Georgia on my mind.

• Author: Aslund, Anders

Vladimer Papava, Secroeconomics, iUniverse, 2005.

The literature about the transformation of the Soviet economy is dominated by writings on Russia, and most books about other post-Soviet economies are of poor quality. Therefore, it is a great pleasure to find a substantial and sensible book on the market transformation of Georgia, the small country in the Caucasus.

Vladimer Papava is a well-read professor of economics and he served as Minister of Economy of his country from 1994 to 2000. At present, he is a Fulbright scholar at the School of Advanced International Studies at Johns Hopkins University in Washington, D.C.

He has written a refreshing and stimulating book, which is a good read. Although he is fond of puns, such as "necroeconomics," his prose is lucid and he has a knack for calling a spade a spade. Unlike so many other economists who have experienced severe crisis, Professor Papava does not display strong ideological preconceptions. His extensive reading is eclectic and his reasoning very open-minded. His interest is simply to find out what works in the real world.

And what a world he has lived in! No former Soviet republic saw as great an economic calamity as Georgia. A brief civil war at the time when it gained independence in 1991-92 brought havoc to the country. Hyperinflation raged and racketeering took over the nearly anarchic country. Officially, output fell by no less than four-fifths. As a realist, however, Papava does not pay any attention to the official statistics. To him, much of the old economy had been misdeveloped into a "necroeconomy," a dead economy of value detraction that could not produce anything of value. Most of the rest of the economy consisted of the shadow economy, in which he distinguishes between productive shadow entrepreneurship and parasitism. You sense how awful the situation was.

So how do you get out of such a mess? Papaya paraphrases Churchill's statement about democracy that a market economy is the worst system except all others that have been tried. "Fortunately today, almost no one in post-Communist countries considers seriously whether there is an alternative to a market system ... nobody is against private property."

But where do you start? Papaya sees only one institution that can salvage society from the morass of corruption: private property. "In order to restrict corruption and establish the institution of private property, it is necessary to legalize the existing results of primary...