The dual transition in the post-Soviet world resulted in a wide range of economic and democratic success. A key part of the economic transition was privatization. Privatization was supposed to allow large portions of the population to be involved in the new market economy and spur competition. State industry either ended up in the hands of the well-connected (insider privatization) or regular people and investors (outsider privatization) This paper combines theories from economics and political science to build the argument that prioritizing outsiders in the privatization process helps form an ownership class that favors the continuation of democracy within the country. To analyze this theory, this paper uses case studies of the Czech Republic, Russia, and Poland to capture three different approaches to the dual in Eastern Europe. This allows a close examination of the complex transition period to show how policy choices and underlying Soviet structures changed incentives and attitudes towards democracy. While the effects of insider and outsider privatization seems to have clearly impacted the transition to democracy in the Czech Republic and Russia, the case of Poland shows that the theoretical framework may not be able to fully explain the differences in democratic success across Eastern Europe and the rest of the former Soviet Union. As democracy is forced onto the defensive in the face of rising inequality, this paper helps provide an understand of how economic participation may play a part in the strength of democracies in the future.

Dr. Ellen Carnaghan (ellen.carnaghan@slu.edu) was hugely influential on this paper. Her class on democratization pushed students to think about the values of democracy, how it forms, and how we keep it. Her classes, and discussion with the author of the paper, helped form the theoretical framework while also challenging it with new information. Additionally, Dr. Carnaghan’s specialty in Russia and Eastern Europe was very helpful when discussing the special circumstances in each of the case studies.