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

1. Structural reasons of learning from and surpassingthe Hungarian reform model in China Dr. Maria Csanádi Institute of Economics Hungarian Academy of Sciences

2. Sporadic comments from yesterday • Divergence of transformationsinpost-socialistcountries • Mistaken top reformistleadershipcausingthedissolution of thesystem • Gorbachevmaking a politicalmistake • Collusion of western and dissidentforces • Party-toparty relations, should be separatedfromstate-tostate relations • System change is an issue of politicaldecisonifthesystem is notsuitable • Is Chinadeveloping a capitalistsystem, or is a developingsocialistsystem M. Csanádi

3. 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 M. Csanádi

4. 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? M. Csanádi

5. Institutional instead of historical approach • IPS modelexplains 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 M. Csanádi

6. 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 M. Csanádi

7. The simplified network Shortcuts missing

8. 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 M. Csanádi

9. 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 Retreating party-state network Emerging new system

10. 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

11. Transformation of self-exploiting pattern (e.g. Romania): Sequence - Overlapping transformations Speed-Abrupt collapseof the net attached to all subfields • Conditions – • uncertain political outcome • longlasting and deep economic crisis M. Csanádi 11

12. Transformation of self-disintegrating pattern Sequence - Political transformation is first Speed – retreat and emergence is gradual • Conditions - • political transformation under economic crisis • economic transformation under democratic regime Emergent field Retreat of the net M. Csanádi 12

13. Nature of system transformation in China (the self-withdrawing pattern) Sequence - economic transformation is first Speed - retreat and emergence is gradual • Conditions – • economic transformation under authoritarian regime, • macroeconomic growth Emergent field Retreat of the net

14. 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 constraints M. Csanádi

15. 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 M. Csanádi

16. 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