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Published online by Cambridge University Press: 28 February 2024
After the political revolutions of 1989, the former eastern bloc countries, although at differing speeds and in a different order, started a process leading to the abolition of the basic principles upon which real socialism was founded. The identity of their social, economic and political systems is being qualitatively changed
The post-revolutionary system, however, is taking a long time to establish itself. The rather open nature of the new legal framework makes it difficult to forecast the final outcome of post-communist societies. Meanwhile, one can remark on the constraints that exist in the postcommunist period. Instead of thinking in terms of final results, it would perhaps be more helpful to start from the remnants of communism and to ask ourselves how sociopolitical realities can be matched with the new principles of democracy, market economy and capitalism. It is important to have a clear insight into the means that will be used to obtain real owners. These real owners are, as a matter of fact, a prerequisite for a capitalist system. Finally, an assessment has to be mack of the ‘moral climate’ in which transformation has to proceed.
1 Kominski, A., &, Obloj, K., 'From Innovative to Systemic Change: The Transformation of Communist Systems', Communist Economies, 1990 n° 3, vol. 2, 335–345.CrossRefGoogle Scholar
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3 On 7 October 1989 the Hungarian Socialist Workers' Party decided to form a ‘new’ party, the Hungarian Socialist Party, by 1079 votes to 159 with 38 abstentions. The General Secretary of the Party, Karoly Grosz, voted against. The new patty was described as the legal successor of the former. Members had until 31 October 1989 to decide whether to join. The new president of the party was Reszo Nyers. The new party immediately proclaimed its intention to be accepted in the socialist international movement See Magyar Nemzet, 11 February 1989.
4 In Czechoslovakia the leading role of the Communist Party and Marxist‐Leninist ideology were removed from the Party Statute in December 1989: Rude Pravo, 1 December 1989; Czechoslovakian law on political parties: Sbirka Zakonu 1990, n° 15; Bulgaria: Derzaven Vestnik 1990, n° 6; Romania: Buletinul Oficial 1989, N° 4, N° 9. Slovenia changed its constitution on 27 September 1989 in a clear commitment to political pluralism and democracy: Uradni List 1989, n° 32, 1704. The leading role of the Communist Party was formally abolished in the USSR by the constitutional reform of 14 March 1990: Izvestiia, 15 March 1990; Isvestiia tsentral' nogo komiteta KPSS, 1990, n° 5, 42.
5 G. Chiesa, ‘The 28th Congress of the CPSU’, Problems of Communism, July‐August 1990, 38.
6 That is why in both Poland and Hungary the negotiated compromise stipulated that the army and the police still remain under some sort communist control: see Komisnki & Obloj, op. cit. 342.
7 Pravda, 15 July 1991, 2.
8 Brus, W. & Laski, K., From Marx to the Market: Socialism in Search of an Economic System, New York (Oxford University Press) 1990Google Scholar; Milanovic, B., 'Privatisation in Post‐Communist Societies', Communist Economies, 1990 N° 1, vol 3, 5–41.Google Scholar
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10 C. Donnelly, ‘Nomenklatura Capitalists’, NATO Briefing, 12 June 1991.
11 Levitas, A., &, Strzalkowski, P., 'What does ‘Uwlaszczenie nomenklatury’ (Propertisation of the nomenklatura) really mean?', Communist Economies, 1990 vol 2, n° 3, 413.CrossRefGoogle Scholar
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13 A. Sajo, ‘New legalism in East Central Europe: Law as an Instrument of Social Transformation’, Journal of Law and Society, vol 17, n° 3, Autumn 1990, 329–343. The problem of propertisation of the nomenklatura is openly discussed in the soviet Press. e.g. Iu. Feofanov, ‘Privatizatiia pod grifom’ sekretno. ‘Posleslovie k zasedaniiu komissii poprivilegiiam’ (= Privatisation under the label ‘secret’. Epilogue to a session of the commission for privileges), Izvestiia, 2 July 1991, 3.
