Working paper // World Institute for Development Economics Research 2010,63
In the former socialist redistributive economies, the transition to market economy and the conversion to private ownership followed different trajectories. The paper offers an overview on how a new class of grand bourgeoisie was formed in three different regions of the transition: Central Europe, Russia and China. In Central Europe this new class often was recruited from the ranks of the socialist technocratic elite who used their managerial skills, inside knowledge and political connections to convert public property into private wealth. The large propertied class of Central Europe is well formed, and private property rights are secure. In Russia, the new grand bourgeoisie was typically 'appointed' by the top political boss, and as leadership changed, the members of this class had to assure the new leader of their loyalty. Failure to do so meant loss of property, exile or jailed. In China, the transition to market economy occurred 'from below'. Many of the wealthy started out with small private businesses that expanded over time. Once they became known to be wealthy, they needed political protection and were vulnerably to political rivalry. Private property in China - much like in Russia - is still rather insecure, and politics are in command.