The Transformation from Communism to Capitalism: How Far? How Fast?

Abstract

Abstract A prominent American specialist on Soviet and East European economies argues that there are important gains to be obtained from rapid market liberalization and privatization in the transition from communism to capitalism. These gains depend on the responsiveness of firms to market signals. A review of the available evidence suggests that rapid privatization is an important factor promoting such responsiveness. The paper also refutes "evolutionary" criticisms of rapid transition policies on the basis of available evidence from East Europe, historical evidence, and the incompatibility between evolutionary approaches and the desire for democratic regimes in East Europe and the former USSR. Journal of Economic Literature, Classification Numbers: E61, H11, L33, P21.