Who Owned What After Shock Therapy? Privatization Design and Capitalist Divergence in Poland and Russia

Günseli Durmaz

Fiscaoeconomia, 2026, issue 2

Abstract: This article questions the diverging paths for Poland and Russia after communism through shifting the analytical focus from macroeconomic stabilization to the distributive foundations of ownership and power. Both countries used radical shock therapy programs during the early 1990s to rapidly implement price liberalization, fiscal restraint, and massive privatization. Yet, the institutional and developmental outcomes differed significantly. Poland has developed a socially embedded market capitalism, while Russia evolved into oligarchic and later state-dominated capitalism. This article uses comparative political economy, state-capture theory, and varieties of capitalism to argue that the privatization design, not reform speed, was the decisive mechanism behind this divergence. Management-employee buyouts in Poland dispersed ownership while limited insider access, and supported regulatory pluralism; voucher privatization in Russia concentrated ownership among elite groups that could extract rents, capture institutions, and consolidate authoritarian rule. The elite structure served as the mechanism of transmission by which initial ownership patterns generated reinforcing feedback loops and path dependence. Quantitative data, such as ownership concentration, foreign direct investment inflows, and governance quality, further support this analysis. The study challenges traditional interpretations of shock therapy and demonstrates that capitalist diversity in post-socialist Europe is due to distributive variations rather than ideological ones. It shows that the early choice of ownership determines the longer-term development of markets, the strength of government, and the type of regime, revealing the political foundations of post-communist capitalism.

Keywords: Shock Therapy; Post-Communist Capitalism; Poland; Russia; Economic Transition (search for similar items in EconPapers)
JEL-codes: F21 M10 P10 P16 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:260213

DOI: 10.25295/fsecon.1846965

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