Privatization and elite reproduction in Eastern Europe

Abstract

This analysis concentrates on die different privatization methods which have been applied in Poland, Hungary, Czech Republic and East Germany. It is argued that the different privatization methods had a considerable impact upon the unequal distribution of ownership and control in former state-owned enterprises. The reproduction rate of the former nomenclature is relatively high in all four countries regardless of the privatization method. In post-socialist countries a particular type of capitalism is evolving which can be characterized by its specific ideology and the governance structure of the privatized firms. The outcome of shock therapy which has been applied in some post-socialist countries has been paradoxical: it did not destroy the power basis of the nomenclature, but radier stabilized it. In most firms there is no clear-cut separation of ownership and control (manager capitalism), but rather a balance of power between managers (nomendature) and the new owners.