Economic Ideas in the Transition from Communism
New Thinking in Political Economy series
Chapter 6: A Test of Market Fundamentalism: Austrian Economics
The notion that the transition process following the collapse of communism in Eastern Europe represents a triumph of ‘market fundamentalism’ has become commonplace in many quarters (Kuttner, 1997; Soros, 1998; Stiglitz, 2002). One would imagine that such strong claims regarding the spread of the so-called ‘market fundamentalism’ would be based at least on a modicum of research and evidence. Yet the dearth of such investigations in a context of a broader dearth of studies of centre-right politics in Eastern Europe (Hanley, 2006b, p. 9) and the relative scarcity of nonbiased histories of libertarian and radical pro-market movements is an acknowledged reality. And so, prima facie, most claims of ‘market fundamentalism’ simply seem to rest more on rhetoric and speculation than on analysis. This chapter tries to confront this issue. Its thrust is that the claims made about the hegemony of ‘market fundamentalist’ ideas could be probed by looking at one speciﬁc school of thought that typiﬁes the radical pro-market approach. By looking at the prevalence of the ‘Austrian Economics’ epistemic community in the region, one could test some of the claims made about the sway of radical pro-market ideas in that part of the world. There are several reasons why a focus on Austrian ideas in Eastern Europe is an appropriate vehicle for such an enterprise. First, Austrian economics is such a suitable proxy for radical free market ideas because no other school of thought places as much emphasis on the primacy of markets. This means that it...
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