Today, the case for socialism is no longer persuasive, but this was not always so. Once, many intelligent people considered socialism not only morally but also economically superior to capitalism and democracy. They thought a benign state would pursue higher ideals than a petty democracy and execute them more effectively. Marxist-Leninist ideas and socialist institutions conditioned the postcommunist transition. To provide some background, I review the essence of the Soviet-type system. As communism broke down, countries faced very different political and economic preconditions, and their collapses proceeded in sharply contrasting ways.

Real Socialism

Karl Marx, Friedrich Engels, Vladimir Lenin, and other communist theoreticians left many ideas on how to develop a socialist state, but Josef Stalin was the one who formed the classical communist economic system with the first five-year plan of 1929–33. This system remained intact until his death in March 1953, and he imposed it on all countries in the Soviet bloc. Despite many reform attempts, the lasting changes were remarkably small. This system was the least common denominator of all the countries discussed in this book. The institutional barriers built to reform it were formidable.