the Free Market
Problems of Reform and Recovery
In the early 1990s, post-Communist Czech and Slovak leaders identified the Communist command economy as the biggest obstacle to economic growth and development. They believed introduction of a free enterprise economy based upon capitalist principles of supply and demand could bring economic health, raise living standards, and ultimately assure political stability.
On the advice of Western economists as well as its own experts, Slovak leaders in the early 1990s subscribed to and followed a range of policies to free up economic life. Among these were (1) privatizing large and small enterprises in industry, agriculture, and service areas like banking, insurance, and retail sales; (2) ending state monopolies; (3) accepting bankruptcies and unemployment as the price of the free market; (4) terminating centralized control of both planning and pricing and allowing prices to be influenced by supply and demand; (5) dismantling the bureaucratic planning apparatus, including removal of the former Communist nomenclature; (6) abandoning subsidies to producers and consumers; (7) using fiscal policy to restrict demand; and (8) making currency convertible by reducing budget deficits, increasing exports, and reforming an inept and inadequate national banking system inherited from communist rule.1
After Slovakia became independent, Prime Minister Meciar continued to implement some of these principles. He was much less an