Anders Aslund's "The Case for Radical Reform"

A summary by Howard Fienberg

for Professor Andreas Pickel, February 13, 1996

The implementation of radical economic and political reforms is the focus of "the Case for Radical Reform" by Anders Alsund. Aslund, a proponent of radical as opposed to gradual change in post-communist Europe, presents his reasoning for this view, refutes the objections made to it, offers an argument in favor of simplicity, displays some empirical findings, then wraps up with a discussion on the new twist to the chicken-egg argument.

Aslund begins by noting that "speed is of the essence." (64) He makes reference to Balcerowicz's so-called "extraordinary" period of politics, what Aslund calls the "window of opportunity." (65) With appatchiki in the post-communist East turning to corruption, and the nomenklatura attempting mass embezzlement during the privatization process, the new social order is seen to be in danger of being branded as "ineffective and possibly illegitimate." (64) The best way to overcome this, according to him, is through rapid, as opposed to gradual, change.

Objections to this presupposiiton are not uncommon. Top-down reform, though necessary, incurs charges of elitism. Aslund notes that in Russia in particular, "antidemocrats hoodwinked democrats into believing that" fast and effective political action would be undemocratic. (66) Facing both a political and economic crisis, Aslund sees no alternative to the leap of faith, in order to counter the "communist-induced distortions" in both realms. (67)

Aslund promotes a simple solution to the problems of change. The first step is abolishing of most "regulations on enterprise, trade, prices and production." (67) This must bundle both liberalization and macroeconomic stabilization into one program. Aslund says that incrementalism will not work because people's patience will not last it out.

Aslund examines five empirical measures of economic performance: inflation; national income; consumption; unemployment; and income distribution. First, shock therapy is seen as the surest aid in combatting inflation. Second, Aslund concludes that a speedy transition offers less decline in GDP, a quicker return to growth, and maybe a higher level of growth overall. Third, "both GDP and consumer living standards" will most likely prosper after a radical change. Fourth, unemployment predictions in radical transitions have proven overly high. Finally, rent-seeking and profiteering can be dealt with best with "rapid liberalization and financial stabilization," which leads to more competition, and a healthier distribution of income.

The democratic breakthrough is shown by Aslund to make possible the market transition. Once this is under way, reformers are told to "rapidly enact" change. (72) Rapid is relative, however, and is given leeway to variance depending on the context. Soon after this is enacted, Aslund reccommends holding elections, taking advantage of the initial support for the reforms. A few years later elections must be held again. In this case, it is not so important that the reforming regime wins the elction, but moreso that "no party coming to power can overthrow the new economic system." In fact, it is unlikely that the regime will be returned to power, given the political costs of radical reform. However, as shown in Poland, even the neo-communists cannot turn back the clocks.

In conclusion, Anders Aslund has provided a brief overview of the case for radical reform, and how it is to be both achieved and consolidated.

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