Reform and transformation in Eastern Europe This page intentionally left blank. Reform and transformation in Eastern Europe Soviet-type economics on the threshold of change Edited by János Mátyás Kovács and Márton Tardos London and New York IN ASSOCIATION WITH THE INSTITUT FÜR DIE WISSENSCHAFTEN VOM MENSCHEN, VIENNA First published 1992 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Simultaneously published in the USA and Canada by Routledge a division of Routledge, Chapman and Hall, Inc. 29 West 35th Street, New York, NY 10001 © 1992 János Mátyás Kovács and Márton Tardos All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data Reform and transformation in Eastern Europe: Soviet-type economics on the threshold of change. I. Kovács, János Mátyás II. Tardos, Márton 330.9470853 ISBN 0-203-16769-4 Master e-book ISBN ISBN 0-203-26259-X (Adobe eReader Format) ISBN 0-415-06630-1 (Print Edition) Library of Congress Cataloging in Publication Data Reform and transformation in Eastern Europe: Soviet-type economics on the threshold of change/edited by János Mátyás Kovács and Márton Tardos. p. cm. Includes bibliographical references and index. ISBN 0-415-06630-1 (Print Edition) 1. Europe, Eastern—Economic conditions—1989–2. Europe, Eastern— Economic policy. 3. Soviet Union—Economic conditions—1985–4. Soviet Union—Economic policy—1986– I. Kovács, János Mátyás. II. Tardos, Márton. HC244.R3757 1992 338.947–dc20 91–25207 CIP Contents List of contributors vii Prologue viii Crossing the threshold János Mátyás Kovács and Márton Tardos x Part I Reform economics and economic theory and the west— missed opportunities 1 Introduction to Part I 3 1 The ‘socialist calculation debate’ and reform discussions in socialist countries Leszek Balcerowicz 5 2 The reform of Soviet socialism as a search for systemic rationality: A systems theoretical view Raimund Dietz 18 3 An organizational theory of the socialist economy Deborah Duff Milenkovitch 36 4 Reform economics and western economic theory: Unexploited opportunities Irena Grosfeld 56 5 Some institutional failures of socialist market economies—a dynamic market and institutional theory approach Helmut Leipold 73 6 On firms, hierarchies and economic reforms John Michael Montias 83 7 Soviet reforms and western neo-classical economics Alec Nove 94 Part II Reform economics and economic theory and the east— separation from Stalinism incomplete 110 Introduction to Part II 112 8 Economic reform in a bargaining economy Petr O.Aven 114 9 From revisionism to pragmatism: Sketches to a self-portrait of a ‘reform economist’ Włodzimierz Brus 124 10 Soviet economic reform in historical perspective Robert W.Davies 130 11 Reform economics and bureaucracy Tadeusz Kowalik 148 12 Reformability of the ‘objective economic laws’ of socialism Pekka Sutela 160 Part III Between reform and transformation—à la recherche 174 Introduction to Part III 176 13 The theoretical and psychological obstacles to market-oriented reform in China Xiaochuan Zhou 178 14 The scope of economic reforms in socialist countries Aleksander Bajt 191 15 The political conditions of economic reform in socialism Ellen Comisso 203 16 Opposition against market-type reforms in centrally-planned economies Jerzy Osiatynski 222 17 Macroeconomic policy for the transitional reforms in the centrally- planned economies Leon Podkaminer 237 18 The property rights in Hungary Márton Tardos 255 Epilogue 268 Compassionate doubts about reform economics (economic science, ideology, politics) János Mátyás Kovács 270 Index 304 List of Contributors Petr O.Aven, Deputy Minister of Foreign Affairs, Russian Federation, International Institute for Applied Systems Analysis, Laxenburg, Austria. Aleksander Bajt, Economic Institute of the Law School. University of Ljubljana, Yugoslavia. Leszek Balcerowicz, former deputy Prime Minister and Minister of Finance, Poland. Research Institute of Economic Development, Central School of Trade, Warsaw, Poland. Włodzimierz Brus, St Antony’s College, Oxford, England. Ellen Comisso, Department of Political Science, University of California, San Diego, USA. Robert W.Davies, Centre for Russian and East European Studies, University of Birmingham, United Kingdom. Raimund Dietz, Vienna Institute for Comparative Economic Studies, Austria. Irena Grosfeld, DELTA, Centre National de la Recherche Scientifique, Paris, France. János Mátyás Kovács, Institute for Human Sciences, Vienna, Austria; Institute of Economics, Hungarian Academy of Sciences, Budapest, Hungary. Tadeusz Kowalik, Institute of the History of Science, Warsaw, Poland. Helmut Leipold, Institute for Comparative Systems of Economic Control, University of Marburg, Germany. Deborah Duff Milenkovitch, Institute on East Central Europe, Columbia University, New York, USA. John Michael Montias, Institution for Social and Policy Studies, Yale University, USA. Alec Nove, Centre for Development Studies, University of Glasgow, United Kingdom. Jerzy Osiatynski, former Minister of Planning (Poland), Institute of the History of Science, Warsaw, Poland. Leon Podkaminer, Polish Academy of Sciences, Warsaw, Poland. Pekka Sutela, Department of Economics, University of Helsinki, Finland. Márton Tardos, head of the parliamentary faction of the Alliance of Free Democrats (Liberals) in Hungary. Institute of Economics, Hungarian Academy of Sciences, Budapest, Hungary. Xiao-Chuan Zhou, Ministry of Foreign Economic Relations and Trade, Beijing, China. Prologue This page intentionally left blank.