because figures for the level of bank deposits or government expenditure were
essentially meaningless. An example of this that used to be crucial in thecold
warwas the difficulty of assessing how much the Soviet Union was spending
on defence. The USA used a technique of working out how much an
American manufacturer would charge, in dollars, to build, for example, a
Soviet T-80 tank, because the rouble values expressed in Soviet figures were
meaningless.
Until these former communist countries allow their currencies to be valued
on the international currency markets, and accept the financial discipline that
Western countries are subject to when their currencies lose or gain value, they
will not be able to participate properly in international trade. Until that time
they have to pay for imports either in foreign currency, which the new
economies find hard to earn, or by a process of bartering their own goods
for Western goods. However, though convertibility is a major step to take, and
could lead to the established values of the currencies collapsing, most of the old
Eastern European economies have accepted it. Those who have not fully done
so, like Romania, already had economies so weak as to make this issue
relatively unimportant.
Non-convertibility must not be confused with fixed exchange rates which
are settled by economic forces. For some time after the Second World War
many currencies, notably the pound sterling, were sold only at fixed rates.
However the pound was kept to the government’s agreed values by buying and
selling of sterling carried out by the Bank of England, rather than by a formal
pegging of the currency. Indeed the United Kingdom did not accept full
market control over the value of the pound until the government decided to
allow the pound to float in June 1972. When the UK joined the Exchange
Rate Mechanism (ERM) of the European Monetary System in October 1990
it was moving back towards currency control, but only in dealings with other
ERM participants. However, this process has been overtaken by the creation of
the single currency, the euro, for most European Union members, against
which the pound floats freely.
Co-operative
Co-operatives were initially organizations either of agricultural producers
(mainly in continental Europe) or of workers which produced or retailed
goods at minimum cost by cutting out intermediaries, and redistributed any
operating profit to members. In Britain the co-operative movement started in
the industrial north. Robert Owen based his model village around a cotton
mill at New Lanark, in Scotland, along co-operative lines, and from it
developed an early version of socialism. The foundation of the Rochdale
Equitable Pioneers in 1844 was an attempt to introduce the principles of an
Co-operative