Transition From A Planned Economy To A Market Economy
The shift from a command economy to a market economy has proven to be difficult; in particular, there were no theoretical guides for doing so before the 1990s. One transition from a command economy to a market economy that many consider successful is that of the People's Republic of China.
By contrast, the Soviet Union's transition was much more problematic and its successor republics faced a sharp decline in GDP during the early 1990s. One of the suggested causes is that under Soviet planning, price ceilings created major problems (shortages, queuing for bread, households hoarding money) which made the transition to an unplanned economy more difficult. While the transition to a market economy proved difficult, many of the post-Soviet states have been experiencing strong, resource-based economic growth in recent years, though the levels vary substantially. However, a majority of the former Soviet Republics have not yet reached pre-collapse levels of economic development.
Still, most of the economic hardship that struck many of the former East Bloc countries and the post-Soviet states comes from the program of shock therapy. The idea behind this program is to convert from a centrally planned economy to a market economy in a short space of time. This means mass-scale privatization, budget cuts and liberalization of economy and finance regulations. This shock therapy program was implemented in several former communist states like Poland and Russia.
Read more about this topic: Planisme
Famous quotes containing the words transition from a, transition from, transition, planned, economy and/or market:
“Power ceases in the instant of repose; it resides in the moment of transition from a past to a new state, in the shooting of the gulf, in the darting to an aim.”
—Ralph Waldo Emerson (1803–1882)
“Power ceases in the instant of repose; it resides in the moment of transition from a past to a new state, in the shooting of the gulf, in the darting to an aim.”
—Ralph Waldo Emerson (1803–1882)
“There is not any present moment that is unconnected with some future one. The life of every man is a continued chain of incidents, each link of which hangs upon the former. The transition from cause to effect, from event to event, is often carried on by secret steps, which our foresight cannot divine, and our sagacity is unable to trace. Evil may at some future period bring forth good; and good may bring forth evil, both equally unexpected.”
—Joseph Addison (1672–1719)
“Every day care center, whether it knows it or not, is a school. The choice is never between custodial care and education. The choice is between unplanned and planned education, between conscious and unconscious education, between bad education and good education.”
—James L. Hymes, Jr. (20th century)
“Unaware of the absurdity of it, we introduce our own petty household rules into the economy of the universe for which the life of generations, peoples, of entire planets, has no importance in relation to the general development.”
—Alexander Herzen (1812–1870)
“But the nomads were the terror of all those whom the soil or the advantages of the market had induced to build towns. Agriculture therefore was a religious injunction, because of the perils of the state from nomadism.”
—Ralph Waldo Emerson (1803–1882)