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This book analyzes the political-economic implications of§system transformation as experienced now in Central and§Eastern Europe and in China. The whole societal organization§being in motion and economic activitybeing in a deep§recession, political leaders will find it extremely§difficult to secure consensus and support for redesigning§institutions, and stabilizing and restructuring activity.§The ensuing process is certainly not one of optimal control,§but has rather evolutionary characteristics leading§constantly to paradoxes and dilemmas. The first part of the§book discusses different paradigms within which the complex§process of transformation could fruitfully be analyzed.§Democratic theory, bargaining theory, efficiency theory,§institutionalism - all contribute to the understanding of§the complex phenomena. Keytopics of the second part are§among others: policy aspects of privatization, adjustment of§fiscal system and policy, industrialrestructuring, the§different case of China. The book illustrates that the first§euphoria of planning the transition to markets was rather§naive, analytically and politically. Transformation is not§only an economic puzzle,not even in the first place. It is§very much of a sociopolitical problem andhas to be treated§as such. The book can be used as a reader or as background§literature in corresponding course.