The First Shall Be Last? Entrepreneurship and Communist Cadres in the Transition from Socialism

TLDR

The article reviews sociological literature on the transition from socialism to capitalism. It distinguishes between erosion and transition phases and between traditional and corporate segments in the emerging private sector. Hungarian panel data show that ex‑communist cadres retain an advantageous position—especially in the dynamic corporate sector—thanks to human capital and the conversion of past political power, while the transition also widens income inequalities.

Abstract

This article reviews the sociological literature on the transition from socialism to capitalism. It distinguishes between the erosion and transition phases and between traditional and corporate segments in the emerging private sector. Panel survey data from Hungary show that during the transition ex-communist cadres maintain their advantageous position and do especially well in the more dynamic corporate segment. They are successful because human capital is important in both capitalism and socialism and because the cadres are able to convert past political power to economic advantage. Contrary to the findings of studies based only on agriculture, the transition increases income inequalities.