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The most important problem does not lie in understanding the laws of the objective world, and thus being able to explain it, but in applying the knowledge of these laws actively to change the worldMao Zedong, Five Essays on Philosophy

By now even the lay observer has become familiar with the success story of the Chinese economy. Since the early ’80s the People’s Republic (PRC) has sustained one of the highest average growth rates of any nation. China is the third largest economy in the world, and may soon become the first. Some Americans have viewed this Chinese “miracle” with a sense of disquiet, no small part of which is due to the Communist Party’s (CCP) diametrically opposite methods of economic and political oversight. Further, China is possibly responsible for American economic malaise, notably the recent spike in oil prices and a hefty U.S. trade deficit, while its holding of American securities has made the US budget deficit increasingly unsustainable.

China’s success story has the potential to serve as a model for other development schemes

From a more objective perspective though, China’s success story has the potential to serve as a model for other development schemes in the region and around the world. There has been considerable literature addressing the affects of the post-1978 reform packages, but few have thoughtfully questioned the contribution to growth, if any, of the Maoist dictatorship. Contrary to common opinion and intuition, the Maoist experience is largely responsible for China’s recent economic success.

Infrastructure and Industry

Despite common conception to the contrary, it should be noted that Mao left the People’s Republic with high levels of physical, human, and social capital, the existence of which would provide a healthy springboard for successful market reforms. A major achievement of the Maoist regime was the ability to transform a formerly inadequate rural irrigation network. The raw data show that the percentage of irrigated land rose drastically from the ’50s until 1978. Though government figures are doubtless inflated, the physical evidence supports the notion that enough new irrigation infrastructure was built to have an identifiable impact on productivity. Of course later market reforms would create incentives to actually produce, but the means to do so at very high levels was already built.

The Chinese planning system proved highlight flexible

The other major Maoist contribution in the way of physical capital was the development of industrial and transportation infrastructure. Industrialization originally began in the Soviet-mold, with the government emphasizing production of manufactures using imported heavy machinery. These programs had various impacts on growth, but what is important is that emphasis was placed on the production of non-agricultural goods to boost agricultural production. The ability to re-enforce the health of one sector with another is remarkable feat, planned economy or not. Moreover, the Chinese planning system proved highly flexible: it adjusted to changing needs and resources exceptionally well. The Dengist regime would find this already established feature particularly useful, for without the ability to quickly change emphasis on certain outputs as opposed to others, no reforms would have been possible at all.

The final contribution to the existing physical infrastructure by the time of market reforms was Mao’s heavy investment in transport infrastructure. In fact, most of the transportation infrastructure that was turned over in 1978 was constructed during the Maoist era, thus enabling the reforms’ immediate emphasis on rural production. It is well documented that there were certain shortcomings in the railroad system, but those were largely a function of prior neglect rather than a fault of the Maoist government. Ultimately, it was the transport infrastructure that enabled economic growth to arrive so quickly after the transition period began, for it provided linkage.

Social Capability

Given the highly publicized human rights abuses, it is ironic that one of Mao’s greatest legacies would be the high level of social capability, or human capital, that he left. Like any dictator seeking to retain legitimacy, he would change the nature of the polity to meet his needs. There was no more effective place to begin than the school system; primary education was used as a means of government propaganda, effectively molding the values and beliefs of future citizens. Of course students needed to read the propaganda, causing the government to implement one of the greatest mass literacy efforts at the primary level. Of course, it made people literate–-a characteristic of highly advanced workforces, and still a defining trait of the Chinese people. It even indirectly promoted gender equity, for women had to be “indoctrinated,” and therefore literate, as well.

A particularly effective feature of social policy was the “sending down” of students, where traditional urban dwellers were sent to learn the ways of the countryside. This allowed for technological sharing, as urban dwellers became more skilled in labor, and rural sectors were introduced to the more efficient cosmopolitan methods and ideas. The convergence of CCP emphasis on literacy, sending down, and technical education helped to generate capable labor. With the addition of an incentive to work under Dengist reforms, the result would be a massive labor surplus. Nor can the Maoist emphasis on education be derided as unimportant to development, for the education level is one of few statistics in which the Chinese people are more advanced than their Indian neighbors, and also a large cause of the country’s current success in the global market.

The Political Equation

The most widely acknowledged, and intuitive result of Mao’s leadership was the political environment he would establish. Human rights abuses and horrible attrocities were rampant and horrific, but they are not essential to the economically-important matter of Mao’s consolidation of economic power and suppression of bureaucratic and special interests. Mao’s actions served to concentrate ever more power at the top of the CCP, leaving Deng in an exceptionally strong position when handed power.

Ultimately, when the Dengist reforms were enacted, they were implemented relatively quickly, absent of the painstakingly long political squabble that would have ensued in a representative democracy. The post-1978 market reforms were enacted under the auspices of heavy insulation from outside interests.

Interestingly, the state’s ability to execute economic policy is a common factor in the story of all of the so-called Asian Tiger economies. This was not the case in India, which is hampered by the infighting of caste and class interests.

Conclusion

There is no disputing the impressive nature of Chinese growth over the last few decades, whatever means are responsible. While the Dengist reforms were certainly effective policy measures, other exogenous factors were present before their institution. Mao bequeathed to his successors high levels of capital surplus, social development, and political centralization. His own flavor of Marx’s dialectical materialism, which can be characterized as a sort of pragmatism, guided policy during his tenure, and has since served China well, although certainly not in the ways he foresaw.