Its Contribution to Economic Growth, Well-being and Rationality
Chapter 7: Intangible Factors in the Eastern European Transition: A Socio-Economic Analysis
7. Intangible factors in the Eastern European transition: a socioeconomic analysis INTRODUCTION Given the state of economic ideology and the predominance of neoclassical economic theory, given the loss of conﬁdence in the communist system among many of the citizens of the formerly communist countries in the late 1980s, and given these people’s impatient desire to move quickly to scrap the old system, it is hard to imagine that the Eastern European economic transition could have occurred much diﬀerently (Adam, 1999: 3; Gora, 1991: 146). Western economists’ advocacy of a rapid radical transition was what many, especially the post-communist political elite, wanted to hear. There was not much opportunity for alternative voices to be heard. Although these historical forces were no doubt irresistible at that time, this should not prevent us from trying, even at this late date, to learn how the transition process could have gone better and how our understanding of the economics of transition could be improved. The transition in Eastern Europe has provided a severe test for economists and economic ideas, and despite some successes, it looks like, overall, the test has failed. Too few of the transition economies have achieved sustained economic growth a decade later. Mainstream theory’s most notable failure is its inability to appreciate the intangible or softer side of how economic systems and organizations operate. In the context of large scale change, it is particularly important to appreciate not just the structured, explicit and deﬁnite aspects of relationships but also...
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