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 a, transition from, transition, planned, economy and/or market:
“A transition from an author’s books to his conversation, is too often like an entrance into a large city, after a distant prospect. Remotely, we see nothing but spires of temples, and turrets of palaces, and imagine it the residence of splendor, grandeur, and magnificence; but, when we have passed the gates, we find it perplexed with narrow passages, disgraced with despicable cottages, embarrassed with obstructions, and clouded with smoke.”
—Samuel Johnson (1709–1784)
“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)
“Every day care center, whether it knows it or not, is a school. The choice is never between custodial care and education. The choice is between unplanned and planned education, between conscious and unconscious education, between bad education and good education.”
—James L. Hymes, Jr. (20th century)
“I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we prudently save means that their life will be so much the more abundant. Economy is idealism in its most practical terms.”
—Calvin Coolidge (1872–1933)
“the old palaces, the wallets of the tourists,
the Common Market or the smart cafés,
the boulevards in the graceful evening,
the cliff-hangers, the scientists,
and the little shops raising their prices
mean nothing to me.”
—Anne Sexton (1928–1974)