ABSTRACT
This chapter discusses various perspectives on the socialist economic reform, particularly in regard to the reform of enterprise systems. China's economic reform is examined from the perspective. Janos Kornai introduced the concept of the soft budget constraint in his book Economics of Shortage and in an expository article as a useful concept for analysis of economic problems in socialist economics. The implications of the soft budget constraint as applied to the socialist enterprise in terms of both allocative and X-efficiency are discussed at a theoretical level. It is necessary to pursue the question why socialist enterprises tend to face the soft budget constraint, and this leads to the question of what is the distinctive nature of the socialist enterprise. The Chinese Marxian reformers' criticism of traditional state ownership emphasizes that it is not a unique and permanent system of socialist ownership.
