Market Communism: The Institutional Foundation of China's Post-Mao Hyper-Growth

By Lance L. P. Gore

This book explains the paradox that China's rapid economic growth for the past twenty years has taken place in a communist institutional context and under the firm rule of the party-state. In contrast to the dominant explanations of the "Chinese miracle" that feature prominently the marketizing and liberalizing reforms, this book examines the role played by communist institutions and communist cadres in the economic success. With administrative decentralization and the opening of markets within the communist hierarchy, a peculiar institutional hybrid is created, and a new form of economic dynamism-bureaucratic entrepreneurialism-generated. Bureaucratic entrepreneurialism in the Chinese context is the phenomenon of state cadres redirecting communist institutions toward the pursuit of market opportunities. It is an effective growth engine in that it fully utilizes the inherent capacity of the communist system for economic promotion. The institutional context from which it arises also makes it possible for non-economic incentives (notably a top-down political pressure) to be systematically deployed to drive economic expansion. In other words, rapid growth took place not in spite of the persistent communist system but in part because of it. However, although proven a powerful driving force in the economy, bureaucratic entrepreneurialism has helped to preserve the basic structure of the communist system and together with it many of the inherent weaknesses of the Stalinist system. It is effective when the economy is characterized by shortage. Under strong market demand-itself a legacy of the Maoist era "shortage economy"-bureaucratic entrepreneurs, once empowered by decentralization, are extremely effective to mobilize production to meet the still crude, unsophisticated demand. However, once a seller's market turns into a buyer's market, bureaucratic entrepreneurialism runs out of steam. Therefore, sustaining the current strong growth into the future requires a complete overhaul of the basic developmental institutions. The country needs new, more market-based growth mechanisms other than those provided by bureaucratic entrepreneurialism. However, because of its political implications for the party-state, the required structural transformation will be a long and painful process with no guarantee of succeeding, and it will have to be undertaken in a much harsher macro-economic environment created by an inevitable economic slowdown, as well as its ensuing threat of social unrest. The book offers a lucid analysis of the most fundamental driving forces in the Chinese economy during the past two decades. It also raises prominently the issue of non-economic incentives in economic development at both the theory and policy levels, and challenges the hegemony of neoclassical economics in development policy-making.

• Format: Hardcover
• Language: English
• ISBN: 0195907582
• ISBN13: 9780195907582
• Release Date: February 1999
• Publisher: Oxford University Press, USA
• Length: 368 Pages
• Weight: 1.25 lbs.
• Dimensions: 1.0" x 5.8" x 8.8"