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How China Became Capitalist. Ronald Coase and Ning Wang Hardcover – August 1, 2011

4 out of 5 stars 21 customer reviews

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Hardcover, August 1, 2011
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--This text refers to the Paperback edition.

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Editorial Reviews


"Patient readers will be rewarded with a better and deeper understanding of the most extraordinary transformation in modern economic history." - The Wall Street Journal

"As China is sure to become a hotly debated focal point in the presidential election, this book, with its emphasis on markets and history, becomes of paramount importance." - The Washington Times

"Anyone curious as to how China became the world's second biggest economy should read this interesting book." - The LSE Review of Books

"This is a major contribution to the whole literature on economic change as well as on China. Nowhere in all of the literature on economic change and development that I know is there such a detailed study of the fumbling efforts of a society to evolve and particularly one that had as long and as far to go as China did." - Douglass C. North, 1993 Nobel laureate in Economics

"Ronald Coase, now 100 years plus, and Ning Wang have written a compelling and exhaustive commentary about China's fitful transition from Socialism under Mao to today's distinctive capitalist economy. No student of China or socialism can afford to miss this volume." - Richard Epstein, University of Chicago Law School

"This book is one of the greatest works in economics and in studies of China, not only for today, but for the future." - Chenggang Xu, University of Hong Kong

"Coase finds a nation whose philosophy and policy have reflected the same simple principle - 'seeking truth from facts' - that has inspired his own path-breaking analyses of firms, markets and law. A fascinating and exceptionally thought-provoking account of how China, repeatedly seeking more efficient socialism, found itself turning capitalist." - Stephen Littlechild, Emeritus Professor, University of Birmingham, and Fellow, Judge Business School, University of Cambridge

--This text refers to the Paperback edition.

About the Author

RONALD COASE is a Nobel Laureate in Economics. His work has had a profound impact on economics; his work clarified the theory of the firm and gave rise to the field of Law and Economics. The Coase theorem is widely studied in economics. Professor Coase is currently Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law School, he is also a research advisor at the Ronald Coase Institute.

NING WANG is Assistant Professor at the School of Politics and Global Studies, Arizona State University.

--This text refers to the Paperback edition.

Product Details

  • Hardcover
  • Publisher: Palgrave MacMillan (August 1, 2011)
  • Language: English
  • ISBN-10: 0230285511
  • ISBN-13: 978-0230285514
  • Product Dimensions: 5 x 0.8 x 7.7 inches
  • Average Customer Review: 4.0 out of 5 stars  See all reviews (21 customer reviews)
  • Amazon Best Sellers Rank: #16,503,321 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

Format: Hardcover Verified Purchase
Few scholars have changed the face of economics like Ronald Coase. His work brought a very rare commodity to the economics profession - clarity. His observations, based on empirical evidence and "old-fashioned" fact-finding, have unearthed a body of work that has transformed the way we think about simple, but crucial, facts. The ways individuals and firms organize and his work on property rights had a profound impact on how we comprehend issues from the inner working of organizations to the use of market tools to address environmental problems. On the latter, his work provide the academic underpinning for the establishment of the Acid Rain program in the United States in the early 1990s, which was so successful that it virtually wiped out the problem of acid rain in America.
At a 101 and not a man to avoid challenges, he now braces himself on an issue that many in the West are puzzled by -"How China Became Capitalist". Again, he brings clarity to a confused picture. Without embracing dogmas from either left or right, he traces the history of Chinese reforms from the rise of Deng Xiaoping to the present. In Coase and co-author Ning Wang's recounting and interpretation, we learn about the unleashing of China's experiment with capitalism. Rather than a top-down approach as many believe, the Chinese government fostered competition between cities and provinces; allowed for experiments and pilots to take place in certain sectors, industries and regions. China after Mao had a blank slate from which to experiment. Throughout this, Coase's work on property rights was critical to many Chinese policy makers. It is no coincidence that alongside Marx and Friedman, Coase is one of the most revered Western economists in China.

Coase is the finest of scholars.
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Format: Hardcover
Everyone knows Ronald Coase is a great economist, but "How China Became Capitalist" shows us that he is a great historian too. In his new book, Coase approaches history in the same manner he approaches economics. As an economist, Coase has always guarded against the tendency for grand, scintillating theories to overtake quantifiable facts. In writing about what is arguably one of the most turbulent periods in Chinese history, he again seems to relinquish all presumption by piecing together observable historical evidence and letting the conclusions emerge by themselves. The results were surprising but not altogether unintuitive.

Many regard China's transformation from a communist economy to a capitalist one as one of the greatest paradoxes in the 20th century. The authors, however, are able to provide a persuasive account of how this came to be. The general theory is that the capitalist transformation in China is the product of marginal, or fringe, revolutions that occurred independently of the machinations of the Chinese government. This is not to say that the Chinese government did not play a role in fostering these developments. As illustrated by the authors, in many cases the Chinese government fostered the environment conducive to the flourishing of capitalism without intending to. The emergence of private farming in the 1960s is a good example. Private farming was encouraged by the Chinese government as a temporary measure to quell grain shortages after the failure of the Great Leap Forward became apparent. Such an ad hoc measure however, had lasting, albeit unintended, implications for China's economic development.

The argument is more nuanced than this.
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Format: Paperback
This is a book about an important topic, and the authors know their material. There are few books out there with this much substance this well analyzed, and the lessons the authors teach, and probably more importantly the false lessons they refute, need to be understood by policy makers.

Unfortunately, it is almost impenetrable, and I have a strong background in economics and am so old that I lived through the Cultural Revolution, Nixon going to China, et. al. The story is not told chronological order and there are quite literally dozens of names that are introduced, often with no background. I found that I had to make a list of characters, look many of them up in Wikipedia, and then make chronological notes as I read.

There is also a strong tendency to draw conclusions without citing much evidence within the text, which weakens their arguments. This is especially unfortunate because I think they draw the right conclusions.

Coase and Ning Wang needed a better editor.
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Format: Hardcover Verified Purchase
That a socialist economy such as China became capitalist is an amazing story in economic history. As a great economist next only to Adam Smith (my opinion), Ronald Coase has given a wonderful economic interpretation in this book coauthored with Ning Wang. The authors emphasize that the success in China in the past 30 years has been the result of the autonomous fight for survival from numerous starving peasants. Then the household responsibility system replaced the stupid commune system in the early 1980s, which laid the foundation of other three marginal revolutions in the coming years: the rises of township and village enterprises, the individual economy, and the special economic zone. But the marginal revolutions themselves were not enough to support the rise of a well-functioning price system because the price of productive factors was still controlled by the central government and the state-owned enterprises. The second-round reforms came in the 1990s. Two of them were the most important: the 1992 price reform, which gave up the dual-track pricing system for most products, and the 1994 tax reform, which imposed a 17% value-added tax on all enterprises and therefore reduced the negotiating and searching costs between central and local governments. These two reforms strengthened the price system and helped establish the market economy in China. But not all developments in China were good for becoming capitalist. Coase and Wang picked one of them which China has failed to accomplish: an open and free market for ideas, including the freedom of speech, thought, and the exchange of ideas. This is the last as well as the most important problem China has to face in the next decades if it wishes to go further in the way towards capitalism, even the one with Chinese characteristics.
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