How China Escaped Shock Therapy
The Market Reform Debate
By Isabella M. Weber
China has become deeply integrated into the world economy. Yet, gradual marketization has facilitated the country’s rise without leading to its wholesale assimilation to global neoliberalism.
This book uncovers the fierce contest about economic reforms that shaped China’s path. In the first post-Mao decade, China’s reformers were sharply divided. They agreed that China had to reform its economic system and move toward more marketization—but struggled over how to go about it.
Should China destroy the core of the socialist system through shock therapy, or should it use the institutions of the planned economy as market creators?
With hindsight, the historical record proves the high stakes behind the question: China embarked on an economic expansion commonly described as unprecedented in scope and pace, whereas Russia’s economy collapsed under shock therapy
The collapse of communism in Europe in 1989.
This left many post-communist states in central and eastern Europe with centralised authoritarian economies that had to transition to decentralised, market-orientated capitalist economies.[citation needed]
Inspired by Bolivia's example, and advised by institutions like the International Monetary Fund and individuals like Jeffrey Sachs, many countries chose shock therapy to shake off the economic lethargy of the communist era and transition to the capitalist systems.
These transitions provide an interesting and important view into shock therapy and its consequences, especially when contrasted with China, which began a gradualist transition (the opposite of the shock therapy approach) in 1978 under Deng Xiaoping.
https://en.wikipedia.org/wiki/Shock_therapy_(economics)#Post-Communist_states
How 'shock therapy' created Russian oligarchs and paved the path for Putin
Natioal Public Radio NPR 22 March 2022
Jeffrey Sachs
The government of Poland awarded Sachs with one of its highest honors in 1999, the Commander's Cross of the Order of Merit. He also received an honorary doctorate from the Cracow University of Economics.
https://en.wikipedia.org/wiki/Jeffrey_Sachs#Advising_in_post-communist_economies
Shock Therapy for Neoliberals
Underlying the current lack of resilience is the fundamental failure of neoliberalism and the policy framework it underpins.
Markets on their own are short-sighted, and the financialization of the economy has made them even more so. They do not fully account for key risks – especially those that seem distant – even when the consequences can be enormous.
Joseph E. Stiglitz Project Syndicate 5 April 2022
https://englundmacro.blogspot.com/2022/04/shock-therapy-for-neoliberals.html
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