Hungary never had "shock therapy." It has long been viewed as the classic case of "gradualism." It is also a case of not having stalled out or getting side tracked by corruption or wars or all sorts of other nonsense, despite the temptation of revanchist nationalism due to all the ethnic Hungarians located outside its borders. Gradual, but reasonably steady and well thought out.
Poland had macroeconomic "shock therapy" and it was successful at reducing the inflation rate. It has not been successful at reducing unemployment very much. As I noted, for all its success and the cheers of the IMF, etc. (which, however still fusses at Poland for not having privatized more), Poland has yet had a government that could get itself reelected. There is still a lot of unhappiness on the ground in all of these countries.
For both Poland and Hungary, things were somewhat easier, not only because of their more western pasts and orientation, but also because they had been the most market oriented of the old Soviet bloc countries and thus already had some of the institutional framework and infrastructure in place. Thus, the therapy was not so "shocking" and in Hungary's case was not even what happened. Barkley Rosser -----Original Message----- From: Seth Ackerman <SAckerman at FAIR.org> To: 'lbo-talk at lists.panix.com' <lbo-talk at lists.panix.com> Date: Monday, May 03, 1999 4:36 PM Subject: RE: Poland
>So does the relative success of Poland and Hungary prove that shock
>therapy in some form can work? That the failure of Russia stemmed form
>purely Russian circumstances, not from the policies themselves?
>
>> -----Original Message-----
>> From: J. Barkley Rosser, Jr. [SMTP:rosserjb at jmu.edu]
>> Sent: Monday, May 03, 1999 3:50 PM
>> To: lbo-talk at lists.panix.com
>> Subject: Re: Poland
>>
>> Doug,
>> Poland's debt reduction certainly helped, but was
>> not the end all and be all. Hungary did not have one
>> and has been doing nearly as well as Poland. Of course
>> they had very different strategies vis a vis privatization
>> which were related to this issue. Hungary has emphasized
>> selling off its assets to foreign multinationals as its way of
>> privatizing. This is also more gradual than the instant
>> privatization voucher schemes pushed by our Bates Medal
>> Winner, Shleifer, that have been such miserable failures in
>> the CR and Russia. But one at least gets a fresh injection
>> of finance, new tech, access to foreign markets, and
>> managerial restructuring out of it.
>> OTOH, Poland has been much more leary of opening
>> to foreign direct investment, with much of that related to a
>> residual fear of German domination. (Much of the fdi in
>> Hungary has come from the much less scary Austria,
>> associated nostalgically with the Habsburgs).
>> The issue is that the debt reduction in Poland made
>> potential foreign investors more leary of going into Poland.
>> But that was just fine with the Poles. The Hungarians wanted
>> fdi and thus have put up with continuing to make high
>> interest payments on their left over debts from their days
>> of Kadaresque "goulash communism" and soft budget
>> constraint market socialism.
>> BTW, the CR and Slovakia did not have this legacy of
>> foreign debts or of hyperinflation as the starting point of their
>> transitions was that of a very rigid command socialism.
>> Barkley Rosser
>> -----Original Message-----
>> From: Doug Henwood <dhenwood at panix.com>
>> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com>
>> Date: Monday, May 03, 1999 2:17 PM
>> Subject: Poland
>>
>>
>> >J. Barkley Rosser, Jr. wrote:
>> >
>> >>Curiously, Poland, which you pose as a highly reformed
>> >>economy (and it is) has been much slower to privatize.
>> >
>> >Poland also got a 50% debt cancellation, no? How important was that?
>> >
>> >Speaking of Poland, Wojtek, I'd like to hear your opinion of the
>> early
>> >1980s Solidarnosc.
>> >
>> >Doug
>> >
>