The Economy — Capitalism without Property
By the middle of the 1990s a new phrase was creeping into the lexicon of Václav Klaus’s speeches. True to form, it had a confident and reassuring ring to it. The Czech Republic had entered The post-transformation phase,’ Switching into metaphor, eastern Europe’s most market friendly, post-communist reformer explained the basic idea thus: ‘Using my standard analogy and describing the three consecutive transformation stages as waiting in a hospital ward, undergoing surgery and recovering in a rehabilitation center, I can assure you that we have made it to the rehabilitation center. And we are in pretty good shape now.’1 The speech was made in November 1994. Having suffered a severe and traumatic relapse the patient is recovering in intensive care. The head doctor has been demoted and he has struck up a curious association with a group whose practices he once dismissed as old-fashioned.
KeywordsGross Domestic Product Corporate Governance Capital Market Central Bank Private Property
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- 1.V. Klaus, Renaissance: The Rebirth of Liberty in the Heart of Europe (The Cato Institute. Washington DC, 1997), pp. 3–5.Google Scholar
- 10.‘In 1990 it was recognised by the reformers that sweeping privatisation was necessary. Because of the limited savings of Czechoslovak citizens, standard privatization by sale to domestic citizens would have had to be protracted; 600 years was one estimate. Rapid sales at market prices would have had to mean sales to foreigners. This was also seen as undesirable.’ Vladimír Dlouhý and Jan Mládek, ‘Privatization and Corporate Control in the Czech Republic’. In Economic Policy (Dec. 1994), pp. 156–7.Google Scholar
- 24.Josef Poeschl, Czech Republic: ‘An Economy Out of Steam’ (Feb. 1999), p. 1. Published by The Vienna Institute for Comparative Economic Studies. Poeschl also argues that internal commercial debt partially passed on from the communist past was a major problem. Companies ended up being so highly geared that they had to spend a vast proportion of any profits they did make on servicing debt. This made innovation and further investment less likely. He suggests that while companies and banks were in state hands it may have been sensible to write off this debt, which would have been purely an accounting matter at the time.Google Scholar
- 27.V. Klaus, ‘The Ten Commandments of System Reform’, quoted in Prospects for the Czech Republic (APP Group a.s., David and Shoel s.r.o., COWI in cooperation with other firms, 1994, Prague).Google Scholar
- 32.H. Appel, ‘Justice and the Reformulation of Property Rights in the Czech Republic’, East European Politics and Societies, 9 (Winter 1995), p. 36.Google Scholar