Description
After the Great Leap Forward (1958-1961) and the ousting of the Gang of Four from power, Chairman Deng Xiaoping was willing to consider market-based methods of economic growth so as to revitalise China's economy and find an economic system compatible with China's specific conditions. However, in doing so, he remained committed to the centralized control and the one-party state central to Leninism.
The socialist market economy was a concept first proposed by Deng Xiaoping in order to incorporate the market into the planned economy in the People's Republic of China, and later, to the Đổi Mới in Vietnam. Following its implementation, this economic system has supplemented the centrally planned economy in the People's Republic of China, with high growth rates in GDP during the past decades have been attributed to it. Within this model, privately-owned enterprises have become a major component of the economic system alongside the central state-owned enterprises and collective / township village enterprises.
There are some similarities to Western mixed economies, with some fundamental differences. The fundamental distinction between the Chinese and Western mixed-market economy models lies less in the implementation of the mixed economic model but rather in the degree of state-ownership and underlying authoritarian political philosophy, which eschews Western notions of democracy, individual rights, and the rule of law.
This type of economic system is defended from a Stalinist perspective which states that a fully developed socialist planned economy can only come into existence after first establishing the necessary and comprehensive commodity market economy and letting it fully develop until it exhausts its historical stage and gradually transforms itself into a planned economy (the Stalinist Two-Stage theory of revolution). Proponents of this economic model distinguish it from Market socialism: Market socialists believe that economic planning is unattainable, undesirable or ineffective, and thus view the market as an integral part of socialism, whereas proponents of the socialist market economy view markets as a temporary phase in development of a fully planned economy.
Read more about this topic: Socialist Market Economy
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