Economics and politics of the great change: Mikhail Gorbachev versus Deng Xiaoping

Abstract

In the history of mankind, there has never been a case where, in a brief episode of the life of one generation, mutual economic relations have changed on such a large scale for so many people as they did in China and Russia in 1989-2020. Both countries are undergoing profound structural and institutional changes, but while the former recorded impressive results in terms of developing and catching up with advanced economies, the latter’s achievements have been very modest. While China has multiplied production to become a world economic power, Russia's economy has grown modestly and plays a minor role in the globalization process. In just a few years, the level of production and the standard of living of the Chinese population will first equalize and then exceed the level achieved by Russia. This happened due to many factors – from the traditional cultural heritage to geopolitical conditions, from the legacy from the previous state socialism to different natural resources bases – however, the nature and duration of the political leadership of Deng Xiaoping in China and Mikhail Gorbachev in Russia were of fundamental importance. Without taking into account the influence of the thoughts and actions of these two statesmen, it is impossible to understand the essence of tectonic changes that have occurred in the world economy recently. While Deng Xiaoping prioritized pro-growth-oriented economic reforms, while doing little in the realm of political liberalization, Mikhail Gorbachev attempted to combine political and economic liberalization, but failed to do so. The effects of decisions made several decades ago are still felt today. Evidently, Deng Xiaoping's approach proved to be more effective than Gorbachev's reforms. In the latter case, they took Russia and other post-Soviet republics in a completely different direction than that assumed by their architect.