The transition from “socialism” to “capitalism” was – apart from being the defining phenomenon of the late twentieth century – an unprecedented natural experiment in societal transformation and organizational restructuring. Before the revolutions, the economies in Eastern Europe were almost entirely state owned and centrally planned; today the property of most post-communist countries is predominantly in private hands and is market integrated. According to neo-classical “transition economics,” as articulated by the leading economists studying the transition as well as the World Bank and other International Financial Institutions, the creation of private property and the freeing of markets should have created enterprise restructuring leading to rapid growth at the national level after a brief period of “readjustment.”
