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Crime was allowed to hijack important parts of the post-communist economic agenda, such as the privatization of state assets. Kleptocracies subsumed the newborn states. Social safety nets crumbled.
Aware of this encroaching "economic imperialism", privatization deals with German firms are being voted down throughout the region. In November, the sale of a majority stake in Cesky Telecom to a consortium led by Deutsche Bank collapsed. In Poland, a plan to sell Stoen, Warsaw's power utility, to Germany's RWE was scrapped. But these are temporary and often reversible setbacks.
Central and east Europe became a giant lab in which to peruse policies pertaining to criminality, private property ownership, entrepreneurship, privatization, income distribution, employment, inflation and social welfare.
Undaunted by mounting evidence of market failures for instance to provide affordable and plentiful public goods this flawed theory returned with a vengeance in the last two decades of the past century. Privatization, deregulation, and self-regulation became faddish buzzwords and part of a global consensus propagated by both commercial banks and multilateral lenders.
Excess capacity coupled with increasing competition, globalization, privatization, and deregulation led to ferocious price wars and to consistently declining prices. Quoted by "The Economist", Dresdner Kleinwort Wasserstein noted that America's industry is already in the throes of deflation.
It was dogmatically held to be true that, miraculously, traffic a chaotic phenomenon will translate to profit hitherto the outcome of painstaking labor. Privatization itself was such a leap of faith. State owned assets including utilities and suppliers of public goods such as health and education were transferred wholesale to the hands of profit maximizers.
The simultaneous crumbling of these urban legends the liberating power of the Net, the self-regulating markets, the unbridled merits of privatization inevitably gave rise to a backlash. The state has acquired monstrous proportions in the decades since the Second world War. It is about to grow further and to digest the few sectors hitherto left untouched.
Crucially, the west was economically successful and democratic while Russia evolved into a paranoid nightmare of inefficiency and gloom. Hence its demise. When communism crumbled, all of Europe east and west experienced a protracted and agonizing transition. Privatization, deregulation, competition and liberalization swept across both parts of the continent.
The situation hasn't been this dire since the toppling of communism in the Velvet Revolution of 1989. Ironically, these bad tidings are mostly the inevitable outcomes of much delayed reforms, notably privatization. Four fifths of the country's economy is alleged to be in private hands a rate similar to the free markets of Estonia, Slovakia and Hungary.
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