February 21st, 2021

Rebuttal to a comment on this matter of “market vs command economy” regarding PRC

Originally published at 狗和留美者不得入内. You can comment here or there.

Original comment on Steve Hsu’s blog: http://disq.us/p/2f9gtns

The problem with the Soviet and by extension the pre-Deng Chinese system was that corporations were given mandates instead of profit driven and prices were set by the state. Their job was to employ people and not efficiency. This in no small part accounted for their lack of economic vitality, though the Slavic culture had not demonstrated great manufacturing ability even in Western nations with a few exceptions.

Soviets in Stalin era and Chinese in Mao era did what was suitable for them at that time. The command economy was pretty successful for rapid industrialization in heavy industry and modernization of military. Just because there was some price fixing and lack of for profit motive doesn’t mean people in important organizations including in STEM weren’t extremely motivated to do great work. In primary and secondary school, idiot teachers said that communism doesn’t work because people are all paid the same; that’s bullshit, because I know for a fact that in Mao era in China, there was 10x difference in salary between the high up people and the average worker in the city, not to mention vastly different benefits, especially housing, and that farmers in the rural areas, who accounted for the majority of the population, basically got the bare minimum for survival along with education for kids. In a time of extreme scarcity, it worked well to concentrate resources where most urgently needed and best utilized.

Scientific discovery which needed a free hand to pursue knowledge, were also done better in the West. You can look at the Nobel prize winners for science and see that the West accounted for the largest portion, though the Soviet block did come up with a few things. To this date, the Chinese have a lot to learn still from the Western academia.

I don’t see much freedom in America here when people have to struggle many years for tenure. In USSR academia, you had implicit tenure after your higher degree and if you managed to gain placement at a research only institution of a pure research nature, you could work on whatever you wished without any risk of getting fired. There was also much stronger separation between research places and teaching places, unlike in America, where teaching duties sap time and energy required for research. In Mao era in China, there was no PhD; if you made it past the selection after undergrad or masters, you had tenure for life; in a really selective place, if you didn’t perform well, they would simply transfer you to a less elite organization. Sure, some Americans regard the tenure track and ability to fire as a guarantee for performance. I don’t deny there isn’t any element of that. However, I think it at the core it assumes lack of initiative in people in the first place and implicitly encourages certain “status-seeking” or “careerist” types in an unhealthy way. Using fear to get stuff out of the people also doesn’t work all that well in the long term, especially at the higher end of the talent spectrum.

As for the Nobel Prize, it was visibly biased against East Europeans and East Asians. There is no reason especially in 2021 to take too seriously the opinion of some scientific committee in second tier Western country Sweden subject to lobbying. I won’t go more into this in detail.

The Soviets did not just missed the micro-electronic industry. Their cars, for example, were quite horrible by Western standards. This is a result of their command economy where making cars were mainly goal driven from the top instead of consumer driven.

Much because cars were not high priority. Besides, you don’t really need a car in a big city with developed public transportation. It’s an unnecessary extra hassle and expense.

You make it sound like Deng did nothing to transform the Chinese economy in his reign, nothing could be further from the truth. While Deng may execute the Great Leap Forward, it was Mao who set the goals which were detached from reality, which encourage the people in charge to cheat. This cause disastrous consequences.

The Great Leap Forward is pretty controversial. It is uncertain what kind of role Mao actually played in it. It is merely naturally to place the blame on the man at the very top. But don’t you think that in a corporation, if an employee commits murder, the level of responsibility in rank order should be him >> his boss who promoted him > head of a department > head of a division >> CEO > board? Mao was no longer directly managing at that period though he took part in the most important decisions, including the selection of the people in the layer underneath him. Just because he makes a public remark about surpassing Britain and catching up with the United States doesn’t mean it should be taken literally by the people working at the more concrete details level. That Deng in late 70s officially pardoned the party secretaries of the worst hit provinces who were afterward demoted and later attacked in mass during the Cultural Revolution, which is well documented, suggest that he was likely rather guilty, though he tried to place the blame on others. Mao’s responsibility mostly lay in promoting Deng and Liu Shaoqi right before the Great Leap Forward; he encouraged the masses to criticize and get rid of them during the Cultural Revolution, but in the 1973, he brought Deng back, and despite that Deng was removed again in 1976, he managed to sneak back to power afterwards. This suggests that Deng was an excessive careerist; generally, if you’ve been removed from the Politburo Standing Committee twice after a questionable track record, you should probably simply retire; nobody was going to kill him.

