Plan&Market  Eastern Europe in Transition



It has been said many times that the fall of communism in 1989 came to many as a big surprise. It was a surprise even to most experts on Soviet and East European politics and economics. What was really surprising - at least to me - was not just the fall of communism but the relatively peaceful way that the communists gave up power in most of the Soviet Union and Eastern Europe. Of course, Bosnia and Chechnya keep us aware that there were exceptions to this dictum.

It was not long after 1989 that the international community was exposed to additional surprises. First, we learned that the transition from a totalitarian system to political democracy and from central planning to the free market economy is much more difficult than anyone could have believed. It has taken longer than expected and all the countries in transition suffered unparalleled economic setbacks. Second, once we were finally convinced that the East European peoples had departed once and for all from that period of their history, they started to re­elect the former communists to power. Finally, at the same time as the arguments about the merits and weaknesses of shock therapy and privatization reached a climax, almost all the East European countries resumed economic growth irrespective of the strategy that they actually adopted.


All these surprises suggest that we may have misunderstood or misinterpreted the historical circumstances and conditions and that some reconsideration of conventional wisdom may be due. I shall start by formulating alternative hypotheses and then reflect on the evidence from the Baltic and other East European countries as presented in the papers and discussions of this conference and in various other publications.










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