Hostname: page-component-78c5997874-j824f Total loading time: 0 Render date: 2024-11-04T19:02:11.684Z Has data issue: false hasContentIssue false
  • English
  • Français

Information, Bureaucracy, and Economic Reforms in China and the Soviet Union

Published online by Cambridge University Press:  13 June 2011

Yasheng Huang
Yasheng Huang
Affiliation:
Political Science at the University of Michigan.
Get access

Abstract

The argument in this essay can be reduced to the following form: the better a planning system is in terms of central planning techniques, the less likely it is to depart from central planning. The author proposes an information approach to explain why China launched economic reforms at a relatively earlier stage of development than did the Soviet Union. The claim is twofold regarding the connections between initiation of reform and information flows in China and in the Soviet Union. First, all else being equal, a bureaucracy better informed about economic conditions is more likely to pursue realistic economic objectives and its policies are less likely to induce macroeconomic instability. To the extent that macroeconomic instability activates a search for alternatives to the status quo, including reforms, a bureaucracy with better information-collection capabilities is less likely to initiate such a search and therefore less likely to initiate reforms.

Second, policymakers choose between reforms and the strengthening of central planning as alternative solutions to the status quo. The choice of one solution over another depends on their relative costs. Again, all else being equal, the higher the costs of strengthening central planning (or reform), the more likely is reform (or strengthening of central planning) to be chosen. This essay focuses on one aspect of these costs—the costs of information provision.

Type
Research Article
Information
World Politics , Volume 47 , Issue 1 , October 1994 , pp. 102 - 134
Copyright
Copyright © Trustees of Princeton University 1994

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 For discussions along this line in the context of developing countries, see Haggard, Stephan and Kaufman, Robert R., “Economic Adjustments in New Democracies,” in Nelson, Joan M., ed., Fragile Coalitions (San Francisco: Overseas Development Council, 1989)Google Scholar; Haggard, Stephan, “Inflation and Stabilization,” in Meier, Gerald M., ed., Politics and Policy Making in Developing Countries (San Francisco: ICS Press, 1991)Google Scholar; and Grindle, Merilee S. and Thomas, John W., Public Choices and Policy Change (Baltimore: Johns Hopkins University Press, 1991).Google Scholar

2 There is an enormous methodological advantage in limiting the study to centrally planned economies, including the exclusion of potentially confounding influences such as the nature of economic and political systems. Such an exclusion enables the analyst to focus on those variables he/she cares about. World Politics 47 (October 1994), 102–34

3 Some may dispute this dating of reform initiations. For the purpose of this essay, however, precise reform dating is not important so long as it is a noncontroversial proposition that the Soviets undertook reforms later than the Chinese relative to the life of the respective central planning systems.

4 Kornai, Janos, The Socialist System (Princeton: Princeton University Press, 1992), 361, 387–92.CrossRefGoogle Scholar

5 Chinese reforms in 1978 focused mainly on the agricultural sector and permitted the restoration of household production in agriculture. In the Soviet case the 1987 reform programs permitted alternative forms of ownership, including private firms and producer cooperatives. In contrast, this element had been missing in the previous attempts, which aimed primarily at administrative decentralization (the Great Leap Forward and Khrushchev's experiment in 1957) or at manipulation of production norms (the Kosygin reforms). On the Chinese agricultural reforms, see Harding, Harry, China's Second Revolution (Washington, D.C.: Brookings Institution, 1987), 101–8Google Scholar; and Hartford, Kathleen, “Socialist Agriculture Is Dead; Long Live Socialist Agriculture! Organizational Transformations in Rural China,” in Perry, Elizabeth and Wong, Christine, eds., The Political Economy of Reform in Post-Mao China' (Cambridge: Harvard University Press, 1985).Google Scholar On the Chinese proposals to use indirect planning and to grant enterprise autonomy, see Solinger, Dorothy J., “Economic Reform via Reformulation in China: Where Do Right Ideas Come From?” Asian Survey 21 (September 1981).CrossRefGoogle Scholar Discussions on the Khrushchev experiment and the Kosygin reforms can be found in Billon, S. A., “Centralization of Authority and Regional Management,” in Bandera, V. N. and Melnyk, Z. L., eds., The Soviet Economy in Regional Perspective (New York: Praeger, 1973)Google Scholar; Ed Hewett, A., Reforming the Soviet Economy (Washington, D.C.: Brookings Institution, 1988), 223–45Google Scholar; and Dowlah, A. F., Soviet Political Economy in Transition (New York: Greenwood Press, 1992), 34–47.Google Scholar

6 For further illustration, see Ragin, Charles C., The Comparative Method (Berkeley: University of California Press, 1987), 47–48.Google Scholar

