Centralization versus Decentralization in Mainland China and the Soviet Union

Abstract

In both Communist China and the Soviet Un ion, one of the major problems facing the leadership is how to ensure that farmers and factory managers act in accordance with the dictates of the central plan. To accomplish this aim, they have at their disposal two types of controls. These are centralized controls, which rely on direct orders to the pro ducing units, and decentralized controls, which either operate through the market mechanism or, as is often the case in China, through the Communist party apparatus. Although both coun tries rely more heavily on centralized controls than their free- enterprise counterparts, there is a greater tendency in China to experiment with various forms of decentralization. In the ag ricultural sector, this is the result of the much lower per capita income and the comparative surplus of labor which exist in Mainland China. In industry, it is a result of the relatively greater importance and large number of small-scale industries using disparate and comparatively primitive technology. The Soviet Union, in contrast, has stuck closely to centralized con trols even though this has become increasingly difficult as the economy has become more complex.