Transition costs

In a 1980 article, Adam Przeworski tried to estimate the likely costs to workers in rich capitalist nations of a transition to socialism. He concluded that they were sizable enough to be a serious deterrent to socialist preferences.

History turned in the opposite direction: less than a decade later eastern Europe began its transition to capitalism. In The Economist‘s 2008 year-end special issue, Laza Kekic offers a two-decades-on estimate of the costs of that transition.

2 thoughts on “Transition costs

  1. But in fact Europe did make that transition. Over the last 28 years it has instituted and functionalized widespread social support programs (while cutting others and overall improving the whole mix).

    The cost? Widespread prosperity, well-being, and stability.

    The U.S., of course, has been–at best–far more halting in making that transition.

    The cost? We’re looking at it. Unfortunately thanks to us, the rest of the world is facing the same thing.

  2. These type of articles only make me think of Huntington’s “Political Order in Changing Societies.” Without the proper institutions these transitions are going to be long and painful and may never succeed, ala Russia… Some studies have shown that the Eastern European countries which changed their institutions to capitalist ones all at once suffered the most at first but recovered the quickest…

    Its a flip of the age old problem “suffering of the few to save the many.” Its the suffering of the early transitioners to pave the way for the future…

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