The Transition to a Market Economy in Russia: Property Rights, Mass Privatization and Stabilization

The Soviet Union and the nations of Eastern Europe are undergoing a historically unprecedented restructuring as they move inexorably from centrally planned economies toward market economies. This historic transition must be guided by a coherent set of stabilization policies to reduce the threat of macroeconomic collapse and the threat of inflation. As a precursor to price liberalization, private property rights must be created, distributed and credibly enforced in order to ensure that these rights can be freely traded at market prices. The creation and distribution of property rights must find a balance between the competing goals of equity on the one hand and efficient governance structures on the other. Finally, provision must be made for a social safety net, sufficiently broad to minimize the short run burden of an inevitably costly adjustment process in order to avoid a crisis of constitutional authority. A program of “Socialist Privatization” is proposed as a political means of establishing market capitalism on the basis of an equitable distribution of wealth.