Why has Eastern Europe all but abandoned its capitalist ideals of the early 1990s? Although pro-capitalist on the surface, many of its reforms undermined a transition to capitalism by creating fear and uncertainty, thereby raising transaction costs and alienating bureaucrats and retirees-obstacles that might have been avoided had reformers emphasized the need for stable, pro-market legal systems compatible with prevailing cultural norms.

Svetozar Pejovich (1931–2021) was Professor of Economics Emeritus at Texas A&M University and Senior Research Fellow for the International Centre for Economic Research in Torino, Italy.
Economic History and DevelopmentEconomic PolicyEconomyEuropeFree Market EconomicsInternational Economics and Development
Other Independent Review articles by Svetozar Pejovich
Fall 2005 On the Privatization of “Stolen Goods” in Central and Eastern Europe
Summer 2003 Transition: The First Decade
Summer 2001 From Socialism to the Market Economy: Postwar West Germany versus Post-1989 East Bloc