Weltwirtschaftliches Archiv

, Volume 129, Issue 2, pp 216–253 | Cite as

From plan to market: On the nature of the transformation crisis

  • Holger Schmieding
Articles

Abstract

From Plan to Market: On the Nature of the Transformation Crisis. — Traditional neoclassical theory is ill-suited to explain why the transition from a grossly distorted to a far more rational economic system is going along with a fall in value added in Europe’s emerging market economies. Whereas Keynesian-type arguments, including the credit-crunch hypothesis, may account for some features of the exact time profile of the slump, the transformation crisis itself cannot be explained by these considerations. The paper argues that an institutional near-vacuum is a major cause of the crisis. While the old institutions for coordinating a complex pattern of economic activities are defunct, the new and ultimately far superior arrangements are not yet firmly established. The resulting institutional deficiencies, together with some inconsistencies in the time profile of the transformation process, impair an effective and reliable coordination of an extended division of labour in space and time.

Keywords

Gross Domestic Product Real Wage Socialist Economy Bank Credit World Market Price 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Zusammenfassung

Von der Plan- zur Marktwirtschaft. Zur Natur der Transformationskrise. — Die traditionelle neoklassische Theorie ist schlecht dafür geeignet zu erklären, weshalb der Übergang von einem stark verzerrten zu einem weit rationaleren Wirtschaftssystem von einem Rückgang der Wertschöpfung in den entstehenden Marktwirtschaften Europas begleitet ist. Die keynesianischen Argumente einschlieβlich der Hypothese von der Kreditknappheit mögen zwar einigen Besonderheiten im genauen Zeitprofil des Niedergangs Rechnung tragen, die Transformationskrise selbst kann aber durch diese Überlegungen nicht erklärt werden. Der Verfasser ist vielmehr der Ansicht, daβ ein nahezu vollständiges institutionelles Vakuum eine Hauptursache der Krise ist. Während die alten Institutionen zur Koordinierung eines komplexen Netzes von Wirtschaftstätigkeiten hinfällig sind, haben sich die neuen und letztlich weit überlegenen Einrichtungen noch nicht fest etabliert. Die institutionellen Mängel, die sich daraus ergeben, sowie einige Unstimmigkeiten im Zeitprofil des Transformationsprozesses beeinträchtigen eine wirksame und verläβliche Koordinierung der Wirtschaftsaktivitäten in räumlicher und zeitlicher Hinsicht.

