This publication is a critical evaluation of the post-communist economic transformation process in Eastern Europe and of Western aid programs. By focusing on (but not limiting ourselves to) the political economy in Eastern Europe, major difficulties and deficiencies both of reform programs in individual Eastern European countries and of Western aid became apparent.
The changes that were necessary after the revolution of 1989-1990 amounted de facto to the erection of an entirely new economy and at the same time the creation of new democratic institutions, all juxtaposed against the virtual absence of a tradition of functioning institutions of civil society. Therefore, the term "transformation" is almost a euphemism in view of the magnitude of the task that the new post-communist governments had to shoulder.
The term "revolution," too, needs qualification and interpretation, because the events of 1989-1990 were less the result of an overthrow of communist regimes than of a massive implosion of a system that failed miserably to meet the social, political, and economic expectations that it had created. Although there is no lack of victory theories to assert that capitalism--as a result of the triumph of the West in the competition of the two systems--defeated communism, the true story of the demise of communism looks more like a process of self-shackling and finally self-destruction, perhaps best described by Sir Karl Popper:
The road to serfdom leads to the disappearance of free and rational discussion; or, if you prefer, of the free market of ideas. But this has the most devastating effect on everybody, the so-called leaders included. It leads to a society in which empty verbiage rules the day; verbiage consisting very largely of lies issued by the leaders mainly for no purpose other than self-confirmation and self-glorification. But this marks the end of their ability to think. They themselves become the slaves of their lies, like everybody else. It is also the end of their ability to rule. They disappear, even as despots. (Sir Karl Popper, "Address Before the American Economic Association," New Orleans, January 4, 1992)