7 A Chinese-Soviet comparison excludes two confounding influences on the decision to reform. One is the role of international trade. Typically in a small economy, the role of international trade looms large for the nation's economic activities and policies. In Hungary and Poland the dependency on non-CMEA trade and the need to adjust to trade fluctuations contributed significantly to the leaders' decision to reform. See Brada, Josef C., Hewett, E. A., and Wolf, Thomas A., “Economic Stabilization, Structural Adjustment, and Economic Reform,” in Brada, , Hewett, , and Wolf, , eds., Economic Adjustment and Reform in Eastern Europe and the Soviet Union (Durham, N.C.: Duke University Press, 1988)Google Scholar; Comisso, Ellen and Marer, Paul, “The Economics and Politics of Reform in Hungary,” in Comisso, Ellen and Tyson, Laura D'Andrea, eds., Power, Purpose, and Collective Choice (Ithaca, N.Y.: Cornell University Press, 1986)Google Scholar; Kazimierz Poznanski, “Economic Adjustment and Political Forces: Poland since 1970,” in Comisso, and Tyson, ; and Hardt, John P., “Stages in Soviet Economic Development: A Sixty-year Record,” in Kamrany, Nake M. and Day, Richard H., eds., Economic Issues of the Eighties (Baltimore: Johns Hopkins University Press, 1979). The other potentially confounding influence concerns external constraints imposed by the Soviet Union on the policymakers of the Warsaw Pact countries when they were deliberating whether to reform. Case selection thus depends entirely on the research questions one asks. If, for example, a researcher is interested in finding out how different levels of international trade affect the timing of reforms, then a rational strategy is to include small European socialist countries as well as large economies such as the Soviet Union and China. Of course, it is nearly impossible to achieve immunity to all confounding influences. For example, the Soviet Union was engaged in a superpower rivalry with the United States in a way that China was not. The findings would be biased if one of the following two scenarios were true: first, the superpower rivalry or its absence somehow contributed to the difference in how planning was organized; second, the superpower rivalry affected the decision to reform more than proportionately. As it turns out, the theory that the superpower rivalry affected reforms is contingent on the notion that the military played a vital role in the reform process, a rather controversial view. Hence, the linkage between superpower rivalry and the organization of planning was remote at best.Google Scholar

8 I thank an anonymous reviewer for clarification on this point.

9 For discussion of the contrast between these two approaches, see Keohane, Robert O., “The International Politics of Inflation,” in Lindberg, Leon N. and Maier, Charles S., eds., The Politics of Inflation and Economic Stagnation (Washington, D.C.: Brookings Institution, 1985), 78–79.Google Scholar

10 This, of course, is a standard defense of the rationality assumption, even when it is shown to be empirically false. See Friedman, Milton, Essays in Positive Economics (Chicago: University of Chicago Press, 1953).Google Scholar For a rigorous demonstration that the rationality assumption is often empirically false, see Tversky, Amos and Kahneman, Daniel, “Rational Choice and the Framing of Decisions,” in Cook, Karen Schweers and Levi, Margaret, eds., The Limits of Rationality (Chicago: University of Chicago Press, 1990).Google Scholar

11 See Kornai (fn. 4), 383–86; Bergson, Abram, Planning and Performance in Socialist Economies (Boston: Unwin Hyman, 1989)Google Scholar; and Desai, Padma, The Soviet Economy: Problems and Prospects (Oxford: Basil Blackwell, 1987), 63–132.Google Scholar Other studies of European socialist economies show that while their performance was comparable to OECD countries, their costs in both capital and labor were higher. See Bergson, Abram, “Development under Two Systems: Comparative Productivity Growth since 1950,” World Politics 23 (July 1971)CrossRefGoogle Scholar; and Pryor, Frederic L., “Growth and Fluctuations of Production in O.E.C.D. and East European Countries,” World Politics 37 (January 1985).CrossRefGoogle Scholar

12 See Szelenyi, Ivan, “Eastern Europe in an Epoch of Transition: Toward a Socialist Mixed Economy?” in Nee, Victor and Stark, David, eds., Remaking the Economic Institutions of Socialism (Stanford, Calif.: Stanford University Press, 1989), 211–16.Google Scholar For related hypotheses, see Robert F. Dernberger, “Economic Policy and Performance,” in Joint Economic Committee, China's Economy Looks toward the Year 2000, vol. 1 (Washington, D.C.: Government Printing Office, 1986).Google Scholar

13 The necessary condition is met when an effect always implies a particular cause; a sufficient condition is met when a particular cause always implies an effect but the effect does not always imply a particular cause. See Chiang, Alpha C., Fundamental Methods of Mathematical Economics (New York: McGraw-Hill, 1984), 89–90.Google Scholar The economic explanation is obviously necessary in the sense that reforms would not arise in the absence of economic problems but it is not sufficient in the sense that economic problems alone would not give rise to reforms.

