This book offers a most comprehensive empirical analysis of the economic transformation of the countries comprising the former Soviet bloc during the first decade after communism. It debunks many myths, seeing transition as a struggle between radical reformers and those thriving on rent seeking. / Pressestimmen: "Building Capitalism has all the right ingredients: it is on a critically important issue; it is based on an extraordinarily detailed knowledge of economic and political history, pre- and post- the break-up of the former Soviet Union; and it displays a full acquaintance with the literature, Anders Aslund's naturally exuberant style, and a clear point of view. Whether you agree or disagree with the argument, you should not be indifferent to this book. And by the end, you should fundamentally agree." (Stanley Fischer, International Monetary Fund) / "He persuasively develops a strong thesis that runs counter to the conventionally accepted view that reform efforts were too rapid and too drastic. A fact-filled and challenging analysis for anyone interested in one of the great transformations of the past half-century." (Foreign Affairs) / "Perhaps the most competent evaluation of the economic development of this vast region for the past decade." (Journal of Peace Research) / "The scope of his text, the breadth and depth of literature cited and the acuity of analysis he brings to bear make Building capitalism an important addition to the literature. And the arguments he deploys will be extremely hard for critics of the Washington Consensus to refute." (International Affairs) / "The strength of his volume remains in its comparative analysis of economic policies, which provides an insight to liberal economic thinking that has been so important in Central and Eastern Europe's transition." (Balkan Academic News) / "Building Capitalism is a tour de force that will come to form part of the corpus of essential background reading for those interested in this subject and its myriad ramifications" (The Journal of Energy Literature).
/ AUS DEM INHALT: / / /
List of Tables and Charts page- viii
Acknowledgments ' xi
List of Abbreviations i ; xvii
t
Introduction 1
The Options of Postcommunist Transformation 2
Major Ideas of This Book o 5
The Structure of This Book 7
Region and Period of Study 11
Methodological Traps ',12
Treacherous Statistics 15
1What Communism Actually Was 20
The Ideas of Communism 20
Real Socialism 23
High Growth Rates but Little Welfare 34
2The Decline and Fall of Socialism 39
The Declme of Socialism 40
The Demise of Communism in Central Europe 51
The Collapse of the Soviet Union 57
What the Collapse Was about 66
3Strategic Policy Choices 70
Historical Legacies and Intellectual References 72
The Radical Reform Program 76
Gradual Reform Programs 82
Major Issues of Dispute 106
4Changes in Output and Their Causes 113
Sharp Decline in Recorded Output 114
The Myth of Output Collapse o 121
Causes of Decline and Growth in Transition 140
vi Contents
Long-Term Growth Prospects 153
Radical Comprehensive Reform Best but Often Not Tried 156
5Liberalization , 159
Strategy of Deregulation 160
Domestic Liberalization 165
External Liberalization 170
Problems of Energy and Natural Monopolies 182
Troublesome Agriculture 191
Big Bang Is Vital in Deregulation 194
6Financial Stabilization 197
A Multitude of Macroeconomic Problems 198
The Disastrous Ruble Zone 203
Exchange Rate Policy 207
Radi'caTFiseal.Adjustment Was Key 214___
A New Tax System'*, ( 227
Monetary Policy: From Loose to Strict 234
Barter and Arrears 244
Stabilization after All 248
7Privatization 255
Alternative Views of Privatization 256
Small-Scale Privatization: If Started, Swiftly Done 267
Large-Scale Privatization: The Biggest Headache 268
Privatization of Land, Real Estate, and Housing 282
New Enterprise Development 283
Enterprise Performance 287
Extent and Success of Privatization 295
8Social Developments and Policy 304
Incomes: Differentiation and Poverty ' 305
Life and Health 316
Education Adjusting to Demand 323
Unemployment and Labor Market Reform ' o 327
Social Transfers and Pensions 338
Conventional Wisdom Little but Prejudice o 345
9State and Politics in the Transformation 348
Corruption and Governance 349
For Whom Is the State Working? 359
Reform of the State 367
Elections and Reform 377
Political Stability and Reform 383
Civil Society and Elite Competition 389
The People Needed to Assume Control over the State 393
Contents vii
10Role of the Outside World 396
Conflicting Outside interests 397
Successful Cooperation in Central Europe and the Baltics 401
Western Role in Unsuccessful Stabilizations ' 404
Limited International Financial Flows > 411
International Support and Its Execution 417
Lessons and the Remaining Agenda 438
11Conclusions 441
How Far Has Transformation Proceeded? 441
Why Have Some Countries Proceeded Further Than Others? 444
Why Rent Seeking Has Been So Costly 446
Dangerous Underreform Traps 449
The Benefits of Shock 450
Is the Situation Changing? 453
Bibliography o I ' 457
Index 491