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.