The soviet-oriented economy did not maximize wealth, but rather maximized the utility function of the then political elites (Hall & Elliott, 1999). The goal of the communist economy was not to improve the product, to increase customer satisfaction, or to increase profit margins; on the contrary, the centralized decisions were taken to further maximize the military power of the eastern European states, and to enhance the responsiveness of economy to centralized control (Maital, 2003).
The low intrinsic value of money, excess demand, and centralized control over natural resources have led to the situation when national population was socially dissatisfied, politicized, and subject to central decision-making models. Those economic conflicts and social dissatisfaction have ultimately caused to the general collapse of communism across Europe. In their post-communist economic development, Poland, Russia, and Hungary followed similar economic patterns, although Poland remains the brightest example of the post-soviet economic and social success.
At the beginning of the 1990s, Polish GDP was declining faster than that in Russia and Hungary, but Poland was able to regain its economic positions faster than its European counterparts: Poland experienced smooth transition from centrist to liberal political coalition that implemented mature economic reforms (Maital, 2003). Russia greatly suffered the worsening demographic indices and life expectancy, but was able to quickly restore after the 1998 crisis for the account of the constantly growing oil prices (Algieri, 2007).
In Hungary, the recycling of parties could potentially undermine all efforts to transform Hungarian command economy, but economic plans in Hungary remained quite liberal in content and consequences (Swaan & Lissowska, 2006). Poland, Russia and Hungary have already accomplished much to merge with the rest of the European states. Evidently, the coming decade will mark further economic reconciliation between post-communist and developed European economies, in which Russia, Poland, and Hungary will have more decision-making powers.
As the reforms proceed, the individuals, organizations and regions that are successfully adapting and becoming better off economically are an emerging constituency for the continuing reforms. This emerging constituency will be associated with the creation of new firms rather than with the transformation of existing firms. (Algieri, 2007) That means that further democratization and liberalization will help post-communist countries find their place in the international economy and market.
Algieri, B. (2007). Trade specialization dynamics in Russia. Comparative Economic Studies, 49: 74-76. Maital, S. (2003). Russia and Poland: the anatomy of transition. Challenge, 36 (2): 80-85. Swaan, W. & Lissowska, M. (2006). Capabilities, routines, and East European economic reform: Hungary and Poland before and after the 1989 revolutions. Journal of Economic Issues, 40 (4): 8-22. Hall, T. & Elliott, J. E. (1999). Poland and Russia: One decade after shock therapy. Journal of Economic Issues, 33 (2): 182-197.