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.
Iraq, after the fall of Saddam Hussein following the 2003 invasion of Iraq, is currently experiencing the transition from a command economy under Hussein to a free market economy. Iran is currently privatizing companies.
Read more about this topic: Planned Economy
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)
“A transition from an author’s books to his conversation, is too often like an entrance into a large city, after a distant prospect. Remotely, we see nothing but spires of temples, and turrets of palaces, and imagine it the residence of splendor, grandeur, and magnificence; but, when we have passed the gates, we find it perplexed with narrow passages, disgraced with despicable cottages, embarrassed with obstructions, and clouded with smoke.”
—Samuel Johnson (1709–1784)
“The god or hero of the sculptor is always represented in a transition from that which is representable to the senses, to that which is not.”
—Ralph Waldo Emerson (1803–1882)
““If little planned is little sinned
But little need the grave distress.
What’s dying but a second wind?
How but in zig-zag wantonness
Could trumpeter Michael be so brave?””
—William Butler Yeats (1865–1939)
“The aim of the laborer should be, not to get his living, to get “a good job,” but to perform well a certain work; and, even in a pecuniary sense, it would be economy for a town to pay its laborers so well that they would not feel that they were working for low ends, as for a livelihood merely, but for scientific, or even moral ends. Do not hire a man who does your work for money, but him who does it for love of it.”
—Henry David Thoreau (1817–1862)
“Today the tyrant rules not by club or fist, but, disguised as a market researcher, he shepherds his flocks in the ways of utility and comfort.”
—Marshall McLuhan (1911–1980)