Elite Structure And The Choice Of Privatization Strategies During The Early Transition In East-central Europe And Russia

Former communist countries in Soviet and East-Central Europe chose distinct transition strategies towards capitalism.While extensive literature has exanimated the effect and long-term influence of various transition paths,only a few touched the question why these countries chose their respective transition strategies.Based on existing literature,this thesis tries to explain the difference among transition paths from the perspective of the interaction between political elites and economic elites.As the outcome of specific political process under the former regime,the government and insiders both possessed partial ownership over the state enterprises before privatization took place.However,the partial ownerships held by the government and insiders were not independent.As privatization unfolded,the government and insiders found themselves in conflict with each other.Whereas the incumbent political elites were capable of devising certain privatization plans,they were sometimes incapable of implementing their desirable ones.Economic elites enjoyed de facto control over the assets and could carry out spontaneous privatization to a certain extent.With the help of their political correspondents or the union of workers,economic elites could even alter the making of privatization policies.The actual privatization plans were often the outcome of a game involving both political elites and economic elites.This thesis provides a simplified framework,which treats privatization as a sequential game with the government and insiders as participants,to illustrate the interaction between political elites and economic elites during privatization.Then this essay discusses the outcomes when the privatization game is dominated by the government,the management,or the workers' collective.This framework is then applied to the privatization cases in Poland,Czech,Hungary,and Russia to test its effectiveness.