ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Capitalism by Accident

Capitalism from Below: Markets and Institutional Change in China by Victor Nee and Sonja Opper (Cambridge, Massachusetts: Harvard University Press), 2012; pp xv + 431, $45.

The emergence of China as the second largest, and soon to become the biggest, player in the global capitalist system is the fact around which every economic history of the late 20th and the early 21st century will be written. The central message of this book, which seeks to explain how this happened, is captured in its very first sentence (p 1): “The emergence and r­apid growth of a private enterprise economy in China was neither envisioned nor anti­cipated by its political elite”.

The numbers on private sector development in post-Deng China are truly striking. Thirty years after the liberalisation of central planning started in 1978, the private sector in China grew to employ 100 million workers in five million registered enterprises with $1.3 trillion in registered capital. The allocation of factor resources by central planning declined from 70% in 1980 to 14% in 1991, the mandatory non-market distribution of manufactured goods declined from 120 products in 1980 to 21 products in 1991. The turnover in the marketplace grew 20-fold from a small base in rural markets. All this happened even though private enterprises were given legal status only in 1988, 10 years after the start of the Deng reforms. It was not till 2004 that they were assured of equal treatment with state and collective enter­prises. Only in 2007 was a property rights law passed.

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