When Deng took over, in addition to having the moribund command economy, China was beset by a bloated and elderly leadership steep in the tradition of class struggles. It was no mean feat to persuade those in charge of the country to step down against their own interests and to set up a promotion system which is meritocratic.

It’s exaggerated how badly PRC was doing in 1976. The ill effects of the Cultural Revolution were naturally exaggerated because it had purged Deng’s faction that later came to power. The truly chaotic period where high up people were being pressured out and replaced was 1966-1968. Then there was the Lin incident in 1971 which required another purge and replacement for political reasons. The market economy was adopted very gradually; even in the late 80s, there were still food stamps. That economic growth in the 80s when there was very limited market economy was just as fast already indicates that it wasn’t simply a matter of socialism vs capitalism. Also he was flexible enough to abandon the class struggles for Western style of market economy.

You have to understand that this was a man in his seventies. Deng was able to turn this rusty ship around. Contrasting this with the Soviet Union, who imploded. While it was good to know how to melt an ingot of steel, it was quite different from having half of the world’s steel making capacity. The latter is that I call industrialization. The Western concept of for profit corporations and market prices allow China to get there much faster. Western technical know how also accelerated this process.

The major turnaround actually happened starting in the 1970s when PRC entered the UN, established diplomatic relations with many Western countries and Japan, and imported from West billions of dollars of high tech much in the chemical sector. So it wasn’t actually Deng who “opened up to the West”. Opening up to the West to some degree was inevitable by then; it was more a matter of in what way it would be done. Deng inherited a system that though still poor in living standards already had in many respects a rather strong foundation. Nobody can objectively deny that in the 60s and 70s, PRC overcame major barriers in military technology and foreign diplomacy, and that this was achieved when Deng’s power was limited. So of course to justify himself, Deng given his limited track record had to in a sneaky way understate many achievements of the past and take credit for the achievements of others. It’s ridiculous to contrast to the implosion of the USSR, because PRC by virtue of being a much weaker power was able to access the West much more while being impeded much less. From this perspective, what Deng did could have easily been done by another leader. I won’t mention his many shortcomings. Like, why did he allow the public relations disaster that the Tiananmen Square to happen? Among many other things, in the late 80s, Dengist influenced people in the media created a culturally self-hating documentary that compared the so called “isolation of the Maoist era” to that of the Qing Dynasty and contrasted China’s land culture with the West’s blue ocean culture. This was patently ridiculous as the Qing Dynasty was an era when the world was still barely inter-connected, and land vs blue ocean aside from crude exaggerated symbolism doesn’t really mean anything. In fact, the associated way of thinking much resembles that of American media but transplanted to a purely Chinese context in self-hate. Deng, while emphasizing the importance of intellectuals, encouraged slippery dishonest anti-intellectual businessmen like Jack Ma to rise up and hoard resources without creating any value that couldn’t have been created else-wise.

While the economic system in China may have changed pre and post Deng, you can see many signs besides GDP growth which point to a much better living standard in the decade that Deng was in charge, so the faster GDP growth was not just due to difference in the way it was measured.

Much because the technological and foreign relations situation had developed to the point where the consumer economy was ripe for growth. It’s like an inevitable explosion in some science or technological field of primarily an incremental nature following some truly foundational breakthroughs.

I’ve come to note that America and Deng have natural chemistry. Both lack rigor and coherence. (Something to note in relation here is that Deng in stark contrast with Lenin and Mao was of very mediocre writing ability.) Both engage in slippery and inconsistent talk that makes it seem superficially as if they did all the heavy lifting, when in reality, if you look closely, much of it was simply taking credit for the achievements of others or putting off a polished finishing touch. Both also lack a type of farsighted-ness. Now in 2021, it is not difficult to the reach the conclusion that Deng was a mediocre, petty, and disingenuous person. He was also only 4’11”, but that’s a rather orthogonal matter.