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  4. Fall 1991
  5. Legality and Market Reform in Soviet-Type Economies

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Legality and Market Reform in Soviet-Type Economies

  • John M. Litwack
Journal of Economic Perspectives
vol. 5, no. 4, Fall 1991
(pp. 77–89)
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Abstract

The classical Soviet-type system operates in the virtual absence of economic legality, which is a prerequisite to a successful transition to a market economy in the Soviet Union and the nations of Eastern Europe. In the absence of economic legality, the leadership of these countries will not be able to implement a credible commitment to private property rights or any other effective market incentive mechanism. In addition, they will be unable to promote the growth of multilateral impersonal trade. Without legality, a shift away from central planning toward market allocation may very likely lead to economic decline, inflationary pressures, and a polarization in income distribution, which, in turn, could unleash political reaction against the reform process in general.

Citation

Litwack, John M. 1991. "Legality and Market Reform in Soviet-Type Economies." Journal of Economic Perspectives, 5 (4): 77–89. DOI: 10.1257/jep.5.4.77

JEL Classification

  • P21 Socialist Systems and Transitional Economies: Planning, Coordination, and Reform
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