Alternative Economic Models of Transition.

Author:Hall, John
Position:Book Review

Alternative Economic Models of Transition, by John Marangos. Burlington, Vt.: Ashgate. 2003. ISBN 0754636577, $104.95.261 pages, plus appendix, bibliography, and index.

The aim of this book is to introduce and develop an analytical framework to model transition processes from planned to market economies. The author introduces a "political economy" approach that seeks to incorporate-within a structure of economic relationships-the interactions between political institutions, social consciousness, and ideas. Marangos suggests that there exists-somewhere out there--an ideal or a goal, as it were, that can be thought of as and termed as a "good society." In order to achieve this desired world, this promised land of a good society, theory can offer useful paradigms to consider. Policy instruments can then be wielded to initiate changes necessary to successfully build a chosen paradigm.

Marangos offers structure to his subject of transition. He notes that there exist "primary" and "secondary" elements in transition models. Primary elements are considered to be (a) economic analysis, (b) a definition for a "good" society, (c) political structure, (d) ideological structure, and (e) initial conditions. Alternative approaches to economic analysis are introduced as neoclassical, Post Keynesian, and Marxist. Several approaches are considered for facilitating transitions from planned to market economies. He introduces transitions through shock therapy, neoclassical gradualism, Post Keynesian demand management, and market socialism.

Secondary elements of transition models are introduced as (a) price liberalization and stabilization, (b) privatization, (c) property relations, and (d) institutions. Other aspects of secondary elements of transition include monetary policy and financial system, fiscal policy, international trade, foreign aid, and social policy.

Marangos references a contribution of Anders Aslund, noting that economic systems are profoundly ideological. He introduces three alternative transition models: competitive capitalism, social democratic capitalism, and what he describes as market socialism-as exemplified by the Chinese model: that can potentially offer an optimal combination of centralization and decentralization, of planning and markets, of individual choices and the common good. Political structures considered include political pluralism, democracy, and nonpluralism based on a political party that plays a leading role and exhibits...

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