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A Theory of Market Transition: From Redistribution to Markets in State Socialism
Abstract
State socialist redistributive economies are characterized by the allocation and distribution of goods through central planning. This paper develops a theory of market transition which argues that, in reforming socialist economies, the transition from redistributive to market coordination shifts sources of power and privilege to favor direct producers relative to redistributors. The shift improves incentives for direct producers, stimulates the growth of private markets, and provides to entrepreneurs an alternative path for socioeconomic mobility. A set of hypotheses test the market transition theory with household- and village-level data.
... Social transition theory suggests that social transition brought about by market transformations includes market incentives, forces, and opportunities. The social transition will generate the appreciation of human capital and open up new channels of social mobility for Chinese residents, which will directly affect changes in individual employment and social mobility and may make individuals wait for more health resources, which affects the health and health equity of Chinese residents (5). ...
... The rapidly growing economy has positively impacted citizens' health, with indicators such as life expectancy and neonatal mortality moving in a healthier direction and increased income from economic growth, leading to a more optimistic attitude toward life and positively impacting health (14,15). According to Nee's theory of social transition, social transition consists of market incentives, market power, and market opportunities, which, at the individual level, correspond to employment units, political capital, and social mobility (5,16). ...
... Public services will tend to improve, which predicts that the health level of citizens will continue to grow with social transition. Social transition theory suggests that China's market-oriented reforms have changed the political rights-oriented resource allocation mechanism in favor of "direct producers, " who actively participate in the market, and have weakened the privileges of "redistributors" (5). The impact of social transition on the SRH of Chinese residents is primarily manifested in three aspects: First, market transition, represented by market-oriented reforms, has provided more opportunities for higher education and continuing education, improved the self-knowledge and selfmanagement abilities of Chinese residents, and enhanced their health literacy, which is conducive to the maintenance of a healthy state of life. ...
Background
Social transition is one of the multi-level mechanisms that influence health disparities. However, it has received less attention as one of the non-traditional social determinants of health. A few studies have examined China’s social transition and its impact on health inequality in self-rated health (SRH). Therefore, this study explores the impact of China’s market-oriented reforms—social transition and socioeconomic status (SES)—on residents’ SRH.
Methods
Using the cross-sectional data from the Chinese General Social Survey (CGSS) in 2017, we analyzed the effects of social transition and SES on the SRH of Chinese residents using the RIF (Recentered influence function) method. The RIF decomposition method investigated health differences among different populations and their determinants.
Results
Social transition and SES have significant positive effects on the SRH of Chinese residents. The correlation between SES and the SRH of Chinese residents is moderated by social transition, implying that social transition can weaken the correlation between SES and the SRH of Chinese residents. The impacts of SES and social transition on SRH vary across populations.
Conclusion
Promoting social transition and favoring disadvantaged groups with more resources are urgently needed to promote equitable health outcomes.
... It has always been controversial whether the emerging market mechanism or persistent political power determines the allocation of social resources, including housing, after the market-oriented reform. Market transition theory argues that since enterprises rely on abundant human capital to make profits, socioeconomic attributes consisting of educational level and occupational skills determine people's bargaining power in the labor market and thus have a decisive impact on their quality of life (Nee, 1989). Power persistence theory proposes that the political power derived from the socialist system and based on political identity and type of work-unit has not been weakened and can be transformed into economic advantage in transitional societies (Rona-Tas, 1994). ...
... Therefore, the socio-spatial sorting of housing is becoming increasingly prevalent in urban China (Li & Huang, 2006). This seems to be in line with market transition theory, whereby the role of political power in the allocation of social resources, including housing, is eventually replaced by market mechanism (Nee, 1989). ...
... Both parental and respondent's own socioeconomic status and political resources are the main independent variables, touching on the market and institutional logics of housing differentiation. Market transition theory assumes that returns to human capital would continue to rise under the performance principle of the market mechanism (Nee, 1989). According to this logic, people with higher socioeconomic status could have access to better quality housing. ...
