Abstract
This paper traces the transition from planned command socialism to market capitalism and the accompanying complex non‐linear dynamics involved. Long wave chaotic hysteretic investment cycles emerge under socialism leading to crisis and breakdown. Macroeconomic collapse occurs with bifurcations of coordination structures during transition. During recovery, transitional cobweb labor market dynamics exhibit chaos, fractal basin boundaries between coexisting non‐chaotic attractors, discontinuous phase transitions, strange attractors, and cascades of infinitely many period‐doubling bifurcations.
Highlights
The process of systemic economic transformation from planned command socialism to market capitalism has proven to be unpredictable and highly complicated with a variety of divergent paths and outcomes emerging from the breakup and collapse of the former Soviet-led CMEA bloc
These will be hypothetical theoretical models which we find suggestive for explicating some of the phenomena that have been and are being observed within these economies
There is a strong tendency among many analysts of economic systemic transition to posit a unilinear process from planned command socialism to laissez-faire market capitalism, especially among policy makers at some of the international financial institutions
Summary
The process of systemic economic transformation from planned command socialism to market capitalism has proven to be unpredictable and highly complicated with a variety of divergent paths and outcomes emerging from the breakup and collapse of the former Soviet-led CMEA bloc. The reform efforts, which spread in various ways and at various rates to the various countries in the bloc, and had already been going on for some time in China without any decline in economic activity, led to extremely sharp declines in economic activity among the CMEA members as the bloc broke up and in the aftermath of the breakup This was the period of the most intense systemic transition when old economic institutions disintegrated and the effort began to install new ones in their place. In this paper we seek to explicate to some degree the varieties of these episodes of discontinuity and turbulence by using some of the tools available in complex non-linear dynamics We shall model both discontinuous changes as well as chaotic and other kinds of complex dynamics occurring during the course of these transitional processes. From these models a taxonomy of various transition paths can be discerned, hopefully with some connection to real events as discussed in the concluding section
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