"It is, perhaps, worth stressing that economic problems arise always and only in consequence of change. So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a plan. " (Hayek, 1945, p. 523) This book is based on my research for the degree of Doctor of Philosophy which I received from Lancaster University, England in the second half of 1997. It is an analysis of the structural transformation of the economic system in East Germany and the behavioural relations these changes imply. The approach of institutionalised transformation (not the least by the creation of the Treuhandanstalt) is examined with a theory-based framework which is derived from system-theoretical, evolutionary and constitutional-ethical considerations as well as from the newly developed adjustment model which has been constructed as a dynamic transformation approach. A relationship between norm changes, the new institutional framework of the economic system and the compatibility of the latter with changes of the remaining partial societal systems is recognised. Rigidity factors in the system's flexibility to react as well as the adjustment of economic behaviour to structural changes are analysed. The "marginal product of system change" is defined (section 2. 8. 2).

One Research Objectives, Methodology and Layout.- 1.1 Field of Analysis and Research Objectives.- 1.2 Methodological Discussion.- 1.3 Structure of Analysis.- Two Theoretical Approaches to System Analysis and the Institutional Framework.- 2.1 Introduction.- 2.2 General System Theory.- 2.2.1 System Segmentation.- 2.2.2 The Institutional Framework.- 2.2.2.1 The Economic System as a Partial Social System.- 2.2.2.2 Social Goal Functions.- 2.2.3 The Organisational Framework.- 2.2.3.1 Hierarchical Organisational Structures.- 2.2.3.2 The Coordination Structure.- 2.2.3.3 The Decision-Making and Information Structure.- 2.2.3.4 The Motivation Structure.- 2.3 Evolutionary Approaches of System Transformation.- 2.3.1 Non-Deterministic Approaches of System Transformation.- 2.3.1.1 The Ordo-Liberal Theory of Economic Systems.- 2.3.1.1.1 The Morphological Methodology of the Approach.- 2.3.1.1.2 The Pure Forms of Economic Systems.- 2.3.1.1.2.1 The Exchange Economy.- 2.3.1.1.2.2 The Centrally Directed Economy.- 2.3.1.1.3 The Course of Action on the Basis of the Economic System.- 2.3.1.2 The Property Rights Theory.- 2.3.1.2.1 The Structure of Property Rights and Transaction Costs.- 2.3.1.2.2 The Evolution of Property Rights.- 2.3.1.2.3 A Critique of the Transaction Cost Approach as Part of the Property Rights Theory.- 2.3.1.3 Liberal Economics.- 2.3.1.3.1 The Natural Order of Freedom and Evolutionary Competition.- 2.3.1.3.2 The Concept of Spontaneous Orders.- 2.3.2 Deterministic Approaches of System Transformation.- 2.3.2.1 The Schumpeterian Theory of Economic Development.- 2.3.2.1.1 The Theory of Creative Destruction and Business Cycles.- 2.3.2.1.2 The Inevitable Transformation of the Capitalist System into Socialism.- 2.3.2.1.3 The Economic Order and the Feasibility of Socialism.- 2.3.2.1.4 The Phase of Transition and the Role of Democracy.- 2.3.2.2 The Marxist Law of Motion.- 2.3.2.2.1 The Philosophical Basis of Dialectic Materialism.- 2.3.2.2.2 The Basis-Superstructure-Theorem as Methodological Foundation.- 2.3.2.2.3 The Historic Development of Communism.- 2.3.2.2.4 A Methodological Critique.- 2.3.2.3 The Development Theory of Rostow.- 2.3.2.3.1 Stages of Sectoral Growth.- 2.3.2.3.2 An Incomplete Analysis of the Transition Phase.- 2.3.2.4 The Convergence Theory.- 2.3.2.4.1 The Open Approach.- 2.3.2.4.2 The Closed Approach.- 2.3.2.4.2.1 The Necessity of Planning in the Industrial Society.- 2.3.2.4.2.2 The Convergence of Industrial Societies.- 2.3.3 Classification of the Two German Economies and Theoretical Relevance of Dynamic Approaches.- 2.4 The Institutional Structure of Control Inside the Firm and Organisational Efficiency.