Animal Spirits, Princeton by Akerlof and Shiller

By Akerlof and Shiller

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After the abolishment of the state monopoly system, the “dual-track system” for grain prices formed, combining both state-set prices and market prices. In terms of real results of these reforms, in 1985 many localities had not implemented reforms to convert from coercive purchasing into contract purchasing, as conditions were not yet ripe. The primary reason for this was that there was a great drop in Chinese grain yields in 1985, and market prices for grain grew over 10%, which caused market prices to be significantly higher than contractually-set prices.

3 23 Agriculture in China for the 30 Years Prior to Reform and Opening In 1949, when New China was founded, the country faced an economic system constituted primarily of peasant agriculture and with little accumulation. In order to accelerate the development of industry, particularly heavy industry, and achieve the goals of catching up to and exceeding developed economies as quickly as possible, it was necessary to concentrate agricultural surpluses to the greatest extent possible, achieve accumulation rates of 12% or higher, and reduce labor and material costs for industrial development to the greatest extent possible.

This demonstrates that per capita grain shares were not fixed and unchanging. As 80% of China’s LuC is used to produce grains, and at least 20% of all LuC is unreported,11 in this book I have assumed that total area of LuC is equivalent to the area of land planted with grain. Henceforth I shall not make any adjustments upward or downward. 1 China Still Possessed Comparative Advantages in Agriculture During This Period Most assessments of agricultural productivity are made in light of natural conditions, land quality, laborer skills, technical levels, and so on.

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