This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Aven, Petr O., “Experiences, Prospects, and Policy Options: The Case of the USSR”. In: Horst Siebert (Ed.),The Transformation of Socialist Economies, Symposium 1991. Tübingen 1992, pp. 211–214.Google Scholar
  2. Berg, Andrew, Jeffrey Sachs, “Poland”.Economic Policy, No. 14,1992, pp. 117–173.Google Scholar
  3. Bhaduri, Arnit, “Conventional Stabilization and the East European Transition”. In: Sandor Richter (Ed.),The Transition from Command to Market Economies in East-Central Europe. Yearbook, Vienna Institute of Comparative Economic Studies. Vienna 1992.Google Scholar
  4. Blanchard, Olivier, Richard Layard,Post-Stabilisation Inflation in Poland. London 1991, mimeo.Google Scholar
  5. Brada, Joseph, Arthur King, “Is there a J-Curve for the Economic Transition from Socialism to Capitalism?”.Economics of Planning, Vol. 25, 1992, pp. 37–53.Google Scholar
  6. Brainard, Lawrence J., “Strategies for Economic Transformation in Central and Eastern Europe: Role of Financial Market Reform”. In: Hans Blommestein (Ed.),Transformation of Planned Economies. Property Rights Reform and Macroeconomic Stability. Paris 1991, pp. 95–108.Google Scholar
  7. Brecher, Richard A., “Minimum Wage Rates and the Pure Theory of International Trade”.The Quarterly Journal of Economics, No. 1, 1974, pp. 98–116.Google Scholar
  8. Bruno, Michael,Stabilization and Reform in Eastern Europe: A Preliminary Evaluation. International Monetary Fund, Working Paper 92/30. Washington, D.C., 1992.Google Scholar
  9. Calvo, Guillermo A., Fabrizio Coricelli [1992a], “Stabilizing a Previously Centrally Planned Economy: Poland 1990”.Economic Policy, No. 14, 1992, pp. 176–226.Google Scholar
  10. — [1992 b], “Stagflationary Effects of Stabilization Programs in Reforming Socialist Countries: Enterprise-Side and Household-Side Factors”.World Bank Economic Review, Vol. 6, 1992, pp. 71–90.CrossRefGoogle Scholar
  11. Charemza, Wojciech W., “Market Failure and Stagflation; Some Aspects of Privatisation in Poland”.Economics of Planning, Vol. 25, 1992, pp. 21–35.Google Scholar
  12. Chow, Gregory,Capital Formation and Economic Growth in China. Princeton University, Econometric Research Program, Research Memorandum No. 356. Princeton 1990.Google Scholar
  13. -,The Integration of China and other Asian Countries into the World Economy. Mont Pelerin Society, General Meeting, Conference Paper. Vancouver 1992, mimeo.Google Scholar
  14. Cukierman, Alex, “The End of the High Israeli Inflation: An Experiment in Heterodox Stabilization”. In: Michael Bruno et al. (Eds.),Inflation Stabilization: The Experience of Israel, Argentina, Brazil, Bolivia and Mexico. Cambridge, Mass., 1988, pp. 48–94.Google Scholar
  15. Diehl, Markus,Systemtransformation in Vietnam seit 1976. Kiel Institute of World Economics, Working Paper No. 557. Kiel 1993.Google Scholar
  16. Dornbusch, Rudiger, Stanley Fischer, “Stopping Hyperinflations Past and Present”.Weltwirtschaftliches Archiv, Vol. 122, 1986, pp. 1–47.CrossRefGoogle Scholar
  17. The Economist, “When China Wakes”.A Survey of China. November 28, 1992.Google Scholar
  18. Fan, Qimiao, Mark E. Schaffer,Enterprise Reforms in Chinese and Polish State-Owned Industries. The Development Economics Research Programme, Suntory-Toyota International Centre for Economies and Related Disciplines, China Programme No. 13. London 1991.Google Scholar
  19. Fehn, Rainer, Behrouz Guerami,Stabilization and Structural Reform in Transition to a Market Economy: The Polish Experience. Kiel Institute of World Economics, Advanced Studies Working Paper, 243. Kiel 1993.Google Scholar
  20. Fischer, Stanley, “Exchange Rate versus Money Targets in Disinflation”. In: Stanley Fischer (Ed.),Indexing, Inflation and Economic Policy. Cambridge 1986, pp. 247–262.Google Scholar
  21. Frydman, Roman, Stanislaw Wellisz, “The Ownership-Control Structure and the Behaviour of Polish Enterprises during the 1990 Reforms: Macroeconomic Measures and Microeconomic Response”. In: Vittorio Corbo, Fabrizio Coricelli, Jan Bossak (Eds.),Reforming Central and Eastern European Economies. Initial Results and Challenges. Washington, D.C., 1991, pp. 141–156.Google Scholar
  22. Gomulka, Stanislaw,The Causes of Recession Following Stabilization. Centre for Economic Performance, Discussion Paper No. 33. London 1991.Google Scholar
  23. Gordon, Roger H., Wei Li, “Chinese Enterprise Behaviour Under the Reforms”.The American Economic Review, Papers and Proceedings, Vol. 81, 1991, pp. 202–206.Google Scholar
  24. Hare, Paul, Gordon Hughes, “Industrial Policy and Restructuring in Eastern Europe”.Oxford Review of Economic Policy, Vol. 8, 1992, pp. 82–104.CrossRefGoogle Scholar
  25. Heinrich, Ralph,The Merits of Insider Privatization: What Russia Can Learn from Eastern Central Europe. Kiel Institute of World Economics, Discussion Paper No. 201. Kiel 1993.Google Scholar
  26. Heitger, Bernhard, Klaus Schrader, Eckhardt Bode,Die mittel- und osteuropäischen Länder als Unternehmensstandort. Kieler Studie, 250. Tübingen 1992.Google Scholar
  27. Hinds, Manuel,Issues in the Introduction of Market Forces in Eastern European Socialist Economies. World Bank, Internal Discussion Paper 0057. Washington, D.C., 1990.Google Scholar
  28. Hughes, Gordon, Paul Hare, “Competitiveness and Industrial Restructuring in Czechoslovakia, Hungary and Poland”.European Economy, Special Edition No. 2, 1991, pp. 83–110.Google Scholar
