The Transition to a Market Economy: Are there Useful Lessons from History?

The mostly peaceful revolutions in central and eastern Europe at the end of the 1980s marked the ultimate breakdown of the traditional socialist systems in the region. Following many years of half-hearted and inconsistent reforms and growing popular pressure for more political freedom, the transformation of the entire social system came to be seen as the only way of overcoming the prevailing political and economic problems. The former European members of the Council for Mutual Economic Assistance (CMEA)1 decided to transform both their centrally-planned economies and their socialist political systems. The transition towards a democratic constitutional state, a market-type economy and social pluralism reflects the growing desire for a liberal way of life in eastern Europe.