In this paper I do not intend to give an exact and overall description of the transformation of the Hungarian economy let alone an explanation of the causes of the collapse of the socialist experiment in Eastern Europe. Rather, I have set up a verbal model (i.e., I have defined the essential actors and the most crucial processes) and assuming the actors behave in the way I suggest, I offer the reader a series of propositions based on certain theoretical assumptions and logic. At some points I have inserted case studies and empirical analyses which seem to support my propositions.
