Jiri Vecernik, Academy of Sciences, Prague Praha: Lidove noviny 1998

Markets and People is a remarkable book, which will appeal to economists, political scientists, and sociologists, as well as to more general readers interested in the political economy of market transitions. Vecernik's approach is a novel and refreshing one. Taking as a point of departure that the macroeconomics of the transition in the Czech Republic have been discussed extensively elsewhere, Vecernik has compiled a valuable set of data, which range from micro-level economic data, to household surveys, to diverse measures of institutional performance. In his own words, he examines the transition from "below", seeking to understand the attitudes, expectations, actual living standards, and coping mechanisms of individual citizens in the Czech Republic during the dramatic transformation to the market, from 1990-1996. He relies on a wide variety of data from surveys, some of which he designed and managed, and others which were conducted by other top academics in the region.
     Vecernik provides some of the best analysis of poverty and inequality trends in the Czech Republic that this author has come across. He then supplements them with rich analysis of people's own perceptions and expectations in light of their situation. He presents this data in comparative perspective, with similar information for Hungary, Poland, and Slovakia. This gives the analysis a rich and fairly unique quality which is both informative and a pleasure to read. It also makes the information useful to economists and political scientists, as well as to sociologists.
     Vecernik also looks at emerging labor markets, examining both the plight of the unemployed and the strategies and characteristics of the "winners" in the transition, focusing on education levels and occupational categories. He also looks in a detailed manner at household coping strategies, and how those strategies interact with changing social policies. His rich analysis tells us much about micro-level responses to macro-level changes, and also provides important insights into the unresolved debate about social policy reform in the transition economies. He focuses on the critical issues of social security reform and the targeting of social welfare benefits. He describes the trade-offs between necessary changes to improve the efficiency and fiscal sustainability of social expenditures, and negative effects on those citizens who face excess bureaucracy or stigma when requesting benefits, or those who are excluded from benefits but remain needy or vulnerable.
     Vecernik examines how the famous Czech voucher privatization affected individuals and households, and at how different households responded to the program. He also analyzes its political effects. Interestingly enough, there seems to be a strong correlation between the "winners" in reform (those at the top end of the income scale), a positive perception of the voucher program, and support for pro-reform political parties. He also examines political attitudes about the market process more generally, providing comparative data from Hungary, Poland, and Slovakia. He looks at the complex linkages between emerging financial hardship, disapproval of economic reforms, support for leftist parties, and desire for strong or authoritarian leaders. While he does not attempt to examine any causal relationships between these complex variables, he does note that the citizens of the Czech Republic, on balance, have experienced less of a "left turn" back to supporting Communists than have other countries, and demonstrate a slightly broader base of support for democracy. And while not a causal variable, it is also no coincidence that low-income Czechs have experienced much less economic dislocation and hardship than have similar households in neighboring countries.
     Vecernik's book makes a real contribution to our understanding of the effects of market transitions on individual citizens, and to the diverse political and economic responses that result. And while his analysis is primarily based in the Czech Republic, he provides a rich array of comparative data which extends his approach and the relevance of his results to several countries in Central Eastern Europe. His ability to incorporate macrolevel trends and microlevel responses is rare and valuable, and the resulting analysis is rich, innovative, and a pleasure to read. I recommend this book most highly to scholars and students of complex economic and political processes across a wide range of disciplines.

Carol Graham
Senior Fellow and Co-Director
Center on Social and Economic Dynamics
The Brookings Institution
Prague Economic Papers 1998:2, pp. 191-192.