Sunset of the 'nomenklatura'.

• Author: Clawson, Patrick L.
• Position: Communist bureaucracy and privatization - Chairman's Agenda: Acquiring in Eastern Europe

Capitalists take cheer: The command economies' and the communist bureaucrats' days are numbered.

As someone who has helped design tax systems for governments around the world, Patrick L. Clawson chuckles good-naturedly when he talks about the flourishing black markets in Eastern Europe. The black markets, admits this international economist, are beneficial in that they are helping to speed the conversion to a free market-oriented system. Clawson was a Senior Economist with the World Bank and the International Monetary Fund. He is now a Resident Scholar at the Foreign Policy Research Institute, an international affairs think tank based in Philadelphia. In a conversation with Directors & Boards, he comments on a variety of economic issues in the Eastern European market.

On the Prospects for Political Stability: "The concept of Eastern Europe that we have today is really a product of the Cold War. It doesn't correspond to the history and culture of the region, which is divided between Central Europe on one hand, and the Balkans on the other. The political future of Central Europe is going to be quite stable. We see East Germany, Czechoslovakia, and Hungary making a transition to new policies and new sets of governments much more smoothly than any of the Balkan states. The political future of the Balkans is going to be very messy. It's been an area of turmoil for hundreds of years. Ethnic groups are all mixed in. They don't like each other, there is no trust, there are no democratic traditions to build on. Romania, Bulgaria, Yugoslavia, and Albania are going to be torn by competing anti-democratic movements and ethnic tensions, which could disturb political stability and, quite possibly, lead to civil strife bordering on civil war. It's very different from Central Europe, and this difference looks like it's going to grow through time."

On Misleading Economic Indicators: "I'm very skeptical about how useful our Western economic concepts are in understanding what's happening in Eastern Europe. What does the GNP in those countries tell you when you simply can't find goods in the market? It's like saying that inflation in Poland has been 2,000%. Someone might well say, |That doesn't make a difference to me. Now I can at least get the goods instead of standing in line for 10 hours, getting to the head of the line, and discovering that what I want is not there.'

"Furthermore, I happen to think that the situation is much better today than what the...