ABSTRACT
The Chinese leadership encouraged economic competition on all levels. Because of the Cultural Revolution's dismantling of much of China's central planning institutions, local governments and economic units enjoyed significant autonomy. The Chinese state's welcoming of competition among state-owned enterprises (SOEs), and the emergence of township and village enterprises (TVEs) in the countryside pressured the SOEs to adopt more "bottom line" practices. Neoclassical discussions of decollectivization and TVEs in the countryside and SOEs in the cities started with the assumption of economic man and the need for strong material incentives for efficient production. One of the key ways that paradigmatic assumptions dominate empirical data in assessments of different ownership forms is by influencing the theorist's counterfactuals, that is, the assumptions made about what might have happened under different policies. Marxist economists have assumed their own counterfactuals, which imagined hypotheticals congenial with socialist projects. This chapter reviews the differences between Marxist-Heterodox and neoclassical analyses of the international sector.
