Post-communist Privatisation: An Incomprehensible Neo-liberal Project?

Abstract

As one of the most salient goals of ‘transitions’ in post-communist Europe was the transformation of regimes of property, I analyse in this chapter the most important claim of the neoliberal policy prescriptions for Central and East European states in the early 1990s, that property should be privatised. My argument is that this policy prescription was based on a number of false assumption about what property was under socialism and about communist law. The reality of property arrangements during ‘Actually Existing Socialism’ in Central Eastern Europe was totally different from that assumed by neoliberal agents and policies. Contrary to their assumptions, the distinctiveness of the communist era property arrangements resided not in the absence of private property, which was tolerated under ‘Actually Existing Socialism’, but in the organisation of property as an administrative matter, based on unwritten ‘operational’ rules. This distinctiveness was even more manifest for socialist corporations, where communist formal law was more or less similar to western corporate law, yet unwritten operational rules determined how all the exchanges and transfers of property took place among these socialist corporations. Nevertheless, the neoliberal policies totally ignored the operational unwritten rules, which should have been changed if a ‘transformation’ was desired, and proposed instead a change of formal law, which was not necessarily needed. As a result, the post-communist process of privatisation was plagued by many unforeseen and negative effects. The consequence was the great enrichment of the former communist managers who were able to manipulate the formal law and operational rules to benefit from ‘privatisation’ at the expense of the public, in a process which was not ‘rights based’ or ‘democratic.’