ABSTRACT
When the reform process began in the 1950s and 1960s, the initial expectation was that once the administrative system was abolished, there would be a momentary vacuum that would then be filled by the market mechanism. In other words, bureaucratic commands would be instantaneously replaced by market signals. Two strong linkages between the ownership form and the coordination mechanism exist. Thus, it is common to encounter classical, pre reform socialist economies that combined state ownership with bureaucratic coordination and classical capitalist economies that combined private ownership with market coordination. These two simple cases might be looked upon as historical benchmark models. Large segments of the economy were coordinated in the usual way by the market mechanism. At the same time, so-called "social compacts" were arranged to establish direct contacts between the representatives of producers and consumers; they were expected to voluntarily make mutual adjustments.