14 Hardt (fn. 7); and Breslauer, George W., “Soviet Economic Reforms since Stalin: Ideology, Politics, and Learning,” Soviet Economy 6 (July-September 1990), 269.Google Scholar

15 Colton, Timothy J., The Dilemma of Reform in the Soviet Union (New York: Council on Foreign Relations, 1986).Google Scholar

16 Some may argue that economic performance under Gorbachev was worse than it was under Brezhnev. This is true but also irrelevant. Because the Soviet economy was declining almost continuously since the late 1950s, at any and every point in time economic performance was at the historically lowest point. Unless there was an implicit “tolerance threshold” (that says, for example, 3 percent economic growth was tolerable but 2 percent was not), economic performance per se is unable to explain why Gorbachev initiated reforms while Brezhnev did not.

17 Colton (fn. 15), 30.

18 Ibid.

19 An argument is indeterminate if it does not have a unique conclusion.

20 Colton (fn. 15), 30.

21 For a more detailed discussion, see Colton (fn. 15), 25–30; and Kontorovich, Vladimir, “Discipline and Growth in the Soviet Economy,” Problems of Communism 34 (November-December 1985).Google Scholar For an excellent case study of how the Soviet leaders persisted with central planning tools despite their knowledge of the widespread problems, see Gustafson, Thane, Crisis amid Plenty (Princeton: Princeton University Press, 1989).Google Scholar

22 Shirk, Susan L., The Political Logic of Economic Reform in China (Berkeley: University of California Press, 1993).Google Scholar

23 Some may object to generalizing in this way, on the grounds that the argument is designed to explain the outcome of a single case. The objection is not valid, however, since drawing causal inferences in a single case study depends on constructing credible counterfactuals and counterfactual analysis is based on the principle of comparative methods. See Fearon, James D., “Counterfactuals and Hypothesis Testing in Political Science,” World Politics 43 (January 1991).CrossRefGoogle Scholar In our case, in order to make credible the hypothesis that slow economic growth led to reforms, the counterfactual hypothesis—that fast economic growth did not lead to reforms—must also be credible. When the case selection is methodologically and theoretically driven, the statement in the latter form differs little from the one stated in the text.

24 International Monetary Fund et al., A Study of the Soviet Economy (Paris: Organisation for Economic Co-operation and Development, 1991), 12.Google Scholar

25 Calculated from the State Statistical Bureau, Zhongguo tongji nianjian 1991 (China statistical yearbook 1991) (Beijing: Zhongguo tongji chubanshe, 1991), 79Google Scholar, 95.

26 See Breslauer (fn. 14); and Moltz, James Clay, “Divergent Learning and the Failed Politics of Soviet Economic Reform,” World Politics 45 (January 1993).CrossRefGoogle Scholar

27 See Goldman, Marshall, Gorbachev's Challenge (New York: W. W. Norton, 1987).Google Scholar

28 Colton (fn. 15), 30; and Bahry, Donna, “Politics, Generations, and Change in the USSR,” in Millar, James R., ed., Politics, Work, and Daily Life in the USSR (Cambridge: Cambridge University Press, 1987).Google Scholar

29 Lowenthal, Richard, “Development vs. Utopia in Communist Policy,” in Johnson, Chalmers, ed., Change in Communist Systems (Stanford, Calif.: Stanford University Press, 1970).Google Scholar

30 Shirk, Susan, “The Political Economy of Chinese Industrial Reform,” in Nee, Victor and Stark, David, eds., Remaking the Economic Institutions of Socialism (Stanford, Calif: Stanford University Press, 1989)Google Scholar; and Baohui, Zhang, “The State Central Economic Bureaucracies and the Outcome of Systemic Economic Reform: An Institutional Explanation for the Soviet and Chinese Experiences,” International Journal of Policy and Administration 5 (July 1992).Google Scholar

31 Another reason for the difference is that the Chinese bureaucratic system endured many more political shocks than did the Soviet system. Whereas the Great Leap Forward and the Cultural Revolution led to a considerable weakening of the Chinese bureaucratic apparatus, the Great Purge in the Soviet Union paved the way for the rise of technocratic elites at the expense of the old Bolsheviks. See Diao, Richard, “The Impact of the Cultural Revolution in Communist China,” China Quarterly, no. 42 (April-June 1970)CrossRefGoogle Scholar; and Fitzpatrick, Sheila, “Stalin and the Making of a New Elite, 1928–1939,” Slavic Review 38 (September 1979).Google Scholar Because the force of the political shocks affected the entire bureaucratic establishment rather than the information system alone, they are not treated here in great detail.

