The Market Shock

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This collaborative work by distinguished European and American scholars presents a constructive and humane approach to reconstructing formerly communist economies. The reconstruction of Central and Eastern European economies resembles the 1920s more than the 1950s, characterized by ongoing inflation, declining output and employment, and deteriorating living conditions for the populace. The book argues that this decline is neither necessary nor beneficial for establishing a market economy that fosters wealth and well-being. Current strategies focused on abolishing controls, managing the money supply, and privatizing state property have led to reduced output, employment, and living standards, lacking positive measures to cultivate market relationships essential for new production opportunities. The authors contend that an emergency program must first stabilize conditions to inspire hope for a better future. Instead of wholesale privatization, they advocate for incentive schemes that hold management accountable for financial performance. Additionally, creating an environment conducive to wealth generation is crucial; this involves transforming decision-making contexts, establishing supportive economic and financial institutions, and ensuring that developed economies provide an appropriate international framework.