The Economics Of Transition: From Socialist Economy To Market Economy

THE ECONOMICS OF TRANSITION The Economics of Transition From Socialist Economy to Market Economy MARIE LAVIGNE Macmillan Education ISBN 978-1-349-24137-8 (eBook) ISBN 978-0-333-52731-3 DOI 10.1007/978-1-349-24137-8 THE ECONOMICS OF TRANSITION Copyright © 1995 by Marie Lavigne Softcover reprint of the hardcover 1st edition 1995 978-0-333-52730-6 All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews. For information, address: St. Martin's Press, Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 First published in the United States of America in 1995 ISBN 978-0-312-12720-6 (cloth) ISBN 978-0-312-12721-3 (paper) Library of Congress Cataloging-in-Publication Data Lavigne, Marie, 1935The economics of transition: from socialist economy to market economy / Marie Lavigne. p. cm. Includes bibliographical references and index. ISBN 978-0-312-12720-6 ISBN 978-0-312-12721-3 (pbk.) I. Europe, Eastern-Economic policy-I 989- 2. Free enterprise-Europe, Eastern, 3. Post-communism-Europe, Eastern. 4. Democracy-Europe, Eastern. l. Title. HC244.L3749 1995 338.947----dc20 95-8199 CIP Contents List of Tables. Boxes and Figures IX Preface xii PART I THE PAST: REAL SOCIALISM 1 The Bases of the Socialist Economic Systen. THE PARTY CONTROL OF THE ECONOMY The Ideology The Nomenklatura The Economic Administration Local Government Self-Management COLLECTIVE OWNERSHIP OF THE MEANS OF PRODUCTION Socialist Ownership Non-Socialist Ownership 3 3 4 4 5 6 7 7 8 9 10 CENTRAL PLANNING Planning Techniques A Non-Reformable System Plan versus Money 10 12 13 2 History 15 16 THE USSR: THE STALINIST MODEL The Beginnings: From War Communism to the NEP and from NEP to Stalinism The Stalinist Era Post-Stalinism THE CREATION OF THE PEOPLE'S DEMOCRACIES IN EUROPE The First Measures The Shift to the Soviet Model Was Yugoslavia a Different Model? 16 20 23 23 24 25 25 THE VARIANTS OF THE SOCIALIST MODEL IN THE THIRD WORLD 27 COUNTRIES 3 The Reforms: Experiences and Failures THE APPARENT LOOSENING OF THE PARTY CONTROL New Relations Between the Centre and the Enterprise A Limited Autonomy The Illusions of Participation v 29 29 30 31 32 Contents vi A DWINDLING OF THE STATE OWNERSHIP MONOPOLY? State Ownership Cooperative Ownership Non-State Ownership COMBINING THE PLAN AND THE MARKET The Principles The Stalemate Could Any Reform Succeed? The Pervading Parallel Economy 4 The Performance THE STRATEGY OF GROWTH The Measure of Performance The Aim and the Model VARIANTS AND ALTERATIONS OF THE MODEL The Eastern European Variants The Non-European Variants THE CRISIS AND THE QUAGMIRE The Economic Crisis The Assessment 5 International Economic Relations 'FUNCTIONAL' AUTARKY State Monopoly of Foreign Trade Foreign Trade Planning Inconvertibility of the Socialist Currencies COMECON How Comecon Worked How the East was Won TRADE AND COOPERATION WITH THE CAPITALIST WORLD The South: A Costly Partnership East-West Relations: War or Peace? PART II 33 33 35 36 37 37 39 40 41 44 44 44 49 50 50 55 57 57 62 65 65 66 67 68 72 72 76 79 79 82 THE PRESENT: TRANSITION IN THE MAKING 6 The End of the System THE CAUSES OF THE COLLAPSE The Roots The Start THE FIRST STEPS OF THE TRANSITION: CENTRAL EUROPE The GDR: A Merger The PHARE Countries 91 91 92 94 96 96 97