The Politics of Social Policy in East European Transitions: Antecedents, Agents, and Agenda of Reform (1993)

Zusammenfassung

Postcommunist political economies face three problems of transformation: property must be privatized; prices must be liberalized or “marketized;” and the state budget must be stabilized in order to relieve strong inflationary pressures. Corresponding to these three transformations and in fact motivating them are three cost considerations: privatization is mandated by the consideration that it will reduce production costs; marketization will reduce transaction costs (including the transaction costs resulting from perverse incentives generated by soft budget constraints); but stabilization, if strictly pursued, does not economize on costs but rather leads to increases of costs of a special kind, namely, “transition costs” (comprising the vast devaluation of both physical and human capital, the fiscal crises ensuing therefrom, and the concomitant pressures upon transfer, service, and infrastructure budgets, all of which result in new failures of provision and new uncertainties), thus generating political resistance to marketization and privatization.