Palgrave Studies in History of Economic Thought recently published a book by Pervez Tahir, Making Sense of Joan Robinson on China. This text makes a must-read for anyone trying to understand how China became what it is today – a question particularly important in the context of how Chinese model of growth and welfare today continues to gain acceptance globally.

The book reveals how Joan’s own perception about China changed as she engaged more with the subject. She was clear that China will beat capitalists at their own game. She explained how growth in China was giving rise to some regions enjoying far better standards of living than others. She foresaw the challenge for the authorities i.e., to mitigate the growth of various forms of inequalities without curbing productivity – much needed to keep the overall job creation and growth process on track.

However, even in 1940s she had explained how the population growth rate will be a critical factor in determining the longer term economic outcomes in China. In her view socialism was going to lead to proportionally greater benefits for industry in China than the agriculture sector. This was to have implications for rural growth and welfare, even in modern-day China.

While in a controlled economy it was possible to put brakes on inflation, it was not always easy. Even in times when the output of grains plummeted, Joan thought that the secret to why China didn’t face prolonged phases of famines and deaths from starvation was in the way communes organised and provided social safety. Furthermore, there was an effort to ensure that demand in the economy didn’t grow at a pace exceeding the overall supply – a key to sustained development over longer periods without creating inflation.

Another remarkable achievement was ensuring that unemployment remained under check all the time. This was easier said than done as industrial enterprises were not allowed to behave in the traditional capitalist manner and set whatever prices they liked, the state instead ensured that prices should be determined in a manner that helps the goal of maintaining high levels of employment in the country.

A lot many variables went in to (centrally) determining the prices of intermediate and finished commodities. These decisions were helped by properly sequenced land reforms, industrial and commercial reforms, organizing manpower and technology, and trade. Therefore, Joan was clear that Chinese will need to find and maintain a system of prices which operates without any need for rationing or temptation towards black marketeering.

She was mindful that in order to achieve this goal substantial thinking had gone into how bureaucracy will function. The civil service in China was not only expected to perform its traditional role of public service delivery but also a critical role of managing the large private and state-owned enterprises undertaking production of various commodities.

In Joan’s view, reinventing the role of public service was a lesson from the dismal outcomes of Soviet Union model. She believed that that China’s “New Democracy” model (1949-52) was far superior in comparison to Soviet Union’s experiment of “New Economic Policy” of 1921. In China, while large and heavy industries were nationalized, pure private enterprise was also allowed to function alongside.

The private sector was also involved in sub-contracting where inputs were provided to public sector enterprises. Such co-existence of public and private sector allowed the authorities to ensure that factors of production and material resources were not left under-utilised.

Today, some Chinese civil service-led enterprises have grown into global conglomerates, many of whom are seen investing the world over under China’s Belt and Road Initiative. This aspect is worth studying further for Pakistani policy makers still trying to make choices regarding ownership and management of Pakistan’s 441 state-owned enterprises.

While losses of most of these enterprises continue to mount the government has been slow to decide which entities it wishes to retain, which to transfer to Sarmaya-e-Pakistan holding arrangement, and which to privatise. It will also be critical to find the answer to why Pakistan’s civil service often posted to run state-owned enterprises could not function in a manner that supported economic activity.

I would also like to turn to some learnings from Chinese labour market and how it functioned in the eyes of Joan Robinson. While capitalism was good at accumulating capital overtime, it fell short as a market system which could equitably distribute the gains (from accumulated capital). Joan had concluded in one of her papers in 1957 that the problem in poor countries is unemployment with low wages.

The poor have weak bargaining power, which allows employers to keep wages persistently low or in the event of dissent, simply hire from the pool of unemployed – signalling to the protestors that they are replaceable. In such a scenario Joan had concluded that key to growth in economies like China will not be to boost consumer demand but accumulation of fixed investment which in turn could continue to produce a considerable number of jobs.

To me, Pervez Tahir’s book is special on two counts: one is how it explains that Joan’s views in development economics were initially not regarded with respect. A lifetime of struggle led the world to understand and give weight to what she was suggesting. She was not the one looking for honours. Graduating at a time when Cambridge didn’t have a tradition of awarding degrees to women, she had to face several forms of gender discrimination during her time in academia.

Pervez Tahir makes an important remark on the discipline of economics and perhaps the way rigour is seen in this discipline. He informs us that Joan was not a mathematician, econometrician, or statistician – a quality often desired by modern-day schools of economics. However, she had the analytical ability which made it difficult to find gaps in her arguments. This discussion in the book is very inspirational and highly recommended for the young academics.

The other special aspect for me is the author’s own struggle to not only put Joan’s contributions and their relevance on paper, which I am sure students of development economics will find a fine reading, but more generally how the author had to accomplish his own analysis under some very testing circumstances. For example, the author notes the intellectual suffocation faced during times of dictatorship in Pakistan. He goes on to explains how students during his youth were revolting against the established order – ultimately leaving a deep impact on how this generation saw the world and their future.

It’s been almost 18 years since I first served under the able leadership of Pervez Tahir in the Planning Commission. Even in those days he used to direct us to study closely China and the Chinese model of poverty reduction. I sincerely hope that the present-day Planning Commission will also take this advice.