Since the transition economies must manage transformation under concrete circumstances of time and place, politics in reality may well not leave enough leeway to chart an “optimal” agenda and pursue carefully each of its elements as part of a coherent whole. But as a firm beacon, the significance of such a consistent agenda should not be ignored. “Optimal” under the circumstances presumably means completing the economic transformation as rapidly as possible so that sustainable economic growth can begin to pay off while minimizing the socioeconomic cost and the duration of the transformation process. The latter could conceivably be condensed into an aggregate “discounted cost” to be weighed off against the discounted benefits of democracy and a market economy. Whose discount factor and cost-benefit assessment should apply here are offhand unclear. Nor is the determination of the takeoff point for sustainable growth in practice straightforward. Textbook optimal trajectories are just that!
In polarized societies as in the transition economies on the eve of the switch, it is imperative that something bold be undertaken rather quickly if only to jolt economic agents out of their lethargy. Eschewing this opportunity to embark on meaningful change may well set back the transformation process in time and exacerbate its eventual costs, given the dilemmas these countries faced in the 1980s and the starting conditions for the transition (see Chapter 2). Even so, much of the apprehension about transformation and many of the errors committed to date could have been avoided or minimized if those under fire had better understood what was at stake and formulated their concrete strategy accordingly. Not only that, wielding the economic ax to settle intrinsically ideological and political battles is not usually the most fruitful option. Alas, economists are not good at configuring the tradeoff, except in the spirit of Henri Bergson’s “illusion of retrospective determinism” (Garton Ash 1996, p. 18).
This chapter addresses the issue of the basic contours of an “ideal” transformation agenda for a generic transition economy. I use the qualifier judiciously. The fairly comprehensive agenda that I explain here in the generic mode, and elaborate on at length in Part II , allows for realistic policy choices over a long period of time. It can still provide the backdrop for the formulation and implementation of concrete policies. I am well aware that, given the window of