Georgia. A Brief Survey of Macroeconomic Problems and Policies

During the first three years of independence (1991-1994) Georgia suffered serious economic decline. The difficulties associated with the transition from soviet-type planning to free enterprise and with the collapse of the CMEA trade system were aggravated by civil strife and especially by the 1992-1993 war in Abkhazia which obstructed one of Georgia's main transport links to the outside world, and caused an influx of 270,000 refugees into Tbilisi and other cities. With the end of hostilities, the restoration of law and order in most of the country, and with the emergence of a government strongly committed to liberalization and to stabilization the situation turned sharply for the better. An analyses of the Georgian economic transition.Georgia, economic transition, macroeconomic policy

The theory of the state: An economic perspective

The principle of laissez-faire, so closely associated with Adam Smith and the classical economists, should certainly not be considered an endorsement of anarchy as the ideal form of social order. Despite the theological overtones of divine providence in the imagery of the "invisible hand", Smith and his followers did not regard the market and the price mechanism as a spontaneous form of natural order that would prevail in any social group. Political organization in some form is necessary to provide the framework of law and order within which justice could be maintained and contracts enforced. Thus even one of their harshest critics, Thomas Carlyle, described their system not as anarchy, but as "anarchy plus the constable". The necessity of the "state" in the sense of the institution that claims a monopoly of the legitimate use of force over a given territory, or as Max Weber (1964, p. 154) defined it, for the proper functioning of "the market" and indeed of all forms of civilized human endeavor, can be traced back to the seminal influence of The Leviathan, the foundation of modern political thought laid by Thomas Hobbes (1651)

Tax-collection costs, public welfare and the predatory state

The collection of taxes, in any economic system, clearly requires the use of resources. In modern democratic states tax legislation is almost always controversial, and subject to extensive lobbying. In developing counties the wealthy often successfully avoid payment of taxes and the burden has to be borne by relatively impoverished rural classes, who are themselves not easy to tax directly because of poor record -keeping and difficulty of communications. In earlier times kings and princes often lacked the necessary means of direct taxation and were forced to rely on decentralized institutions such as feudalism. To convince the skeptical reader that the issue of tax-collection costs is neither trivial nor obvious, we pose the following question. What is the effect of greater efficiency in tax collection on the welfare of the tax-paying public? If the government is benign, taxing only to defray socially necessary public expenditure, a reduction in the costs of collecting these minimal taxes would clearly be a 'good thing'. What, however, if the state is inherently "predatory" in nature, as argued by Brennan and Buchanan (1980) and a number of others? In this case the state taxes not only to pay for public services but also to raise revenue for its own, possibly nefarious, purposes. Would an increase in the efficiency if tax-collection be undesirable under this alternative scenario

Poland: Transition and Integration in the World Economy

"The East-Central European communist regimes that came into power at the close of World War II sought to eradicate the market mechanism and to insulate their countries from the capitalist West. Poland was no exception: most of its exports were directed to, and most of its imports were obtained from other COMECON members, in particular from the Soviet Union. Gradually, however, the leadership of PZPR, the Polish United Workers' (communist) party realized that the command system and isolation from the world spelled stagnation. Sporadic attempts at reform were made as early as 1956, but the system remained virtually unchanged for the next twenty five years.

The Classical Roots of Neo-classical Political Economy

Neoclassical Political Economy applies the concepts and techniques of Neoclassical Analysis to elucidate the interrelations between the Economy, the Polity and the State. The basic issues at hand were clearly stated by the social thinkers of the 17th, 18th and 19th Centuries, often referred to (admiringly or disparagingly) as the "Classics". The "Classics" lacked the analytic techniques of contemporary social science. They had no access to statistical data and had no knowledge of quantitative methods. They lived in a universe much simpler than ours. They often failed to distinguish between the normative and the positive approach. Yet despite such limitations (or perhaps because of them) they often had an extraordinary clarity of vision. The insights of Hobbes, Locke, Hume, Adam Smith, of Madison and of Marx, are signal posts for to-day's Political Economists

Inflation and Stabilization in Poland 1990-1995

The Polish liberalization and stabilization program put into effect on January 1, 1990, called for the removal of virtually all price controls, and for a sharp curtailment of production subsidies. These measures magnified the effects of pre-existing inflationary forces. Within one month retail price index rose by 79.6 per cent. The inflation was, however, quickly brought under control by the stabilization measures adopted as a part of the reform package. By August the rate of price increase declined to a 1.8 percent monthly rate. Yet the goal of complete price stability by year-end proved to be elusive. In 1991 prices still rose by over 70 percent; in the subsequent years inflation slowed down, but it remained at a two-digit level (Table 1)

The Privatization of the Polish Economy

Privatization

THE OWNERSHIP-CONTROL STRUCTURE AND THE BEHAVIOR OF POLISH ENTERPRISES DURING THE 1990 REFORMS: MACROECONOMIC MEASURES AND MICROECCONOMIC RESPONSE

government policy ; economic policy ; investments ; private ownership ; supply and demand