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China and Industrial Policy
Brad DeLong's post on China and industrial policy combines a deep knowledge of history, politics and economics. It's a superb post, one of Brad's best ever so do read the whole thing then come back here for some minor quibbles.
Brad goes over the top for Deng Xiaoping ("quite possibly the greatest human hero of the twentieth century.") Without denying Deng's importance, I would say that China's great leap forward came with the death of Mao Zedong. Once Mao - quite possibly the greatest human killer of the twentieth century - was dead, China could almost not help but improve.
Second, the Chinese people, especially the peasant farmers, deserve a huge amount of credit. Here's a couple of paragraphs I wrote recently:
The Great Leap Forward was a great leap backward - agricultural land was less productive in 1978 than it had been in 1949 when the communists took over. In 1978, however, farmers in the village of Xiaogang held a secret meeting. The farmers agreed to divide the communal land and assign it to individuals – each farmer had to produce a quota for the government but anything he or she produced in excess of the quota they would keep. The agreement violated government policy and as a result the farmers also pledged that if any of them were to be jailed the others would raise their children.
The change from collective property rights to something closer to private property rights had an immediate effect, investment, work effort and productivity increased. “You can’t be lazy when you work for your family and yourself,” said one of the farmers.
Word of the secret agreement leaked out and local bureaucrats cut off Xiaogang from fertilizer, seeds and pesticides. But amazingly, before Xiaogang could be stopped, farmers in other villages also began to abandon collective property.
Deng and others in the central leadership are to be credited with recognizing a good thing when they saw it but it was the farmers in villages like Xiaogang that began China's second revolution.
Addendum: For the story of Xiaogang I draw on John McMillan's very good book, Reinventing the Bazaar.
Posted by Alex Tabarrok on July 17, 2007 at 07:21 AM in Economics, History | Permalink
Comments
To quibble over the relative greatness of Deng and instead credit the timing (death of Mao) is silly, as the same argument could be made for every great accomplishment of man. Clearly it took the death of Mao to provide the opportunity for someone like Deng to revolutionize China through pragmatic reform, but he still deserves much credit for this. The last centuries are littered with the corpses of government leaders who tried to revolutionize countries through completing destroying old institutions and constructing new (generally weak) institutions in their place. Deng's post-Mao China is a promising counterpoint to this trend, and toeing the Communist/Market economy line for decades to lift hundreds of millions out of poverty certainly does put him up there as far as individuals go.
Posted by: Christopher at Jul 17, 2007 8:50:13 AM
Compare China if Mao had lived with China if Mao had died and so had Deng. The latter still looks way better than the former.
Posted by: Alex Tabarrok at Jul 17, 2007 8:53:48 AM
I'd recently read the interesting claim (I can't recall where so can't give credit, I'm sorry to say) that what really motivated Deng Xiaoping and his reforms was not that he was _less_ of a Marxist than Mao but rather that he was a _much more orthodox_ Marxist, and came to believe that the idea that communism could be achieved without a period of massive capitalist growth, change, and accumulation (with peasant revolt taking its place) could not, contra Mao, work. In this, of course, he fit with Marx and with early Russian Marxists who actually pushed not for socialism or communism in Russia but for the development of Capitalism as a necessary stage, only to be pushed to the side by Lenin's heretical "vangard party" idea. The claim went on that this is by far the dominant view among Chinese communist party leaders now as well. I have no idea if it's true but found it quite interesting. (I think I might have read it in _Dissent_ from an issue or two ago but don't recall for sure.)
Posted by: Matt at Jul 17, 2007 9:12:41 AM
I'd recently read the interesting claim (I can't recall where so can't give credit, I'm sorry to say) that what really motivated Deng Xiaoping and his reforms was not that he was _less_ of a Marxist than Mao but rather that he was a _much more orthodox_ Marxist, and came to believe that the idea that communism could be achieved without a period of massive capitalist growth, change, and accumulation (with peasant revolt taking its place) could not, contra Mao, work. In this, of course, he fit with Marx and with early Russian Marxists who actually pushed not for socialism or communism in Russia but for the development of Capitalism as a necessary stage, only to be pushed to the side by Lenin's heretical "vangard party" idea. The claim went on that this is by far the dominant view among Chinese communist party leaders now as well. I have no idea if it's true but found it quite interesting. (I think I might have read it in _Dissent_ from an issue or two ago but don't recall for sure.)
