WSJ Reviews Coase's 'How China Became Capitalist'
Ronald Coase ranks among the world's most influential economists, yet he rarely appears in the media spotlight. That's because he channels his influence through other economists, while maintaining a prudent distance from the glare of quotidian policy disputes. Mr. Coase, who received the Nobel Prize for economics in 1991, has originated some of the most important economic ideas of recent years. These include the eponymous Coase Theorem, which states that strong, precisely defined property rights can reduce the social costs of private transactions. He has also pioneered the law-and-economics field, using economic insights to illuminate legal problems. He's 102, yet his intellectual output remains dazzling.
In "How China Became Capitalist," Mr. Coase and Ning Wang, an assistant professor of global studies at Arizona State University, offer a "historical narrative of the chain of actions" that brought about China's remarkable transformation from a deeply impoverished socialist country to the world's second-largest economy.
Yet to describe the book simply as "historical narrative" would be a misstatement. Messrs. Coase and Wang interpret China's rise in terms that are distinctly different from what has been accepted as conventional wisdom, which holds that China's dramatic rise has resulted from astute guidance by its Communist Party leadership. But as the authors demonstrate, China's dramatic economic growth over the past three decades hasn't been a top-down process engineered by party leaders in Beijing. Instead, China's rise has been a bottom-up process driven by what the authors call the "four marginal revolutions."