The Incomprehensible Post-Communist Privatisation

In this article I analyse one of the most important claims of the neoliberal policy prescriptions for Central and East European states in the early 1990s, that 'communist' property should be privatised. My claim is that this neoliberal policy prescription was based on a number of false assumptions about what it was 'communist' property, and a number of false assumptions about communist law. As a result of these assumptions, the post-communist process of privatisation was plagued by a host of unintended and negative consequences. Nevertheless, based on these false assumptions, the neoliberal ideology was capable to portray the privatisation as 'rights based' and essentially a democratic process. I debunk these pretenses by showing that the reality of 'communist property' was totally different than that assumed by neoliberal policies. The distinctiveness of communist arrangements of property resided not in absence of private property, which was tolerated under communism, but in the organisation of property as an administrative matter, based on unwritten operational rules. Moreover, the communist corporate law was more or less the similar with the 'western corporate' law, so a simple change of formal law would not lead to the transformation of communist property into private property. If a transformation was desired, what needed to be changed was the operational rules accordingly to which the communist property operated. However, this was a level of 'reform' totally ignored by the neoliberal policies, with the result that post privatisation these operational rules continued to apply. The result was the great enrichment of the former communist managers who were able to benefit 'privatisation' at the expense of the public, in a process which was not 'right based' or 'democratic.