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With the Chinese economy slowing and the stock market bubble bursting, debate is raging inside and outside the country over how to ensure the world’s most populous nation remains the biggest driver of global growth.
Probably the only thing all sides can agree is that a return to the collectivist totalitarianism of Maoist economics would be a bad idea. But according to research by a group of prominent economists, Chinese policymakers should probably not be too quick to rule that out.
In a paper, the four economists — from the Federal Reserve Bank of Dallas, Princeton, Yale and Sciences Po in Paris — have examined productivity and growth rates in China at the height of the Maoist period and extrapolated those to predict how the country would grow between now and 2050 had it returned to those policies.
They concluded that the abolition of the private sector in China and the return to a command economy would yield an annual average gross domestic product growth rate of 4 to 5 per cent between now and 2050.
That was only about a percentage point less than the average growth rate they predict China will achieve if it continues with market-based reforms that began in the late 1970s and are credited with lifting hundreds of millions out of poverty in only a few decades.
“Our model is essentially an accounting exercise that allows us to uncover the key factors of growth in China during and after the Mao era,” said Aleh Tsyvinski, a professor of economics at Yale and co-author of the report.
“The main point of our findings is that, contrary to common misconceptions, productivity growth under Mao, particularly in the non-agricultural sector, was actually pretty good.”
Assuming a continuation of current policies, the paper predicts the Chinese economy will expand 7-8 per cent for the next 10 years or so, with growth slowing to 5.2 per cent on average between 2024 and 2036 and then a rate of just 3.6 per cent between 2036 and 2050.
That is actually slower than the growth rate of 3.9 per cent it predicts between 2036 and 2050 if China were to return to Maoist policies introduced in the aftermath of the disastrous Great Leap Forward, in which between 30m and 40m died in a famine that was largely the result of economic mismanagement.
The authors of the paper were focused only on economic factors and did not consider the impact of individual policies or the enormous social costs of Mao Zedong’s “brutal” political movements and purges, which left many millions dead, ostracised or imprisoned in gulags.
In contrast to their findings on the Maoist economy, an earlier paper by the four co-authors, who are all ethnically Russian, entitled “Was Stalin necessary for Russia’s economic development?” concluded Stalin’s industrialisation and collectivisation policies were disastrous even in purely economic terms.
Chinese president Xi Jinping’s hardening of authoritarian rule and penchant for Mao quotations has led some reform-minded officials to accuse him of seeking a return to the dark days of Maoist totalitarianism.
But almost no one seriously expects him or his administration to abolish or significantly roll back market reforms that have helped make China a rising superpower and the world’s largest economy in purchasing power terms.