In the years of Mao Zedong's leadership (1949-1976), the public domain held absolute sway over the private, the collective over the individual, political command over the vagaries of the market. Key political-economic decisions were almost exclusively topdown, emanating from the Party hierarchy in Beijing and enforced through the allembracing tentacles of the Chinese Communist Party successively down to the lowest possible levels. This was feasible because all Chinese lived (as most still do today) in work-units (danwei) which provided them not only with work and remuneration but also with living accommodation, education, medical and other services, pensions, entertainment and a general sense of social being. To the extent that each danwei maintained a Party branch and that most Party committees, and in particular the Party Secretary (shuji) ruled them (even if popularly) with a rod of iron meant that the will of the central hierarchy could be translated into practice in the fields, on the shop floor, even on the streets, with almost effortless ease.
Mao wanted rapid economic growth. Yet by 1976, after nearly thirty years of Communist rule, and despite huge sacrifices made by large numbers of Chinese in the years since 'liberation' in 1949(2) to achieve it, China remained materially poor. On some parameters, there had been significant advances: in comparison to most other 'Third World' countries: health care was impressive, even in rural areas (Mao's bare-foot doctors had done a good job), life expectancy was high (almost to European levels), there was a high degree of income equality (the Gini coefficient, at 0.29 in 1979(3), was one of the lowest in the world) and there was a significant array of infrastructure, in the form of canals, irrigation systems, dams, dykes and the like, built up by gangs of collective labour, which provided a material basis for future advance. But China was still demonstrably a 'Third World' country. While the lot of urban Chinese was marginally better most rural Chinese (four-fifths of the population) still lived in mudand-straw huts, cooked and slept on the traditional long, low stove (kang) had no indoor sanitation or electricity, had few if any consumer durables and ate little other than rice. As Howard put it:
Peasants succinctly expressed their predicament with a common complaint that they were being "roped together to live a poor life." It was time to cut the rope.4
MAO ZEDONG AND DENG XIAOPING
Despite their shared experiences as fellow Long Marchers, early Communist revolutionaries and comrades-in-arms in the antiJapanese and Civil wars in the 1930s and 40s, Mao and Deng held very different perspectives as to the correct manner of translating socialist theory into political practice. While Mao continued throughout to practice the political economy of command, based on selfsufficiency and isolation from the outside world, charismatic leadership, continuous "socialist" revolution and the supremacy of politics over economics, Deng took a very much more pragmatic position, best illustrated by his catch phrase "it doesn't matter if the cat is black or white so long as it catches the mouse", a position for which he was periodically criticized and labelled a "capitalist roader". Indeed, in 1966, at the height of Mao's power during the "Great Proletarian Cultural Revolution,"5 Deng was exiled from power, put under house arrest in the countryside, his family "struggled against"and his son crippled and almost killed by Mao supporters. It was only after Mao's death that Deng wrested control of the levers of power, culminating in the historic decisions of 1978 and the creation of a political economy, though continuing to be characterized by strong, autocratic and frequently ruthless government, in which the role of markets in determining social outcomes was dramatically expanded.
THE REFORMS OF DENG XIAOPING
Deng wanted to improve the standards of living of the Chinese people and recognized the failure of past policies to do so sufficiently quickly. He therefore determined that resource allocation in China should increasingly be determined by the incentives and disciplines of the market. Under Mao, China had become largely isolated from the world economy while internal prices reflected (where they existed) output plans and administrative orders. For Deng, the role of markets was to be expanded, internal prices were to be increasingly determined by market forces and planning progressively to reflect those prices. At the same time, China's economy was itself to be increasingly integrated with the world economy. Thus the programme of "reform-and-opening to the outside world" (gaige kaifeng) began.