32 See Byrd, William A., The Market Mechanism and Economic Reform in China (Armonk, N.Y.: M. E. Sharpe, 1991).Google Scholar The central ministries also made direct allocations to the enterprises under their administrative supervision. But central enterprises accounted for only a small share of industrial out put. In the late 1970s they accounted for 9 percent of total industrial output for the state sector; see Jianzhang, He and Jiye, Wang, Zhongguo jihua guanli wenti (On Chinese planning) (Beijing: Shehui kexueyuan chubanshe, 1984), 67.Google Scholar In 1985 the shares recovered to 25 percent. See State Council and State Planning Commission, Zhongguo gongye xianzhuang (The current state of Chinese industry) (Beijing: Renmin chubanshe, 1990), 489.Google Scholar

33 As will be shown later on, the Soviet system consistently exhibited greater macroeconomic stability than the Chinese system did. The combination of greater stability and a greater degree of specialization would imply even greater availability of information for the Soviet central planners.

34 A territorial system tends to be autarkic. Donnithorne has referred to the Chinese economic system as a “cellular economy.” See Donnithorne, Audrey, China's Economic System (London: George Allen and Unwin, 1981).Google Scholar Empirical evidence suggests that industrial production is widely dispersed in China; see World Bank, China: Macroeconomic Stability and Industrial Growth under Decentralized Socialism (Washington, D.C.: World Bank, 1990).Google Scholar In the Soviet case, however, interrepublican trade was larger than external trade. International Monetary Fund et al. (fn. 24) suggests (1) a greater degree of interregional dependence and, (2) assuming much of this trade was not spontaneous, a greater economic role for the central government in resource transfers.

35 See Campbell, Robert W., “Changing Role of Statistics in the USSR,” in Treml, Vladimir G. and Hardt, John P., eds., Soviet Economic Statistics (Durham, N.C.: Duke University Press, 1972), 26–27.Google Scholar With the arrival of computers in the late 1950s, Soviet leaders believed they had the solution to the problems associated with processing the information necessary for planning. They campaigned for the automation of statistical collection and hence of decision making. Rutland, Peter, The Myth of the Plan (London: Hutchinson, 1985), 191–94.Google Scholar

36 See Gregory, Paul R. and Stuart, Robert C., Soviet Economic Structure and Performance (New York: Harper and Row, 1981), 135.Google Scholar The technical upgrading of the CSA came in response to Khrushchev's 1957 Sovnarzkhozy reform, which increased the demand for work performed by the CSA because of the fear of the localist tendencies that would result from Khruschev's reforms. Thus statistical reporting was centralized and the CSA assumed greater responsibility, even when economic decisions were decentralized. For an account, see Campbell (fn. 35).

37 See Dangdai Zhongguo de tongji shiye (Contemporary statistical work in China) (Beijing: Zhongguo shehui kexue chubanshe, 1990), 185–86.

38 Yue Rupeng, “Jiakuai jianshe guojia tongji xinxi zidonghua xitong de jige wenti,” in China Statistical Association, ed., Zhongguo tongji fazhan zhanlue wenti yanjiu (Research on China's statistical development strategy) (Beijing: Zhongguo tongji chubanshe, 1988), 178.Google Scholar

19 Sai, Zhang, “Tongji fazhan zhanlue wenti yanjiu,” Tongji yanjiu, no. 4 (1987).Google Scholar

40 For a list of Soviet ministries as of the mid-1970s, see Hough, Jerry and Fainsod, Merle, How the Soviet Union Is Governed (Cambridge: Harvard University Press, 1979), 412–17.Google Scholar The CSA enjoyed ministerial status from the very beginning. It was established in 1918 with the administrative position of a People's Commissariat; in 1926 it became a full member of the Council of People's Commissars, the precursor of the Council of Ministers. See Kaser, Michael, “The Publication of Soviet Statistics,” in Treml, Vladimir G. and Hardt, John P., eds., Soviet Economic Statistics (Durham, N.C.: Duke University Press, 1972), 45–46.Google Scholar

41 From 1940 until probably 1975, Vladimir Nikonovich Starovskii led the CSA; between 1975 and 1985 it was led by Lev Volodarsky. Starovskii, a professional statistician, joined the service in 1925. Mikhail Korolev, who replaced Volodarsky in 1985, was also an insider; he had served as Volodarsky's deputy for ten years before assuming the top post. On Starovskii, see Kaser (fn. 40), 45–46; and on Volodarsky and Korolev, see Treml, Vladimir G., “Perestroyka and Soviet Statistics,” Soviet Economy 4, no. 1 (1988).Google Scholar

42 Treml (fn. 41), 67.

43 See Campbell (fn. 35), 24–25; and Yezhov, A., Organisation of Statistics in the U.S.S.R. (Moscow: Progress Publishers, 1967), 25–26.Google Scholar

44 See Grossman, Gregory, Soviet Statistics of Physical Output of Industrial Commodities (Princeton: Princeton University Press, 1960)Google Scholar; Kaser (fn. 40), 51–52; and Yezhov (fn. 43), 51.

