ABSTRACT
This chapter provides an overview of the point of departure for China’s market reforms. It examines why China turned to reform in the late 1970s and introduces key features of the pre-reform system. It derives how a reorientation away from the late Maoist ideal of continuous revolution to economic progress as the all-encompassing goal of reform led to the reinstatement of economics after the discipline had been banned as a “bourgeois” project during the Cultural Revolution. From the perspective of Chinese reformers, the urge for economic reform in the late 1970s necessarily involved a remaking of the price system. In order to provide the needed context for the struggle over how to reintroduce markets among economists in the 1980s, Chapter 4 introduces the origins and basic workings of the price system and the role of prices in the Mao-era economy (1952−1976) and shows how relative prices between industrial and agricultural goods (“price scissors”) were intertwined with China’s model of economic development.
