Despite dramatic increases in poverty, unemployment, and social inequalities, the Central and Eastern European transitions from communism to market democracy in the 1990s have been remarkably peaceful. This book proposes a new explanation for this unexpected political quiescence. It shows how reforming governments in Poland, Hungary and the Czech Republic have been able to prevent massive waves of strikes and protests by the strategic use of welfare state programs such as pensions and unemployment benefits. Divide and Pacify explains how social policies were used to prevent massive job losses with softening labor market policies, or to split up highly aggrieved groups of workers in precarious jobs by sending some of them onto unemployment benefits and many others onto early retirement and disability pensions. From a narrow economic viewpoint, these policies often appeared to be immensely costly or irresponsibly populist. Yet a more inclusive social-scientific perspective can shed new light on these seemingly irrational policies by pointing to deeper political motives and wider sociological consequences.