- Question
How do we think about the shock therapy approach to economics?
'Shock therapy' — rapid, sweeping economic liberalisation — remains fiercely contested. This entry maps the debate over the approach, setting out the positions that shock therapy works and that it does not.
Position 1 of 2
Read this position →Shock therapy works
The case that shock therapy works: that the measures of a market economy function only as a set, that part-reform leaves the old incentives in place, and that speed protects the programme from being hollowed out by those it costs.
Position 2 of 2
Read this position →Shock therapy doesn't work
The case that shock therapy does not work: that markets rest on institutions no decree can create quickly, that removing controls first rewards capture over productivity, and that compressing the adjustment decides who pays for it.