Legality and Market Reform in Soviet-Type Economies

John M. Litwack

Journal of Economic Perspectives, 1991, vol. 5, issue 4, 77-89

Abstract: The classical Soviet-type system operates in the virtual absence of economic legality, which is a prerequisite to a successful transition to a market economy in the Soviet Union and the nations of Eastern Europe. In the absence of economic legality, the leadership of these countries will not be able to implement a credible commitment to private property rights or any other effective market incentive mechanism. In addition, they will be unable to promote the growth of multilateral impersonal trade. Without legality, a shift away from central planning toward market allocation may very likely lead to economic decline, inflationary pressures, and a polarization in income distribution, which, in turn, could unleash political reaction against the reform process in general.

JEL-codes: P21 (search for similar items in EconPapers)
Date: 1991
Note: DOI: 10.1257/jep.5.4.77
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Citations: View citations in EconPapers (32)

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