A cogent overview of the recent “history” of the transition economies prior to the “1989 events” is important. I confine myself largely to the period of state socialism. But a few references to the state of affairs, or perceptions thereof by the then ruling élites, that contributed to the inauguration of state-socialist economic policies provide useful pointers to the objectives of those advocating the communist alternative. My basic reference here is what communist adherents thought could and should be done about the degree of industrial underdevelopment with low-productivity in agriculture and substantial rural overpopulation. Whether these objectives failed to be accomplished, or were realized not quite to the degree their advocates had originally hoped for, is a different question. But it needs to be addressed too.
In tackling these issues with some economy, I prefer to look at six topics: (1) the broad backdrop to recent history and communist ideology, (2) the doctrine of communist economic development, (3) the economic strategy and its evolvement, (4) the institutions innovated to serve both the ideology and the strategic aims of development, (5) the policies adopted with the institutions in place to realize the strategic ambitions, and (6) the major signposts in policy making aimed at imparting a new impetus to economic growth without fundamentally changing the strategic aims of state-socialist economic development. The first five topics form the heart of this chapter. Because the reform discussions are rather complex and are directly related to the starting conditions of transition, I defer that treatment to Chapter 2. Given the nature of this volume, however, I can at best hope to set forth some important pointers to the “past” that formed the stepping stone toward “1989” and beyond. If this highly condensed rendition whets the reader’s appetite for a more rounded review of the complex issues at stake, it will have accomplished its purposes.
After a brief examination of history and ideology in communist doctrine, I detail core precepts of economic development therein. Next I clarify the communist strategy of industrial development. Then I examine the orthodox economic model, with a detailed discussion of the policies and its institutional infrastructure in the two last sections. I conclude with pointers to the economic dilemmas that emerged from orthodox central planning because they set the stage for the reform episodes and ultimately the collapse of state socialism.