Modelling the Privatization Process in Transition Economies JOHN MARANGOS* ABSTRACT Alternative economic paradigms give rise to alternative models of transition, which give rise to alternative privatization processes for transition economies. This is because each transition model is associated with a unique privatization process compatible with the predetermined assumptions and value judgements of the paradigm in question. As a result, five alternative models of transition that give rise to five alternative privatization processes are considered: the shock therapy model of transition; the neoclassical gradualist model of tran- sition; the Post Keynesian model of transition; the pluralistic market socialist model of transition; and the Chinese model of transition. The privatization method adopted is directly linked with the value judgements associated by the economic paradigm in question. Compari- sons of privatization processes that ignored the value judgements of economic paradigms were meaningless. 1. Introduction Building knowledge in economics is not a straightforward matter of applying an agreed logic to an agreed set of facts; consequently, ideology takes on great importance. Value judgements are what we use when there is no clear demonstrated conclusion. Value judgements are of particular importance for economics, because the subject matter keeps changing and also because theorizing requires abstraction. This results in compe- tition between alternative economic paradigms derived from scientific observation and procedure. Empirical testing cannot provide a final resolution, since empirical tests themselves are theoretically based (Lee, 1990, p. 263). Theoretical analysis in a social theory like economics “inevitably has a casual story to tell” (Dobb, 1973, p. 30). Different types of “casual story” may have very different implications for what it is possible to do and to achieve by way of policy and social action; thus it is relevant, indeed crucial, for establishing what alternatives are viable within a given politico-econ- omic-ideological framework. The “battle of ideas” in the transition case focused on which paradigm was most realistic, feasible, desirable and appropriate for the process in question. Awareness of such a background facilitates the interpretation of the less clear sources of disagreement between economists and of the overall complexities involved in transition economies. Hence, different economic paradigms give rise to alternative models of transition. *John Marangos, Department of Economics, Colorado State University, 1771 Campus Delivery, Fort Collins, CO 80523-1771, USA. I am grateful to John King and an anonymous referee for their useful comments. ISSN 1360-0818 print/ISSN 1469-9966 online/04/040585-20  2004 International Development Centre, Oxford DOI: 10.1080/1360081042000293353