After the late 1970s China slowly moved away from totalitarian, command economy communism. It moved towards a nationalistic, state-guided, bureaucratic market economy, with a high emphasis on harnessing individual entrepreneurial energies within a collectivist framework. The reforms harnessed the potential latent in the old system and set in motion a virtuous circle of growth out of the command economy. China became ever more powerful internationally. In Russia, the reforms quickly destroyed the old state apparatus, but failed to construct an effective successor state. They allowed the creation of a highly unequal and deeply disorienting process of primitive capitalist accumulation. The resulting inequalities in asset ownership will fix the parameters for economic life for many decades to come. The reforms caused a disastrous decline in investment and industrial output, setting in motion a vicious circle of economic collapse. Russia became ever weaker internationally, to the point that its policies were constructed at the direct instruction of the major international capitalist institutions. In the brief space of just a few years it had been humiliated and broken as a great power.
KeywordsAsset Ownership Communist Country Virtuous Circle Reform Period Fiscal Capacity
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