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In
order to describe main trends in group dynamics
of the transitional reform the authors have
extracted three basic constituencies in "a
typical economy at the start of the transition":
State sector workers are described
as those "without the skills to become new
entrants in the competitive market". In the
state sector downsizing accompanied with unemployment
and price increases "they face significant
losses".
Potential new entrants are
described as "workers and new entrepreneurs,
originally from state owned enterprises, who
have the skills to become new entrants in
the competitive market". They manage to adjust
to the state sector decline and overcome initial
losses. Insiders and oligarchs are
described as "actors who begin the transition
with substantial de facto control rights over
state assets and close ties to the political
elite inherited from the previous command
system. Insiders and oligarchs benefit immediately
from liberalisation and privatisation because
they can convert their existing control over
state assets into substantial gains." |
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Transitional countries had left the model of non efficient
centrally planned economy. For more than ten years,
they are trying to establish market economy model capable
to compete globally. And, of course, not to be a permanent
looser as they were before!
The market economy is not only about competition. Still,
the old model is very much blamed for tightening competition
and liberties. In the centrally planed economies the
state was the dominant constituent, a "commander in
charge" for all major enterprises and institutions in
society.
Redistribution
of economic chances
What happens when the old command system is abandoned
and the new rules of market economy system are "on the
way" but not established yet ? Who gets the control
rights over state assets in the process of liberalisation
and privatisation? Who are the winners and losers after
a decade of the long term reform?
Increasing inequality in all transitional countries
is expected temporary result of the adjustments to the
new competitive market rules. But most of the reform
supporters had not predicted the heights of inequality
that are reached in the very beginning of the transition.
 The
main competitors
In recent World Bank study ("Transition, The First Ten
Years Analysis and Lessons for Eastern Europe and the
Former Soviet Union") paid much attention on that: "The
countries of Europe and Central Asia started transition
with some of the lowest levels of inequality in the
world. Since then,however, inequality has increased
in all transitional economies and dramatically in some
of them..." (page xiv,). The authors expressed concern
about the fact that some groups have realised substantial,
extraordinary gains from the first level of the (partial)
reforms and about their ability to freeze the reform
The winners of the first level of the reform are oligarchs
and insiders! Who are they and how they manage to win?
Drawing
the paths of winners and losers
On the Figure 9.1 we can follow the rise of inequality
between three major actors of transition reform. Paths
of three main actors at the first level (from R0 to
R1) are drawn according to numerous empirical data.
There is a lot of statistical evidence in majority of
transitional countries about extraordinary rise of the
income gains of the minority group of "oligarchs and
insiders", about the slow income rise of the new entrants
and steady looses of the former state sector workers
not only in their income but also in their social care
beneficiaries.
How
to get to the second level
In other words the Figure 9.1 seems to be "realistic"
about the first level of transition. In the terms of
competitive game, it presents extraordinary high results
of one small "team" in relatively short time and it
is hard to find such example in developed economies
of our time. What if oligarchs and insiders have not
left other "teams" far behind themselves temporary,
but forever? Paths from R1 to R2 point (second level
and further) are traced according to favourable direction
of the reforming process where transition is over and
efficient economy established. The levels after the
point R1 are about the future and how to get there.
The authors have expressed their concerns about freezing
the reforming process. And what about the people's lives
in a such dramatic changes in economic and social positions?
How does it look like to live in typical (or non typical)
transitional country? This section of our newsletter
is opened to commentaries, testimonies and dialogue
related to these questions. <
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