Market, Socialist, and Mixed Economies: Comparative Policy and Performance, Chile, Cuba and Costa Rica (review)

Comparative economic studies have been in vogue for almost 40 years now. The pioneering ones were undertaken at the Yale Economic Growth Center and at the Brookings Institution, beginning in the early 1960s. They spread very rapidly to other venues, such as Bela Balassa's research at Johns Hopkins, and the National Bureau of Economic Research (NBER) projects on the economics of trade protection, among others. Generally these comparisons had a positive bent, with normative undertones being the welcome corollaries.

The book being reviewed pursues a different angle. Instead of considering how various economies perform, and then drawing conclusions about appropriate policies, it examines systems of economic policies in a comparative vein, and tries to discuss how helpful they were in achieving various indicators of economic progress.

The field in question, comparative economic systems, has been largely defused since the confrontation between command and market economies became obsolete. So why a book on this topic now? And how useful can it be within the context of Latin America? Part of the answer is that this volume began a long time ago, when the disputes about more versus less state control were still raging. But the most relevant reply is that in Latin America there is still a debate about how much to privatize, regulate, globalize, and use market mechanisms.

This encyclopedic book seeks to throw light on the emphases that should be given to the different components of an economic system in present day Latin America, so as to achieve a high level of economic welfare. Within this purview, it is short on the theoretical constructs of maximization, constraints, and second-best policies, and long in the socioeconomic indicators that may be considered its instrumental variables. Suffice it to say that over one-third of the book consists of tables, many of them crammed (literally, as the type is small) with statistics. Clearly, this required the principle author to call on the aid of four coauthors, many of whom are from the countries being compared, and whose Ph.D.'s were obtained in the process.

Although it is difficult to decipher the broad range of socioeconomic indicators presented by Carmelo Mesa-Lago, he has used something akin to principal components analysis to come up with results for different subcategories, by rationally weighting each substrata of indicators. This is summarized in tables at the back of the book, but it is also explained in the text. It is recommended that those that have the slightest statistical bent cut short to the figures rather than reading page after page of words and numbers in practically the same proportion.

But those that persist are rewarded by the useful and sometimes surprising conclusions that come at the end. It is here where contrasts among the broad systematic economic differences found in Costa Rica, Cuba, and Chile (in strict Spanish orthographical order) are brought to bear. The book finds that socioeconomic indicators point to the comparability, if not superiority, of outcomes for market- and middle-of-the-road policy systems, when compared to communist ones—this, despite the fact that when judged in terms of macroeconomic indexes per se, the reverse is true (see pp. 620, 657, and 660). These results are certainly not the expected ones, but if statistics are taken at face value, this is what the numbers show.

However, the book here shows dysfunctionality between the tables and the text with regard to Cuba. It has been warning us all along about the mendacity of this country's statistics in great detail, but in the end the tables use the official numbers published by the Cuban government. Thus, it does accept them on the one hand, and dismisses them on the other, with the overall determination...