ABSTRACT
When communism collapsed in 1989, an intense discussion erupted about how to proceed. The dominant line of thought urged early and radical transformation. The radical reformers focused on three aspects of reform: liberalisation of prices, trade and enterprise; macroeconomic stabilisation; and privatisation. A standard fourth point was the construction of a social safety net. Implicit in these reforms was institutional reform, but reform of the judicial system and law enforcement were not central to the early reformers because they were predominantly economists, and there were hardly any lawyers. There were those who called for slower, more moderate reforms, but no coherent alternative arose. Their dominant idea was that slower reforms would reduce social costs. Another idea was that experimenting was better than the imposition of one comprehensive model and that the old administrative capital had to be utilised.
In hindsight, rent seeking and corruption became the biggest problems, and they were understated, especially by the gradualists. Judicial reform should have been more central, but legal reformers were absent. Deregulation was best done quickly. The same was true of macroeconomic stabilisation. Privatisation was very difficult, and the key appears to have been political acceptance.
