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China just followed the Soviet Union model and inevitably encountered the same problems that socialist countries all suffered in the 1950s and 1960s. That is the lack of incentives of people and the waste of resources which are closely explained in János Kornai's book: The Socialist System The Political Economy Of Communism.

Mao realized the shortage of the planned economy and mobilized the population to conquer the difficulties but it backfired and led to two disasters: The Great Leap(including the following famine) and the cultural revolution.

Did he have the only option? Why there would be no better solutions for him?

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    I think the question is not really answerable, at least not without holding a seance to summon up the ghost of Mao. Of course there were better solutions (as proved by China today), but they would have involved abandoning Communism. Even if Mao could have seen this (something that might equate to a religious conversion), doing so without convincing his fellows might have led to his overthrow. “He who rides a tiger is afraid to dismount.” – jamesqf Jan 22 at 20:05
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    There was the en.wikipedia.org/wiki/New_Economic_Mechanism in Hungary which introduced a limited amount of market economy. Probably too capitalist for Mao though. – user2414208 Jan 22 at 23:45
  • @jamesqf I wonder if I am right that China is not a socialist country now? – JLL Jan 23 at 0:43
  • "just" "inevitably" "Mao as a determinate individual". No basic research conducted, not a historical question. – Samuel Russell Jan 23 at 6:22
  • @ZLn: That would depend on just how you define "socialist" - that covers a pretty broad spectrum. But it certainly is not Communist. – jamesqf Jan 23 at 18:09
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I learned from China Under Mao: A Revolution Derailed that there are three solutions to the drawbacks of a socialist economy:

  1. rely on the experts and scientific management;
  2. import market as a supplement to the planned economy;
  3. use political mobilization and promote party leadership and hard work

Mao chose the third one because

  1. he had tried that in Manchuria and won the civil war against the Nationalist;
  2. the first approach may need the party to yield/cede authority to the technical specialists;
  3. the second approach would provide the educated elites a ladder to their positions, threatening their status finally. (refer to this case)
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  • But none of those three "solutions" actually work. So either Mao wrongly thought his "solution" would work, or he chose it because it was the best way for him to hold on to power. – jamesqf Jan 23 at 18:13
  • To import something, you need to export another thing. China indeed exportet grain - million of tons of it - during the great leap famine. – mart Mar 19 at 7:39
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    Oh and interesting aside (irrelevant for China): The soviet union loved US style large mechanized farms and imported lots of knowledge. It just didnt work very well (neither US nor SU had a very efficient agriculture during the 20ties, 30ties) - see James Scott seeing like a state. The "scientific" management and engineering style of large capitalist farms where seen as non threatening by the party. – mart Mar 19 at 7:44
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    @mart Thanks for your book recommendation. I will read that. – JLL Mar 19 at 12:44

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