ABSTRACT
This chapter provides a set of primary and secondary elements of the shock therapy model of transition. The primary elements include the market socialist model is concerned with the optimal combination of public and private property, centralization and decentralization, of markets and planning and of individualism and the social good. Shock therapy's insistence on the need for speed, there was no time for a native capitalist class of small private entrepreneurs to mature into large corporations. An analysis of the political structure of market socialism reveals a contradiction. The secondary elements include the privatization simply resulted in enriching the managers, without any benefit to the workers or to production. Karl Marx emphasized the importance of supporting institutions for accumulation and the fact that institutional choice did not take place in a vacuum. The market socialists argued that the transition process required an adequate social policy.
