Politics and Policies in Post-Communist Transition: Primary and Secondary Privatisation in Central Europe and the Former Soviet Union

Politics and Policies in Post-Communist Transition: Primary and Secondary Privatisation in Central Europe and the Former Soviet Union

Politics and Policies in Post-Communist Transition: Primary and Secondary Privatisation in Central Europe and the Former Soviet Union

Politics and Policies in Post-Communist Transition: Primary and Secondary Privatisation in Central Europe and the Former Soviet Union

Synopsis

Discusses the policies, practices and outcomes of privatization in six transition economies: the Czech Republic, Hungary, Poland, Russia, Slovenia and Ukraine, paying particular attention to cross-country differences and to interrelations between the processes of privatisation and the political transition from communism to a new system.

The analysis is restricted to the privatisation in those fields where its methods have been strongly different from privatisations in advanced market economies and where differences of privatisation principles and techniques among our six countries were also rather various. This is basically the privatisation of middle-sized and large enterprises, not including banks, non-bank financial companies, natural monopolies and agricultural entities

Excerpt

During the last wave of nationalisation, in 1949, when I was five years old, Hungary's communist government confiscated my father's company (a small factory, with some 30 employees). This was the first significant socio-economic event of which I understood something. That last wave of nationalisations (i.e., confiscations) was followed four decades later by the first post-communist privatisations in my country (and another one to four years later in other former communist countries). Already an economist, with numerous publications behind me, and soon the main speech-maker on economic issues for the second largest political party in the Hungarian Parliament, I certainly understood privatisation better than nationalisation at that time. But understanding required intellectual effort, because the comprehensive privatisation of a country's economy was much more complicated than the comprehensive nationalisation had been. In the 1990s, it was often said that nationalisation was like taking the contents of an aquarium and making fish soup, while privatisation was exactly the opposite endeavour.

In communist nationalisation, economic considerations played little, if any, role. In the case of my father's factory, it should have been obvious that such a small production unit could not really function as a stateowned entity. Nationalisation doomed it; it was closed down soon afterwards (in a town suffering from high unemployment). Communist ideology and political considerations (the latter meaning the elimination of the capitalist class) alone determined the overall blueprint, as well as most practical details, of communist nationalisation.

Post-communist privatisation has been different. The collapse of communism came about in an economic crisis and led to democracy and freedom—at least to far more democracy and freedom than people in European communist countries had had for decades. Under such circumstances, governments could not put aside economic considerations in shaping and implementing their policies (on privatisation or anything . . .

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