DEMOCRACY IN REFORMING COLLAPSED COMMUNIST ECONOMIES - BLESSING OR CURSE

From a political standpoint, post-communists systems include both demo cratic and non-democratic nations. From an economic standpoint, they i nclude both collapsing and expanding economies. All four logical possi bilities exist for post-communist political and economic systems. The Czech Republic is an example of a democratic political system and an e xpanding economic system. Russia is an example of a democratic politic al system and a collapsing economic system. China is an example of a n on-democratic political,system and an expanding economic system. North Korea is an example of a non-democratic political system and a collap sing economic system. The fact that all four logical possibilities exi st suggests that democracy is neither necessary nor sufficient for goo d economic performance. However, democracy is certainly a value in its elf that requires certain basic institutions, including free and fair elections, the orderly transfer of power to those elected, the rule of law and the separation of powers, cmd the protection of individual fr eedoms and basic liberties, including those of speech, press, religion , assembly, property, and economic opportunity. Economic policies, rat her than the form of government, determine the results for an economy. Russia and China, the two largest socialist economies, followed very different economic policies and experienced radically different outcom es. The failure of ''shock therapy'' economic policies for transition to a market economy in Russia is related to its use of the Washington Consensus SLP package of stabilization, liberalization, and privatizat ion, cls recommended by the World Bank and the IMF. The success of Den g's economic policies for transition to a market economy in China is r elated to its rejection of the SLP in favor of the ICG approach of ins titutions, competition, and government. Other interesting cases are th ose of the Czech Republic and North Korea. Those nations in which both political and economic reforms have been simultaneously successful, s uch as the Czech Republic, are generally, small, homogeneous European nations with a historic work ethic, with a relatively short period of socialism, and with support from neighboring advanced industrialised n ations. There is great difficulty in simultaneously establishing both democracy and a market economy without a very special set of circumsta nces. Thus, it is necessary to determine a sequence for political and economic reform. Ultimately, however, the ideal of both democracy and a market economy may be attained even in nations without special circu mstances and external assistance, with Russia eventually filming its e conomy around and with China eventually reforming politically into a d emocratic nation.