Privatization of Industrial Enterprises, 31st Dec., 2010.

Ronald I. McKinnon has an article in the American Economic Review, titled "Spontaneous Order on the Road Back from Socialism: An Asian Perspective."

Virtually spontaneous liberalization in Chinese agriculture, with the household-responsibility system emerging as the dominant form, was possible because the nature of Chinese farming was suited to small holder agriculture. For labor-intensive farming, communes were naturally divisible into small household plots. However, traditional state-owned enterprises (SOE's), particularly the very large-scale factories commonly found in Eastern Europe, are different. They are not naturally divisible into smallholder operations by any "spontaneous" leasing process. Because organized private capital markets or large pools of privately controlled capital are absent in newly liberalizing socialist economies, neither can SOE's be sold or "placed" with private buyers who then assume managerial control, as were state-owned companies privatized in Margaret Thatcher's Britain. [ . . . ]

A liberal market order is best grown from the bottom up. Once small-scale capitalism in farming, trade,manufacturing, and services is unfettered and encouraged to flourish under the protection of evolving common law for the enforcement of Hayekian "rules of just conduct," the resulting spontaneous order can indeed spread rapidly, as the example of Chinese agriculture has shown.