By Nicholas R. Lardy

ISBN-10: 0511528426

ISBN-13: 9780511528422

ISBN-10: 0521071704

ISBN-13: 9780521071703

ISBN-10: 0521252466

ISBN-13: 9780521252461

Explores the connection among the chinese language peasantry, who're the basic base of help for the progressive chinese language Communist get together, and the state-led economic climate tested through the social gathering after 1949.

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Extra resources for Agriculture in China's Modern Economic Development

Sample text

But as is shown below, the case for price controls is quite strong for the control of agriculture. The theory of price and quantity control The primary objective of economic planners in centrally planned socialist systems is to control the output of producers in a manner that maximizes the planners' social welfare function. In theory, for the simplest case of a single output produced by a single firm, the planner must choose between the use of a quantity or price directive to control production.

Quantity targets could be set so that ex ante marginal production costs were equalized across all producers. As a practical matter, it is extremely costly to gather and process the information necessary to set appropriate qt for over 5 million production teams, even when targets are set at the lowest level of the state administrative network. 1 In short, the planners are unlikely to be able to set q{ such that marginal benefit and marginal cost are equated. 2 Inequality of marginal costs means, of course, that a higher level of output could be achieved through a more efficient allocation across producers of the fixed supplies of factors of production.

In the future, additional tens of millions of peasants will go to the cities and enter factories" (Mao Tse-tung 1943, 250). Mao recognized the critical role of agriculture's financial contributions to industrialization, yet his policy was not primarily extractive but developmental. He warned as early as 1942 against the mistake of what he called "draining the pond to catch the fish" (Mao Tse-tung 1942, 114), a theme to which he would return almost two decades later in his critique of Soviet agricultural development policy.

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Agriculture in China's Modern Economic Development by Nicholas R. Lardy


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