Transforming Post-Communist Political Economies (1998) / Chapter Skim
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Understanding Economic Change
Understanding Economic Change
Pages 11-18
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From page 11... ...
I Overview
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From page 13... ...
Awareness of the current limits to our knowledge is a prerequisite to understanding the problems involved in improving the performance of economies in transition from state socialism. Economic growth results when the output of an economy grows because more land, labor, capital, and entrepreneurial talent are devoted to the production process and/or because the productivity of these factors of production rises.
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From page 14... ...
The foundations of that interplay are three: the demography, which describes the quantity and quality of human beings; the stock of knowledge the society possesses, which determines the human command over nature; and the institutional framework, which determines the rules of the game. The demographic characteristics include not only fertility, mortality, and migration characteristics and labor force composition, but also the stock of human capital (derived from the stock of knowledge)
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We may write economic history as a great success story of an enormous increase in material well-being, which has reflected the secular growth in the stock of knowledge. But it is also a vast panorama of decisions that have produced death, famine, starvation, defeat in warfare, economic decline and stagnation, and indeed the total disappearance of civilizations.
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From page 16... ...
While nothing as elegant as a formal dynamic theory is even on the horizon, recognizing that policy enactment is a process in time is the beginning of the political economy we seek. The implication of the foregoing analysis is that path dependence can and will produce a wide variety of patterns of development, depending on the cultural heritage and specific historical experience of the economy.
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From page 17... ...
If one accepts the crude schematic outline of the process of change set forth above, it is clear that change is an ongoing, continuous affair, and that our institutional prescriptions typically reflect learning from past experience. But there is no guarantee that past experiences are going to equip us to solve new problems.
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From page 18... ...
REFERENCE Hayek, F.A. 1960 The Constitution of Liberty.
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