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For Western people, capitalism has offered a way better lifestyle than communism could. Even the East German fascist people rejected it after WWII, having to suffer the consequence of their factories being shipped to war ravaged Russia. I don't blame you for your cheering capitalism.

If you want to make this an Asian foot race for prosperity, I think China is better compared with India for size and poverty level before China went communist. Productivity, literacy, infant mortality rates, and general health all became much better in China than India under communism.

China was not following a Soviet model. The Soviet Union became revisionist after Stalin's death causing the rift with China. The Chinese communist revolution focused on the countryside peasants, encircling the cities. The Bolshevik's organized the workers. China was not following a Soviet blueprint dogmatically.

Besides the wealth of First World nations, I don't see Third World countries benefiting from capitalism all that much, the poor nations stay poor. With the resultant starvation, dysentery, and infant deaths all but ignored by the West.

Interesting. Though India was also quiet close to socialisms or statism (though not `communism').

"And, yes, Korea's south prospering while the north stagnated was also a cautionary example to the rulers of China." --- but not to the North Koreans, it seems.

"Democracy Wall" writers in this transition period referred to the example of Taiwan as a basis for criticizing the Communist Party regime in China.

So China had no choice but to loosen economic regulation and tacitly reject orthodox Marxist-Leninist-Stalinist-Maoist doctrine to catch up to Taiwan.

I agree with the original article's limited claims about market reforms, but since you seem to reference more than economic reform:

China only made the market reforms, and politically, Taiwan was still at the time, an authoritarian, one-party Leninist state. Many Chinese Communists were former members of the Kuomintang and their similarities weren't just superficial; they both learned their bag of tricks--propaganda, how to organize their party-state-military structure, how to suppress dissent, how to control the larger population--from the Soviets. To this very day, Taiwan still has political military officers stationed at all public high schools and colleges (though thankfully their role has changed a lot). If Taiwan was showing China anything, it was that they could keep around the party and the authoritarianism and open up their markets at the same time. As you are well-aware, martial law wasn't lifted until 1987 and Taiwan wasn't even really anything you could even nominally call democracy until the 90s.

So basically 1) Taiwan was still Leninist and 2) I don't get what the Democracy Wall writers are inspired by when Taiwan wasn't a democracy then.

Ironically, one foundation for economic prosperity in Taiwan was the land reform the Kuomintang copied--although they would not admit it--from the Communists and implemented after they occupied Taiwan after World War II. They forced all the big landlords at gunpoint to trade in their land for largely worthless stock in state-owned companies. Prior to that, much of the population were landless tenant farmers. The possibilities for entrepreneurship change quite a bit when you go from being a tenant farmer to a small time farmer with your own land.

You are correct that

1) Taiwan was a dictatorship at the time China made its economic transformation (I lived there at the time)

and

2) Taiwan's land reform was forced on the landlords.

But I have studied the history of the Taiwan land reform from several sources, and it wasn't based on a model copied from the Communist Party of China. As you wrote, "The possibilities for entrepreneurship change quite a bit when you go from being a tenant farmer to a small time farmer with your own land." That end result is quite a bit different from what happened in China.

Responding to pg above, the political control that the KMT had in the late 1970s is why Taiwan, even more than Hong Kong, was a model for China's loosening of control on the economy while keeping control of politics. But even in the late 1970s, while Taiwan was literally a Leninist dictatorship under the KMT, it was already a much freer place with much more rule of law than China was until much later (or has ever been in my lifetime?). And that is what inspired Democracy Wall writers as early as the 1970s, not only Taiwan's prosperity. Taiwan did make a transition into full multiparty democracy during the 1990s (and I saw several elections while I lived there around the turn of the last century), and that is a transformation the Communist Party of China still fears and resists. But maybe that will be the result of peaceful evolution of the political-economic system of China soon, on the model of most neighboring countries.

Fair enough--I should have said inspired by rather than wholesale copied. I do see a remarkable parallel there between the KMT having lost one country due in part to extreme economic disparity, redistributes wealth to maintain control in a second; and the later economic disparity you eloquently describe between China and Taiwan that inspires the reverse.

I bet Hong Kong was also an influence.

Hong Kong is perhaps the best modern case study of relatively free capitalism in action. In just a quarter of a century, a poor country with few natural resources raised its standard of living above that of the UK, its colonial parent.

There's an old story that once, in a meeting, Milton Friedman was chastising Sir John Cowperthwaite, Hong Kong's Financial Secretary, for not collecting the economic statistics that Milton and other economists wanted. Cowperthwaite replied that the omission was intentional; he knew that if he collected the data, the bureaucrats back in the UK would see the numbers and expect him to do something about them.

I think the opium trade may have had something to do with that (and with the wealth of Macao as well).

Slight statistical effect though - it was a small place that had concentrated banking/shipping etc. The average income of the city of London (the financial centre) is higher than the average for the UK - that doesn't mean the solution is for the rest of the country to build banks on all the farmland.

Right. What works for Hong Kong, Macau, Singapore, the Isle of Man, and other low tax city states just does not work for the rest of the world--it doesn't scale.

Exactly. Regulatory arbitrage doesn't work if everyone shares the same regs.

Taiwan and Hong Kong (and the other two "Asian Tigers", South Korea and Singapore) were favored trading partners with the US during their economic rise, in the hopes that China would notice their booming economies and abandon strict communism. The US helped Taiwan out with billions of dollars of loans and financial aid for exactly this reason.