Structural reasons of learning from and surpassing the Hungarian reform model in China

Dr. Maria Csanádi

Institute of Economics

Hungarian Academy of Sciences

Sporadic comments from yesterday Divergence of transformations in post-socialist

countries Mistaken top reformist leadership causing the

dissolution of the system Gorbachev making a political mistake Collusion of western and dissident forces Party-to party relations, should be separated from

state-to state relations System change is an issue of political decison if the

system is not suitable Is China developing a capitalist system, or is a

developing socialist system

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Transitologist discussions Origin: should they be intoduced from above or

should the spread from below Speed: Should they be introduced gradually or

simultaneously as a shock-therapy Sequence: should economic or political reforms

come first? Political conditions: are reforms more efficient if

introduced in an authoritarian or in a democratic political regime

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Theoretical questions Can these reforms be put on common grounds no matter which

party-states we compare? Are these reforms indeed alternatives? Do the kind and sequence and timing of reforms depend solely

on strategic choice? If yes, than why did the EE countries choose the “wrong

alternative”? To what extent and why Hungarian style reforms could be

implemented in China from mid 1980s? What was the reason why Chinese reforms deviated from the

Hungarian from the early 1990s? In what way did this cause the differences in the

transformation process?

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Institutional instead of historical approach IPS model explains the structure and dynamics

of operation and transformation of party-states in general,

Points to the structural background of their different operation and transformation

Answers to the above theoretical an strategic questions

Structural background of self-similarities Case-studies in Hungary over the decision-making

process – dependency and interest promotion among party-state and economic decision-makers

Power network with different bargaining capacities of participating actors

Self-similarities (time, space, aggregation) Main elements Main connecting and operating principles How does it reproduce itself What are the main traps of self-reproduction leading to

transformation

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The simplified network

Shortcuts missing

Structural background of differences (time, space, aggregation) Different dependencies within the network within and accross

party and state hierarchies Different administrative levels of resource extraction and

distribution Different resource attracting and resisting capacities to

intervention of actors (level of integration into the network) Bring about differences in the distribution of power of the

network: Different instruments of resource extraction and distribution

(forced extraction, reforms within the network reforms outside the network)

Pattern-dependent ways of operation and paths of transformation

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System transformation

The party-state network is retreating as a social system from monopolized sub-spheres, and

The sub-spheres of a new social system are emerging

Retreatingparty-state

network

Emerging new system

Differences among patterns in transformation Transformation is

pattern-dependent different sequence different speed different

conditions the political

conditions of economic transformation

the economic conditions of political transformation

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Transformation of self-exploiting pattern (e.g. Romania):

Speed- Abrupt collapse of the net attached to all

subfields

Sequence - Overlapping transformations

Conditions –

•uncertain political outcome

•longlasting and deep economic crisis

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Transformation of self-disintegrating pattern

Retreat of the net

Emergent field

Sequence - Political transformation is firstfirst

Speed – retreat and emergence is gradual

Conditions - • political transformation under economic crisis

• economic transformation under democratic regime

Retreat of the net

Emergent field

Sequence - economic transformation is first

Speed - retreat and emergence is gradual

Conditions – •economic transformation under authoritarian regime,

•macroeconomic growth

Nature of system transformation in China (the self-withdrawing pattern)

Theoretical conclusion Different patterns should not be confunded Not all patterns implement reforms Speed, origin, sequence, political conditions of

reform and transformation is not an issue of choice Patterns determine the main character of reforms:

either within the network, or external to it. Patterns determine the sequence speed and

conditions of transformation Neither pattern-conforming reforms, nor pattern-

conforming transformations are alternative choices They are instead characteristic of structural (pattern)

constraints. Room for manouvere of economic policy is within

these constraintsM. Csanádi 14

Conclusions on Chinese and Hungarian reforms

What China learned from Hungary was the gradual decentralizing reforms within the network, however it proved to be insufficient

Deviation of the Chinese system occurred due to pattern constraints: the need of further sources through reforms leaping out of the network

Escalating reforms external to the network were politically rational determined macroeconomic growth and economic transformation first and thereby political stability in China

Keeping, moreover escalating reforms within the net in Hungary was also due to pattern constraints

Escalating decentralizing reforms and resource distribution within the net was politically rational, but brought about recession and political delegitimation – and thereby political transformation first and economic transformation second

Pattern constraints did not allow transformation by learning

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Reflection to sporadic issues of yesterday Patterns explain the divergence of transformations Pattern-conforming transformation rather than

mistaken top strategies Gorbachev’s mistake: not considering pattern

constriants, trying to counter the pattern sequence Collusion of western and dissident forces: made a lot

of mistakes confunding patterns Party-and state relations cannot be separated in such

an intertwined, politically monopolized network System change is not an issue of political decison if

the system is not suitable China is a transforming communist system with

pattern characteristics (economic transformation first)M. Csanádi 16