Political exchange in mass party regimes and the transition from socialism

This paper contrasts the east European and the Chinese routes of exit from the Soviet-type economy and argues that a communist regime, if it is to remain in power, cannot renounce state ownership or control of large-scale industry and party control of managerial appointments, careers, and incomes: these two features make up an enforceable, efficient contract for political service in a monopolistic political market. These features were abandoned in the European route and preserved in the Chinese route because of the average versus modal character of party representation and membership in the two groups of countries, so that the modal nature of the Chinese party is the key to the regime's survival and success under market reform. The approach also explains the failure of Gorbachev's attempt to export the Chinese model to the Soviet Union in the form of perestroika.