The role of the state in making a market economy (original) (raw)
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Market Transition and Societal Transformation in Reforming State Socialism
Annual Review of Sociology, 1996
The far-reaching institutional change and societal transformation occurring in former state-socialist societies have attracted new social science interest in transition economies. This chapter reviews recent research on China, highlighting the theoretical arguments and findings of general interest to social scientists. The paper argues that a paradigm shift is taking place within research on China, from state-centered analysis to a theoretical approach that locates causal forces within a macrosocietal framework. Within a macrosocietal framework, state socialism is viewed as a distinctive institutional arrangement in which society, economy, and the state are integrated through society-wide redistributive arrangements. Forces in economic and political change emanate not only from political actors but from economic and social actors as well. The chapter reviews work in which a macrosocietal approach is used to address stratification, societal transformation, and marketization in reforming Chinese state socialism.
Social Inequalities in Reforming State Socialism: Between Redistribution and Markets in China
Power has a role as control over resources in a state socialist economy, which could be a work of position inside the distributive hierarchy. As the importance of redistributive control decays, the disparity between redistributors and coordinate makers moreover decreases. Sociological thinks about affirm that the move to markets is likely to result in a decrease of social imbalance organized by redistributive forms. Hence, the reduction of social inequality is likely to be confounded by conflicting institutional dynamics under partial reform. Besides, Private entrepreneurs often can purchase crucial raw materials only through state monopolies. Separated from individual reserve funds, the major source of credit capital is state-owned banks. However, to understand the changes in the stratification order, it is important to understand the interaction between redistributive forces and the market under partial reform. Gold (1986) stated that Taiwan is an example of an unreformed one-party political system in which market-driven economic development resulted in a gradual erosion of official power and privileges relative to direct entrepreneurs and producers. The rural political economy in China provides a perspective for measuring the impact of market reforms on the distribution of relative and absolute benefits.
A Theory of Market Transition: From Redistribution to Markets in State Socialism
American Sociological Review, 1989
State socialist redistributive economies are characterized by the allocation and distribution of goods through central planning. This paper develops a theory of market transition which argues that, in reforming socialist economies, the transition from redistributive to market coordination shifts sources of power and privilege to favor direct producers relative to redistributors. The shit improves incentives for direct producers, stimulates the growth of private markets, and provides to entrepreneurs-an alternative path for socioeconomic mobility. A set of hypotheses test the market transition theory with household-and village-level data.
Market Socialism: A Case for Rejuvenation
Journal of Economic Perspectives, 1992
is unfortunate that the momentous events in socialist countries since 1989 have persuaded many that socialism as a political, economic, and intellectual movement is now to be dismissed as bankrupt and practically moribund. The economic experiment that has clearly failed was characterized by three features: (1) public or state ownership of the means of production; (2) non-competitive, non-democratic politics; and (3) command/administrative allocation of resources and commodities. In this paper, we will outline a feasible economic mechanism of "competitive socialism" in which (2) and (3) are negated-there would be competitive politics and competitive allocation of most commodities and resources-but in a major part of the economy we do not replace state or public ownership of the principal means of production with traditional private ownership. Public ownership in the narrow sense of state control of firms is not necessary to achieve one of socialism's goals, a relatively egalitarian distribution of the economy's surplus. We take public ownership, in a wider sense, to mean that the distribution of the profits of firms is decided by the political democratic process-yet the control of firms might well be in the hands of agents who do not represent the state. What the Eastern European experience has shown is that a system of pervasive state control of firms, plus the absence of markets, does not work. Our claim is that competitive markets are necessary to achieve an efficient and vigorous economy, but that full-scale private ownership is not necessary for the successful operation of competition and markets. Contrary to popular impression, this claim has not yet been disproved by either history or
The State, market economy, and transition
2003
What role should the state play in China's transition to a market economy? On this issue, a consensus seems to have emerged among Chinese economists, that is, the government should leave to the market what can be best handled by the market and only concern itself with what the market cannot accomplish, either inherently or for the time being (Gao, 1993). But the extent of agreement should be exaggerated. Behind seemingly accordant statements, a great deal of room remains for argument over specifically what problems can and cannot be resolved by the market. Accepting the neoclassic assumption of the naturalness, spontaneity, and efficacy of market, and public choice theorists' thesis of the state, some Chinese economists suggest that the role of the state should be restricted to providing defense, defining property rights, enacting and implementing a
Naval Postgraduate School - Comparative Economic Political Systems, 2016
Today’s economic success—in terms of economic growth, economic development, and material prosperity—has been the result of capitalism (Barma 2016a). However, although necessary for economic growth, capitalism is not sufficient on its own. While every economically successful country is capitalist, not all the capitalist countries are successful. To maintain and sustain growth, and economic success in the broader sense, countries need to employ the essential conditions of capitalism—market economy, private property, entrepreneurship, and the rule of law (McCraw 2000, 3-4). Yet, these conditions, or pillars, do not prescribe how each country’s capitalism should look; the varieties of capitalism differ based on decisions made by each country. These pillars essentially describe a capitalist system that is organized around them. Scholars agree on the necessary conditions of capitalism; however, they differ significantly on the nature of the relationship between governments and markets. Two contending perspectives are the market-liberal and the market-institutional viewpoints, which constitute the underlying debate on the basic understanding and interpretation of real-world phenomena, such as the transition from socialism to capitalism.
