Abstract
The transition from command to market economy should proceed through the following stages: stabilization, privatization, and restructuring: this is the prevailing opinion. It is based on the assumption that state intervention and, in particular, state ownership leads to inefficient allocation of resources, that a market and private ownership will motivate economic agents to more rational behavior, and that the growth of market opportunities will promote entrepreneurship and, sooner or later, lead to economic growth.
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References
Friedrich Hayek, “The Use of Knowledge in Society,” American Economic Review, vol. 35, 1945, September.
About the philosophical assumptions of a “natural order” underlying market models, cf. Pierre Rosenvallon, Le capitalisme utopique: Critique d’ideologie economique (Paris: Seuil, 1979).
Cf. interesting theoretical discussion of this process in anthony Giddens, The Nation-State and Violence (Cambridge: Polity Press, 1985), pp. 122–171; the author’s point is that the state must not be reduced to a play of economic forces, and neither must the opposite occur. Cf. Fernand Braudel, Civilization and Capitalism (New York: Harper & Row, 1981–84), vol. 2, pp. 514–55, and Charles Tilly, Coercion,Capital and European States (Cambridge, Mass: Blackwell, 1990), pp. 161–191, where he discusses the European state system.
See, for example, E.L. Jones, The European Miracle: Environments, Economies and Geo6politics in the History of Europe and Asia (Cambridge: Cambridge University Press, 1981). A similar argument is made on the basis of very rich material by Braudel.
For historical reinterpretation, cf. Douglas North, Structure and Change in Economic History (New York, 1981).
Cf. Braudel, vol. 2, pp. 522ff.
It is enough here to recall the powerful account of Michel Foucault, Discipline and Punish: The Birth of Prisons (New York: Vintage Books, 1977).
Alexander Gerschenkron, An Economic Spurt that Failed: Four Lectures in Austrian History (Princeton: Princeton University Press, 1977); Gerschenkron, Economic Backwardness in Historical Perspective (Cambridge, Mass: The Belknap Press, 1962), pp. 72–91.
Cf. E.P. Thompson, The Making of an English Working Class (Haromndsworth: Penguin Books, 1980); Nina Assorodobraj, Poczatki klasy robotniczej w Polsce (The Origins of the Polish Working Class) (Warsaw: PWN, 1966).
The distinction is that of Gerschenkron.
A very interesting typology of “industrial ages,” which stresses different technologies, different types of social organization, and different models of behavior at different stages of the industrial era, was developed by Daniel Chirot, Social Change in the Modern Era (San Diego: Harcourt Brace Jovanovich, 1986), pp. 223–30. For reasons of brevity, my “mature” and “late” periods of industrialization are more comprehensive than Chirot’s “ages.”
On the role of “international demonstration effect,” see Andrew C. Janos, Politics and Paradigms: Changing Theories of Change in Social Science (Stanford, California, 1986), pp. 84–95.
The idea of the substitution of the preconditions of modern growth was formulated by Gerschenkron.
W.O. Henderson, The Rise of German Industrial Power: 1834–1914 (London: Temple Smith, 1975), p. 240.
R.H. Tilly, “Capital Formation in Germany in the Nineteenth Century,” in Peter Mathias and M.M. Postan, Cambridge Economic History of Europe,vol. VII: “The Industrial Economies: Capital, Labour, and Enterprise, part I: Britain, France, Germany and Scandinavia” (Cambridge: Cambridge University Press, 1978), p. 415; Gustav Stolper et al., The German Economy to the Present (New York: Harcourt, Brace & World, Inc., 1967), p. 41.
Henderson, p. 212.
Hans-Joachim Braun, The German Economy in the Twentieth Century (London and New York: Routlege, 1990), p. 21.
Jurgen Kocka, “Entrepreneurs and Managers in German Industrialization,” in Mathias and Postan, p. 563.
Stolper et al., p. 43.
D.E. Schremmer, “Taxation and Public Finance: Britain, France, and Germany,” in Mathias and Postan, pp. 483 ff.
J.J. Lee, “Labour in German Industrialization,” in Mathias and Postan, p. 456.
Kocka, p. 571.
Paul Kennedy, The Rise and Fall of the Great Powers (New York: Random House), p. 207.
Cf. Masamichi Inoki, “Civil Bureaucracy-Japan,” in Robert E. Ward and Dankwart A. Rustow, eds., Political Modernization in Japan and Turkey (Princeton: Princeton University Press, 1964); Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975 (Stanford: Stanford University Press, 1982), passim.
