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The Plan for a J-Curve Transition

Chapter 1 shows how economic reforms advocated by the International Monetary Fund (IMF), the World Bank, and the European Bank for Reconstruction and Development (EBRD)—the international financial institutions that oversaw transition—planned for the construction of free market systems across the postsocialist world. It shows they relied heavily on reforms designed for Latin America after the debt crisis of the 1980s, placing great faith in market mechanisms and underestimating the postcommunist social context. The most innovative reform, mass privatization, enabled corrupt institutions and individuals to act as predators in asymmetric exchanges. While policymakers planned to mitigate the impacts of neoliberal reforms on the poor through targeted social policies, reforms created an economic and social order based on widespread inequality.