used Lithuania as a laboratory for large scale social experiment, creating the first planned command administrative economy in the world. After they were promoted to the higher commando of all German armed forced and established in 1917–1918 de facto military dictatorship over Germany, they made the attempt to establish the Ober Ost system in the metropole. Although the realization of the complete „Hindenburg programme“ did fail, by 1917 Germany lived under military socialism (Kriegssozialismus) and coercive economy, which became the example and source of inspiration for Bolsheviks constructing Soviet model of state socialism. In 1940, this model came back to Lithuania, history making the full circle. This means that the market transition in 1990–1992 was second restoration of capitalism in Lithuania, because in 1918–1922 the capitalist economic system also was restored here jointly with the establishment of national state. Contemporary Lithuania demands from Russia to pay for damage inflicted on Lithuanian economy by Soviet occupation, and interwar Lithuania did demand the same form Weimar Germany in 1922–1923. However, while interwar Lithuania did ask to pay only direct occupation damage, contemporary Lithuania demands to compensate also the indirect damage. The main part of this damage is the loss of the national income which Lithuania did not receive in 1940–1990 because the efficient capitalist economic system was replaced by the less productive state socialist system during this time. However, the calculations of the indirect damage incorrectly assume that all varieties of capitalism are more efficient in the developing countries in comparison with command administrative system. The assumption that the variety of capitalism which existed in Lithuania by 1940 (state cooperative capitalism) was not less efficient than Stalinist Soviet socialism is politically correct one, as much as the expectation that under this system independent Lithuania would become advanced technological frontier country („second Finland“) by 1990. Nevertheless, the counterfactual development path of the independent capitalist Lithuania in 1940–1990 would include critical conjunctures and crossroads, which could end with Lithuania entering „low road“ development path. Tellingly, Latin American capitalist country Uruguay (similar to Lithuania and other Baltic culture by its size and economc structure) had higher GDP per capita level than Lithuania in 1940, but by 1990 this level was lower than in Soviet Lithuania. Importantly, Uruguay never was under Soviet Russian occupation, did not construct socialism or suffered war damage.
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