14 Szalai, E., 'Elites and Systematic Change in Hungary', Praxis International, vol. 10, 1990, 1–2.Google Scholar
15 Chavance, B., 'What Kind of Transition and What Kind of Market in Eastern Europe?', Most-Moct, 990, N°2, 10.Google Scholar
16 L. Feige argues that the 'privatisation schemes adopted by East European countries are often hailed in the West as bulwarks of free enterprise and entrepreneurship. In fact, they amount to little more than inefficient giveaway programs to the entrenched bureaucracy (Perestroika and socialist Privatisation: What is to be done? And How?, Paper presented at the International Conference on Entrepreneurship in the World Economy, Moscow, 13–16 November 1989.
17 W. Andreff, La ‘success story’ des privatisations en France et les besoins actuels des pays de l'europe de l'Est, Mimeo, Roses, Université de Paris 1, Sorbonne, 10 February 1991.
18 Privatisation Acts: Poland: Polish State Enterprise Privatisation Act, The office of the Minister of Ownership Transformation Act, both published in Rzeczpospolita, n° 169, 23 July 1990 and both us. Polish News Bulletin of the British and American Embassies, Warsaw, Economic Review, special issue, n° 6, 90. Hungary: Act XIII ‘On the Transformation of Economic Organisations and Economic Associations’Public Finance in Hungary (=PFH), n° 54 (1989) 5–48; modified and updated version thereof: PFH, n° 73 (1990) 1–37; 'Act on Economic Associations1, PFH n° 45 (1989); ‘Act on the State Assets Management Agency and the Protection of State Property Entrusted to Enterprises’, PFH, n°65 (1990); ‘Act LXXIV On the Privatisation of the Property of State‐Owned Companies which pursue Retail, Public Catering and Consumer Service Activities, 1990.’PFH is published by the Hungarian Finance Ministry. Czechoslovakia: ‘Joint Stock Companies Act, 1 May 1990’; the bill on large scale privatisation was approved 26 February 1991, entering into force 1 April 1991. The restitution law of 21 February 1991 paves the way for the return or compensation of non‐agricultural property exprorpriated by the communist government from 1948 through 1989, see International Corporate Law, April 1991. USSR: Project of the USSR law ‘On Basic Principles of Destatisation and Privatisation’, Isvestiia, 26 June 1991. A similar law has been adopted in five republics, e.g. RSFSR: Decree of the Supreme Soviet of the RSFSR “On Measures preparing the Processes of Privatisation of State and Municipal Property on the Territory of the RSFSR”, Ekonomika; Zhizn, May 1991, n° 20,5; Lithuania: Law of the Lithuanian Republic ‘On the First Measures of Privatisation of State Property’, Ved. VS Litovskoi respubliki, 1991, n° 10, item 261. Romania: Law 15/1990 deals with the conversion of public enterprises into commercial companies and offers the population a ‘give way’ scheme, Romania Economic Newsletter, April–June 1991, 7.
19 In Czechoslovakia the Act on Private Entrepreneurial Activities of Natural Persons of 14 April 1990 was one of the first pieces of legislation after the Velvet Revolution. It enables citizens, including foreigners, to engage in business. Entrepreneurs may employ an unlimited number of workers and may acquire an unlimited amount of property for the business. Apart from fanners, doctors and lawyers, businessmen employing more than 25 workers and whose tax base exceeds more than 450,000 crowns must register as companies.
20 In the first phase of transformation, the Polish government encouraged street sellers in order to create retail competition as quickly as possible. In the last months of 1990 new (transformed) small shops have been mushrooming in the big cities. In Hungary, although the relevant legislation was passed in the early autumn of 1990 small scale privatisation is not proceeding with the expected impetus. The trading companies managed in time to squeeze a part of their assets into partnerships (mainly founded with foreign participation): see K. Miszei, Experiences with Privatisation in Hungary, Mimeo, Budapest 1990, Paper presented at the World Bank Conference on Privatisation and Ownership Changes in East and Central Europe, June 1990.
21 The Soviet law on Industrial Labour Activity (May 1986, Pravda, 19 November 1986) lost most of its relevance after the enactment of the laws on Cooperatives (26 May 1988, Ved. SSSR 1988, n° 22, item 352) and on Small Enterprises (Decree of the Soviet Ministers of the USSR, 8 August 1990, n° 790). Finally the law was abolished by the new USSR legislation on private entrepreneurial activity (April 1991, Eknonomika i zhizn', April 1991, n° 16, 13).
