Fifteen years of economic transition

Three years after the collapse of the Berlin Wall, and one year after the break-up of the Soviet Union, Egon Matzner collaborated in the production of a book that was critical of the Western-inspired policy of market ‘shock therapy’ then being carried out in the countries of the form Soviet Bloc (Kregel et al., 1992). A key assumption behind this policy was that the market order would rapidly germinate and grow, one the old state bureaucracies were swept away. As the influential Western advisor Jeffrey Sachs (1993, p.xxi) contended: ‘markets spring up as soon as central planning bureaucrats vacate the field.’ In fact, markets did not spring up spontaneously. The requisite commercial rules, norms and institutions were lacking (Kozul-Wright and Rayment, 1997; Grabher and Stark, 1997). As the Nobel Laureate Ronald Coase (1991, p.718 rightly observed: ‘The ex-communist countries are advised to move to a market economy…but without the appropriate institutions, no market of any significance is possible.’