REINHARD ENGEL
53
in 1993 that, despite privatization and reforms of the local self-admin–
istrations, the majority of their proponents were disappointed. Still,
according to Michnik, not even politicians of the left could envisage the
return of the good old days of the welfare state, without unemployment
and with free vacations for workers, education, and health insurance.
IN ALL
FIVE
REFORM STATES
it was clear that market-driven economic sys–
tems had to be established. But of what type? Economic interests
clashed even more than political ones. A Reagan-type capitalism, or one
like Chile's? Or a mixed economy, as in Austria or France? The new
democratic politicians perceived a special danger emanating from the
former communist elites who had allegedly left politics and could now
take the lead in the new economies, mostly through uncontrollable pri–
vatization. Kleptocracies abounded. Their members were recognizable
by their limousines, luxury villas, and wives clothed by Versace. Sev–
enty-five to 85 percent of the population believed that none of these rich
had earned their money honestly.
During the rebuilding of the new democracies, however, it was not
enough to impede some from stealing the silverware, to keep kleptoma–
niacs away from existing markets, or to privatize state property: politi–
cians had to establish the very fundamentals of capitalism. In each
country they found some way of decontrolling prices, cutting subsidies
in order to create true markets, and aiming at stable, convertible cur–
rencies. After the shock of rising prices, a restricted finance policy was
to bring stability. But the weak Central European states could not fol–
low through. Thus many "uncontrollable sectors" of the economy were
taken over by criminal elements and by developing monopolies.
Industry was used as the motor for change. The Leninist dictatorships
of Eastern Europe had been based on industrial economies. In the
1970s, the Soviet Union and its "satellite states" had produced electric–
ity, airplanes, washing machines, radios, buses, and cars, but even the
best of the latter could not compare in quality to Western products-be
they food, textiles, or machinery. That discrepancy held true for nearly
every consumer item, so that Western goods and firms soon dominated
the markets. This phenomenon in turn engendered unemployment
which, however, was compensated for within a few years by moving
cheap labor production from Asia into Eastern Europe. Still, there was
a dearth of experienced managers; and there remains the danger that
