ABSTRACT
Several lessons emerge from the analysis of socialism’s economic problems and the People’s Republic of China (PRC) experience since the death of Mao Zedong with tackling those problems. The market system and private property must replace the system of administrative commands and socialized property as the dominant institutional arrangement and the dominant philosophy. Intrasystemic adjustments carried out since 1976 and the partial reforms introduced after 1978 have had remarkable success in some areas of the economy for a certain time. An analysis of the PRC’s economic changes since 1978 leads to the inescapable conclusion that the six conditions for the successful operation of a market system have not been fulfilled. For the PRC economic decentralization has meant some marketization of information, coordination, and incentives—the transformation of mandatory, vertical, monopolistic, buyer-seller transactions into voluntary, competitive, horizontal ones—and some privatization of some property rights.
