Institutions in Transition

The restructuring of socialist economies in the former Soviet Union, and East and Central Europe following the fall of the Berlin Wall in 1989 belong to the largest projects of social engineering ever undertaken. At once, policy-makers were confronted with fundamental questions such as whether to dismantle the core institutions of the communist state, what new institutions to create, how to articulate the relationship between plan and market, and in what time frame. In the view of neo-liberal economics, privatization is an essential condition for a well-functioning market economy. This premise, enshrined in the "Washington Consensus" became the guiding principle for many social engineering programs of the World Bank and the International Monetary Fund in the former Soviet Union and East-bloc countries. In hindsight, one lesson learnt is that society and societal change are less pliable and malleable than social engineering and neo-liberal economics suggest. Studying institutional change regardless of whether it is focused on transitional or developing economies, may prove most fruitful when focused on its structuring of the means of production - land, labour and capital. This book singles out land as an object of study and places it in the context of one of the world's largest and most populous countries undergoing institutional reform, the People's Republic of China. The book demonstrates that private property protected by law, the principle of "getting the prices right", and the emergence of effectively functioning markets are the outcome of a given society's historical development and institutional fabric. In other words, the successful creation of new institutions hinges in part on choice and timing in relation to the particular constellation of societal, economic, political and cultural parameters. Disregarding these might result in rising inequality, bad land stewardship, and the eruption of social conflict. This book addresses a wide readership of professionals interested in the economics of transition, rural development, legal anthropology, and natural resource management, and will be of interest to students of development studies and contemporary China.