Eastern Europe: The Legacy of Communism and the Weight of History

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In order to assess the success or failure of the shift towards economic freedom in eastern Europe, while maintaining a sense of proportion, the author focuses on the basic differences which generate resistance to change. The fact that the liberalisation of the economy proceeds faster than the rebuilding of institutions raises the transaction costs. Yet this does not prevent change – it only makes it more expensive. If, however, we consider the combined effect of the formal and informal constraints which constitute the moral order, the prospects become cloudier. During communism, moral rules were subject to very strong pressure, the effects of which are perceivable across society. In politics, this translates into the success of the former communist parties, which promise a return to the "good old days", while conserving capitalism in the shops. Nonetheless, certain factors – the markets role in transition, first and foremost – induce cautious optimism about the outcome of the transition process in the majority of eastern and, above all, central European countries.