Legacies of the Past or New Institutions?

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Abstract
In a case study of how claims of former owners for the return of nationalized assets were dealt with in Hungary, the explanatory power of theories emphasizing the importance of cultural “legacies” is tested against that of theories stressing the impact of institutional incentives in accounting for political outcomes. In Hungary, the structure of post-1989 institutions provides a persuasive explanation of the Compensation Law; legacies had a largely rhetorical impact. Yet, restitution claims were dealt with equally generously elsewhere in Eastern Europe despite differing institutional features and partisan alignments and despite the fact that former owners everywhere were a relatively unrepresentative outlier in electorates as a whole. Hence, although institutions clearly affected how former owners' demands were processed, they do not account for the strength of the demand itself. The implication is that the substantive array of forces on the political spectrum and the nature of groups able to capture the center in decision-making bodies may be a more critical factor in the survival of pluralism than either formal institutions or global political culture.