The market meets its match : restructuring the economies of Eastern Europe

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With close attention to the history and institutional realities of the region, The Market Meets Its Match explains the failure of the simplistic market medicine administered in the first five years of transition. Merely "getting the prices right"--Lowering wages and raising interest rates and energy prices - won't improve competitiveness, the authors argue, as long as nonlabor costs such as the quality of goods, product design, outmoded technology, and inefficient distribution channels remain problems. Easing these bottlenecks requires long-term capital accumulation and profit maximization. The institutions necessary for such growth have not developed under Eastern Europe's new "pseudo-capitalism," as the authors demonstrate, and "pseudo-privatization," while distributing state property to citizens, has not provided them with the capital and technology they need to succeed.