Book Review: How China Escaped Shock Therapy: The Market Reform Debate by Isabella M. Weber

 This debate looks good, but they normally want you to take out a subscription, so I won't be able to view it, but maybe one day it will free on YouTube. 

The Chinese communist/ markets system fits in well with ancient tradition. And in Europe, because of WW2, European governments nationalized a lot of their industries too, believing it strengthened the country during war. In the UK, the NHS was backed by many conservatives, because they believed it would improve the health and fighting capacity of the nation's men. 

How China Escaped Shock Therapy: The Market Reform

Shock therapy prescribes that price controls and the planned economy should be terminated through overnight price liberalisation and meteoric privatisation. Although in the short run there could be economic pain, including mass unemployment and inflation, liberal economists propose that this method will eventually lead to economic recovery, activated markets and prosperity. Shock therapy was once the prologue of the ‘Economic Miracle’ in West Germany (60), but its widespread practice in Russia and Eastern Europe resulted in economic disasters. Chinese leaders found it diametrically opposite to what they had inherited from ancient teaching.

In Guanzi, a political textbook which was written 2000 years ago and preached diverse wisdom about how to conduct ‘politics’, it is taught that administrators should control what is ‘heavy’ (important and essential) for the sake of people’s lives and social stability, and let go of what is ‘light’ (unimportant and peripheral). Guanzi’s original aspiration was to elucidate how to strengthen the capacity for enlarging and wielding resources so that kings could overwhelm rivals in an era of warfare. Therefore, how to achieve ‘prosperity’ and the stable functioning of a society was central to Guanzi. Later, in imperial dynasties, abstract lessons were transformed into concrete practices, such as monopolies on salt and iron, the granary system used to flatten the price of grain, etc. 

Thus, contingency and necessity are intertwined here. Debates in the 1980s did not convince Chinese decision-makers of the benefits of shock therapy but exposed the potential risks of such reform. The long-tested political logic also told them to avoid actions which could endanger stability. Out of the gradualist approach grew eventually a market mechanism in the 1990s and 2000s.

Book Review: How China Escaped Shock Therapy: The Market Reform Debate by Isabella M. Weber/