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, transition, planned, economy and/or market:
“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)
“The most remarkable aspect of the transition we are living through is not so much the passage from want to affluence as the passage from labor to leisure.... Leisure contains the future, it is the new horizon.... The prospect then is one of unremitting labor to bequeath to future generations a chance of founding a society of leisure that will overcome the demands and compulsions of productive labor so that time may be devoted to creative activities or simply to pleasure and happiness.”
—Henri Lefebvre (b. 1901)
““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)
“War. Fighting. Men ... every man in the whole realm is in the army.... Every man in uniform ... An economy entirely geared to war ... but there is not much war ... hardly any fighting ... yet every man a soldier from birth till death ... Men ... all men for fighting ... but no war, no wars to fight ... what is it, what does it mean?””
—Doris Lessing (b. 1919)
“When General Motors has to go to the bathroom ten times a day, the whole country’s ready to let go. You heard of that market crash in ‘29? I predicted that.... I was nursing a director of General Motors. Kidney ailment, they said; nerves, I said. Then I asked myself, “What’s General Motors got to be nervous about?” “Overproduction,” I says. “Collapse.””
—John Michael Hayes (b. 1919)