45 Between 1970 and 1978, the SSB was subordinate to the State Planning Commission. See Dangdai (fn. 37), 76, 88.

46 Ministries and provinces have the same bureaucratic rank. For a description of bureaucratic ranks in the Chinese system, see Lieberthal, Kenneth and Oksenberg, Michel, Policy Making in China: Leaders, Structures and Processes (Princeton: Princeton University Press, 1988), 142–43.Google Scholar

47 For a chronology of important events at the SSB, see Yifu, Wang, Xin Zhongguo tongji shigao (History of new China's statistical work) (Beijing: Zhongguo tongji chubanshe, 1986), 349–59.Google Scholar

48 Planning realism here refers to a static situation; i.e., plans are consistent with existing conditions. As such, planning realism should not imply that Soviet planning was more efficient. Indeed, the opposite case can be made, that Soviet growth suffered because of planning consistency, to the extent that it required limiting enterprise autonomy and suppressed both incentives for innovations and the dynamic factors in the economy. Second, planning realism is a relative concept. The argument here is simply that there was more planning realism in the Soviet system than in the Chinese system, not that Soviet planning was realistic by some objective criteria.

49 An example of statistical inadequacy in China is in the area of investment planning. Before 1978 Chinese central planners did not collect data on a locally controlled category of investment known as “technical transformation.” By the late 1970s technical transformation investment accounted for between 20 and 30 percent of total investment, which means, in effect, that the central economic authorities formulated investment plans without knowledge of about one-quarter of the investment activities. See Naughton, Barry, “Hierarchy and the Bargaining Economy: Government and Enterprise in the Reform Process,” in Lieberthal, Kenneth G. and Lampton, David M., eds., Bureaucracy, Politics and Decision Making in Post-Mao China (Berkeley: University of California Press, 1992).Google Scholar

50 Much of this analysis of the SSB is consistent with a study by Oksenberg based on a series of interviews he conducted in 1981. He gives the example of the acreage of sown cotton, which was under-reported by 10 percent in Hebei province. See Oksenberg, Michel, “Economic Policy Making in China, Summer 1981,” China Quarterly, no. 90 (June 1982).CrossRefGoogle Scholar

51 These projects had a financing requirement equal to the total capital construction costs for the previous twenty-eight years. See Riskin, Carl, China's Political Economy (New York: Oxford University Press, 1987), 258–61.Google Scholar

52 Naughton, Barry, “The Pattern and Legacy of Economic Growth in the Mao Era,” in Lieberthal, Kenneth et al., eds., Perspectives on Modern China (Armonk, N.Y.: M. E. Sharpe, 1991), 249.Google Scholar

53 An example is the case of constructing a pipeline for transporting natural gas from Sichuan to Shanghai. Huge investments had been made before it was discovered that Sichuan did not have sufficient natural gas. See Naughton (fn. 52), 249–50.

54 This was given in Perkins, Dwight, “Reforming China's Economic System,” Journal of Economic Literature 26 (June 1988), 618.Google Scholar Other authors have given lower figures. Harding estimates the import contract value to be $40 billion (fn. 5), 149; and Naughton gives an even lower figure, $13 billion (fn. 52), 249. These yield, respectively, 4 and 1.3 times China's export level at the time.

55 Powell, Raymond P., “Plan Execution and the Workability of Soviet Planning” Journal of Comparative Economics 1 (March 1977).CrossRefGoogle Scholar

56 Gregory, Paul R., Restructuring the Soviet Economic Bureaucracy (Cambridge: Cambridge University Press, 1990), 34.CrossRefGoogle Scholar

57 First, Gosplan had independent sources of information with which it could evaluate ministry requests from its on-site visits and audits; Gregory (fn. 56), 37–38. Second, given the fact that the CSA was in charge of receiving ministry requests and that the Soviet system aimed at ironing out differences before reaching the next higher level, it is a plausible conjecture that the CSA data were used to check on ministry or enterprise requests (pp. 29, 93). Third, Gosplan used input norms and other engineering data to counter ministry requests as well as to guide material planning (p. 37). Ministry-wide input-output tables were used as technical criteria to evaluate requests for plan revisions. An example of this use of such tables is given by Cave, Martin, Computers and Economic Planning: The Soviet Experience (Cambridge: Cambridge University Press, 1980), 115–17.Google Scholar

