From «Envy and Distrust» to «Trust and Ambition» Eastern Europe’s Problems: How to Solve it and Why it May Take Long

Abstract

The monetary and fiscal problems that the Soviet Union and other Eastern European countries face today are important, but not only are they marginal relative to others, but also their solution depends on making credible legal reforms enabling private property righrs to emerge, be defined and be enforced first, before trying to implement other reforms (1). Unless this is done, no monetary, no fiscal policy and no exchange rate policy in the world will put these societies back to the road leading toward a better life. Recall that idea of communism could be — and was — summed up (in its Manifesto) in one sentence: the abolition of private property. This is at the root of their problems, and this is were the treatment should start. All the rest of the communist regimes’ undeniably big problems are only symptoms. Treating them rather than the sickness will not cure the patients. But even if such steps are firmly taken — and meanwhile in most Eastern bloc countries they are not: the symptoms are being treated, rather than the sickness — prosperity will not be around the corner. It will take years until credibility in the new legal system is established.