Parental support increasingly influences young people’s housing outcomes. Using OLS models, this study examines the relative effects of parental and own socioeconomic status and political resources on young homeowners’ housing quality and their temporal dynamics in Beijing, China. We find that the market transition theory has explanatory power for both generations. However, the socioeconomic status of parents outweighs that of young homeowners in influencing their multifaceted housing qualities. These housing qualities are also positively associated with parents’, but negatively with the young homeowners’ political resources. This
indicates power persistence theory does not stand for the younger
generation, but parental political advantages derived from the
socialist system are remanent in shaping contemporary youth’s
housing stratification. The more recent the acquisition of homeownership by young adult children, the stronger the positive influence of parental attributes, but the weaker the influence of the
younger generation’s own attributes. This demonstrates the intergenerational reproduction of housing stratification and socio-spatial inequality becomes more pronounced as housing affordability
declines.
... In 1973, the environment protection leading group of the state council was established as a state-level environmental protection agency, and since then environmental capital construction has been included in the national budget. The central government's focus was on vigorously developing the economy to improve social welfare, during this period, it delegated financial and most administrative powers to local governments (Vivian Zhan, 2009).In this period, except for public affairs that are fundamental to the country's livelihood, such as national defence and resource-based enterprises, other public affairs were devolved to local governments, so that local governments received fiscal and tax incentives and political promotion incentives, and had room to choose and compete in their public affairs governance strategies (Nee, 1989). This phase gave local governments more power and capacity, resulting in poor implementation of some central policies at the local level, environmental policies being one of them (Li, 2020). ...
In recent years, the Chinese government has initiated assertive centralization efforts in its approach to environmental governance. However, the efficacy of these initiatives demonstrates marked variability across different sectors. While the central-local relational framework has traditionally been employed to elucidate these disparities, its explanatory power is showing signs of strain. This paper, through policy analysis and field interviews, investigates regulatory conflicts in land use for ecological and agricultural purposes within China. The findings highlight instances of overlapping jurisdictions and discordant policy objectives among agencies responsible for delineating ecological spaces and agricultural zones. While these conflicts seem to stem from the dynamics between the central and local governments, they more accurately reflect the inherent characteristics of fragmented authoritarianism. This paper aims to expand the theory of fragmented authoritarianism by incorporating the dimension of inter-departmental competition into environmental governance, moving beyond the traditional binary analysis framework of central-local relations. It seeks to understand and critique its limitations from a broader perspective, emphasizing the role of departmental competition within fragmented authoritarianism. By analyzing this internal mechanism, the paper reveals a more nuanced governance landscape, essentially replacing the traditional central-local paradigm with a model that situates departmental competition within the overall context of fragmented authoritarianism. We propose two models for delineating competition among governmental institutions: the bureaucratic model and the charisma model, thereby advancing and deepening the application of fragmented authoritarianism theory in China’s environmental governance. This provides new theoretical insights for understanding the current challenges and developments in China’s environmental governance.
... Political dynamics and shifting party priorities undoubtedly played crucial roles in reshaping China's ideological landscape (Wang 2002;Yan 2021), yet there are good reasons to think market transition has also been a major driver of rising materialism. First, market transition entails a fundamental redefinition of the relationship between the individual, the state, and society (Nee 1989;Tang and Parish 2000;Yan 2009). Before the reform, nearly all productive assets had been nationalized, and Chinese citizens were subject to strict government control with little economic freedom. ...
This study examines how markets affect personal culture in the context of postsocialist China. Drawing on several bodies of literature, I argue that China’s transition to a market economy promotes materialist values via two causal pathways. First, market transition entails a process of economic liberalization, which accentuates economic incentives and exacerbates existential insecurity. Second, market transition also entails a process of commodification that, by immersing individuals in market relations, crowds out intrinsic motives and normalizes the pursuit of material self-interests. My empirical analysis uses repeated cross-sectional data from a large-scale national survey to demonstrate the effect of market transition through the lens of work values. Taking advantage of China’s regional variations in the pace of institutional change, I show that, between 2005 and 2015, provinces where market transition had made greater progress tended to experience a sharper rise in materialist work values. Additional analyses reveal significant differences in work values between state-sector employees and workers in the market sector, and that the relationship between market transition and materialist values extends beyond the work domain. These
findings contribute to the theoretical literature on the cultural consequences of markets and the empirical knowledge on cultural change in contemporary China.
