Introduction

This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book elaborates a micro-economic model which adequately explains the interrelationships among economic forces determining the distribution of income in a peasant economy in the early stages of transition to industrialization, taking prewar China as a reasonably typical example of such a society. It examines the degree to which statistical and other data pertaining to the prewar Chinese economy are consistent with this model using in part econometric techniques. The book argues that while naive application of neoclassical equilibrium distribution theory to peasant economies is inappropriate, the understanding of the traditional sector implicit in the “dual economy” theories is contra-factual and implausible. It describes the methods and results of such estimation, using data from a large-sample, cross-regional survey.