The Political Economy of Transformation (Studies in Contemporary Economics) - Softcover

Transformation has become the major puzzle of economics for the last decade of this century, and not of economics alone: it has so many ideological, cul­ tural, juridical, social and political ramifications that it will take some time to construct a framework within which the process can be analyzed proper­ ly. Economists usually discern three major aspects of transformation, macro­ economic stabilization, institutional reform and restructuring. Since transfor­ mation was not only caused by political will, after the demise of more or less totalitarian regimes, but also by a manifest economic crisis, the success of the operation will be judged by its ability to bring the transforming economies back on a road of self-sustained economic growth. Macro-economic stabilization is considered a precondition of growth as well as of institutional reform and restructuring. It is theoretically understood best, and can be implemented rather directly. This is much less true of institutional reform and restructuring. Where they are functioning well, competitive market economies have emerged over a long period of time. Nowhere do they exhibit theoretically pure forms, and economic theory does not understand well the process oftheir constitution. However, it seems evident that institutional reform is also mainly a task of policy. As for restructuring, there is much less consensus that this is the case. The schools of thought differ in their opinion about the role of the state in guiding production and investment decisions.

This book analyzes the political-economic implications of system transformation as experienced now in Central and Eastern Europe and in China. The whole societal organization being in motion and economic activitybeing in a deep recession, political leaders will find it extremely difficult to secure consensus and support for redesigning institutions, and stabilizing and restructuring activity. The ensuing process is certainly not one of optimal control, but has rather evolutionary characteristics leading constantly to paradoxes and dilemmas. The first part of the book discusses different paradigms within which the complex process of transformation could fruitfully be analyzed. Democratic theory, bargaining theory, efficiency theory, institutionalism - all contribute to the understanding of the complex phenomena. Keytopics of the second part are among others: policy aspects of privatization, adjustment of fiscal system and policy, industrialrestructuring, the different case of China. The book illustrates that the first euphoria of planning the transition to markets was rather naive, analytically and politically. Transformation is not only an economic puzzle,not even in the first place. It is very much of a sociopolitical problem andhas to be treated as such. The book can be used as a reader or as background literature in corresponding course.