Despite income inequality in China being a heated topic in scholarship and public discussion, little research has explored the trend in income inequality since the mid-2010s or focused on the implications of household assets on income inequality. Using pooled cross-sectional data from the Chinese General Social Survey, we estimate income inequality at the household level from 2012 to 2021 and further examine the effects of two types of household assets (housing assets (HA) and financial assets (FA)) on income inequality in urban China, as well as the moderating effects of socioeconomic status (SES) and regional marketization. The results indicate that national income inequality was sustained at a high level between 2012 and 2021, while income inequality in urban households was higher than that in rural households. Both HA and FA were positively related to income inequality, and the latter assets had a stronger effect on income inequality. The association between the two types of household assets and income inequality strengthened along with an increase in family SES and regional marketization levels. The study highlights that FA, relative to HA, are a more important contributor to income inequality among urban households, thus extending the literature on inequality and social stratification in contemporary China by revealing the causes underlying rising income inequality from the household assets perspective.
"Internal labor markets" take different forms in the capitalist and the socialist firm as the distinctive organizational problems in each economic system produce differing but comparable institutional solutions. Analysis of systemic uncertainties and the organizational responses of workers and managers yields a comparative model of mirrored opposition: in economies in which the firm operates in a market environment, systemic uncertainties regarding labor are reduced through internal bureaucratic rules operating according to a classificatory logic. In the socialist economy, by contrast, where systemic uncertainties are produced by a bureaucratic environment, the firm responds through internal market transactions based on affiliative ties. The market-like character of these internal mechanisms is brought into even sharper relief in an analysis of the recent establishment in Hungary of semi-autonomous subcontracting units inside the enterprise.
This paper examines the informal economy and its relationship to commonly held theories of industrial development. Although these theories stem from very different intellectual traditions, their general assumption has been that widespread informal economic activities are primarily a feature of Third World economies, in which they function as a refuge from destitution; such activities are presumably destined to desappear with the advance of modern, industry-led growth. Evidence is presented that indicates that these assumptions, including the identification of informality with conditions in the less developed countries, are wrong. Alternative interpretations of the resilience of these activities in Third World countries, despite rapid industrialization, and their continuity and apparent revival in the advanced economies and discussed.
Although Weber distinguished sharply between "class" (an individual's market position) and "status" (participation in a collectivity bound together by a shared status culture), only measures of the former have been included in most empirical analyses of the stratification process. In this article a measure of status-culture participation (or cultural capital) is developed from the responses of men and women interviewed in 1960 by Project Talent. Questions tapped a range of high-cultural interests and activities. Analyses of data from a follow-up study 11 years later show significant effects of cultural capital (with appropriate controls) on educational attainment, college attendence, college completion, graduate attendance, and marital selection for both men and women.
Before 1978 in China, the economic institutions for agriculture and industry operated essentially under a centrally planned
system. The reasons for a change toward a more market-oriented economy and the key elements of economic reform are discussed.
Today the major issues being deliberated by the leading economic officials include reform of the price system, the administrative
structure of state-owned enterprises, the banking system and macroeconomic control mechanisms, and foreign trade and investment.
The Economy as Instituted Process Pp. 243-69 in Trade and Market in Early Empires
- Polanyi
- Karl
Polanyi, Karl. 1957a. "The Economy as Instituted Process." Pp. 243-69 in Trade and Market in Early Empires, edited by K. Polanyi, C. Arensberg, and H. Pearson. Glencoe, IL: Free Press.