How Capitalism Was Built: The Transformation of Central and Eastern Europe, Russia, and Central Asia [1 ed.] 0521865263, 9780521865265, 9780511342653

Table of contents :
Cover......Page 1
Half-title......Page 3
Series-title......Page 4
Title......Page 5
Copyright......Page 6
Dedication......Page 7
Contents......Page 9
List of Tables and Figures......Page 13
List of Abbreviations......Page 15
Acknowledgments......Page 17
Introduction: A World Transformed......Page 19
Overview of the Arguments of this Book......Page 21
Why Was Postcommunist Transition So Arduous?......Page 22
Hadn't a More Gradual Dissolution of the Soviet Union Been Better?......Page 23
Are Oligarchs Pure Parasites?......Page 24
Is the European Union the Best Solution?......Page 25
Have the Postcommunist Countries Achieved Sustainable Economic Growth?......Page 26
Real Socialism......Page 29
Decline and Fall of Socialism......Page 33
The Demise of Communism in Central Europe......Page 38
The Collapse of the Soviet Union......Page 41
2 Shock Therapy versus Gradualism......Page 47
The Radical Reform Program: A Big Bang......Page 49
The Importance of Speed And Comprehensiveness......Page 53
Gradual Reform Programs......Page 55
The Chinese Model......Page 56
Western Arguments for Gradualism......Page 58
Reform Communists Opposing a Normal Market Economy......Page 62
Rent Seeking: The Scourge of Transition......Page 65
Criticism of Radical Reform after the Russian Financial Crash......Page 71
3 Output: Slump and Recovery......Page 75
Sharp Decline in Recorded Output and Varied Recovery......Page 77
Exaggeration of the Slump......Page 81
Radical Reform: Least Decline and Early Recovery......Page 87
Late Reformers: Surged after 1998......Page 93
4 Liberalization: The Creation of a Market Economy......Page 100
Two Strategies of Deregulation......Page 101
Liberalization of Foreign Trade......Page 107
Labor Market Policy......Page 110
Combat of Monopoly: Gas and Coal......Page 114
A Big Bang: Vital in Deregulation......Page 119
High and Persistent Inflation......Page 122
Establishing National Currencies......Page 126
Radical Fiscal Adjustment Was Key......Page 129
Tax Policy: From Social Democratic to Liberal......Page 134
Monetary Policy: From Loose to Strict......Page 137
Entrepreneurial but Problematic Banking Systems......Page 139
Exchange Rates: Currency Board or Free Float......Page 141
Dramas of Financial Stabilization......Page 145
The Arrears Crisis......Page 150
The Russian Financial Crash of 1998......Page 151
Major Lessons from Postcommunist Stabilization......Page 156
6 Privatization: The Establishment of Private Property Rights......Page 161
Differing Aims of Privatization......Page 162
The Political Goal: Depoliticization of Enterprises......Page 163
The Key Economic Goal: Building the Foundation of a Market Economy......Page 164
What Justice?......Page 167
The Specter of Spontaneous Privatization......Page 168
Choices of Privatization......Page 171
Small-Scale Privatization: If Started, Swiftly Done......Page 172
Large-Scale Privatization: The Biggest Headache......Page 173
Privatization of Land, Real Estate, and Housing......Page 182
New Enterprise Development: The Ultimate Success......Page 183
Great Achievements of Privatization......Page 186
Vital: Speed and Legitimacy of Property Rights......Page 196
7 An Inefficient Social System......Page 200
Incomes: Differentiation and Poverty......Page 201
Life and Health......Page 205
Declining Male Life Expectancy......Page 206
Falling Infant Mortality......Page 207
Confusing Demographic Developments......Page 211
Education Adjusting to Demand......Page 212
Social Transfers and Pension Reform......Page 215
The Dilemmas of a Social Safety Net......Page 216
An Expensive but Inadequate Pension System......Page 219
Three Alternative Social Models......Page 221
8 Democracy versus Authoritarianism......Page 224
Democratic Breakthrough: Critical for Successful Transformation......Page 225
An Underreform Trap......Page 233
Renewed Democratization: Colored Revolutions......Page 239
Parties, Electoral Rules, and Constitutions......Page 242
How toTame the Leviathan: Reform of the Communist State......Page 248
Public Opinion and Ideology......Page 250
Democracy and Democracy Aid......Page 254
9 From Crime toward Law......Page 259
An Explosion of Crime......Page 260
Attempts at Building a Legal System......Page 263
Corruption: The Bane of Transition......Page 267
10 The Role of Oligarchs......Page 274
Who are the Oligarchs?......Page 275
The Economics of Oligarchy......Page 277
The Politics of Oligarchy......Page 282
Complaints: A Matter of Ideology......Page 285
A Question of Property Rights......Page 290
Putin's Alternative: Centralized Dictatorship......Page 294
11 The Impact of the Outside World......Page 299
The Dream of Europe......Page 300
Western Failure to Act in the East......Page 304
Trade Policy: A Gulf Between the EU and the CIS......Page 310
International Assistance: Insufficient but Crucial......Page 315
Five Models......Page 323
Achievements and Revelations......Page 325
Why Certain Policies Worked and Others Did Not......Page 329
Bibliography......Page 333
Index......Page 361