Posted by: Matt at Jul 17, 2007 9:12:46 AM
Alex,
My point is that you are demeaning the importance of the individual -- Deng -- because of the great importance of circumstance. If we were to assess the importance of Deng historically, we would be better suited to theorize what the average party leader would do in his position versus what Deng did.
Deng is impressive in the same way that George Washington and Alexander Hamilton are impressive. THe other individuals who would have likely taken their "spot" in history would have lacked their unique skillset which proved unbelievably useful and beneficial -- Washington's ability to be a leader and lay down his power procedurally twice, and ability to stop military coups (taking for granted his decision to not play a part). Hamilton's opposition to the Jefferson/Madison faction and creation of the economic institutions that would power US growth for the next centuries as well as do more than anything else to tie the fates of the colonies together.
If you want to argue that others of the CCP were capable and prepared to do what Deng did, and he just happened to be at the front of the line, I look forward to hearing your evidence, it would certainly be interesting. Otherwise, if we are to compare Deng to other great men of the 20th century, we should not demean his significance by attributing his accomplishments to fortunate timing. If we were to do so, surely there would be no great man left standing.
Posted by: Christopher at Jul 17, 2007 9:23:36 AM
Matt, I've heard that elsewhere. The idea is to rapidly industrialize, obtain technology from the West, and then redistribute the wealth. Given the way the party operates, it's hard to say who is in charge, but there are many members with that belief.
I'd like to know what DeLong thinks of Pinochet.
Posted by: 8 at Jul 17, 2007 9:37:10 AM
Chairman Mao-the greatest humanist world ever saw.
Deng-the greatest Killer
Think about Tianamen Squire.
Posted by: ponmel at Jul 17, 2007 10:08:58 AM
Chairman Mao-the greatest humanist world ever saw.
Deng-the greatest Killer
Think about Tianamen Squire.
Posted by: ponmel at Jul 17, 2007 10:10:09 AM
ponmel, I don't understand your point about Tiananmen Square. While it clearly demonstrated the Deng government's fear of freedom, it doesn't seem to compare with the 38 million deaths under Mao, which R.J. Rummel estimates.
Posted by: caveat bettor at Jul 17, 2007 10:45:22 AM
Wait, I'll give you "Deng was better than Mao" and "Deng made some important, beneficial changes" but Deng was in charge of a totalitarian country and he played the part. We can laud his good decisions, but calling him a hero is to forget the very, very bad things he also did. I completely, totally, 100% endorse the liberalization of the Chinese economy, but "hero" implies something else.
Posted by: Brian Moore at Jul 17, 2007 11:12:48 AM
I spit on them both.
Posted by: Klug at Jul 17, 2007 11:15:21 AM
Alex,
While I agree that it is inordinately much easier (from an economic perspective, not necessarily from a political one) to to grow an economy from where China was at the time of Mao's death than from where the US is today for example, it doesn't follow at all that this was in any way predestined or even had greater than 50% chance at happening.
History is littered with horrible economic policies being replaced by yet more horrible economic policies (or equally horrible, or the same policy) upon a change of head of state. Think the US in 1933, Haiti at virtually any time since 1986, any number of coups in South America during the 70's and 80's, Nigeria, etc.
My reading of Chinese history post-Mao is that Deng had a delicate public choice balancing act to walk while trying to bring about as much economic freedom as possible.
While I am appalled at the Tiananmen Square Massacre, and while history has recorded that as at the hand of Deng because he was head of state, it doesn't necessarily follow that he had pure head of state power that could be used, or more importantly not use, at his whim without taking into account those with real power around him. Using a notion from the Foundation series of novels, Tiananmen might well have been unable to end any other way regardless of who was head of state, or unable to end in a less destructive way anyway.
Or not. Maybe Deng really does deserve the full brunt of history's scorn for Tiananmen. Either way though, from an economic perspective I can't think of a clearly better choice for the title of "the greatest human hero of the twentieth century". His policies pulled hundreds of millions of people out of World Bank definition poverty and effectively ended recurring inexcusable deaths of tens of millions of people under Mao's system.
