From the April 1997 issue of the Socialist Standard
"Sucked in and spat out like raw eggs", was how one member of the British public described the unfortunates who invested and lost everything in Albania’s "pyramid funds". It seems that pure logic alone should have told those who thought they were on to a winner that all would come to nought, and if not that then surely the experience of Russians and Rumanians who had also been conned in the past by such "get- rich-quick" schemes.
The Albanian pyramid fund schemes were quite simple. Investors were offered large rates of interest from the money they had persuaded others to invest. Obviously, sooner or later, and especially in a rather insular population of three million, a saturation point would be reached when the funds ran out of investors’ money. Collapse was as inevitable as night follows day.
But after decades of poverty and authoritarian rule under a Stalinist regime, and then media stories about western living standards being just on the horizon, we can hardly blame the Albanian working class for falling for the scams. After all. even "enlightened” workers in the western world have been conned into depositing their money in dubious schemes for as long as living memory. Remember Maxwell and his pension scheme?
For the average Albanian the pyramid funds were deemed a safe bet because the government was believed to be closely involved and would act as protector of hard-earned money the people had invested. A further incentive was the fact that at the inception of the funds there was no banking system, and little prospect of work or other methods of making money. Little wonder then that so many—an estimated one million households—were prepared to invest all and everything into schemes which were advertised as charity and welfare funds guaranteeing regular pensions.
During the peak period of the pyramid funds, it was widely believed that the economic transition from authoritarian state capitalism to something resembling the western model was running smoothly. Even the World Bank believed that Albania was quicker at learning the western economic and democratisation process faster than Russia and other former eastern bloc countries. In truth, Albania was no different. What money there was in circulation had been earned by some Albanians working in other countries, for instance in neighbouring Greece and Italy. Furthermore, much money going into the funds was via drug-trafficking operations, arms sales to those involved in the nearby Balkan conflict and money-laundering operations.
Meanwhile, the European Union was only too happy to sanction aid schemes— $1,200 million a year—ignoring a scam that was being watched over by a corrupt Albanian government. Anything was better than "communism" and if Albania was en-route to democracy, then what the hell. Though the US did level token condemnation at the pyramid schemes, the business community in Britain, as well as certain leading politicians, supported Berisha's ruling Democratic Party. Berisha could even be found standing beside Margaret Thatcher on the Tory Party Conference platform in 1991.
The world capitalist elite was full of praise for Berisha. For one thing he was determined to see through painful economic reforms that would have given leading Tory Party officials an orgasm and he had achieved commendation for a rapid land redistribution programme. Regional support was reinforced when it was believed he could appease ethnic tensions in the neighbouring regions of Kosovo and Macedonia which had sizeable Albanian populations.
In November of last year many investors were enjoying a 40 percent return on their deposits, even reinvesting that. Thousands had sold their homes to fund their investments. By January, the popular Gjallica pyramid fund had collapsed and investors had lost everything. An estimated $2 billion was gone overnight.
In the Mafia town of Vlore, tens of thousands took to the streets, rioting and fighting with police, demanding their money back, incensed by the idea that they had been duped by the government. Berisha tried unsuccessfully to deflect the blame on to others, even promising to repay lost money. His words fell on deaf ears. Mass civil unrest followed in the towns of Fier and Barat and spread quickly to other parts of Albania. Army bases were attacked and looted, public buildings were firebombed and prisoners released from jails over-run by rioters.
Albania’s opposition parties co-operated to form a joint venture they named the Forum for Democracy, demanding not only the government’s resignation, but that it be replaced by a government of technocrats—"economic experts"— whom they argued could best handle die growing unrest.
As the tidal wave of protest spread, becoming bloodier by the day, Berisha declared a state of emergency and in an attempt to assuage the anger on the streets sacked his prime minister and government. With martial law in place, Berisha cut links to the outside world, blacked out the independent media, imposed a night-time curfew, banned political activity and ordered police to “shoot to kill" rioters. Anarchy waited in the sidewings.
WB Yeats once wrote a memorable verse that seems to have become a much-quoted epitaph for modern times:
"... Things fall apart; the centre cannot hold;Mere anarchy is loosed upon the world,The blood-dimmed tide is loosed, and everywhereThe ceremony of innocence is drowned. The best lack all conviction, while the worst are full of passionate intensity."
This verse is from the prophetic Second Coming and Yeats makes a verbal play on the phrase, making it refer to cyclical repetitions of unrest that have occurred before.
The words are well suited to the chaos that has returned to Albania after the overthrow of Enver Hoxha’s tyrannical regime in 1991 and which has plunged the country into a long and protracted period of unrest. They are finding a twisted echo in graffiti sprayed across walls the length and breadth of Albania: "Albania needs God again". The slogan hints immediately at the seriousness of events in Albania and of a desperation born of a belief that there can be no foreseeable mortal solution to the ongoing problems of Albanians.
In truth, the solution is wholly mortal. It comes of workers in Albania realising their common class position with their counterparts the world over and in rccognising that their god Mammon needs to be dismissed like every other god the master class would have us worship, before we can—any of us—live in comfort and security.
Indeed, if ever a model should be held up to workers of the insanity of the money system it should be the pyramid investment schemes of Albania.