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The undelivered promise of market socialism: Why the attempts at market-oriented reforms of the communist economy were doomed to fail?

Author

Listed:
  • Marek Dabrowski

    (Bruegel, Brussels, Belgium
    CASE — Center for Social and Economic Research, Warsaw, Poland)

Abstract

The decentralized model of a communist economy based on autonomous state-owned or socially owned enterprises exposed to market signals (market socialism) was a response to the inefficiencies of the traditional model of a centrally planned economy, first introduced in the Soviet Union at the end of the 1920s and early 1930s. Market socialism was implemented in Yugoslavia from 1950 and in Hungary from 1968, bringing mixed results. A few other countries also tried this model, but either rolled back the reform soon after it began (Czechoslovakia in 1968–1969) or implemented it in a fragmentary and inconsistent way (Poland in the 1980s, the Soviet Union at the end of the 1980s), without positive results. The main obstacles to the implementation of this model had a political character, because it challenged the totalitarian character of a communist regime and the hegemonic position of the communist party. Only after the collapse of communist regimes in the late 1980s and early 1990s could genuine market reforms begin, but the concept of market socialism became useless.

Suggested Citation

  • Marek Dabrowski, 2026. "The undelivered promise of market socialism: Why the attempts at market-oriented reforms of the communist economy were doomed to fail?," Russian Journal of Economics, ARPHA Platform, vol. 12(1), pages 6-27, March.
    • Handle: RePEc:arh:jrujec:v:12:y:2026:i:1:p:6-27
    DOI: 10.32609/j.ruje.12.175160

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    References listed on IDEAS

    1. Dabrowski, Marek, 1996. "Different strategies of transition to a market economy : how do they work in practice?," Policy Research Working Paper Series 1579, The World Bank.
    2. Rumen Dobrinsky & Dieter Hesse & Rolf Traeger, 2006. "Understanding the Long-Term Growth Performance of the East European and CIS Economies," ECE Discussion Papers Series 2006_1, UNECE.
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    Keywords

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    JEL classification:

    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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