The annus mirabilis in the eastern part of Europe inaugurated an unprecedented movement toward society-wide changes throughout the communist world. These were partly based on widely held ambitions for pluralistic democracy and market-based resource allocation. This book addresses the policy questions around the challenge of transforming these economies from their planned, administrative past to vibrant market-based entities. Initially, the broad range of analysts and policy makers advocated a predominantly neoclassical approach. They viewed the task of transformation as consisting primarily of stabilization, privatization and liberalization rather than the construction of markets supported by all of the institutions required to function well. By disregarding the 'initial conditions' or the legacies of over forty years of state-socialist policies throughout society, their critical importance for path-dependent transformation was largely ignored. Jozef van Brabant considers in turn, the wider set of challenges facing these economies - stabilisation, privatization, liberalization, institution building, and developing and maintaining the sociopolitical consensus - before examining the evolving role of the state. Finally, he discusses policy options for integration into the world economy and whether the transformation is sustainable. Using concrete examples from the eastern European countries, this work systematically examines the initial conditions of transformation, the policy tasks ahead and the manner in which policies have been pursued before drawing useful lessons for policy makers in other countries. The author considers the challenges in a society-wide context.