Specific Features of Transition from Plan to Market

To identify the specific features of a transition from a centrally planned to a market economy, a general framework of economic systemic change is needed. My understanding of that framework assumes that all economic systems are subject to change and that change may proceed in three ways — through sectoral reform, comprehensive economic reform, or through general replacement of one economic system by another. By sectoral economic reform I mean substantive changes in individual sectors such as industry, agriculture, health services, education, banking, the fiscal system, etc. By comprehensive economic reforms I mean simultaneous changes in several or most economic activities, changes which reallocate the economic and political power among groups of micro and macro economic agents and thus move the centre of gravity within the economic system. Regular and timely sectoral reforms may have effects similar to those of comprehensive economic reforms. A combination of sectoral and occasional comprehensive economic reforms may profoundly change an economic system to such an extent that it evolves into another. In contrast, the lack of either sectoral or comprehensive economic reforms over a long period inevitably leads to a situation where the economic system has to be replaced all at once by another, with inevitable social and political conflicts, likely to be accompanied by violence. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.