In the confrontation between the two main economic systems that has marked the twentieth century, capitalism has been declared the winner–by default– over its adversary, socialism. Today, establishing a market economy has become the primary goal of the formerly socialist countries. The history of economic reform helps explain this remarkable turning point. Attempts to improve the old centralized system by expanding enterprise autonomy (in Poland, the Soviet Union, and East Germany) and more radical reforms that limited the role of central planning (in Yugoslavia, Czechoslovakia, Hungary, and China) encountered social and political obstacles or had unexpected and undesired effects. During the 1980s, the idea of a socialist market economy, which had been seen as a "third way" between capitalism and centralized socialism, was abandoned as economists gradually came to support a free market rather than the dogma of planning. Through a comparative and historical analysis of change in socialist and post-socialist systems, this timely and original book clarifies the policies and pitfalls in this extraordinary transition. Bernard Chavance provides a succinct introduction and analysis of the politics and economics of Eastern Europe from the creation of the Stalinist system in the Soviet Union through what he argues have been three major waves of reform since the 1950s to the dismantling of most socialist governments in the 1990s. Exploring the link between the one-party regime and the growing rigidity of socialist economic systems, the author analyzes the failure of both incremental and radical reforms to adapt to new economic challenges, thus leading to the ultimate collapse of communist regimes in Europe.
Introduction -- The Traditional System -- The Institutional Base -- Central Planning -- Other Parts of the System -- The Socialist Economy in Stalinist Doctrine -- Systemic Adjustments -- Poland: Pioneer and Then Laggard (1956-1979) -- Big Brother Modernizes: The Soviet Union (1957–1985) -- An Original Way: East Germany (1963-1989) -- Radical Reform -- Self-Management and the Retreat from Planning in Yugoslavia (1950–1964) -- Plan and Market in Czechoslovakia (1966–1969) -- Hungary's New Economic Mechanism (1968-1979) -- Modernization in China Under Deng Xiaoping (1979–1989) -- Toward the Dismantling of the System -- The Evolution of Reformist Ideas During the 1980s -- The New Yugoslav Experiments (1965–1991) -- Poland: From Solidarity to the "Big Bang" (1980–1991) -- The Hungarian Laboratory of Radicalization (1980–1991) -- From the GDR to the Five New States (1990–1991) -- Conclusion -- Epilogue