Introduction to Transition

The demise of communism in Central and Eastern Europe ushered in a new phenomenon in economics, transition. This is an unprecedented process as no economy has ever moved from a comprehensively controlled economy to a market economy, although many have traversed the reverse path. It is rather easy to get a general idea of what this was to involve – privatize, create a functioning legal system, liberalize prices and wages – it is much harder once we have to get down to specifics.1 A lot of thought went into the transition from capitalism to socialism, not all of it of value, but little about the reverse course, for until the end of the 1980’s nobody thought this was going to happen. Or as The Economist put it: ”Hundreds of books have been written on the transition from capitalism to communism but not the other way. There is no known recipe for unmaking an omelette” (March 24-30, 1990: 22). Conquest recognizes the difficulty, but the metaphor is incorrect: