Democracy, Market and Social Safety Nets: Implications for Postcommunist Eastern Europe

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Abstract
Past discussions of market versus planned economies in terms of the efficiency/equity tradeoff missed the adverse equity implications of totalitarian political systems and the importance of pluralistic political decisionmaking structures. The paper demonstrates the role of the paternalistic party–state in creating nonmarket inequities, limiting the articulation of political preferences concerning social safety nets, and restricting nonstate sources of welfare. The transition to pluralistic market economies implies potential improvements both in equity and efficiency. The distinct problems of the transition are primarily rooted in uncertainties arising from the scarcity of resources and the fluidity of political preferences.

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