The Four Segments of Institutional Change: Question of Integrity of Transformed Economic System
The Four Segments of Institutional Change: Question of Integrity of Transformed Economic System

Summary/Abstract: The problem of systemic change lays in an inevitable mutual penetration of institutions originating from different orders. The key question on institutional systemic change is not that much what to choose among various contemporary “models” of market economies and liberal democracies, as the margin of a real choice is very narrow. The question is rather how to find the way to ensure integrity of a new institutional order. The outcome of systemic change is determined by the communication between the micro and macro levels. Social embededness of actually functioning institutions manifests itself in good communication between the systemic level and the actors operating on a micro scale. Communication between these two levels is an essential precondition for integrity of the order. Without such a link a real consolidation of the institutional order is hardly achievable even if certain recognised formal criteria for consolidation are fulfilled. Social communication and integrity, however, is mostly threatened by inconsistent and partial changes. Economic reforms often neglect some important segments of institutional order that in fact distort economic institutions. Looking for analogy with the school of ‘Variety of Capitalism’ (VoC), but going beyond its scope, the paper identifies the essential segments which eventually shape the economic systems in post-communist capitalism.

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