58 See Kornai, Janos, The Economics of Shortage (Amsterdam: North-Holland, 1980).Google Scholar

59 Harrison, Mark, “Investment Mobilization and Capacity Completion in the Chinese and Soviet Economies,” Economics of Planning 19, no. 2 (1985).Google Scholar

60 Ibid., tables 2, 4.

61 On the Soviet figure for 1989, see International Monetary Fund et al. (fn. 24), 93, table C5.

62 Rumer, Boris, “Investment Performance in the Twelfth Five-year Plan,” Soviet Studies 43, no. 3 (1991).CrossRefGoogle Scholar

63 Peebles, Gavin, “Aggregate Retail Price Changes in Socialist Economies: Identification, Theory and Evidence for China and the Soviet Union,” Soviet Studies 38 (October 1986).CrossRefGoogle Scholar

64 Ellman, Michael, Socialist Planning (Cambridge: Cambridge University Press, 1989).Google Scholar

65 Kornai (fn. 4) defines “forced substitution” in the following way: “The customer abandons her original purchasing intention and instead buys something else that is more or less a substitute for it” (p. 230).

66 See Bauer, T., “Investment Cycles in Planned Economies,” Acta Oeconomica 21, no. 3 (1978)Google Scholar; Grosfeld, Irena, “Modeling Planners' Investment Behavior: Poland, 1956–1981,” Journal of Comparative Economics 11 (June 1987)CrossRefGoogle Scholar; and Roland, Gerard, “Investment Growth Fluctuations in the Soviet Union: An Econometric Analysis,” Journal of Comparative Economics 11 (June 1987).CrossRefGoogle Scholar

67 See Pryor (fn. 11). Of course, factors affecting macroeconomic stability differed between smaller European countries and the former Soviet Union. For small countries, the more likely factors were trade fluctuations; for the former Soviet Union, the internal policies were more important.

68 Throughout this essay, information refers to knowledge about routine and relatively general economic phenomena rather than about those that are highly idiosyncratic or intrinsically unobservable (such as an individual's preference or intelligence). This distinction is critical, since in the case of routine information (such as the tonnage of steel produced), increasing information provision is a meaningful alternative to reforms.

69 For further discussion of specific investments or asset specificity and its implications for business organizations, see Williamson, Oliver E., The Economic Institutions of Capitalism (New York: Free Press, 1985).Google Scholar For a political science application of the concept, see Frieden, Jeffry A., Debt, Development, and Democracy (Princeton: Princeton University Press, 1991).Google Scholar

70 Broadly speaking, routines themselves embody “tacit knowledge” necessary to operate an organization. “In a sense,” Teece argues, “organizations ‘remember by doing.’ Routine operation is the organizational counterpart of the exercise of skills by an individual.” To the extent the tacit knowledge embodied in one routine is specific to that routine, the investment in setting up that routine constitutes a specific investment. See Teece, David J., “Towards an Economic Theory of the Multiproduct Firm,” Journal of Economic Behavior and Organization 3 (March 1982).CrossRefGoogle Scholar

71 On this and other related points, see Campbell (fn. 35); and Trend (fn. 41).

72 Arrow, Kenneth J., The Limits of Organization (New York: W. W. Norton, 1974).Google Scholar

73 International Monetary Fund et al. (fn. 24), 135.

74 Aslund, Anders, Gorbachev's Struggle for Economic Reform (Ithaca, N.Y.: Cornell University Press, 1991).Google Scholar

75 International Monetary Fund et al. (fn. 24).

76 On this and other related points, see Rueschemeyer, Dietrich and Evans, Peter B., “The State and Economic Transformation: Toward an Analysis of the Conditions Underlying Effective Intervention,” in Evans, Peter B., Rueschemeyer, Dietrich, and Skocpol, Theda, eds., Bringing the State Back In (Cambridge: Cambridge University Press, 1985), 51–52.Google Scholar

77 For a more rigorous illustration of these points, see Gilbert, Richard J., “Mobility Barriers and the Value of Incumbency,” in Schmalensee, Richard and Willig, Robert D., eds., Handbook of Industrial Organization, vol. 1. (Amsterdam: North-Holland, 1989).Google Scholar

78 Arrow (fn. 72).

79 Oksenberg (fn. 50).

80 These figures refer to numbers of people in charge of statistical collection and processing in all government departments and enterprises. See Wang (fn. 47), 319–20. Whether such a comparison actually has the kind of economic significance alleged by Sun is beside the point; more relevant is the perception that the problem existed.

