Market Failure: A Guide to Eastern Europe's Economic Miracle (Paperback)

Up until now there has been no general overview of economic developments in Central and Eastern Europe and the former USSR since 1989 written from the left. This book aims to fill that gap. Written by Laszlo Andor, a lecturer at the Budapest University of Economic Sciences associated with the Hungarian Left Alternative grouping, and by Martin Summers who has worked on Eastern Europe for the Catholic Fund for Overseas Development and the New Economics Foundation, it represents a searing attack on the management of economic policy in the region over the last decade. Those determining this policy, both from inside the region as neo-liberal politicians and from outside as economic advisers, are described by Andor and Summers as "Market Maoists" who are undertaking a "Great Bourgeois Cultural Revolution". Like Mao in the Great Leap Forward of 1959 the Market Maoists have substituted an idealist revolution based on a schematic plan for an analysis of concrete realities. This book is designed to outline the effect of this revolution on the peoples of the region and to suggest alternatives. Andor and Summers begin by outlining the context within which transition in Eastern Europe has taken place, with a special focus on the role of the international institutions such as the IMF and World Bank. They compare the activities of these institutions and related `experts' with their roles in other regions, notably Latin America, and argue that differing institutional policies, for example those propounded by Jacques Attali during his period in charge of the European Bank for Reconstruction and Development (EBRD) have been systematically sidelined. They then move on to discuss the effect of price liberalisation and associated monopolistic exploitation and the reasons for the collapse of production in the early 1990s. This is followed by an account of privatisation and the formation of a "noveau nomenklatura" through the privatisation process and associated corruption. Later chapters deal with agriculture and rural development, inequality both within the region and between Eastern and Western Europe and political developments in the East on both the left and right. The book concludes with an examination of possible alternatives to the Market Maoist approach. Andor and Summers write well and one very attractive feature of their book is the genuine passion and anger about what has been done in the area which shines through their writing and differentiates it from the vast bulk of what has been written on this subject, especially in conventional textbooks. Another strong feature of their account is its range, as detailed above. The book covers a large amount of issues in a relatively short space. However, this also brings with it certain costs. While there are a number of very telling and suggestive statistics, for example on the dramatic decline in food production, they remain illustrative and there is little space for more detailed analysis. This is especially telling in the sections on inequality where it would have been good to have had some more specific information on the growth and nature of divisions within Eastern Europe since these have been largely ignored in more orthodox accounts. There are also costs associated with trying to cover such a wide range of countries within a single account. In particular there is no real discussion of the extent to which the former Soviet Union exemplifies a distinctively different pattern of transition from that in Eastern and Central Europe. In many ways the most interesting aspect of Andor and Summers' account is their analysis of alternatives. They consider a very diverse set of perspectives here. When writing about privatisation they draw a distinction between Anglo-American capitalism and that practiced in Japan and Germany. The implication is that the Eastern European privatisation programmes are the result of opting for an Anglo-American model and that this was a mistake compared to the Japanese-German alternative. In their final chapter Andor and Summers discuss a number of more specific alternative policy proposals. One of these is that put forward in 1991 by the Polish economist Marek Gruchelski. This was essentially a policy of work sharing, with each worker working every second day to preserve employment during the transition. It would have been interesting to have related this more explicitly to the current debates in Western Europe, particularly France and Italy, on the shorter working week. Other models discussed include the Scottish Community Business movement, Chinese Township and Village Enterprises and credit unions. Finally the authors argue for increased co-operation within Eastern Europe, at least to the level of a payments union. The range of alternatives analysed here shows two strengths of the book; firstly, the insistence throughout that the Market Maoist model with its disastrous consequences was not an inevitable response to the crisis of Stalinist planning and secondly, the authors' willingness to consider concrete issues of policy as well as to describe problems. However, their sheer range and the obvious conflicts that exist between some of them also indicate that this book can only be a start in initiating a critical discussion of the orthodox approach to the East European transition. Andor and Summers would surely be the first to recognise this: they conclude by writing that `if this short book has helped to educate the reader about the nature of the problems we all face and stimulated further informed reflection and committed action, then it will have served its purpose' (p. 191). It is to be hoped that the book will have this effect and will encourage an overdue investigation of possible ways forward in Eastern Europe that will also convey lessons for those opposing Market Maoism in other parts of the world.

Andrew Kilmister.