Abstract

The paper is based on the analysis of economic and social systems in the last 80 years that ended up both in the processes of transition, and globalisation. The paper is theoretic with an illustrative material on new features of social governance, including the comparison of transition economies with advanced EU countries. Author challenges the dualistic view of social, political and economic governance, where markets and hierarchies (i.e. the state and governments as agents) dominate the theoretical fields. This is also a problem of new frontiers of economics. A classification method for analysing the “fundamental ways ” in organising and governing human societies is developed and the authentic building blocks for a threepronged policy-making are found in the objectives of individuals and their micro-organisations (kinships). The issue is how individuals are included into the macro-systems of markets and hierarchies. No instruments of socio-political governance can dissociate themselves from the patterns of behaviour where justice, solidarity, altruism, reciprocity, consensus, cohesion local networks, human capital or ethics play important roles. The demise of communism, the hardships of transition and the differences in the performance of capitalism can be explained by their particular involvement of the third social pillar (the network of human micro-world) into the working of state hierarchies and economic markets. Paper illustrates the particular developments of real societies by using the historical evidence on growth and institutional developments related to our third pillar of governance (cohesion, social inclusion, culture, redistributive coalitions or rent-seeking). We will concentrate on the countries of Europe and particularly the transition countries. The long-run economic developments depends not so much on the proportion how markets or hierarchies are used in the socio-economic governance (e.g. contrasting the present situation in

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