Of Czechoslovakia and Ourselves: Essential Legal Supports for a Free Market Economy
![handle is hein.journals/hasint15 and id is 47 raw text is: Of Czechoslovakia and Ourselves:
Essential Legal Supports for a
Free Market Economy
By RICHARD S. GRUNER*
I. INTRODUCrlON
Across Eastern Europe, countries are struggling to overcome eco-
nomic stagnation and to compete for western capital and markets. In
Czechoslovakia, the Government plans to restore some of that nation's
former industrial success' by establishing a new legal framework for eco-
nomic activities.2 Drastic revisions in commercial and property laws
have already been implemented to expand foreign capital investment, in-
crease entrepreneurial incentives based on private ownership of most
businesses, and bring about new efficiency in Czechoslovak business en-
terprises. The Czechoslovak Government's emphasis on legal reforms as
essential steps towards economic renewal reflects an underlying belief
that a rule of law can create greater incentives to investment and en-
trepreneurial activities than the country's past regime of uncertain state
economic controls.'
What is striking about the legal reforms now underway is how ex-
* Professor of Law, Whittier College School of Law. LL.M., Columbia Univ. School of
Law, 1982; J.D., Univ. of So. Cal. Law Center, 1978; B.S., Calif. Institute of Technology,
1975.
1. Czechoslovakia received 70-80% of the industrial facilities of the former Austro-Hun-
garian empire at the close of World War I. A period of political stability and economic pros-
perity ensued; at the beginning of World War II, Czechoslovakia was one of the world's ten
most industrialized states. U.S. DEP'T OF THE ARMY, CZECHOSLOVAKIA: A Cou.TRY
STUDY 32 (Ihor Gawdiak ed., 3d ed. 1989) [hereinafter CZECHOSLOVAKIA].
2. Czechoslovakia needs to promote economic progress by bring[ing] its legal frame-
work into line with the norms of a market economy so that property rights and contracts can
be asserted and defended. Edward Fennell, English Join the East's Velvet Revolution, THE
TIMEs, July 2, 1991, at 29.
3. Czechoslovakia's President Vaclav Havel recognized the importance of a firm legal
foundation for a strong Czechoslovak economy when, in response to a question about whether
it was time to privatize Czechoslovakia's economy, Havel observed: Right now we are in a
transitional stage, where individual businesses are acting as though they were private, but
without legal standing. The law must be articulated before we proceed. Lawrence E. Joseph,
Prague's Spring Into Capitalism, N.Y. TIMES, Dec. 2, 1990, § 6 (Magazine), pt. 2, at 20, 34.](ViewImageLocal?handle=hein.journals/hasint15&div=9&collection=&method=preview&ext=.png&size=3)
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Of Czechoslovakia and Ourselves: Essential Legal Supports for a Free Market Economy
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