Equality, Participation, Transition: Essays in Honour of Branko Horvat

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is already in place. In the subsequent section I analyze the potential role of labour-management in transition and consider the appropriate ownership form and institutional structure. 9.2 The opportunities for labour-management in transition economies Saul Estrin 147 The opportunities for the speedy growth of a labour-managed sector in transition economies arise for a very simple reason. Excluding the former Yugoslavia where, as Horvat has stressed, ownership was social, the vast majority of industrial firms in the former communist block were state owned. I have argued elsewhere (Estrin, 1994) that, for political reasons primarily, reform governments sought very rapid privatization. This was done to prevent the de-cumulation of state owned assets by theft or through consumption. It was also explicitly intended to create a new middle class and thereby to provide political underpinnings for the reform process. Among others, Stiglitz (1994) has questioned whether the economic arguments alone would support such speedy ownership transformation, rather than allowing first a sharpening of competitive forces. To achieve widespread private ownership very quickly, in a context of poorly developed or non-existent capital markets and with very limited private savings, there are only two options for the bulk of industrial firms: 1 To sell the industrial sector to foreign firms or investment funds. This has been, to a significant extent, the inner strategy in Hungary and in Estonia (see Estrin, 1994). However, this approach has profound domestic political ramifications and is, anyway, hardly a viable strategy in larger economies such as Russia or even Poland. 2 To give the industrial sector away to the domestic population. If this strategy is being followed, there are only three avenues to follow: first, one could distribute the shares to the population as a whole, as was done in the Czech Republic, Slovenia and Poland. The second way would be to distribute shares to workers and managers, as was in effect done in Russia and Ukraine. Finally, one might give ownership rights back to the former owners – restitution – an important phenomenon in East Germany. The various options are summarized in Figure 9.1, with examples of countries that predominantly followed particular methods. 1 Some data
148 Self-Management, Employee Ownership and Transition PRIVATIZE RAPIDLY SELL VIA DOMESTIC CAPITAL MARKET STATE OWNED INDUSTRIAL SECTOR SELL TO FOREIGN BUYERS NOT PRIVATIZE RAPIDLY MASS PRIVATIZATION e.g. HUNGARY, ESTONIA 'GIVE AWAY' OR SELL AT NOMINAL PRICES TO: POPULATION AS A WHOLE e.g. CZECH AND SLOVAK REPUBLICS, POLAND WORKERS AND MANAGERS e.g. RUSSIA, UKRAINE Figure 9.1 Privatization options for state sector FORMER OWNERS 'RESTITUTION' e.g. EAST GERMANY may be helpful to establish the potential scale of the labour-managed sector in these economies. The pace of privatization has been extraordinarily rapid in most transition economies. In the most advanced countries (the Czech Republic, Slovakia, Poland and Hungary), well over 50 per cent of GDP was in private hands by 1996, increasing to 70–75 per cent by 1998. Even in the countries where privatization has been more modest, such as Ukraine or Azerbaijan, the private sector
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Equality, Participation, Transition
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First published in Great Britain 20
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vi Contents 9 Self-Management, Empl
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List of Figures 02.1 First Law of O
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x Foreword institution most dear to
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Notes on the Contributors Ivo Bića
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xiv Notes on the Contributors membe
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xvi Notes on the Contributors done
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xviii Notes on the Contributors pri
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Introduction: Branko Horvat - Beyon
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xxii Introduction Dame (1978), Univ
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xxiv Introduction theory led him to
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xxvi Introduction though friendly,
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xxviii Introduction The second pape
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xxx Introduction disciplines such a
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Branko Horvat: Select Bibliography
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xxxiv Branko Horvat: Select Bibliog
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xxxvi Branko Horvat: Select Bibliog
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xxxviii Branko Horvat: Select Bibli
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2 Horvat’s Contributions to Econo
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10 Horvat’s Contributions to Econ
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2 Individual Initiative, Entry and
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28 Egalitarianism On Its Own Thomas
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30 Egalitarianism On Its Own projec
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32 Egalitarianism On Its Own absenc
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34 Egalitarianism On Its Own tithin
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36 Egalitarianism On Its Own what s
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38 Egalitarianism On Its Own 100% 9
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40 Egalitarianism On Its Own contri
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42 Egalitarianism On Its Own anothe
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44 Egalitarianism On Its Own politi
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46 Egalitarianism On Its Own Eckel,
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4 Determinants of Cross-Country Inc
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50 Determinants of Income Inequalit
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56 GINI GINI 65 60 55 50 45 40 35 3
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Table 4.2 The regressions: dependen
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5 Illyrian Theories of Cooperative
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92 Employee Participation in Enterp
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94 Employee Participation in Enterp
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Page 137 and 138: EMPLOYEE RETURN ONLY PROFIT PROFIT
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Page 141 and 142: 7 Employee Involvement and the Mode
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Page 157 and 158: 8 Uneasy Symbiosis of a Market Econ
Page 159 and 160: 120 Market Socialism in Yugoslavia
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Page 189 and 190: Table 9.1 Methods of privatization
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Page 201 and 202: 10 Privatization and Enterprise Per
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198 Growth Theory and Transition Ec
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200 Growth Theory and Transition Ec
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202 Index economic growth - continu
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204 Index Horvat, Branko - continue
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206 Index neoclassical economics -
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208 Index ‘third way’, 88, 104
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Equality, Participation, Transition: Essays in Honour of Branko Horvat

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