Aslund, Anders. How Capitalism Was Built: The Transformation of Central and Eastern Europe, Russia, and Central Asia.

AuthorKodolov, Oleg
PositionBook review

Aslund, Anders. How Capitalism Was Built: The Transformation of Central and Eastern Europe, Russia, and Central Asia. New York: Cambridge University Press, 2007. xvi+ 356 pages. Cloth, $70; paper, $25.99.

Anders Aslund, former Swedish diplomat and a senior fellow at the Peterson Institute for International Economics, presents a compelling and systematic analysis of all the major issues associated with the reform process in those nations with a Communist legacy. Empirically rich and theoretically well-grounded, this book addresses a number of conceptual issues including the collapse of communism, shock therapy vs. gradualism in market liberalization, inflation control, privatization, democratic vs. authoritarian models of transition, the role of the oligarchs, establishing new legal systems, and the role of the European Union (EU) in post-Communist transitions. Discussion of each issue is grounded in historical analysis as well as in real-world economic and political experience of the nearly two decades since the end of Communism in those countries. The argument is clear and compelling, with its practical application enhanced by the author's personal experience advising various post-Communist governments during their most challenging period of transition. Classification of the twenty-one post-Communist nations selected for this study (fifteen former Soviet republics and six non-Soviet East European nations) and of their paths toward reform is based, in part, on a profound understanding of differences in political culture and public attitudes towards democracy and market among these states.

The detailed discussion of political elites, and, in particular, of the post-Communist elite transformation, is a definite strength of this book. One impression, however, is that new elites have developed as a result of conflicts between statists and market reformers. As Aslund points out, this conflict has become the major one rather than that between "rent-seekers" and "true" reformers. This claim, however, is weakened by the author's acknowledgment that rent-seekers and reformers are often the same individuals at different time periods. Aslund succeeds in showing that the conflict between narrow rent-seeking and broader reforms does affect the shape of the market-statist conflict, but he is hardly successful in proving that this latter conflict is being replaced by the former one.

The effective blend of substantive economic data and political and...

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