Havel then was the revolution's acknowledged moral authority owing to his well- chronicled resistance against the hated communist regime and to his public exposure of that regime's absurdity and illegitimacy. At the same time Havel felt (and the dissidents agreed) the only way forward was to institute reforms that would re-establish Czechoslovakia as a bone fide "Western" nation.

Three factors connected with the composition and orientation of the dissidents worked in favour of the penetration of neoliberals into elite economic policymaking circles. First, Havel and most dissidents, according to their own admission, were persons of the arts and, by definition, did not understand Western "scientific" economics. The gap in the education of the dissidents made them willing to listen to the advice of acknowledged "objective" economists, such as the neoliberals. Moreover, the dissidents regarded (in the Central and East European tradition) economics as a non-political, technical field that could not serve as an avenue for political power for its experts. Consequently they did not fear the neoliberal economists, at least at the outset of the transition.

Second, the dissidents were a very small group – perhaps 250 – sitting astride a bureaucracy filled with Communist Party members. To counterbalance the communist influence, the communists sought reliable outside help. The obvious source was the disappointed generation of professionals who worked in the state institutes and enterprises. Out of the so-called Czech Prognostics Institute, for example, the dissidents appointed Vaclav Klaus as finance minister. Third, it would be an overstatement to say that dissidents spoke in one ideological voice.

The ideas of Havel and may dissidents were formed in the failed effort to give socialism a human face in the 1960s. Others, such as Charter 77 author Jan Patocka, co-founded the political party ODA to promote free-market liberalism. The unifying feature of the dissidents then was not ideological consensus over economic reform, but rather the general (and vague) idea that a return to communism was unthinkable and a transformation of institutions along Western lines was necessary. Therefore, the neoliberal economists whose views on economic reform (including privatization) were likely to cause social hardship did not meet strenuous objections from the dissidents.

The genius of Klaus and his neoliberal cohort, in fact, was to devise a privatization approach that fitted the mood of the new elite and the people. Like many of the reform economists of the 1960s, in Czechoslovakia, Ota Sik (7) had argued that Western capitalism was an unjust system. He developed an ideal political economy, unfortunately as it would turn out, The Third Way, since much maligned in the "West". Sik's approach emphasized market mechanisms in combination with worker safeguards, the most important ones being general worker participation.


The disappointed generation, moreover, worried about Havel's apparent willingness to forgive communists. They feared that Havel would halt radical transformation initiatives and support kinder but less ambitious economic reforms. Havel also abstained from privatization debates because, as Schwartz has already said, he was unfamiliar with Western economics. He believed, moreover, that economics should be handled by trained professionals. This belief was consistent with the traditional Eastern European view that economics, like engineering or accounting, is a technical, bureaucratic chore. By then stepping out of the economic debates, Havel unwittingly opened the space for the neoliberal reformers (and fervent anti-communists) to seize the economic agenda. The casualties of Havel's political mistake turned out to be the Social Democratic left. The prime beneficiary was his neoliberal namesake, and ultimate nemesis, Vaclav Klaus.

Unlike Havel, moreover, who opted out of the privatization debates owing to his own shortcomings, enterprise managers and trade unions were hemmed in by the prevalent anti-communist and pro-Western sentiment. When the trade unionists criticized neoliberal theory, they therefore provoked a reflex counter-charge. Anti-communists called them socialist. In the wake of such, the Czech government was able to institute voucher privatization without the consent of enterprise insiders. While in November 1989, only 3 per cent of Czechoslovaks preferred capitalism to socialism or a mixed economy, by May 1990, public opinion had reversed, duly shaped by the media, which came out strongly in favour of economic reform and voucher privatization. By this time, Havel himself had endorsed Klaus's economic programme. In sum, historical legacies and political tactics as well as nationalism combined to account for why the Czech neoliberals were successful.

In our terms here, the societal "North", not to mention a communal "South" and a spiritual "East", which have been equally left behind, lost out to a crude – that is non/ integral – version of the "North-west". Vaclav Havel remains, to this day, revered by the non-establishment abroad, while, like Gorbachev, he is dismissed in his own country as, ultimately, a failure. As so often happens, living in the truth is overcome by living by expediency, and kow-towing, in the process, to an ultimately unsustainable version of the "West". We take the story on from here, in the following chapter, via European-ness and innovation.

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