1.8 ndian onom
economy, Lange was suggesting just the same in There were many states of the world that opted
the case of the state economies. Democracies are for a mixed economy in the post-Second World
flexible thus they were able to go for an experiment War period after coming out of the colonial rule,
which paid them in coming times. But as the such as India, Malaysia, Indonesia, etc., to name
socialist and communist political systems had a few. The leadership of these countries could be
been stubborn by nature, they did not go for any considered visionaries which was to be proved by
experiment and thus started moving towards their the mid-1990.
economic decay. Though at a practical level, the world looked
It was in communist China, under the flat for the mixed economy model, a formal
leadership of Mao Tse-tung, from where the first opinion on the goodness, immediacy and the
opinion came against the total state economic ultimate viability of the mixed economic system
control. The ultimate example of the state was yet to emerge. The first such authoritative
economy (i.e., China) started its preparation opinion, in this direction, came from the World
towards a limited market economy under the Bank (WB) which accepted the goodness and
political design of dictatorship. In 1985, China the need of ‘state intervention’ in the economy.4
announced its ‘open door policy’, the first This was a turning point in the world economic
experiment in ‘market socialism’—Lange had the thinking as the World Bank and the International
last laugh. Other state economies, though caught Monetary Fund (IMF) were ardent votaries of
unprepared, followed the Chinese experiment virtues of the free market economy.
towards market socialism. However, the switch The concluding consensus emerged with the
over to market socialism has not been smooth for publication of the World Development Report
most of the state economies. The efforts towards (1999) titled Entering the 21st Century in which
market socialism in the Soviet Union, fuelled by the the WB said, “Governments play a vital role in
lofty ideas of ‘glasnost’ (openness) and ‘perestroika’ development, but there is no simple set of rules
(restructuring), resulted in the very disintegration that tells them what to do.” The WB went on to
of the nation-state. The experts consider it ‘a suggest that every country should determine the
political fallout of an economic mismanagement’. areas and the extent of the market and the state
The other state economies experienced major intervention, depending upon its own stage of
economic breakdowns in their transition phases to economic development, socio-political and other
market socialism. Basically, for smooth transition historical factors.
to market socialism some prerequisites were
The last WB document had basically rejected
required to be put in place aforehand. China was
both the historically existing economic orders,
well ahead doing this homework since Mao’s time
namely the free-market economy, and the state
(specially since 1975 onwards) which emerged
economy—which meant Adam Smith and Karl
as a real winner—the ideal type example of state
Marx were cancelled and rejected outrightly, that
economy getting smoothly metamorphosed into a
too on the basis of the historical experiences of
giant market economy.
both the worlds. Rather, the document advocates
These two events spanning many decades for a ‘mixture’ of both the economic orders, i.e.,
were nothing but timely and rational selections the mixed economy. The long-standing ideological
of economic traits from each other’s economic dilemma as to whether the market economy or the
systems and experiences. The world by the late
state economy was the better or the best way of
1980s was having neither a pure example of
capitalistic economy nor of a state economy. 4. The East Asian Miracle, W.B. Study, 1993.