  29. Janacek, Kami] et al.,Transformation of the Czechoslovak Economy: Macroeconomic and Social Problems and Perspectives. Periodic Reports. Ekonomicky Ustav. Ceskoslovenské Akademie Ved. Prague 1992.Google Scholar
  30. Kolodko, Grzegorz W.,Stabilization, Recession and Growth in Postsocialist Economy. Institute of Finance, Working Paper No. 29. Warsaw 1992.Google Scholar
  31. Kornai, Janos,Economics of Shortage. Amsterdam 1980.Google Scholar
  32. Laski, Kazimierz,Transition from Command to Market Economies in Central and Eastern Europe: First Experiences and Questions. Vienna Institute for Comparative Economic Studies, Forschungsberichte, No. 181. Vienna 1992.Google Scholar
  33. Lipton, David, Jeffrey Sachs, “Creating a Market Economy in Eastern Europe: The Case of Poland”.Brookings Papers on Economic Activity, No. 1, 1990, pp. 75–147.Google Scholar
  34. McKinnon, Ronald I.,The Order of Economic Liberalisation. Baltimore 1991.Google Scholar
  35. —,Macroeconomic Control in Liberalizing Socialist Economies: Asian and European Parallels. Stanford University. Stanford 1992, mimeo.Google Scholar
  36. Murreil, Peter, ‘BigBang’ versus Evolution: East European Economic Reforms in the Light of Recent Economic History. PlanEcon Report, No. 26. Washington, D.C., 1990.Google Scholar
  37. —, “Evolutionary and Radical Approaches to Economic Reform”.Economics of Planning, Vol. 25, 1992, pp. 79–95.Google Scholar
  38. Nagaoka, Sadao,Reform of Ownership and Control Mechanisms in Hungary and China: Recent Developments and Future Directions. The World Bank, Energy Department Working Paper, Industry Series Paper No. 7. Washington, D.C., 1989.Google Scholar
  39. Naishul, Vitaly A.,Liberalism, Customary Rights, and Economic Reforms. Moscow 1991, mimeo.Google Scholar
  40. Naughton, Barry, “China’s Experience with Guidance Planning”.Journal of Comparative Economics, Vol. 14, 1990, pp. 743–767.CrossRefGoogle Scholar
  41. -, “Implications of the State Monopoly over Industry and Its Relaxation”.Modern China, 1992.Google Scholar
  42. North, Douglass C, “Institutions and a Transaction-Cost Theory of Exchange”. In: James E. Alt, Kenneth A. Shepsle (Eds.),Perspectives on Positive Political Economy. Cambridge 1990, pp. 182–194.Google Scholar
  43. -,Institutions, Institutional Change and Economic Performance. Cambridge 1991.Google Scholar
  44. Olson, Mancur,Why is Economic Performance even Worse when Communism is Abolished? University of Maryland, 1992, mimeo.Google Scholar
  45. Poznanski, Kazimierz, “Market Alternative to State Activism in Restoring the Capitalist Economy”.Economics of Planning, Vol. 25, 1992, pp. 55–77.Google Scholar
  46. Raiser, Martin,Soft Budget Constraints: An Institutional Interpretation of Stylised Facts in Economic Transformation in Central Eastern Europe. Kiel Institute of World Economics, Kiel Working Paper No. 549. Kiel 1992.Google Scholar
  47. Rostowski, Jacek, “Comment on the Paper by Dariusz Rosati”. In: Horst Siebert (Ed.),The Transformation of Socialist Economies, Symposium 1991. Tübingen 1992, pp. 274–279.Google Scholar
  48. Schmieding, Holger [1991a],From Socialism to an Institutional Void: Notes on the Nature of the Transformation Crisis. Kiel Institute of World Economics, Kiel Working Paper No. 480, Kiel 1991.Google Scholar
  49. - [1991b],Transforming the Financial System in Eastern Europe’s Emerging Market Economies: A Proposal for Clean Balance Sheets and an Institutional Transfer. Kiel Institute of World Economics, Kiel Working Paper No. 497. Kiel 1991.Google Scholar
  50. - [1992a],Lending Stability to Europe’s Emerging Market Economies: On the Potential Importance of the EC and the ECU for Central and Eastern Europe. Kieler Studie, 251, Tübingen 1992.Google Scholar
  51. — [1992 b], “Gradualismus oder Schocktherapie? Eine Zwischenbilanz der ostmitteleuropäischen Erfahrungen”.Wirtschaftsreformen in Mittel- und Osteuropa, Beihefte der Konjunkturpolitik, Vol. 40, 1992, pp. 11–27.Google Scholar
  52. -,Claudia Buch,Better Banks for Eastern Europe. Kiel Institute of World Economics, Discussion Paper No. 197. Kiel 1992.Google Scholar
  53. Van Long, Ngo, Horst Siebert, “A Model of the Socialist Firm in Transition to a Market Economy”.Journal of Economics, Vol. 56, 1992, pp. 1–21.Google Scholar
  54. van Wijnbergen, Sweder, “Stagflationary Effects of Monetary Stabilization Policies: A Quantitative Analysis of South Korea”.Journal of Development Economics, Vol. 10, 1982, pp. 133–169.CrossRefGoogle Scholar
  55. —, “Credit Policy, Inflation, and Growth in a Financially Repressed Economy”.Journal of Development Economics, Vol. 13, 1983, pp. 44–65.Google Scholar
  56. Winiecki, Jan [1991a], “On the Inevitability of Output Fall in Early Transition to the Market: Theoretical Underpinnings”.Soviet Studies, No. 4, pp. 669–676.Google Scholar
  57. - [1991 b],The Polish Transition Programme at Mid-1991: Stabilisation under Threat. Kiel Discussion Paper No. 174. Kiel 1991.Google Scholar
  58. - [1991c],Resistance to Change in the Soviet Economic System. London 1991.Google Scholar

Copyright information

© Institut fur Weltwirtschaft an der Universitat Kiel 1993

Authors and Affiliations

  • Holger Schmieding

There are no affiliations available

Personalised recommendations