Note how this thread is consumed by the assumption that there must be a World War II against Germany. If we want to focus on the difference between Eastern Europe suffering Soviet occupation and the potentials of that region without such trauma, doesn't it make more sense to assume there never is a second world war at all?
I think removing Hitler from history, an easy enough thing to accomplish by several means (the surest being violent, but quite probable as he did serve on the front lines in the Great War after all) greatly lowers the probability Germany winds up a continent-conquering monster. Odds are it will become an authoritarian regime with considerable ambition for easy conquests, but a decent alliance system is enough to check that and I do think the Soviet Union would sit immobilized under Stalin, and then back off further from adventurism under his successor--to be fair, the wrong set of successors to Stalin might uncork the genie and set the Soviets on an ill-advised military course. But the one war the Western European powers would be preparing for (not necessarily well prepared) would be to contain or crush the USSR.
OK, so supposing no war in Europe ever, beyond some rather small damned things in the Balkans anyway, which might get nasty but stay in their theatre, is it a slam dunk that Poland, Czechoslovakia, Hungary, Yugoslavia, Albania and Romania will all benefit from the superiority of free market capitalism?
I say---no. Some might indeed benefit; Czechoslovakia is well placed, and Romania might be in a fine position if they use their oil revenues and strategic ties with France effectively.
The thing people rarely seem to recall about capitalism is, although in principle it is not a zero-sum game, at any particular moment it operates very much like it is. There is only so much opportunity to go around in any developing world. One can point to various nations that seem to have done very well under capitalism and say to another, less developed nation,"look at Singapore over there! Look at Malaysia! Why can't you be a success like them! For shame!"
But the truth is, it is a race for market position. Whoever gets there first can enjoy advantages and growth, but it does not follow that every nation with similar resources that follows a similar development plan will be able to enjoy the same success as its mentor or exemplary rival.
Why exactly should we expect development of Eastern European nations in a world that emerges slowly from the Depression of the 1930s but without a big war in Europe? Why should capital invest in Polish or Hungarian industry, when the developed nations of the West including Germany are still only partially recovered from their own slump? What markets would Polish industrialists, assuming they aren't overriden by foreign capital calling the tone, invest in specifically, that they aren't cut out of already by prior vested interests?
Czechoslovakia did well before WWII, and I suppose that what oxygen there is in the East to be inhaled by rising industries will tend to be sucked to Bohemia first--if not itself suffocated by a powerful draft of air drawn into Germany!
I see no reason at all to anticipate particularly dynamic growth in Hungary or Yugoslavia.
Romania will enjoy oil income--but note that more often than not that is not capitalized as the basis of a broad economic growth, but rather squandered by the kleptocratic regimes the combination of sheer greedy temptation and powerful foreign influences tend to favor. Romania also has an important strategic position as a front-line state against the USSR, which could win her favor with French strategists granting her economic concessions for the sake of stability and reliability. A smart regime there might leverage all of this into economic competitiveness, with France helping open the way to a place in the world markets.
If the world of the League of Nations/Weimar era muddles through into the second half of the century, I don't see any reason to expect much change in the relative positions of the Eastern nations to the Western, except perhaps for Czechoslovakia perhaps coming up toward Western European standards (and maybe only in the west of the country at that) while Romania has a chance to improve itself, but I would doubt they would realistically pull up to western European levels. Poland lacks Romania's oil but does enjoy some strategic attention and will probably enjoy a bit of economic favor for that reason, but hardly enough to jump-start an entire industrial economy.
Now compare that to OTL. On one hand, they all suffered a really horrible windshield-wiper war rolling first east then west through their lands, and two ruthless kleptocratic regimes successively commandeered everything in their war efforts, leaving the entire region devastated and depopulated. These were very bad things for the people there, and the fact that the Soviets wound up in complete domination was very nasty for them too.
But not, I think, from the cold-blooded point of view of industrial development per capita. The capitalist West hardly needed or wanted to raise up competitors against itself, but the Soviets, facing a Cold War against the highly developed and rapidly recovering western powers, needed to build up industrial capacity as fast as they could, and found the Eastern European lands and peoples more handy than the Soviet Union itself. Just as the USA assisted Japan and West Germany to rapidly recover to fill a pressing need for more material, so did the Russians desire and need extensive development in Eastern Europe. It also was in accordance with Bolshevik-Stalinist ideology that their rule should foster such development. And so I think that on the balance, the Soviet occupation and control fostered far more industrial development than free market capitalism would have favored there. It is quite true that the form of development was inflexible and inappropriate to competitiveness in the global markets once these nations were able to break free from Moscow's command. But then too, ongoing strategic competition against a still-threatening Russia meant that the newly liberated Eastern European economies found favor they would not have had the Cold War never happened.
Eastern Europe today is far better developed than would be reasonable to expect had there never been a Soviet period.
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Now the question of what would have happened if we assume Hitler's Reich was inevitable is another matter of course. But in that case, I don't see any plausible path for liberation and inclusion on favored terms by the western powers. Without Soviet power to offset Hitler, we are most likely looking at a Nazi Mitteleuropa, and very probable worse devastation in a later war using nukes, if the Reich is ever to be overthrown at all. Most of this thread seems to be taken up in wargaming that, and with the agency of the Eastern nations being left pretty much on the sidelines.
A nuclear crusade against the Reich in the later 40's or early 50s would involve the release of quite a lot of fallout, which alone might render the whole question of hoping for a non-Communist path of development quaint and macabre. Perhaps per capita it would be more industrialized--because some 50 percent or more of the people are dead, and the sole means of survival involves domed-over sealed greenhouses trying to raise crops with minimal fallout poisoning, causing Eastern Europe to look like some post-ecocatastrophe science fiction space colony. The few survivors are industrial because they live in buried salt and coal mines!
The notion that the Reich would be relatively easily defeated has become more popular on this board since the Sickle Cut TL that asserts that German victory over France was actually a near-run matter of luck and that France could easily, in retrospect, have stopped the Germans, and then they'd die back inevitably. Probably the latter is true, but how likely really is it that German conquest of France was a fluke?
Well, say it happens that France does stand and the Reich is pushed back, and Stalin is regarded as a Nazi ally for his invasion of Poland and seizure of the Baltics. I stopped reading Sickle Cut and don't know how it ended; the author was hell-bent on an anti-Soviet crusade when I last looked. Assuming that the Germans can't cut a deal and wind up being conquered systematically by Entente forces, does this spell any sort of better deal for the Eastern European peoples? Recalling that Hitler was well able to create puppet states that favored his cause in Slovakia, and found willing allies in Hungary, will the conquering Entente be particularly well disposed to the liberated eastern nations?
If a crusade against the Soviets is justified, it is because in the chaos Hitler caused, Stalin did move to take possession of various conquests. With the Reich collapsing, will he sue for peace? If he does, the old frontline states are just where they were before. Will Britain and France favor the sort of regional development that Stalin did, to build a stronger curtain of containment against the Soviet Union? I think they would be more likely to favor, as they did before the war, paternalist governments that purchase their industrial products, weapons systems especially, from Britain and France, and industrial development would be desultory and limited.