Abstract

A major difference between capitalism and socialism is the ownership of non-labour productive resources. Before the transition began, the state owned most of the non-labour productive inputs in the Communist economies. Since a central feature of capitalism is the private ownership of productive resources, the ownership of these non-labour assets needed to be transferred into private hands. While there were examples where state-owned companies had been privatized in Western capitalist economies before the transition began, there had never been a privatization programme of the magnitude and scope that was required if the former Communist countries were to achieve the transition to capitalism.