The article discusses the shift from socialism to capitalism in former socialist countries, impacting the lives of 1.65 billion people. It emphasizes the importance of institutions and political support in achieving efficient economic evolution. The research explores how large-scale reforms are decided politically, the effects of liberalization on economies without existing markets, and the behavior of firms during the transition to private ownership. The findings shed light on the dynamics of institutional change and contribute to our understanding of capitalism and economic systems.