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Reform in China and Other Socialist Economies.

This volume is a collection of eighteen essays, all but one of which were previously published. Fifteen were published on the eve of Central Europe's transmutation and of China's Tiananmen debacle (between 1986 and 1989). The central theme is that capitalism is superior to socialism and that China and other (formerly) socialist countries need to undergo a radical transformation to capitalism. It follows that the malaise of mainland China since 1949 has been its failure to adopt this capitalist gospel. The same applies to the formerly socialist Central Europe and USSR.

Part One (Chapters 1-4) lays out Prybyla's ideological and theoretical predilections. Chapter I opens with the assertion that the problem with state socialism is its Marxist foundation. That foundation necessarily leads to "lies, hate, and depersonalization" [p. 3]. These and all the other heinous crimes associated with China and the Soviet Union directly stem from adherence to Marx's social theory. Prybyla does not substantiate this broad historical assertion. Chapters 2 and 3 argue that the economic problems in socialist countries are symptomatic of an irrational and inhumane arrangement. Only a free market economy based on individual freedom, voluntary exchange and private property can efficiently deliver the goods and solve these problems. China's attempts to reform socialism by combining the market and the plan are doomed to fail. Market and plan are inherently contradictory and systems based on both will eventually resolve themselves into one or the other. Thus, central planning must be completely abandoned: "to become modern the socialist system must deny itself" [p. 37]. Moreover, such a transformation "requires for its proper functioning an ethic rooted in the Judeo-Christian tradition, more specifically in the tradition's Protestant manifestation" [p. 32]. Prybyla argues this is not ethnocentric because other Asian economies have adopted this requirement without injury. In this reviewer's opinion, Prybyla does not succeed in escaping the charge of ethnocentrism. Chapter 4 is a sensitive and beautifully written essay about the author's visit to China in 1974.

Part Two (Chapters 5-8) assesses the performance of the Soviet-type economy and critically compares the experiences of economic reform in China, the Soviet Union, Hungary and Poland. Chapter 5 examines three main sectors of the Soviet-type economy: the military/public security economy, the centrally planned and official market economies, and the underground economy. In evaluating the strengths and weaknesses of this system, Prybyla concludes that there are no strengths, other than having achieved military power and control over the civilian population at the expense of the civilian economy. The weaknesses are inefficiency, shortages, and all the rest.

Chapters 6, 7 and 8 compare and contrast the attempts made by the aforementioned socialist countries to reform their failing socialist systems. The chapters are very informative and provide an excellent summary of events prior to the 1989 transmutations. The problems experienced are similar everywhere, as are Prybyla's conclusions: reforms have failed because policy makers only went half way by trying to combine planning with the market, and economic efficiency with socialist ethics. Prybyla says this combination cannot succeed. What is needed is complete price liberalization, private property and free markets - the complete dismantling of the system. Mixing plan and market will result in instabilities which will be resolved by moving in the direction of the plan or the market. History correlates well with Prybyla's analysis, but only insofar as the direction of change is concerned. Whether or not those societies will actually become better off remains to be seen.

Part Three (Chapters 9-14) deals exclusively with China during the 1980s. Prybyla surveys economic reforms in agriculture, industry, incentives systems, and macroeconomic control during that period. Especially useful is Prybyla's overview of Chinese pricing policies. The retrenchment begun in 1988 is also appraised as is the response of the capitalist nations to the Tiananmen square tragedy.

China has had the usual assortment of problems common to the other planned economies. Like the others, she has been unwilling to carry out reforms to their (i.e., Prybyla's) logical conclusion. Prybyla once again offers his solution: China must completely transfigure itself into its capitalist opposite. He recognizes the enormous social and political implications of this solution but treats too lightly the questions of how such a transfiguration could be accomplished and what this might exactly mean for the average Chinese citizen. His analysis is also biased toward China's failures, and insufficient attention is paid to her successes. While Prybyla's essays do not benefit from events which have taken place since 1989, the latter remain consistent with his prognostications.

Part Four (Chapters 15-17) provides a summary and analysis of development strategies and trade policies in Taiwan and Hong Kong and compares these to the PRC. The essays are provocative. The author's central point is to show what could happen if mainland China were to take the capitalist road: the "miracles" of Taiwan ("a resounding success, a triumphal march from poverty to prospery" [p. 253]) and Hong Kong (the "nearest living thing to Adam Smith's |obvious and simple system of natural liberty'" [p. 277]). The essays are rich with insights, despite his glorification of "capitalism with Chinese characteristics" [p. 262].

In the final essay of Part Five, Prybyla once again directs his wrath against Marxist socialism. It is utopian and uses "mischievous, even villainous means ... on the way to impossible goals" [p. 292]. Moreover, market socialism is unworkable. It is a mere adjustment. What is required is a complete capitalist reformation. This simplistic, black and white assessment of a very complicated world gives the entire collection of essays a superficial and reductionist quality.

The book is lively and written with great enthusiasm (and in places bitterness). It will be sure to rankle anyone even slightly critical of the capitalist alternative to socialism and to delight its champions.
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Author:Lichtenstein, Peter M.
Publication:Southern Economic Journal
Article Type:Book Review
Date:Jul 1, 1993
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