81 Oksenberg (fn. 50), 185.

82 Ministry of Personnel, “Guanyu guojia tongjiju suoshu shiye danwei jigou he bianzhi de pifu,” in State Statistical Bureau, ed., Tongji gongzuo zhongyao wenjian xuanbian, 1988–1990 (Selections of important documents on statistical work, 1988–1990) (Beijing: Zhongguo tongji chubanshe, 1991), 161.Google Scholar

83 Wang (fn. 47), 212–13.

84 Zhongsheng, Gao et al., “Jiaqiang tongji fazhi, tigao shuzi zhiliang,” in China Statistical Association, ed., Zhongguo tongji fazhan zhanlue wenti yanjiu (Research on China's statistical development strategy) (Beijing: Zhongguo tongji chubanshe, 1988), 174.Google Scholar

85 This is not meant to be a comprehensive discussion of the pros and cons of the tax contract system. Such discussion would require that any informational gains be balanced against other problems associated with the tax contract system. For a discussion of many of the economic problems associated with the system, see World Bank, China: Revenue Mobilization and Tax Policy (Washington, D.C.: World Bank, 1989), 7–23.Google Scholar

86 This is a central hypothesis advanced in Alchian and Demsetz. The argument is that firms reduce shirking behavior typically associated with team production by giving the principal—the owner—the marketable title to the reward of the team production; the principal then has an incentive to monitor team production. See Alchian, Armen and Demsetz, Harold, “Production, Information Costs, and Economic Organization,” American Economic Review 62 (December 1972).Google Scholar

87 Shortage of capable administrators in developing countries causes governments to levy excessive tariffs on imports and exports for which ports of entry are few, while leaving many other potential taxable activities untapped. That agriculture has a complex production function is often the single most important reason why central planning has failed in agriculture much more than in industry. For these and related points, see any standard textbook on economic development, e.g., Gillis, Malcolm et al., Economics of Development (New York: W. W. Norton, 1983).Google Scholar In the Soviet Union one-third of meat and milk production and two-thirds of egg production were accounted for by private plots, even though private plots only constituted 1.4 percent of cultivable land. See Hewett (fn. 5), 117. Poland and Hungary adopted private farming long before their governments formally embraced a market model.

88 Kornai (fn. 4), 396.

89 On enterprise autonomy, see Hewett (fn. 5), 252, 260–63; and on product quality, see International Monetary Fund et al. (fn. 24), 20–21.

90 The number of ministries at the union level was reduced from sixty-four in 1979 to fifty-five in 1988 and it was claimed that out of 108,000 central management ministry personnel in 1986, 39,000 were cut by 1988. See Aslund (fn. 94), 119.

91 Treml (fn. 41), 67.

92 See “Problems in Statistics Work Discussed,” Sobraniye Postanovleniy Pravitelstva SSSR: Otdel, no. 34 (1987), trans, in FBIS-sov, October 23, 1987, 63–68.

93 Korotkov, P. and Luchnikova, E., “Do Statistics Know Everything? Notes from a News Conference at the USSR State Committee for Statistics,” Ekonomicheskaya Gazeta, no. 18 (April 1989)Google Scholar, trans. in FBIS-SOV, May 4,1989, 82–84.

94 Statistical falsifications probably became more severe under the impact of Gorbachev's acceleration program, as the incentives to embellish achievements increased. N. Belov, first deputy chairman of the USSR State Committee for Statistics, wrote in 1987 that overreporting was discovered at 18 percent of the installations inspected in the Kabardino-Balkar ASSR, at 16.6 percent in Kiev, and at 31.3 percent in Samarkand Oblast. See Belov, , “Changes in Statistics Work Outlined,” Ekonomicheskaya Gazeta, no. 42 (October 1987)Google Scholar, trans. in FBIS-SOV, October 27, 1987, 78–80.

95 Rytov, Yu, “Topic of the Day: Better Early Than Never,” Izvestiya, April 27, 1988Google Scholar, trans. in FBIS-SOV, May 3, 1988, 41–42.

96 Their analysis was based on the calculation of physical units of output to avoid price overcharge. See Selyunin, Vasily and Khanin, Grigory, “Making the Case for Reliable Statistics,” Novy mir, no. 2 (February 1987)Google Scholar, trans. in Current Digest of the Soviet Press 39, no. 25 (1987), 10–12. Soviet researchers also began to challenge the social statistics collected by the CSA. On environmental statistics, see Liubomirskii, Leonid, “Another Look at the Reliability of Official Soviet Pollution Statistics,” Environmental Policy Review 5 (January 1991)Google Scholar; on educational statistics, see Denisova, L., “Let Us Not Sin against the Truth,” Soviet Education (May 1990).CrossRefGoogle Scholar

97 See “Izvestiya Interviews Statistics Chief Korolev,” Izvestiya, June 23, 1987, trans. in FBIS-SOV, July 2, 1987; “Bases for Economic Comparisons Questioned,” Izvestiya, October 13, 1988, trans. in FBIS-SOV, October 18, 1988; “Statistics Committee Chief Interviewed,” Izvestiya, August 1, 1989, trans. in FBIS-SOV, August 9, 1989; and “Economic Statistics No Cause for Satisfaction,” Izvestiya, January 27, 1990, trans. in FBIS-SOV, January 30, 1989. Treml (fn. 41) argues that the publicity such criticisms received may have been part of a strategy to put more pressure on the CSA.