From a social perspective I'd have to nominate Ghandi, but economically who was better than Deng? Reagan? Thatcher? Milton Friedman? Hayek?
Posted by: happyjuggler0 at Jul 17, 2007 11:31:18 AM
If Mao was able to obtain unlimited personal authority over a billion people through his skillful political acumen, building a power structure that was unswervingly loyal to him while routinely purging anyone that might be a threat to his own position, wielding the power of an unquestioned, unrivaled totalitarian dictator all so that he could live the life of a god on earth - then Deng or any other inheritor of that power should have been able to use it to dismantle the machinery of oppression and create a nation of free people.
But he didn't. Of course not. What absolute dictator ever would?
Deng is only a hero to DeLong because he wasn't the megalomaniac that Mao was. He didn't think of himself as a god, and thus didn't feel like murdering hundreds of millions of his subjects just because it suited his whims. Deng was merely your penny-ante run-of-the-mill absolute dictator; a piker compared to the likes of Mao, Hitler, and Stalin. A very down-to-earth tyrant. An eminently practical despotic thug. The kind who thinks it's more fun to rule over a country enjoying a growth in prosperity than it is to conquer more land and slaughter more people.
The key point, of course, is that Deng still wanted to rule over the country. Think of Mao and Deng as playing Sid Meier's Civilization, with two very different playing styles. Deng was playing to get a high score. Mao was just having fun building monuments and killing his own people. But even Deng wouldn't have had much fun if his people could have voted him out and made him stop playing. Of course, Mao and Deng were playing Civilization for real.
DeLong excuses Deng for holding on to power instead of instituting freedom because, well, those poor benighted Chinese people just weren't ready for freedom. They were better off under Deng's wise leadership. If they had been allowed to speak freely, vote for their leaders, set their own prices and wages, own their own property, decide where to live, practice the religions of their choosing, and read whatever books they wanted to... why, they probably would never have had the amazing economic growth we've seen to date! Instead of investing in just the right mix of agriculture and industry at just the right time as Deng directed and as DeLong - coincidentally - agrees was optimal, a billion people probably would have burned their crops, smashed their factories, and sold their children to buy opium. It's just a short hop from there to total anarchy and ruin, like Somalia.
Thank god for Deng, the hero!
DeLong excuses Deng's iron grip on the hearts, minds, thoughts, actions, jobs, prices, trade, books, travel, birth, death, retirement, schooling, clothing, fashion, entertainment, culture, and worship of a billion people because in his heart of hearts he wants Deng's job. DeLong complains about being "ruled by these idiots" not because he has any problem with being ruled but because the ones doing it are, in his opinion, idiots. Deng is a hero because he wasn't an idiot, and if only DeLong could become dictator then he wouldn't be an idiot either. And if that's not possible, he'll at least settle for being ruled by someone who is at least wise enough to listen to his advice.
Posted by: eddie at Jul 17, 2007 2:11:53 PM
Deng did not have the same power as Mao and his cult of personality, he was working within a larger party system which would only allow him to govern insofar as he stayed within certain boundaries. To suggest that Deng could have dissolved the CCP, liberalized, and democratized China immediately or even over a short period of time and not thrown China into Civil War (if he wasn't simply removed immediately, ending his little experiment before it began) is simply insane. And to suggest that that a state as near as prosperous or even as *FREE* as the current Chinese state would have been the product of Robespierre leading the charge after Mao's death is also indeed asinine.
Tiannanmen Square Massacre was a tragedy, and the human rights abuses that have occurred are indefensible. However, I think there are on the small end of the spectrum when compared to the high human cost that would have been incurred by a more aggressive, revolutionary reform. Also, let us not forget that these protests were in large part an attempt to roll back the economic liberalization taking place, and with a page out of Bryan Caplan's irrational voting book, the people wanted to stop this liberalization.
I will say that I am glad the local governors had strong enough independent centers of power to force the national government to let them continue to liberalize.
Posted by: Christopher at Jul 17, 2007 2:41:00 PM
I guess Washington wasn't too bad, but if I believed in hell I would be sure Hamilton is burning in it!
ponmel, you are quite possibly the most idiotic commenter that has appeared 'round these parts. Calling Mao the "greatest" anything other than killer is just laughable. And you want to bring up Tianamen Square to make Deng look worse in comparison? Mao killed so many more people he makes Deng's actions in that incident look angelic.
happyjuggler0, have you read The Ghandi Nobody Knows? I think the British Empire did a pretty good job of running their territories. It was only somewhat recently that India turned away from socialism and really started moving forward.
