From state resource allocation to a 'low-level equilibrium trap': re-evaluation of economic performance of Mao's China, 1949-78

Kent Deng and Jim Huangnan Shen

Economic History Working Papers from London School of Economics and Political Science, Department of Economic History

Abstract: This paper provides a full picture of how Maoist economy actually performed. We argue that Mao’s China neither undertook a structural change towards industrialisation nor generated a sustainable growth from 1949 to 1978.2 With fatal shortcomings of a planned economic system imported from the Soviet Union – the ‘principle-agent’ problem and information asymmetry for the bureaucracy, and disincentives for producers – China’s economy remained not only deliberately unbalanced but also predominantly rural until the 1980s. More importantly, the Maoist economy was not designed to enrich and empower the masses in society. Instead, all key consumer goods including food, clothing and housing were strictly rationed. The material life of ordinary citizens in China saw no improvement. This paper aims to reveal the harsh reality of the Maoist economy with solid evidence and theoretical explanation.

Keywords: Maoist economy; structural change; disincentives; information asymmetry; price distortion; material life (search for similar items in EconPapers)
JEL-codes: N00 N55 O40 O53 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2019-07
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://eprints.lse.ac.uk/101127/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:wpaper:101127

Access Statistics for this paper

More papers in Economic History Working Papers from London School of Economics and Political Science, Department of Economic History LSE, Dept. of Economic History Houghton Street London, WC2A 2AE, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager on behalf of EH Dept. ().