Social Costs of Transformation to a Market Economy in Post-Socialist Countries: The Cases of Poland, the Czech Republic and Hungary by Jan s> Adam (review)

Abstract

REVIEWS 589 facilities:only I I% of respondentshad ever applied, among whom one-third of the men, but none of the women, were successful.The old and the new tapi was in the name of the family head, of whom in the sample just 5% were women. After each production collapse the InternationalMonetary Fund sought to helpAlbanian economic recoveryby providingsubstantialcreditsconditional on the government'sadoption of measuresfora marketsystem(includingland registration) and for macroeconomic stabilization. Its current three-year Poverty Reduction and Growth Facility (i 998-2001) releases tranches of creditin stepwith the fulfilmentof 14 'structuralbenchmarks',one of which is quarterlytotals of land title registrations.The WorldBankis funding a Rural FinancingFundforsmallcreditto farmers.The institutionalconstraintswhich Lemel'ssurveydetailed arebeing relaxed,but the societalinhibitionswill take longer to tackle. Institutefor German Studies, University ofBirmingham MICHAEL KASER StAntony's College, Oxford Adam, Jan. SocialCostsof Transformation to a MarketEconomy in Post-Socialist Countries. TheCasesof Poland,theCzechRepublic andHungagy. Macmillan, Basingstoke and London, and St Martin's Press, New York, 1999. XiV+ 212 pp. Preface.Tables. Notes. Bibliography.Index. ?45.??. FROM the outset Adam lets the reader know that his own preference for a transformation strategy is moderately social-democratically oriented. Since the present reviewer basically shares this orientation, a quick perusal of the table of contents and listof tablesled him to expect a vigorouschallenge to the 'Washington consensus' the conventional neo-liberal wisdom on the substance and sequence of the changes necessary to transform the former Soviet-type economies to prosperousand democratic free-marketeconomies and societies. This expectation is only partly fulfilled,largely because of the arid mode of exegesis and the author's neglect of the political dimensions of the struggleover reformsin the three countriesin question. Adam provides copious materials for such considerations. After a useful introduction to the respective starting points of the three economies and a brief account of their differentstrategiesfor transformation,he gives a more detailed account in separate chapters of their respective performance in implementing their reform programmes. In another chapter he describes in detail the different modes of privatization-vouchersin the Czech Republic and Poland (albeit with a differentialemphasis) and direct sales (largely to foreigners) in Hungary. Adam provides a useful four-point checklist of the objectives of privatization:redistributionof economic power and influence; strengthening of domestic socio-economic institutions;enhancement of economic efficiency;and procurement of revenues for the state treasury(p. 69). He demonstratesthat in terms of revenue-raisingneither the Polish nor the Czech modes of privatization were conspicuously successful and, in the Hungarian case, the revenue raisedwas not effectivelyutilized. Nor were the three countries very successfulon the other criteria. He makes the point 590 SEER, 79, 3, 2001 albeit not very forcefully that the shift away from state ownership is no guaranteeof economic or managerialefficiency. In Part III, on the Social Costs of Transformation, there are separate chapters on Unemployment, the Standard of Living, Social Policy and Poverty.All of these topics are bolsteredwith tabulardata (unfortunatelynot going furtherthan I997) and relativelypedestrianrehearsalsof the changes in policy direction and emphasis during the early post-Communist years up to I997. Adam shows how the new economic systemshave simplybeen unable to maintainthe previoussocial and economic securityprovisions,particularly as the depressant effect of belt-tightening on GDP has reduced budgetary incomes. For various reasons, including a low level of inherited state indebtedness, the CR had less need to restrainpublic spending, but the neoliberalideology of the Klaus Governmentled it to do so anyway.Adam makes some interestingobservationsabout the relationship(orlackof same)between employment levels and GDP movements. The use of unemployment to maintain low or negative growth of real wages has given governments in the three countries more leeway in restrictingsocial expendituresthan they had any rightto expect in nominallydemocraticpoliticalconditions. Much of this material is certainly useful, not to say insightful,but there is insufficientgeneralization on the validity of the transformationstrategiesor reflection on popular reactions to them. Public opinion data do exist. Unfortunately, in the real world, things change rapidly, as do the political attitudes of the people being affected by the changes inflicted upon them in the name of modernization and qualificationfor membershipof the prosperous EU club. In dismay over their fate, the people repeatedly elect social democrats and unenthusiastic reformers, only to see them pressing...