Economic Systems in Historical Perspective (Kendall/Hunt Publ. Co., 1997)

PREFACE

Will capitalism survive? Is socialism really dead? I have made an effort to be truthful, but not neutral in my view of economic systems. As a result, what emerges is a text that contains somewhat one-sided arguments - a book that can be described as both polemical and idiosyncratic. In an age when textbooks are often packaged like Pablum, designed to offend no one, this volume may not prove very popular.

Yet, I don’t think that I shall be the only teacher using it as a text to teach comparative economic systems. My main reason for writing it is the fact that I find the three or four leading texts in this field rather unsatisfactory. Without naming names, one is too much like an encyclopedia, including references to at least a hundred economists, and a score of theoretical/political schools. A more recent book provides detailed discussions of quite a large number of countries, which may be very difficult for the average student to think about and sort through. Another is too simple by far, while the two or three others are competent, but somewhat boring. In my opinion, there is a very strong tendency in this field to overemphasize Marxist theory and Eastern European/Soviet details, without saying much about the rest of the world, which leaves out many very interesting issues for comparative analysis. I have set out to do a book that also deals with North-South issues explicitly in addition to the more traditional East-West comparison. Of course, many teachers will probably want to supplement this text with some additional readings in those more customary areas, such as spending more time on Marx, but they would now have the opportunity to emphasize other issues of considerable interest, particularly developments in dynamic Pacific Asia. I have written this book after nearly thirty years of full-time teaching at Georgetown, with my professional specialization being primarily Asian economic development. However, I have also taught a comparative economic systems during the summer for about 20 times, under the auspices of Georgetown’s Institute for Comparative Political and economic Systems (ICPES), which is now in its 28th year, as well as during the regular school year recently. The ICPES program brings approximately one hundred student leaders from all over the United States and now the rest of the world as well for a very intensive six weeks of academic courses, internships, site briefings, and lectures. The backgrounds of these students are really varied ranging from economics majors in schools ranked above Georgetown to over-achievers from places that I haven’t even heard mentioned before the student had applied to the program. It is for this reason that I have included a brief review of standard Keynesian macroeconomics, as well as a bird's eye view of the history of economic thought in the long chapters. (Therefore, quite a few teachers teaching a thoroughly prepared and more uniform group of students can de-emphasize the first few chapters - make them optional assigned reading - perhaps, simply begin with Chapter 5).

This text will differ from the standard comparative economic systems book in a number of ways. First, I consider myself an "unrepentant capitalist-roader" - a "rightwing economist," having great admiration for Hayek, Schumpeter, Friedman, and the so-called "voodoo economics" school. There aren't very many of us, I fear, and adoptions may suffer as a result. Still, it is quite possible that some fair-minded teachers, who disagree with my views almost completely, will still use this book to expose their students to a different viewpoint, perhaps in order to get a few of them mad, excited, interested, and disturbed. I myself have often deliberately used rather left-wing texts and readings over the years, in order to motivate some serious discussion, with heat often generating some light as well. Nevertheless, I strongly believe that economic freedoms and political democracy usually tend to go together - a centrally planned economy, with government ownership of the means of production, has always in practice also meant a single-party government. On the whole, the economic performance of market-oriented economies has been quite superior to that of centrally-planned countries. Indeed, having been born in Latvia, now once again an independent country and having spent my childhood in Europe right before, during, and after the Second World War, I bring a very personal strong bias in favor of individual freedom and the market economy to my discussion of these matters. We left Latvia in a great hurry in 1944, since my family was on the list of those to be "repressed" in the Stalin era. I have also lived in Thailand for a couple of years, and watched closely what went on in Cambodia and Vietnam after their "liberation." At times, perhaps I go a little overboard - the purple prose should perhaps be toned down - and I did do a bit of that before publication.

As already noted, a second conscious differentiation of the product involves considerably greater emphasis on North-South issues - two chapters on competing explanations of underdevelopment, a contrast of China and Japan, and a chapter on "the capitalist-roaders of Asia." Again, many teachers will probably wish to spend somewhat more time on the recent history of the Soviet Union, and will elect to assign chapters in other texts, articles that they themselves have written, or other selections.

Despite the fact that I have confessed to a pro-market bias in this introduction, I find that many of my conservative students tend to be seriously lacking in compassion while most liberals seem to lack common sense - and I hope that yet a third aspect of product differentiation becomes evident to my readers. Some of my right-wing posturing may actually be deliberate. Perhaps, I could be described as "a closet moderate." I would happily endure some increase in my income taxes, if I could be sure that poor children got to drink some milk or eat some vegetables as a result. As the world socialist system disintegrates, and China as well as Vietnam experiment with the market, there is a temptation simply to declare a victory for the market - and to cancel the course. However, Marxism has played a tremendously important historical role, and socialist solutions are by no means dead. It may also be argued that real-world political decisions have been greatly affected by the very existence of the other alternative - the U.S. and the Japanese may be more conscious of egalitarian concerns because of the challenge posed by socialist arrangements, for example. At the same time, socialist challenges to the legitimacy of capitalist-oriented governments are certainly softened by the mistakes (horrors, may I say that?) witnessed in the U.S.S.R. during the Stalinist era, in the PR.C. during the Great Leap Forward and the Cultural Revolution, and at Tiananmen Square, as well as in Cambodia under Pol Pot. To be fair about it, the examples of Chile and South Africa also suggest that market-oriented regimes do not invariably promote democracy and human rights.

There are many people to thank for their assistance in this effort. The writing got started during a very pleasant year at the University of California at Irvine - thanks to Max Fry, Charlie Lave, and Jack Johnston, among others. A number of colleagues have read bits and pieces of the draft, including Adhip Chaudhuri, "Sam" Crane, Stuart Brown, and a handful of others, whom I don't want to embarrass unnecessarily. Word processing was handled most cheerfully and efficiently by Pia Maschio, John Schorn, Sabrina Spahr, and Jeanne Murphy, as well as a number of student assistants (Shirley Kan, Michiko Wada, Natasha Braginsky, and Trinh Doan) in the Georgetown economics department office. Any theoretical errors are entirely my fault, but typos can certainly be blamed on them as well. Last, but not least, let me thank several classes of students at Georgetown, both during the summer and also the regular year, who used this volume in draft form, and helped to improve the final product - in particular, let me acknowledge the contributions of Alex Nyikos and Rafic Naja.

 All in all, I have tried to write an unconventional text - a book that will make you, the professor, refute some of my arguments and contentions, and also force our students to think, to argue among themselves, and to learn. If there are things in here that you find outrageous, please let me know - I'll change them or respond to your criticism, if I feel that I cannot. I am certainly willing to be convinced that I've made a mistake or overstated the case, but I hope that I've given you an alternative to the "Lite Comparative Economics" of some other texts.

Preface

Chapter One: Introduction

Chapter Two: Adam Smith and Competitive Capitalism

Chapter Three: The Keynesian Revolution

Chapter Four: Macroeconomics in Disarray: Where Are We Today? Chapter Five The Future of Capitalism

Chapter Six: Socialism in Practice: The Stalinist Model

Chapter Seven: What Comes After the CMEA?

Chapter Eight: Less Developed Countries: The "World Economy" View

Chapter Nine: Less Developed Countries: The "Traditional Society" View

Chapter Ten China: One Nation, Two Systems

Chapter Eleven Japan: Can It Serve as a Model?

Chapter Twelve Japan: As Number One?

Chapter Thirteen: The Capitalist-Roaders of Asia

Chapter Fourteen: The Future of Systems

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