The Economy — Capitalism without Property
By the middle of the 1990s a new phrase was creeping into the lexicon of Václav Klaus's speeches. True to form, it had a confident and reassuring ring to it. The Czech Republic had entered 'The post-transformation phase.' Switching into metaphor, eastern Europe's most market friendly, post-communist reformer explained the basic idea thus: 'Using my standard analogy and describing the three consecutive transformation stages as waiting in a hospital ward, undergoing surgery and recovering in a rehabilitation center, I can assure you that we have made it to the rehabilitation center. And we are in pretty good shape now.' 1 The speech was made in November 1994. Having suffered a severe and traumatic relapse the patient is recovering in intensive care. The head doctor has been demoted and he has struck up a curious association with a group whose practices he once dismissed as old-fashioned.
By the end of the decade the Czech economy was back in deep recession. While Hungary and Poland were posting growth rates of between 3 and 6 per cent a piece, the one time flagship of east European reform was leaking badly. Major banks tottered on the brink of collapse, unemployment was rising fast, industrial production was plummeting and for much of the second half of the decade the PX50 stock index had stood at less than half the value of when it was set up. 2 Far from catching up with the West, the Czech Republic was slipping further behind.
International organisations were queuing up to change their minds about the Czech economic miracle. 3 It was even being suggested that the Czech economy had failed to recover from the downturn suffered