Chalmers Johnson, “The People who Invented the Mechanical Nightingale,” Dedalus,Summer 1990, p. 72; for the study of Japanese emulation of the West, see D. Eleanor Westney, Imitation and Innovation: The Transfer of Western Organization Patterns to Meiji Japan (Cambridge, Mass: Harvard University Press, 1987).
The merits of direct state involvement in industry are debated in the more recent literature, as the pilot factories were incurring heavy budgetary losses and their managers were not that keen to open them up to private entrepreneurs to learn. Seymour A. Broadbridge, “Aspects of Economic and Social Policy in Japan, 1868–1945,” in Peter Mathias and Sidney Pollard, eds., The Cambridge Economic History of Europe, vol. VIII: “The Industrial Economies: The Development of Economic and Social Policies” (Cambridge: Cambridge University Press, 1989), pp. 1111–2.
cf. Broadbridge, p. 1114.
K Yamamura, “Entrepreneurship, Ownership and Management in Japan,” in Mathias and Postan, part II: “The United States, Japan and Russia” (Cambridge: Cambridge University Press, 1978), p. 241.
Yamamura, p. 241.
K Ohkawa and H Rosovsky, “Capital Formation in Japan,” in Mathias and Postan, part II: “The United States, Japan and Russia” (Cambridge: Cambridge University Press, 1978), pp. 136,156ff.
Broadbridge, p. 1118.
cf. Herbert Passin, Society and Education in Japan (Tokyo: Kodansha International Ltd., 1982), pp. 62–99.
Olga Crisp, Studies in the Russian Economy before 1914 (London: Macmillan, 1976), p. 24.
As Olga Crisp notes: “[U]nlike the governments of some contemporary underdeveloped countries, who use the money creating facilities of the banking sector as an alternative taxation, the government of Russia like that of Japan transferred resources obtained by taxation to the banking system. In effect, they used a combination of tax power of the state and the specialized talents of the bankers to shift resources from consumption to production.” Crisp, Studies, p. 155.
T Shanin, The Awkward Class (Oxford: Clarendon Press, 1972).
For a comparison of Russia and the Western powers in that matter, cf. Kennedy, pp. 203,208.
Crisp, Studies, p. 53.
I am, obviously, refraining from any attempt to explain the causes of their success, restricting myself to pointing out the “nonmarket” elements of these cases. I am also not trying to spell out circumstances under which—gradually, not instantly—Korea and Taiwan turned to developmentalism. There is an enormous literature on Japan. For an overall account, see, for example, Kozo Yamamura and Yasukichi Yasuba, eds., The Political Economy of Japan,vol. 1: “The Domestic Transformation” (Stanford: Stanford University Press, 1987). For Korea and Taiwan (and other newly industrialized countries), see Stephan Haggard, Pathways from the Periphery: The Politics of Growth in the New Industrializing Countries (Ithaca and London: Cornell University Press, 1990); Alice Amsden, “Diffusion of Development: The Late-Industrializing Model and Greater Asia,” American Economic Review, vol. 81, no. 2, p. 286; Amsden, “The State and Taiwan’s Economic Development,” in Peter B. Evans et al., eds., Bringing the State Back In (Cambridge: Cambridge University Press, 1985); Amsden, Asia’s Next Giant: South Korea and late Industrialization (New York: Oxford University Press, 1989); Robert Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton: Princeton University Press, 1990). Bruce Cumings offers a very convincing, comprehensive economic and political analysis of postwar modernization of Japan, Korea, and Taiwan in terms of their role within the world economy and in terms of their place in American policy: “The Northeast Asian Political Economy under Two Hegemonies,” in Edmund Burke, ed., Global Crises and Social Movements: Artisans, Peasants, Populists, and the World Economy (Boulder and London: Westview Press, 1988).
cf. Jan Kofman, “Economic Nationalism in East-Central Europe in the Interwar Period,” in H Szlajfer, ed., Economic Nationalism in East-Central Europe and South America, 1918–1939 (Geneve: Libraire Droz, 1990), pp. 191–249.
Chalmers Johnson, MITI, pp. 314–20.
Johnson, “The People Who Invented the Mechanical Nightingale,” p. 74.
The concept of Guillermo A. O’Donnell, Modernization and Bureaucratic-Authoritarianism (University of California, Berkeley: Institute of International Studies, 1973); and a discussion in David Collier, ed., The New Authoritarianism in Latin America (Princeton: Princeton University Press, 1979).
Cumings, “The Northeast Asian Political Economy,” p. 254.
Cumings, “The Abortive Abertura: South Korea in the Light of Latin American Experience,” New Left Review, 173/1989, p. 7.