22 Lenkovics, B., 'Die Kleinuntemehmungen und das ungarische Zivilrecht', Annales Universitatis Scientiarum Budapestiensis de Rolando Eotvos nominatae, Sectio luridica, Tomus XXVIII (1986), 179–195.Google Scholar
23 The Hungarian re‐privatisation law, after having been passed by parliament, was declared unconstitutional on 2 October 1990 by the Constitutional Court because it discriminated against other former landowners. In Poland no such law has been passed, although the former minister of Ownership Transformations, Waldemar Kuczynski, said that the government planned to do so, beginning with small and medium sized companies and farms. In Czechoslovakia, re‐privatisation is an important part of the transformation process. A restitution law was passed on 21 February 1991 and came into force on 1 April. It paves the way for the return of property or compensation for expropriation of nearly $11 billion of non‐agricultural property expropriated between 1948 and 1989. The situation of the former German Democratic Republic is peculiar for several reasons: the West German suite never recognised the legitimacy of the East German state and thus did not recognise the status quo of ownership relations created there. The last great wave of nationalisation occurred in East Germany as late as 1972. It is easier to return the assets confiscated at that time since in the majority of cases only small changes have occurred in the assets.
24 R. Prodi & D. De Giovanni, “The State, the Firm and the Market in the Future of Eastern European Economies”, Most‐Moct, 1991, n°2, 6.
25 Sajo, A., 'New Legalism in East Central Europe: Law as an Instrument of Social Transformation', Journal of Law and Society, vol 17, n° 3 (Autumn 1990), 329–343.CrossRefGoogle Scholar
26 Polish Transformation Act, art. 28. S. Kawacee, “Privatisation of the Polish Economy”, Communist Economies, 1989, n° 3, 241–256.
27 Chavance, op. cit., 9ff.
28 Polish Privatisation Program (Program Prywatcji), Rzeczpospolita, 21 November 1990.Google Scholar
29 D.J. Arbess, ‘Vaclav Havel's Free Market Revolution’, International Corporate Law, April 1991.
30 “Privatisation Process in Hungary”, PFH, 1991, n° 81, 15.
31 Polish State Enterprise Privatisation Act, 13 July 1990, Rzeczpospolita, n° 169, 23 July 1990. The combined value of the preferences accorded to the employees must not exceed the product of the average pay in the state company in the 12 months preceding the entry of the corporation onto the commercial register and the number of the employees acquiring stocks. The number of stocks sold on preferential terms and the terms and settlements of the obligations must be defined by the articles of incorporation.
32 J. Sachs, quoting Dreze, J.H., Labour Management Contracts and Capital Markets. A General Equilibrium Approach, Oxford (Blackwell) 1989, 114Google Scholar. For an opposing view see Estrin, S., ‘Some Reflections on Self‐Management, Social Choice and Reform in Eastern Europe’, Journal of Comparative Economics vol 15 (1991), n° 2, 349CrossRefGoogle Scholar.
33 Ibid.
34 Sluzibeni List, n° 60(1989), 921.
35 Sachs, op. cit., note 26.
36 Magyar Közlöny, n° 35 (1990).
37 Polish legislation on wage indexing did not provide for a full indexing in step with price rises. The indexation compensates up to 80% of the general price rises. The Senate accepted this compromise between social protection and economic needs: Rzeczpospolita, 17–18 October. 1989.
38 W. Szubert, ‘Betrachtung uber Modelle des Arbeitsrechts aus polnischer Sicht’, Osteuropa Reck, 1991. Heft 1, 31–44.
39 Cf the critical comment by George F. Will on the sending of Mr Robert Strauss to the USSR: ‘The ultimate capitalist if there ever was one. Just look at his client list, a page and a half of the Fortune 500 companies. He'll teach them about making money’, International Herald Tribune, 13 June 1991.
40 . Justinian, Digest, I, i, de Iustit. et lure, 10; Instit. I, i, eod. tit.
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