Making Markets: Economic Transformation in Eastern Europe and the Post-Soviet States

By Shafiqul Islam; Michael Mandelbaum | Go to book overview
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Capitalism in today's most advanced industrialized countries took centuries to develop, and even then the state always remained intimately involved in shaping its evolution and ensuring its survival. The creationist model of laissez faire capitalism is an appealing, but abstract ideology: It was neither created instantly anywhere with a big bang, nor does it have much in common with the modus vivendi of advanced capitalist economies. True believers may cling to the creationist approach now in vogue in the transitional economies, but the weight of history and experience appears to favor the alternative.


Notes
1.
Incomes policy normally means some measure to restrain wage inflationfor example, taxing enterprises that approve wage increases.
2.
It appears that by the time this volume gets into the hands of the readers, CSFR will have already separated into two independent nations: Czech Republic and Slovakia. CEE-3 will then consist of Poland, Hungary, and Czech Republic.
3.
See, for example, Richard Portes' chapter in this book; Andrew Berg and Jeffrey Sachs, "Structural Adjustment and International Trade in Eastern Europe: The Case of Poland", Economic Policy: Eastern Europe 14 ( April 1992); and Andrew Berg, "A Critique of Official Data" (Paper presented at the IMF/World Bank Conference on the Macroeconomic Situation in Eastern Europe, Washington, D.C., 1992).
5.
See Berg and Sachs, "Structural Adjustment and International Trade in Eastern Europe"; and Dani Rodrik, "Making Sense of the Soviet Trade Shock in Eastern Europe: A Framework and Some Estimates", National Bureau of Economic Research Working Paper, no. 4112 ( Cambridge, Mass., 1992).
6.
Rodrik, in "Making Sense of the Soviet Trade Shock in Eastern Europe", estimates that the trade shock caused the gross domestic product to decline by 3-4 percent in Poland and 7-8 percent in Hungary and Czechoslovakia.
7.
Stanley Fischer and Alan Gelb, "The Process of Socialist Economic Transformation", Journal of Economic Perspectives, vol. 5, no. 4 ( 1991), p. 101.
8.
International Monetary Fund, World Bank, Organization for Economic Cooperation and Development, and European Bank for Reconstruction and Development, A Study of the Soviet Economy ( Paris: International Monetary Fund, 1990), pp. 18-19.
9.
The Hungarian economist Janos Kornai has made the same point in an interview: "I hate the phrase 'shock therapy.' We don't apply the therapy for the sake of the shock. The shock is an inevitable side effect." See RobertKuttner

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