9. What was Shock Therapy? Was this the best way to make a transitionfrom communism to capitalism?

Shock therapy was a process of transition from an authoritative socialist system to a democratic capitalist system after the collapse of communism. The model of transition in Russia, central Asia and East Europe came to be known as shock therapy. However, shock therapy wasn’t the best way to transition from communism to capitalism because: • It was a sudden and immediate change that uprooted the entire existing system and wrecked havoc over the economy of the state. • In Russia the huge industries controlled by the state almost collapsed and 90 percent of them were put up for sale to private individuals and companies. This was called as ‘the largest garage sale’ in history as the industries were undervalued and sold away at throw away prices. • The value of Ruble, the Russian currency went down dramatically. Inflation grew uncontrollably leaving the Russian economy in a battered state. • The collective farming system disintegrated leaving people without food and security. • The already miserable state of economy was further worsened by privatisation which widened the gap between poor and rich even more. • The old system of social welfare was destroyed with the defeat of socialism and the withdrawal of government subsidies pushed a lot of people into poverty. read less