Remaking the Economic Institutions of Socialism: China and Eastern Europe
International Affairs (Royal Institute of International Affairs 1944-), 1990
State Socialism 3 international developments into the next century, an understanding of reform takes on added urgency. It is at this moment, then, that the length of reform in a country like Hungary and its breadth across settings as culturally and historically diverse as China and Eastern Europe provide a critical mass of evidence for analyzing the problems endemic to centrally planned economies and the dilemmas faced in efforts to reform them. This book takes the first steps toward such a comparative analysis by presenting the results of new research on reforms in China and Eastern Europe. Its contributors include Wlodzimierz Brus and Janos Kornai, economists who have contributed to each stage of the reform debates in Eastern Europe and whose works are now stimulating much discussion in China, as well as representatives of a younger generation of economists, sociologists, and political scientists, many of whom report on field research recently conducted in factories, cities, and villages in China and Eastern Europe. This set of essays is brought together, however, not simply to reach across the boundaries of disciplines and area studies or to publish a compendium of related findings, but because the research and analysis in these papers exemplify an emerging new perspective in the study of state socialism. This new perspective, whose broad contours will be outlined in this introduction, is developing as an alternative to the two major traditions-the theory of totalitarianism and modernization theory-that have dominated the specialized study of socialist societies in the postwar period.
World Development, 2001
Ð In the 1990s, parts of the state bureaucracy in China have been setting up new pro®tseeking, risk-taking businesses. Some of these businesses are entrepreneurial rather than rentseeking, and are an unplanned and unanticipated development in China's market-oriented economic reforms. What are the lessons of this phenomenon for the developing world? State entrepreneurialism may create problems such as reduced government control over departmental ®nance, loss of state assets, and uneven provision of services. It is nevertheless an innovative solution to the politically dicult problem of bureaucratic restructuring, and confounds the development orthodoxy, fostered by neoliberalism, that states will resist market reform. It also demonstrates that to understand fully the politics of market reform we must research the activities of subcentral state bureaucrats as well as central leaders and policymakers. Ó
Market socialism: a historical view and a retrospective assessment
1992
The present study was started when it seemed that some kind of market socialist option was still on the agenda as a way out of the crisis of what used to be called the Soviet-type economies. Now that the previously socialist countries of Central-Eastern Europe have decidedly embarked on the transformation of their economic institutions into some variety of a mixed economy of the Western type it might seem rather uninteresting to be concerned with the market socialist model.
China's transition to markets: market-preserving federalism, chinese style
Journal of Economic Policy Reform, 1996
This paper studies the relationship between decentralization and the success of reform in China. We argue that a particular form of decentralization, called market-preserving federalism, Chinese style, provides the critical foundations for market success. China's form of decentralization has served the critical purpose of creating markets at a time when political resistance to economic reform remained strong and when the durability of the reforms was important. Nonetheless, federalism, Chinese style, lacks some national public goods, and the new system needs to be institutionalized. We also highlight some parallels between the United States under the Articles of Confederation (1781-1787) and those of modern China.