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Chongqing: Equitable Development Driven by a “Third Hand”?

author Philip C. C. Huang publish : 2011/11/12 16:00:00   hits :  15278
Chongqing’s experience suggests that while Janos Kornai is surely correct
about shortage in a planned economy, he is mistaken that market signals
may only be employed under an economic regime of private property.
Chongqing has called instead on government-owned firms, and their market
earnings and appreciation, to fund social equity programs and infrastructural
construction. This “third hand” is different from Adam Smith’s “invisible”
first hand, which, on the basis of rational individuals pursuing their own
interests, supposedly generates a self-regulating and optimizing market
economy; it is also different from the second hand, by which the state
engages in a variety of interventions in order to perfect the functioning of
such a market economy. Its main actors are state-owned and not privately
owned enterprises but, unlike earlier state enterprises, it strives not for
the profit of the enterprise but rather for social equity and public benefit.
It in fact at once challenges and utilizes the other two hands. Though stateowned,
in the context of China’s current political-economic system and
the globalized economy, this third hand does not behave like a monopoly;
rather, it must compete against the other two hands, and not only against
other localities within China but also other nations and economic entities
outside China. Only if it succeeds in driving economic development under
such competition can it become a “model” with wider application in China
as a whole. And only thus can it, in a globalized economy dominated by capitalism, establish equitable development as a realistic alternative. Thanks
to the Chongqing “experiment,” the question is no longer just a theoretical
or ideological one, but one of observable and evolving realities.

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