State-building for the market economy in Eastern Europe

Kornai’s earlier works embodied the idea that state institutions formed a system with a strong tendency to
reproduce itself, and hence to resist minor reforms. Thus, at the end of socialism, huge changes were
needed in politics, economics, and the law to build a new system oriented towards the market-type
economy, which would again be stable, self-reinforcing and self-sustaining. Transition promoted the
development of new states in Eastern Europe that conformed to the Copenhagen criteria for the EU
accession. Were we too hasty in thinking that we had succeeded? The new systems are not returning to the
previous one, and only in a few areas have the basic norms of a market-type economy been set aside in
Hungary or Poland. But concerns arise at the interface between politics, law and economics – to do with the
rule of law, the nature and role of the state, and the interactions between parliament, the executive and the
judiciary. Unavoidably, there is also an interesting international dimension here, represented by the shift
from the Warsaw Pact and CMEA to NATO and the EU. This paper explores these issues in the light of
some of Kornai’s recent analysis of developments in Hungary, while also drawing on his very insightful earlier works