380 Economies in Development and Transition
especially those of determining how to move into the ranks of the most developed
states.
Most of the other former centrally planned economies, however, look quite
different from the rapidly advancing nations of Central Europe. This group includes
most of the former Soviet Union, China, Vietnam, and the Balkans. This group
possesses one or two characteristics, and sometimes both. First, the societies in
question started at a relatively low level of socioeconomic development, and second,
the transition from central planning to the market has been less successful. China
and Vietnam suffer from the first problem, which is a starting point of general
underdevelopment; Russia and Ukraine are especially plagued by the second
problem—a troubled transition; and Central Asia and the Balkans have both
problems.
It is not too much of an exaggeration to say that by now, these formerly socialist
economies have simply joined the ranks of the so-called developing world. To be
sure, they continue to have some features that differentiate them from the other
less developed countries (LDCs), but their problems are very similar to those of
other nations in Africa, Asia, and Latin America. While many achieved high rates
of industrialization under communist rule, their economies are not competitive in
current international markets; indeed, the system of centralized planning and
intrabloc trade that arose under the old regimes can be understood as an extreme
case of ISI, with all the problems that strategy entails. In addition, state ownership
of most of the productive assets and the absence of effective internal markets
created further economic distortions. Today, the former centrally planned economies
must compete with other developing countries on international markets, even as
they attempt to put their economies on sounder foundations.
The difficult process of political and economic reform that both the
developing and the former communist states have undertaken is virtually
unprecedented. This is especially true for the countries moving away from
central planning. While similar to Western Europe’s transition from mercantilism
to liberalism in the eighteenth and, especially, nineteenth centuries (see
Kindleberger, Reading 5), the jump from a command to a market economy is
farther, and states have attempted to traverse this chasm more quickly than
ever before. This transition, and the problem of development more generally,
raises questions central to the study of international political economy. How,
and under what circumstances, should countries seek to integrate themselves
into the international market? How can the international economy be structured
so as to fulfill the needs of separate nation-states? How does the international
economy affect politics within states?
An examination of the historical and contemporary international political
economy can shed important light on these questions and produce essential insights
into the future of the economies in development and transition. Nonetheless, the
final outcome of this process will not be known for many years and depends
fundamentally on the weight of decades of past developments. As Karl Marx wrote
in 1852: “Men make their own history, but they do not make it just as they please;
they do not make it under circumstances chosen by themselves, but under
circumstances directly encountered, given and transmitted from the past.”^2