Why Some Reforms Succeed

Summary When the editors asked me for a contribution to the Festschrift for Ota Sik, they suggested that I use the Long Wave concept for deriving some fundamental thoughts that appear equally interesting to East and West. Assuming that Easterners and Westerners are equally interested in the conditions under which reform plans emerge and either succeed or fail, it seems reasonable, indeed, to try to relate cumulative causes over long stretches of time to both the emergence of new needs (and reform plans) and the emergence of (sufficient) conditions for their favourable socio-political reception in the respective country. In evolutionary economics, a range of alternative patterns of events can be studied on the basis of new micro-macro theory. Kondratieff waves are one special case, my Metamorphosis Model is another one; one that permits gradual evolution (steady growth) at some periods and breakthroughs (rapid phase transitions) at other intervals of time. Metamorphosis is structural transformation combined with transformation in the order of things (wihout chaos, though). At the core is the theory of structural readiness for basic innovation (and for clusters of basic innovations tied in with previous mishaps and subsequent series of improvement innovations). Throughout breakthrough and rapid change, however, the notion of what is good and bad doesn’t get lost. If it doesn’t, reform plans that emerge at the right time have a high probability of succeeding. Underlying long waves and other patterns of economic change are causal relationships representing either an equilibrium path or a chain of events that can be characterised as ‘vicious’ or ‘virtuous’ circles. Only in the latter case can reformers expect to succeed. Part of the struggle is demonstrating reform benefits at an early stage of the reform process (such as cuts in military spending in the 10 to 20 per cent order of magnitude). Another part of the struggle is to point fingers at forces that are part and parcel of the ‘vicious circle’ (such as state monopolies, and vested interests that do cost the public dearly if you think it through, or care to figure it out). Without being able to prove it scientifically, I conjecture that the ultimate sufficient condition for success of reform plans is that state-funded institutions of socio-economic research dare, when the time has come for breakthrough, formally to announce research programmes which promise to think through, and figure out, the disbenefits of doing business as usual.