Posted by: TGGP at Jul 17, 2007 2:54:55 PM
"I do not care if a cat is black or white, only if it catches mice."
--Deng
Squeek.
Deng's stated goal was to move China to a position that she could dominate the world militarily, thence to ensure that proper policy would be followed globally.
You know, Hitler raised Germany out of grinding poverty, too. Deng started with a more difficult economic situation than Hitler. He started without the deep sense of wounded national pride that Hitler had. (I have no information on his views of race, which suggests that they were likely unremarkable.) But yes, he was playing Civ, and going for a military victory. He was just smart enough to plan ahead.
Posted by: Nathan Zook at Jul 17, 2007 2:56:09 PM
You have no idea what you're talking about. I stop reading your post when you compare Mao and Deng to playing Civilization. How old are you anyway?
Posted by: tc101010 at Jul 17, 2007 3:00:29 PM
The students at Tiananmen did not want democracy, they wanted more freedoms.
Zhao Ziyang spent 15 years under house arrest for trying to meet some of the student's demands.
From his wiki entry:
"In the 1987 Communist Party Congress Zhao declared that China was in "a primary stage of socialism" that could last 100 years. Under this premise, China needed to experiment with a variety of economic systems to stimulate production. Zhao proposed to separate the roles of the party and state, a proposal that has since become taboo. According to western observers, the two years Zhao served as General Secretary were the most open in modern Chinese history—many limitations on freedom of speech and freedom of press were relaxed, allowing intellectuals to freely propose improvements for the country.
Equally important, in the economic arena, Zhao was one of the first leaders that advocate the reduction of state control in enterprises by increasing private ownership via stock. Although the idea also became taboo during Zhao's era, it did begin to become a reality since 1990s.
Zhao's proposal in May 1988 to accelerate price reform led to widespread popular complaints about rampant inflation and gave opponents of rapid reform the opening to call for greater centralization of economic controls and stricter prohibitions against Western influence. This precipitated a political debate, which grew more heated through the winter of 1988 to 1989."
http://en.wikipedia.org/wiki/Zhao_Ziyang
Posted by: 8 at Jul 17, 2007 3:16:19 PM
"From a social perspective I'd have to nominate Ghandi, but economically who was better than Deng? Reagan? Thatcher? Milton Friedman? Hayek?"
Norman Borlaug.
Sam Walton, Bill Gates, Malcom McLean and probably a handful of others are probably well above all the people you mention, but still orders of magnitude behind Borlaug.
Posted by: Nathan Benedict at Jul 17, 2007 3:17:06 PM
Christopher said: Clearly it took the death of Mao to provide the opportunity for someone like Deng to revolutionize China through pragmatic reform, but he still deserves much credit for this. The last centuries are littered with the corpses of government leaders who tried to revolutionize countries through completing destroying old institutions and constructing new (generally weak) institutions in their place.
Deng deserves credit for presiding over a totalitarian regime and taking measures to make it slightly less totalitarian? Because lots of other people have tried to radically reform regimes and failed?
History is littered with the corpses of failed leaders of every stripe, would-be reformers and would-be tyrants alike. Politics in uncivilized lands is a dangerous profession. Even if it's true that dictators are better able to survive than reformers, saying "Well, I would have liked to push for freedom, but to stay alive I had to lead an oppressive regime instead" is not a convincing moral argument.
Furthermore, I am very skeptical that any actual tyrant could ever make that argument. Dictatorships aren't given out to good-hearted people who are stuck by unfortunate circumstances. Power ends up in the hands of the most ruthless, the ones who most want it. There's no reason to think that Deng was any exception, and no call to apologize for his leadership of a regime that held (and still holds) a billion people in chains by hypothesizing that anyone else would probably have been worse.
Posted by: eddie at Jul 17, 2007 3:17:22 PM
Eddie,
Could you please come up with a list of political leaders who actually introduced immediate, sweeping revolutionary change that liberalized their state? I don't mean that as a cutesy statement hinting at the impossibility of such a thing, but I would be interested in your findings.