- 2.4.1 The Organisational Form and Input Factor Monitoring.- 2.4.2 The Codeterministic Form of Participation and Input Factor Productivity.- 2.4.2.1 Mandatory Codetermination.- 2.4.2.2 Voluntary Codetermination.- 2.4.3 Empirical Studies of Participatory Organisational Forms - Misinterpretation and Lack of Differentiation.- 2.4.3.1 Existing Empirical Studies.- 2.4.3.2 The Need for Differentiation within the Analysis of Codetermination.- 2.4.3.2.1 Self-Management as Opposed to Ill-Defined Property Rights.- 2.4.3.2.2 Constraints of Codetermination within the German Participatory Laws.- 2.5 Constitutional Economics and the Theory of the Democratic Firm.- 2.5.1 The Conventional Employment Contract and Ethics.- 2.5.1.1 The Rights-Based Versus the Utilitarian Normative Theory.- 2.5.1.2 Positive and Negative Control Rights.- 2.5.1.3 The Labour Theory of Property.- 2.5.1.4 The Inalienable Rights Theory.- 2.5.1.5 The Appropriation Critique.- 2.5.2 The Theory of Economic Democracy and the Firm.- 2.5.2.1 General Democratic Principles.- 2.5.2.2 The Democratic Firm.- 2.5.2.2.1 Property Rights and Personal Rights.- 2.5.2.2.2 The Democratic Principle of Self-Governance.- 2.5.2.3 The Financing of Democratic Worker-Owned Firms.- 2.5.2.3.1 The Net Asset Value of the Firm and Internal Capital Accounts.- 2.5.2.3.2 External Financing.- 2.5.2.4 Examples of Worker Ownerships.- 2.5.2.4.1 Traditional Worker Stock Cooperatives.- 2.5.2.4.2 Yugoslav-Type Worker Cooperative.- 2.5.2.4.3 Mondragon-Type Worker Cooperatives.- 2.5.2.4.4 The Employee Share Ownership Plan.- 2.5.2.4.5 The Chinese Responsibility System.- 2.5.2.4.6 Hungarian New Economic Mechanism-Reforms of 1968.- 2.5.2.4.7 Soviet-Type Cooperatives.- 2.5.2.5 Reform Suggestions.- 2.6 An Alternative Allocation of Control within the Codeterministic Firm and the Democratic Firm.- 2.6.1 Individual and Corporate Objectives.- 2.6.2 The Principle of Free Choice of Participation and Primary Control Rights.- 2.6.3 Performance Related Income and Secondary Control Rights.- 2.6.4 The Wage Committee, the Representative Board and Wage Negotiations.- 2.7 Theoretical Synthesis.- 2.8 Modelling of a Dynamic Transformation Approach.- 2.8.1 Basic Assumptions.- 2.8.2 The Adjustment Model.- 2.8.3 Conclusions from the Adjustment Model.- Three The Institutionalisation of the East German System Transformation.- 3.1 Introduction.- 3.2 The Former East German Economic Structure of a Socialist Planned Economy.- 3.2.1 Principles of the East German Political Economy.- 3.2.2 The Structure of Planned Economic Operation.- 3.2.3 The Organisational Structure of Combines.- 3.2.4 The Ownership Doctrine of Marxism-Leninism.- 3.2.4.1 The Three Phases Of Expropriation.- 3.2.4.2 Constitutional and De Facto Significance of Socialist Property.- 3.2.5 Insufficient Reform Efforts (NES, ESS).- 3.3 Transformation of the Centralised Structure of Organisation and Decision-Making.- 3.3.1 Corporatisation of Nationally-Owned Enterprises.- 3.3.2 The Assignment of Limited Private Property Rights to the Treuhandanstalt and TH-Corporations.- 3.3.3 The Decentralised Structure of the Treuhand.- 3.3.4 The Organisational Structure of Newly-Corporated Enterprises.- 3.4 Deconcentration of Combines as Basis for Competitive Market Structures.- 3.4.1 Competition Law and Policy: Principles and Assumptions.- 3.4.2 Pragmatic Deconcentration Sanctioned by the Separation Law - Spaltungsgesetz -.- 3.5 Establishment of Unambiguous Property Rights.- 3.5.1 German Political Unification and its Constitutional Property Rights Implications.- 3.5.2 Re-Privatisation of Peoples' and State Administered Property.- 3.5.2.1 Restitution: Benchmark Figures.- 3.5.2.2 The Principle of Injustice of National Separation: Restitution and Return of Property to the Previous Owners.- 3.5.2.3 Restitution to Local Authorities and Corporations under Public Law.- 3.5.2.4 Enterprise Restitution: Some Empirical Results.- 3.5.2.5 Synopsis and Economic Implications.…