Full text: The Economics of Transition.

11 
In this pattern we recognise the essential features of the shift 
to market production of small producers. The prices are increased 
in favour of small producers and traders, the real income of the 
consumers, that is chiefly workers and employees, is reduced. 
There is a shift in income distribution and an increase in the 
inequality of incomes. If that is not accepted the change of the 
system is not possible. 
It might be commented here in parenthesis that an essential 
feature of the now defunct "real" socialist system can be seen in 
a reduction of the inequality of distribution and a decrease in 
the productivity of labour; the second of these elements has come 
to dominate more and more the evolution of the system until it has 
finally brought it down. The superceding of the system implies a 
movement in the opposite direction. The success of the transition 
therefore depends crucially on the increase in efficiency 
because that is what it has promised. 
If I had to choose priorities I should opt in the first instance 
for an improvement of the system of distribution. As long as 
trading is primitive, haphazard and badly organised, it must be 
terribly costly and the traders profits must be unduly high. It is 
necessary to organise both transport, storage and markets, where 
by markets I do not mean an airy concept, but the real place and 
organisation which as economic history shows has taken some time 
and effort and protection to develop. This is also an essential 
condition for getting inflation under control, because this 
depends on the flow of products being made to run and on 
incentives and confidence of producers being restored.
	        

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