ABSTRACT
It is widely believed that the transitional costs of transforming the command economies of Eastern Europe, the Soviet Union, and China into market economies will be extremely high, as well as protracted. But this assessment is flawed by a fundamental measurement error. The real economic value of Poland's current GNP probably equals or exceeds that of the prior nonmarket, command system. Although the usual estimates exaggerate the transitional costs associated with transformation to a market system, the challenge of effectively transforming command economies to market economies remains formidable—formidable but tractable. The real economic value of Poland's GNP probably equals or exceeds that of the prior nonmarket, command system. Although the usual estimates exaggerate the transitional costs associated with transformation to a market system, the challenge of effectively transforming command economies to market economies remains formidable—formidable but tractable.
