What we really wanted 25 years ago was to avoid a non-transformation. We didn't want to give a chance to all kinds of groups which sought to preserve the status quo and/or steal the whole transformation process for the benefit of their vested interests. This influenced our position vis-à-vis all versions of gradualism, which we considered a non-reform. We did not believe that gradualism was a realisable reform strategy (in a politically free society) and we disagreed with the term "shock therapy", both as a useful reform concept and as a description of the reality of our country and elsewhere. We refused to accept the "shock therapy vs. gradualism" dilemma that is even now discussed in economic debate as meaningful alternatives. The term "shock therapy" is not an analytical term. It is a political charge used by socialists like Joseph Stiglitz.
We considered economic and political reforms to be interconnected and indivisible. To separate them à la China was, in Central and Eastern Europe, impossible. The unrealistic concept of gradualism was (and is) based on the belief in the possibility of a detailed programme of reform. It would have been, however, possible only in the absence of political freedom, which was not our case.
We knew that the transformation project had to be ours, based on our ideas and realities. We did not consider ourselves representatives of international institutions and we did not feel any reason to please them. We tried to find our own "Czech way" and to give the people a chance to be part of the game, not just passive observers.
The decisive part of the transformation process was massive, wholesale privatisation. In our case, it was based on several ideas:
From the very beginning, we knew we had to privatise the economy we inherited as quickly as possible. We did not want to leave our shortly-to-be-privatised-firms in a pre-privatisation limbo in which they would rapidly lose their value. For that reason, we did not have any great interest in the maximisation of the proceeds of privatisation. The speed of privatisation was seen as an asset, not a liability.
We considered economic and political reforms to be interconnected and indivisible. To separate them à la China was, in Central and Eastern Europe, impossible. The unrealistic concept of gradualism was (and is) based on the belief in the possibility of a detailed programme of reform. It would have been, however, possible only in the absence of political freedom, which was not our case.
We knew that the transformation project had to be ours, based on our ideas and realities. We did not consider ourselves representatives of international institutions and we did not feel any reason to please them. We tried to find our own "Czech way" and to give the people a chance to be part of the game, not just passive observers.
The decisive part of the transformation process was massive, wholesale privatisation. In our case, it was based on several ideas:
- Our goal was to privatise practically all the existing state-owned firms, not just to allow the setting up of new firms on "green fields".
- Swift privatisation was considered to be the best contribution to the much-needed restructuring of inefficient state-owned firms (we did not believe in the ability of the government to restructure the firms prior to privatisation).
- Privatisation of firms in the real economy couldn't wait for the completion of bank privatisation (it had to go in parallel).
- Because of the lack of domestic capital (which did not exist in the Communist era) and because of the very limited number of serious potential foreign investors, firms had to be privatised at a low price. This idea led us to the concept of "voucher privatisation", which played an important, but not dominant, role in our country which is often misunderstood. Less than a quarter of the Czech privatisation programme was carried out by means of vouchers.
From the very beginning, we knew we had to privatise the economy we inherited as quickly as possible. We did not want to leave our shortly-to-be-privatised-firms in a pre-privatisation limbo in which they would rapidly lose their value. For that reason, we did not have any great interest in the maximisation of the proceeds of privatisation. The speed of privatisation was seen as an asset, not a liability.
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