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A detailed analysis of Poland and the Czech Republic suggests that alternation between strategies has been the secret to the success of East-Central European countries.
This comparative case analysis identifies the significance of reform mistakes during transition and the corrective benefits of policy alternation, its claims illustrated with an in-depth study of privatization policy in the two countries.
Mitchell A. Orenstein delves into the historic struggle to build capitalism and democracy during a decade of post- communist transition in East-Central Europe and develops a model that explains why democratic policy alternation may accelerate policy learning under conditions of uncertainty and constraint.
Out of the Red is accessible to a general audience and as such is suitable for both graduate and undergraduate courses on political economy. It will be of particular interest to economists, political scientists, sociologists, students of postcommunism, and anyone interested in the relations between capitalism and democracy in the contemporary world.
Mitchell A. Orenstein is Assistant Professor of Political Science, Syracuse University.
The danger does not lie with the masses, as is believed by people who stare as if hypnotised down into the depths of society. The deepest core of the socio-political problem is not the question of the economic situation of the ruled but of the political qualifications of the ruling and rising classes. The aim of our socio-political activity is not to make everybody happy but the social unification of the nation, which has been split apart by modern economic development, and to prepare it for the strenuous struggles of the future.
--Max Weber 1994, 26
Poland's goal is to be like the states of the European Community. Although there are many submodels within Western Europe, with distinct versions of the modern welfare state, the Western European economies share a common core of capitalist institutions. It is that common core that should be the aim of the Eastern European reforms. The finer points of choosing between different submodels--the Scandinavian social welfare state, Thatcherism, the German social market--can be put off until later, once the core institutions are firmly in place.Governments that came to power in 1989 in East Central Europe had to develop "strategies for transformation" that addressed the central problem they faced of building capitalism under conditions of political democracy. Throughout the postcommunist countries, the most influential strategy, in both its economic and political dimensions, was the "neoliberal" strategy, often called "shock therapy." Neoliberal strategy for transformation emphasized the importance of establishing basic economic reforms to promote growth and market rationality in the face of democratic interest group opposition. It proposed to create free markets, free trade, and a stable monetary environment quickly before such political opposition could emerge. The neoliberal strategy for transformation was widely debated in postcommunist Europe and criticized in some circles for posing a threat to democracy. These critics generally argued that shock therapy's single-minded pursuit of economic reform endangered support for and development of democratic institutions. They recommended that governments should instead pursue more cohesion-oriented strategies that would compensate reform losers and tie the interests of a broader cross-section of the population into the reform effort. This chapter explores both theoretical positions and the conflict between them that unfolded over the period 1989-99. This provides an important background to the study of actual governmental strategies for transformation in Poland and the Czech Republic since 1989, because these theories often deeply influenced practitioners of reform.
--Jeffrey Sachs 1993, 5
Excerpted from Out of the Red: Building Capitalism and Democracy in Postcommunist Europe by Mitchell A. Orenstein Copyright © 2001 by Mitchell A. Orenstein. Excerpted by permission.
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|List of Figures|
|List of Tables|
|1||Strategies for Transformation||11|
|2||Poland's Shock Therapy and Beyond||25|
|3||Czech Social Liberalism and Beyond||61|
|5||Democratic Policy Alternation||128|