Management and Organization in Chinese Industry: From Mao to Deng

This paper compares Maoist with Dengist approaches to industrial management and organization. The Maoist model emphasizes selflessness and collectivism, but failed because of an inconsistency between means and ends, and the insurmountable problem of asymmetric information on motive. In contrast, the Dengist model emphasizes individualism, is consistent between means and ends, and will enable widespread increases in living standards in the short to medium term. In the long run, however, it is likely to lead both increases in income inequality and stagnant living standards for low income earners. A compromise model based on self-interested cooperation is likely to reduce income inequalities and allow a continuous rise in general living standards. The disadvantages of this model are limited labor mobility, and extensive and intrusive collective labor discipline.