The basic problem

It has been known for a long time that the centralized planned economy in its various forms – forms that differ only in degree and not in kind – is not in a position, either now or in the future, to fulfill the demands placed on a modern national economic system. These demands include adequate economic growth, rising living standards, a high level of employment, price stability, social equality, and the conservation of the environment and natural resources.

All the Comecon countries had one decisive feature in common. Without exception they have to come to terms with the Stalinist heritage of a centralized planned economy. The main defect of this system is that it was not able to react with sufficient flexibility to external influences or to initiate internal changes. Of course, there were national differences between the various planned economies – for example, between Hungary and Poland. However, these differences are of secondary importance in comparison with the structural problems, which are our prime focus of interest in this chapter.

For decades, the dominant theme in academic and political discussions has been the transition from capitalism to socialism – and not vice versa. Marx and Schumpeter belong to the leading exponents of this school of thought. Of course, everyone will remember the discussions about the “third way” – in other words, the synthesis of the two antagonistic economic orders.