Nothing affects the life of a child so much as the unlived life of its parent.Carl Jung (1875–1961)
If one examines rapid progress period of developed economies, one finds that these economies started them mostly from poverty and low education with social and political order. Before WWII, German and Japanese economies were growing from poverty and low education. After the war, the two economies grew swiftly from poverty, even though human capital was not totally lost in the war. They had social and political stability under American protection. The USA, great as it is today, was built by poor and uneducated immigrants of low social status from their original countries. This is true for Australia, Canada, and New Zealand. Before WWII, the modern industrial economies became developed in association with colonization. The colonization played an important role for social and political stabilities as “trouble-makers” in their own countries could make fortunes in other lands. Wars might also help political and social stabilities. Singapore, Hong Kong, and Taiwan were developed by immigrants of low social status in their original provinces back in mainland China. They enjoyed relatively orderly social and political reliable environment under Western powers. South Korea had swift growth after being liberated from a colonized state and subject to American protection. China’s initial state was poverty and low education with social and political stability and order under a single party’s control.
When Chairman Mao was passing, Chinese people were not only poor, but also had no dream to become rich; they were not only lowly educated, but also had no hope to receive any formal higher education. Mao created a worst type of poverty: no hope for a better life. China has experienced meteoric improvement in national economic conditions since it launched the economic reform and opened to global markets in 1978. The per capita GDP jumped from $100 in 1978 to over $10,000 in 2019. Eight hundred million people made a great escape from poverty. By 2018, China was the world’s second-largest economy from its 10th position in 1978 with its 9% average annual growth rate of GDP in the previous four decades. Its share of the world economy rose from merely 2.7% to 16%.
A great challenging question in the history of civilizations in general, and economic development in particular, is why China could have achieved such rapid economic progress with the one-fifth global population and little resource (in terms per capita) from the bottom of the world (in terms of per capita income and per capita higher education received). The Nobel Laureate in Economics, Coase, jointly with Wang claim: “It will take us decades, if not centuries, to fully explain why China became capitalist the way it did, resolving all intriguing puzzles.” (Coase and Wang 2012: 202). There is perhaps no precise solution of the black swan event. But it is worthy to study China’s economic reform as Fernand Braudel (1902–1985) points out: “Everything must be recaptured and relocated in the general framework of history, so that despite the difficulties, the fundamental paradoxes and contradictions, we may respect the unity of history which is also the unity of life.” China’s economic proliferation is a short period of China’s history, but an exciting one. It is the bifurcating point into modern social and economic structure from the traditional one.
The Chinese economic structure has experienced catastrophic changes due to a well-known idea in the ocean of economic knowledge—market mechanism. Traditional economic theory cannot explain how a “trite” political economic idea can lead to an unpreceded change in human history. This kind of change needs modern chaos theory or theory of complexity to rigorously explain. Chaos theory mathematically exhibits how a small change can lead to dramatically structural change. “Mathematically” implies that the theory demonstrates rigorously not only beautiful phenomenon, but also, perhaps more importantly, the mechanisms controlling the system, the structure, and the status under which the phenomenon is observed. Traditional Newtonian natural science and neoclassical economics predict that a small change can only result in small changes. Traditional sciences cannot explain structural changes with small exogenous changes. Chaos theory demonstrates how a butterfly flaps its wings in Okinawa may subsequently cause a storm which ravages Japan. A touch of a friend’s dog in a small town may cost many human lives and originate a global economic crisis due to virus diffusion. Sources of structural changes in human societies are not necessarily big shocks such as revolutions, storms, nuclear bombs, earthquakes, great liars, and great politicians. Revolution, even if it succeeds in the destructive purpose in the short term, often does not lead to permanent structural changes in the long term. There are plenty of examples that a society, or an industry, or an organization experiences structural changes due to seemingly unimportant events. The chaos theory also tells why so many economists in the world who have been trained and done research so many years and are equipped with most advanced mathematics, valid data, and computers can predict only these phenomena which people without professional training roughly know. This is similarly for weather forecasting. An old man should know what it means the best doctor is oneself. Young people do not need sophisticated doctors if they catch a cold; old people with complicated health problems can hardly find a useful one among many well-trained doctors. Politicians should do little in improving economic performances if an economy is in healthily growing stages; politicians often worsen economic performances if the economy is in deep troubles. Chaos theory help us to understand the complexity of nonlinear dynamic phenomena.
The most intellectually challenging question about the butterfly effect is not the unpredictable and amusing phenomenon, but the complexity of structure and preconditions under which a nuance brings about large-scale changes. A butterfly must flap at the right time within the right structure, and at the right state of the system to generate the big effect. Political economic ideas for improving human societies are abundant and applied in varied parts of the world. None has brought about the butterfly effect in scale, scope, and speed as Deng’s idea about economic reform in entire human history. In fact, Deng had once advocated the idea in the 1960s, together with his superior Liu Shaoqi (1898–1968). They were together labelled in the late 1960s as China’s foremost “capitalist-roaders”. Their idea was proposed at the wrong time, even though China’s socioeconomic structure in the 1960s was the same as in the late 1970s. Deng’s early application of market mechanism to China’s reality had no great impact on China’s economic advancement. He had to wait for fortunes before switching China’s modern path of development to the track of rapid economic progress.
Liu Shaoqi—the Chairman of the People’s Republic from 1959 to 1968—deemed that a limited market economy and the retention of private ownership (which is the idea that Deng practiced after 1978) is not against socialism and should promote socialist development. The basic idea was what the CCP (Chinese Communist Party) now calls market economy with Chinese characteristics. Liu, rather than Deng, is still considered by some Chinese as the pioneer of market economy in the New China. Liu and Deng failed to introduce market mechanism to Chinese economy due to the wrong time within the same economic structure as in 1978. Mao Zedong was China’s most powerful man and he had no concern about market economy. Under Mao’s leadership, China remained poor in terms of per capita income and lowly educated. Mao had begotten the structure and state for Deng’s butterfly effect.
A great success of man occurs as a combination of his character, efforts, and fortune. Talent, diligence, and virtue do not lead to great fruits if no fortune falls. After the death of Mao (who never lived in an industrializing economy except the short visit to Russia), Deng (who experienced 5-years “hard-work and frugal study” in many parts of France) was the right person with the belief in market economy and in the nation’s top position to bring about the socioeconomic structural changes in the New China left behind Mao.
Mao as the Leader of China from 1949 to 1976
Many are stubborn in pursuit of the path they have chosen, few in pursuit of the goal.Friedrich Nietzsche (1844–1900)
Mao Zedong (1893–1976) was the founding father of the New China. He became the national leader after his forces defeated the Nationalist government and forced Chiang Kai-shek’s government to withdraw to Taiwan. He ruled the country as chairman of the CCP from its establishment in 1949 until his death in 1976.
Mao was born in the village of Shaoshan in the Hunan Province of China. He was brought up by his peasant father and Buddhist mother. His family was fairly well-to-do. He received Chinese classics education. He attended his village’s primary school at the age of eight, focusing on Confucian classics. He then worked in his family farm at the age of thirteen. He soon went to study in a neighboring county and then moved to a secondary school in Changsha at the age of 17. In the capital city of the province, he got some Western ideas. He joined a unit of the revolutionary army for 6 months as a soldier. Then he began to study at a Hunan Provincial library on his own. He read the Western works by, for in...