98 As Pierson observes, “Incentive structures influence the probability of particular outcomes and the payoffs attached to those outcomes. Individuals choose, but the conditions that frame their decisions provide strong inducements to make particular choices.” See Pierson, Paul, “When Effect Becomes Cause: Policy Feedback and Political Change,” World Politics 45 (July 1993), 598.CrossRefGoogle Scholar

99 If the argument on military pressures can be generalized to state that superpower rivalry induces military pressures for reforms, the argument must be falsified in a comparison of the Chinese and Soviet reform timings, because it would predict a higher likelihood of reforms in the Soviet Union. In addition, Sovietologists are divided about the role played by the military in the initiation of reform. See, for example, Evangelista, Matthew, “Economic Reform and Military Technology in Soviet Security Policy,” Harriman Institute 2 (January 1989)Google Scholar; Bova, Russell, “The Soviet Military and Economic Reform,” Soviet Studies 40 (July 1988).CrossRefGoogle Scholar

Theories on generational change and ideological evolution, when generalized across cases, would also predict a higher likelihood for reform in the former Soviet Union.

100 Indeed, because there are only a few cases available for doing comparative qualitative analysis, the strength of a posited relationship between an independent variable and a dependent one should be further evaluated by identifying approximate cases for analysis. This requires, among other things, incorporating different dependent variables in the analysis.

101 See Shirk (fn. 30). By and large, Chinese policymakers took a piecemeal approach to reform by sequencing reforms in different economic sectors and by not setting a precise timetable for implementation. The Chinese reform approach has been variously described as “open-ended” and “crossing the river by feeling the stones.” See Lin, Cyril Zhiren, “Open-ended Economic Reform in China,” in Nee, Victor and Stark, David, eds., Remaking the Economic Institutions of Socialism (Stanford, Calif.: Stanford University Press, 1989).Google Scholar For more detailed discussions, see Singh, Inderjit, “Is There Schizophrenia about Socialist Reform Theory?” Transition 2 (July-August 1991)Google Scholar; Kang, Chen, Jefferson, Gary H., and Singh, Inderjit, “Lessons from China's Economic Reform,” Journal of Comparative Economics 16 (June 1992).Google Scholar In contrast, Soviet leaders favored a simultaneous and comprehensive approach and tended to specify, ex ante, precise dates for completing reforms. The reform package announced in 1987 embraced “nearly every major aspect and sector of the economy,” as Schroeder notes; see Schroeder, Gertrude, “Anatomy of Gorbachev's Economic Reform,” in Hewett, Ed A. and Winston, Victor H., eds., Milestones in Glasnost and Perestroika, volume on the economy (Washington, D.C.: Brookings Institution, 1991), 217.Google Scholar A full price adjustment was to be attempted. This proposal was rejected by Chinese policymakers, however, explicitly on the grounds that there was not sufficient information. Enterprise, foreign trade, and agricultural reforms were to be carried out at the same time. Indeed, a new economic mechanism was to be in place by 1990. See Abalkin, Leonid I., “The New Model of Economic Management,” in Hewett, and Winston, ; Sheng, Hua, Xuejun, Zhang, and Xiaopeng, Luo, “Zhongguo shinian jingji gaige huigu, fansi he zhanwang,” Jingji yanjiu (September, October, and December 1988).Google Scholar Also some of the price reform schemes were based on central planning concepts, such as using linear programming to calculate marginal costs and using input-output tables to forecast the effects of price changes. See Nikolay Ya. Petrakov, “Prospects for Change in the Systems of Price Formation, Finance and Credit,” in Hewett and Winston.

102 Pierson (fn. 97).

103 North, Douglass C., Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1991).Google Scholar

104 Stark, David, “Privatization in Hungary: From Plan to Market or From Plan to Clan?” East European Politics and Societies 4 (Fall 1990).CrossRefGoogle Scholar

105 Solinger, Dorothy J., “Urban Reform and Relational Contracting in Post-Mao China: An Interpretation of the Transition from Plan to Market,” Studies in Comparative Communism 22 (Summer-Autumn 1989).CrossRefGoogle Scholar

106 Yingyi, Qian and Chenggang, Xu, “Why China's Economic Reforms Differ: The M-Form Hierarchy and Entry/Expansion of the Non-state Sector” (Manuscript, Stanford University and London School of Economics, 1992).Google Scholar

107 See Pierson (fn. 97).