ABSTRACT
Markets are concerned with allocation and efficient exploitation of resources. Regarding inputs, the functions can be separated into the allocation of capital, labor, land, and other natural resources. The paramount issue involved in the establishment of a market, then, concerns capital assets, namely, providing conditions for raising capital's net worth. If capital services can be allocated at lesser cost, other things being equal, by internalizing the coordination process than through formal markets, obviously private property would be the answer. In postwar Eastern Europe, saving for capital-formation purposes was not actively promoted outside the narrow state and cooperative sectors. Criteria would include, for example, a minimum required rate of return on capital; targets of overall and disaggregated net returns, unit costs and productivity; and the obligation to resort to commercial markets for funds. The former can be fostered through demonopolization, foreign competition, and rapid private capital formation.
