The Review of Austrian Economics, 15:1, 61–74, 2002. c © 2002 Kluwer Academic Publishers. Manufactured in The Netherlands. Is There an Austrian Approach to Transition?

Abstract. This paper discusses the meaning of the term “transition ” and its implications for policy making. It is suggested that an Austrian view would enhance a better understanding of what has been happening in Central and Eastern Europe in the past decade. Within this framework, the analysis should be based on three criteria: acquisition of knowledge, individual responsibility, free entry. It concludes that future transition analysis should devote more attention to the way a number of subjectivistic features drive institutional change, as well as to the features of the new opportunity sets made available to individuals. JEL classification: P20, A11, B41. 1. The End of Transition and its Consequences Central and Eastern-European Countries (CEECs) are still referred to as “transition economies”. In this context, the term “transition ” is of course meant to convey the notion of continuous structural change, say from a central-planning archetype to a free-market ideal. Yet, ten years have already gone by since the political collapse of the centrally-planned regimes. Although the traits of these countries show constant change (as it happens in any economy), some general features have already come to the surface fairly explicitly. As such attributes become clearer and clearer, the more misleading and harmful it is to assign th