The Market Meets its Match: Restructuring the Economies of Eastern Europe - Softcover

Amsden, Alice H.

Softcover

ISBN 10: 0674549848 ISBN 13: 9780674549845

Publisher: Harvard University Press, 1998

Synopsis

Under free-market shock therapy, the economies of Eastern Europe have fallen into crisis. Shortages may have disappeared, but so have social services, a living wage, and equitable income distribution. Political unrest increases apace as output plummets. The questions as to why so much stagnation, inflation and de-industrialization have occured, and what can be done to turn this state of affairs around, are addressed in this critique of the free-market economic policies that have shocked Eastern Europe. The authors also propose a more sensible approach to reform, including a restructuring of the state itself so that it can play a more positive role in this difficult transition. With close attention to the history and institutional realities of the region, this book explains the failure of the simplistic market medicine administered in the first five years of transition. Merely "getting the prices right" - lowering wages and raising interest rates and energy prices - won't improve competitiveness, the authors argue, as long as non-labour costs such as the quality of goods, product design, outmoded technology, and inefficient distribution channels remain problems. Easing these bottlenecks requires long-term capital accumulation and profit maximization. The institutions necessary for such growth have not developed under Eastern Europe's new "pseudo-privatization" while distributing state property to citizens, has not provided them with the capital and technology they need to succeed. This book shows that the market mechanism alone will not transform Eastern Europe's potentially productive enterprises into international competitors without government co-ordination and support.

About this title

About the Authors

Alice Amsden was Barton L. Weller Professor of Political Economy at the Massachusetts Institute of Technology.

Jacek Kochanowicz was Professor of Economic History at the University of Warsaw and Visiting Professor at Central European University, Budapest.

Lance Taylor is Arnhold Professor of International Cooperation and Development at the New School for Social Research.

From the Back Cover

Under free-market shock therapy, the economies of Eastern Europe have plunged into crisis. Shortages may have disappeared, but so have social services, a living wage, and equitable income distribution. Political unrest increases apace as output plummets. Why so much stagnation, inflation, and de-industrialization, and what can be done to turn this risky state of affairs around? This book, the first critique of the free-market economic policies that have jolted Eastern Europe, addresses these questions in penetrating detail. The authors also propose a sensible approach to reform, including a restructuring of the state itself so that it can play a more positive role in this difficult transition. With close attention to the history and institutional realities of the region, The Market Meets Its Match explains the failure of the simplistic market medicine administered in the first five years of transition. Merely "getting the prices right" - lowering wages and raising interest rates and energy prices - won't improve competitiveness, the authors argue, as long as nonlabor costs such as the quality of goods, product design, outmoded technology, and inefficient distribution channels remain problems. Easing these bottlenecks requires long-term capital accumulation and profit maximization. The institutions necessary for such growth have not developed under Eastern Europe's new "pseudo-capitalism", as the authors demonstrate, and "pseudo-privatization", while distributing state property to citizens, has not provided them with the capital and technology they need to succeed. This book shows that the market mechanism alone will not transform Eastern Europe's potentially productive enterprises intointernational competitors without careful government coordination and support.

Edition details

• Publisher: Harvard University Press
• Publication date: 1998
• Language: English
• ISBN 10: 0674549848
• ISBN 13: 9780674549845
• Binding: Paperback
• Number of pages: 264