Market capitalism refers to a market in which things like distribution, investment, and production are influenced by demand and supply forces. As such, the prices of both services and goods can be established in an economy with a price system that is free. Alternatively, it can be defined as an economic system where the industry and the country’s trade are controlled by the private sector without any sort of interference from the state. On the other hand, market socialism is one where methods of production and other economic activities are socially owned or publicly owned such as cooperatives. The essay aims at determining whether post-Mao China is moving towards becoming a country that practices market socialism of market capitalism. The changes in the market trends, ownership structure, decentralization of the government and the newly acquired autonomy in some of the agricultural systems show that the country is geared towards achieving market-capitalism (Sujian 165).
Post-Mao China has undoubtedly moved towards market capitalism. This is evidenced from the fact that the structure of ownership is now more mixed than what used to be the case. Unlike before, the state no longer had too much control in post-Mao China (Sujian 192). Since 1978, a number of changes have been made in the agricultural sector. The initiative to de-collectivize agricultural production and opt for families to farm individually is a step towards achieving market capitalism. Activities like distribution, production, and planning made it possible to obtain a greater level of autonomy. Furthermore, during the 1990s, the regime of post-Mao China puts so much focus on economic liberalization in a bid to make their activities more oriented in fulfilling the needs of the market thus more competitive. In fact, due to the numerous reforms in post-Mao China, analysts have reached the conclusion that with all the economic reforms the country is unquestionably heading for a “capitalist takeover.” According to Sujian (172), some of the empirical aspects that justify this claim are such as the economic changes that occurred in post-Mao China. These changes include things like the crucial role played by the market in China’s economy, the presence of capital elements, the private sector being in possession of a large chunk of the economy of post-Mao China. In addition to this, idea of changing the practice of central planning significantly reduces the role of the state in regulating distribution and production activities. Unlike before, local governments in China now have more liberty to make economic decisions. The fact that market forces are used to direct economic activities while the government’s policies and the economic mechanisms only play a regulatory role. This shows that China has become more flexible and is now making an effort to embrace capitalism. In as much as socialism was initially the norm in China, the country’s leadership has come up with policies that will accommodate capitalism in order to strengthen the economy of post-Mao China. The separation of ownership of the management of economic activities served as a stimulant for economic growth and efficiency. Consequently, planning was no longer mandatory, and the private sector now had an advantage. Mandatory planning resulted in quotas and targets and this imposed limitation on the Chinese market. Moreover, guidance planning which involves aspects of taxation and interest rates were increased. Therefore, these initiatives by post-Mao China are evidence of China’s efforts to move towards capitalization of their markets.
Even though China has moved towards market capitalism, it still has certain aspects of market socialism. For instance, the unitary form of ownership has not entirely changed. Even though it is currently mixed, the government still has a substantial stake in the market (Sujian 182). Therefore, the opponents of this view argue that the role of the government in the industry is tremendously vital, and thus post-Mao China cannot utterly transform to a capitalistic state. The government still has to get involved in the activities of the industry. Moreover, it is argued that post-Mao China is not actually heading towards market capitalism because private takeovers form an insignificant portion of the market. The public sector is still the largest player in China’s market, especially where the important characteristics of socialism are concerned. For instance, employment relationship, minimal budget constraints, and government intervention have continuously remained present in the economy of post-Mao China hence market socialism cannot be overlooked.
In as much as market socialism is still practiced in post-Mao China, market capitalism has numerous benefits for the inhabitants of post-Mao China, and it is for this reason that they have become more inclined towards capitalism. Some of the benefits are such as that of giving the market an opportunity to set the prices as they deem fit. This move is beneficial, as it will minimize incidences of shortages and surplus. When the market forces set the price, it is usually placed in an equilibrium position, which equates the demand of consumers to the supply. In any case, setting the price of goods without interference is effective, as it will not demotivate the sellers of goods. Usually, the government sets low prices for goods in a socialist market and this ends up discouraging manufacturers from producing certain goods. Additionally, the change in the unitary kind of ownership to that of an economy, which is mixed, is geared towards the attainment of market capitalism (Sujian 190). I refute the claim that capitalism forms an insignificant portion of post-Mao China. This is because statistics show that in the mixed economy, the output from the state enterprises stood at only 34% in the year 1995. Actually, this is a remarkable drop from the 81% that was recorded in 1979. Therefore, the opponents of this view are wrong to say that post-Mao China is not moving towards market capitalism.
Post-Mao China has showed that it is aggressively moving towards the attainment of market socialism. This is mainly depicted from its activities such as that of changing its activities from a unitary ownership to a mixed ownership with the private sector having the largest ownership. Furthermore, control of market prices and de-collectivizing agricultural production are more proof post-Mao China is gradually becoming a capitalistic state. Even though the opponents of this view claim that the extent of market capitalism is insignificant there is no doubt that this claim is not true, judging by the drop in state enterprises from 81% in the year 1979 to 34% in 1995. Generally, post-Mao China is heading to become a capitalistic market judging from the steps it is continually taking. Even though China was initially more inclined towards market socialism, which involves public ownership, it is slowly embracing market capitalism because of the immense benefits that can be derived from the capitalistic system.
Sujian, Guo. “Post-Mao China: From Totalitarianism to Authoritarianism?.” Economic Reforms (2000): 163-197. Print.