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A Very Coasian Revolution

After Mao’s death, when members of the elite were able to travel abroad, they concluded that they had gotten something terribly wrong. Socialism was the best economic system, but their implementation had left China desperately poor. In trying to solve that puzzle, they got one crucial thing right—facts trump theories. The way to fix socialism was to experiment with many different approaches. The result was a series of reforms mostly unplanned, in some cases illegal, but tolerated because they worked. Their success eventually convinced the leadership to shift to an economic model controlled primarily through the market.