Capital Market Inflation and Privatisation in Capitalist and Post-Communist Economies

This paper examines the conditions under which privatisation has been associated with capital market inflation in early and contemporary capitalism. It is argued that this association with capital market inflation creates an unstable financial structure. The lack of private financial accumulation under Communism has constrained privatisation through capital markets. But the alternative privatisation through foreign direct investment has created a stronger financial structure, albeit creating an industrial structure that is more vulnerable to adverse international circumstances.