Was Shock Therapy Consistent with Democracy?

John Marangos

Review of Social Economy, 2004, vol. 62, issue 2, 221-243

Abstract: The transition process in Russia and Eastern Europe was dominated in the literature and in policy making by the shock therapy process. However, shock therapy was short-lived. Governments that implemented shock therapy were not able to sustain the reform program since they lost power after the first term as a result of unfavourable electoral results. The new governments implemented gradualism. While after the first term shock therapy governments were substituted by gradualists, a government in favour of shock therapy never substitute any gradualist governments. The aim of the paper is to demonstrate that shock therapy was inconsistent with a democratic process of decision-making. Actually shock therapy was only consistent with a pluralistic political structure in the tradition of Hayek, Buchanan and Friedman. Foreign aid was inadequate to ensure the continuation of the shock therapy reforms within a democratic environment.

Keywords: shock therapy; democracy; foreign aid; economic reforms (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (4)

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DOI: 10.1080/00346760410001684451

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