Cumings, “The Abortive Abertura,” p. 14; Richard M. Steers, Yoo Keun Shin, Gerardo R. Ungson, The Chaebol: Korea’s New Industrial Might (Grand Rapids: Harper and Row, 1989), pp. 19–32 and passim.
In 1986, prices of 110 main commodities were controlled. amsden, “Third World,” p. 22.
Yasusuke Murakami, “The Japanese Model of Political Economy,” in Yamamura and Yasuba, eds., p. 46. There is by no means agreement as to the efficiency, or even desirability, of Japanese industrial policy, which neoclassical economists generally oppose. For a review of the discussion, see George C. Eads and Kozo Yamamura, “The Future of Industrial Policy,” in Yamamura and Yasuba, eds.
Johnson, MITI, p. 302.
Murakami, p. 46.
As Alice Amsden notes: “If the metaphor of the First Industrial Revolution is ‘laissez faire’ and that of the Second ‘infant industry protection,’ then that of late industrialization is a category comprehensive enough to overcome the penalties of lateness—call it ’the subsidy’ [... [t]he governments of Korea and Taiwan had to intervene to subsidize the production of even cotton textiles—a relatively labour-intensive good—until either productivity at home or the wages of foreign competitors rose enough to make subsidies redundant.” Alice Amsden, “Third World Industrialization: ’Global Fordism’ or a New Model?” New Left Review, 182/1990, pp. 16, 22. Cf. also Amsden, Asia’s Next Giant, Ch. 6: “Getting Relative Prices ’Wrong’: A Summary.”
Cf. Eiko Ikegami, “The Logic of Cultural Change: Honor, the Samurai and State Making.” A talk presented at the School of Social Sciences, Institute for Advanced Study, Princeton, December 6, 1990.
Amsden, “Third World Industrialization,” p. 26; Amsden, Asia’s Next Giant, p. 281.
Cf. Martin K. Starr, ed., Global Competitiveness (New York-London: W.W. Norton & Co., 1988), pp. 261–63, 308–10. Cf. also the discussion in the American media, which was taking place while this paper was being written.
James Tobin, “One or Two Cheers for the ‘Invisible Hand, ” Dissent, Spring 1990, pp. 233–34.
The previous Polish government of Jan Bielecki started, in the face of recession, to change its approach in this respect. The nomination of Ms. Henryka Bochniarz as a Minister of Industry and Commerce marked the beginning of interest in industrial policies. See interviews with Ms. Bochniarz in Polityka, August 10, 1991; and Zycie Gospodarcze, August 25, 1991. However, the change of government after the election discontinued these efforts and the present administration—the product of a shaky parliamentary coalition—does not seem able to formulate any clear industrial policy.
Tobin, p. 234.
Despite the prevailing neoliberal climate of Polish economic thinking, there is the beginning of interest in Asia’s experience. See, for example, Adam Lipowski and Jan Kulig, Panstwo czy rynek? Wokol zrodel “cudu gospodarczego” w Korei Poludniowej [State or Market? Origins of the “Economic Miracle” of South Korea] (Warsaw: Poltex, 1992).
Empirical research on the behavior of state-owned firms under the new market rules shows that many of them do behave in quite an efficient way. Cf. Janusz M. Dabrowski et al., “Stabilization and State Enterprise Adjustment: The Political Economy of State Firms after Five Months of Fiscal Discipline, Poland 1990,” Program on Central and Eastern Europe Working Paper Series, #6 (Cambridge, Mass: Minda de Ginzburg Center for European Studies, 1990).
Cf. interesting study of the Italian IRI, stressing that while its role was to serve government strategic ends, it fulfilled it through managerial autonomy and conforming to the market rules. Stuart Holland, ed., The State as Entrepreneur (London: Weidenfeld and Nicolson, 1972). Quite recently—in early 1992—the Polish Ministry of Privatization, apparently more and more conscious that privatization was not as smooth as they might have wished, organized a conference on the experiences of Polish prewar state enterprises. On the whole, however, this experience is fairly well forgotten and the conference papers exist only in mimeographed form.
A.C. Janos, Politics and Paradigms: Changing Theories of Change in Social Science (Stanford: California, 1986), p. 91.
Once again, there are positive signs—the school of civil service (modeled on French ENA) was recently established in Poland, and the government is considering a bill on civil service and another barring civil servants from private business activities.
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Kochanowicz, J. (1993). Transition to Market in a Comparative Perspective: A Historian’s Point of View. In: Poznanski, K.Z. (eds) Stabilization and Privatization in Poland. International Studies in Economics and Econometrics, vol 29. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-2206-1_12
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