The "successful" revolutionaries I have seen have set back their country decades, and I would hypothesize that the only cases of successful sweeping, revolutionary political reform were really just formal acknowledgments of economic and social developments that had already occurred.
Anyhow, my point is that China had numerous advantages over countries like the former Soviet Union, but I do think that glasnost and the immediate liberalization of the SU was a much worse policy than the doi moi of Vietnam and the gradualism of China. Furthermore, I think the folly of the SU's policy reflects a greater weakness in the argument for immediate and sweeping liberalization.
I have no idea whether Deng wanted to empower his Chinese brothers and sisters or whether he wanted to take over the world, but I do know that his balancing of competing interests that a) supported Mao/the communist utopia he represented, b) supported economic growth, c) supported local autonomy led to an improvement in quality of life unmatched anywhere else in the world.
Posted by: Christopher at Jul 17, 2007 3:51:54 PM
Nathan Benedict,
Norman Borlaug is one of my great all time heroes and I am appalled that most Americans have no idea who he was. He is to a huge extent responsible for the productivity increases shown in this chart.
TGGP,
I am currently reading your link, and I realize now Gandhi isn't who I thought he was. Nevertheless, my point was about the notion of non-violence which was taken up by Martin Luther King as well as by South African blacks under apartheid. I only wish Palestians would do the same. Economically India has been a basket case since independence until recently. Personally I blame John Kenneth Galbraith, who was US Ambassador to India under JFK, for encouraging the wretched economic policies they adopted, thus condemning a billion people to needless poverty for half a century. Imagine how they might have turned out if JFK had sent Milton Friedman instead.
Individuals matter.
Posted by: happyjuggler0 at Jul 17, 2007 4:30:46 PM
I can actually think of another Chinese leader who might qualify as one of the great heroes of the 20th century: Lee Kuan Yew.
Are his accomplishments any less astonishing than Deng's? And as far as benevolent despots go, Singapore is far more benevolent - and far less despotic - than China ever was.
Posted by: Independent George at Jul 17, 2007 5:40:22 PM
Perhaps old Broad de Round can imagine himself having been an economic advisor to Deng, or someone like him, but knows that he'd have been murdered had he been an advisor to Mao.
Posted by: dearieme at Jul 17, 2007 6:26:07 PM
Christopher: Could you please come up with a list of political leaders who actually introduced immediate, sweeping revolutionary change that liberalized their state?
Egon Krenz did nothing more than allow East Germans to leave the country if they wished. Less than a year later his former subjects were citizens of a free and democratic country.
Nicolae Ceaucescu did his subjects the great service of getting shot. Within three years Romania had multiparty elections, within seven years Ceaucescu's successor had been peacefully voted out of office, and as early as 2002 Freedom House ranked Romania as "free".
How many years has gradualism been at work in China? How many more years do you think the Chinese people will have to wait?
I suppose that Germany and Romania fall under your thesis of "formal acknowledgments of economic and social developments that had already occurred". If so, I can't really dispute it. Still, I think you give too much deference to the various power-holding factions in China and not enough credence to the simple truth that Deng was a despot and that China was a despotic state under Deng because Deng wanted it that way. Perhaps the autocratic structure Mao had produced was incapable of producing anything other than another autocrat. Perhaps there was no way an actual reformer could have gained power. That doesn't make Deng a good guy, just one of the many bad guys standing around trying to grab the throne. For all we know, he wasn't even the least bad of the lot. If Deng is a hero because he instituted more market reforms than Mao did (and killed fewer people), why wouldn't he also be a villain because he didn't do as much as Zhao Ziyang would have?
I understand your main argument is that immediate liberalization leads to the crony capitalism of Russia while gradualism leads to prosperity in China. I have a hard time accepting it. If you are being hogtied and beaten, how gradually should your attacker stop beating you and untie you? What's the ideal rate of cessation of beating and untying of rope to produce the maximal welfare benefit? In the case of Russia, perhaps there's something other than liberalization that has caused their misery; in the case of China, perhaps there's something other than control of the people's lives by the Communist Party that has caused their prosperity. Can crony capitalism be that much worse than crony communism?
Posted by: eddie at Jul 17, 2007 7:32:37 PM
