Making the Menu: Russia’s Recipe for Calculating Political-economy Constraints

Peter J. Boettke and Bridget I. Butkevich

Chapter 9 in Alternative Theories of the State, 2006, pp 191-216 from Palgrave Macmillan

Abstract: Abstract When the Berlin Wall fell in 1989, Western economists were asked for advice on how to manage the transition from a state-controlled economy to a market economy. This task has proven more difficult than first imagined. One source of difficulty is that the transition to the market is less a process to be managed and more a process to be observed.1 Nonetheless, the standard advice was straightforward. If consumers suffered under the old state-administered economy from a shortage of consumer goods, then reform would allow prices to fluctuate equilibrating supply and demand.2 If the system suffered from production inefficiencies due to perverse incentives caused by state ownership of enterprise, then reform would privatize enterprises.3 Finally, if the system had macroeconomic imbalances due to the softbudget constraints needed to subsidize inefficient firms and maintain a cradle-to-grave social safety net, then reform would harden those budget constraints and restructure the social safety net.4

Keywords: Civil Society; Political Economy; Market Economy; Alternative Theory; Economic Freedom (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-37279-5_9

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DOI: 10.1057/9780230372795_9

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