Liberalization and its Consequences

Liberalization and its Consequences

A Comparative Perspective on Latin America and Eastern Europe

Edited by Werner Baer and Joseph L. Love

The essays in this volume describe, analyse and compare the achievements and the failures of societies that adopted market-based economies within a democratic polity after a long period of communist rule (Russia and Eastern Europe) or military authoritarianism (Latin America). Together, they also trace the rocky course of liberal economic policies over the whole twentieth century.

Chapter 13: Institutions and property rights across time and space: lessons from Eastern Europe and Latin America

Lee J. Alston and Geoffrey J.D. Hewings


1 Lee J. Alston History matters.2 This statement is intuitively appealing to scholars researching transition economies as well as to the casual observer. A large part of its appeal is its vagueness: it can mean different things to different people. Yet, to be useful to the analyst, we need to specify the myriad ways in which history determines where you can go from here. By so doing, we will be able to construct testable hypotheses about the importance of different historical factors. In this way we can help policymakers limit the extent to which ‘history repeats itself.’ In this chapter I will explore the possible ways history mattered and will matter in the future. In so doing, I will draw on examples from the chapters in this volume. HISTORY BEFORE THE TRANSITION/PRIVATIZATION PROCESS ‘When You Ain’t Got Nothing, You Got Nothing To Lose’3 This quotation captures the concept of opportunity cost. A greater discontent with the past allows a leap of faith to markets. In short, societies risk little if the past was miserable. For Central Europeans the bitterness toward past ‘invaders,’ in particular the most recent period of Soviet control, encouraged them to adopt markets more quickly than they otherwise might have. For example, Kochanowicz argues that for Czechoslovakia, ‘For all its isolationism, the experience of 1968 seemed to bury whatever sympathies existed in Czechoslovakia for Marxism–Leninism, contributing at the same time to the emergence of the civil liberties movement of Charter 77.’ (Chapter 7, p. 171...

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