Abstract

Since the late 1990s, a consensus has emerged among scholars of the post-communist transitions that an enfeebled state is not an asset but a liability to a transition economy. Moreover, it is now accepted that underdeveloped fiscal capacity is a leading cause of state weakness in Eastern Europe and the former Soviet Union. This article compares the alternative revenue extraction strategies developed by state leaders in post-communist Poland and Russia. It stresses political institutional constraints to explain why Poland opted for a social pact with labor over household incomes, while Russia developed a system of elite bargaining over corporate profits.