I hope this layman's question is not off topic. I was not able to find guide lines as to how professional questions have to be.
I am trying to qualitatively understand the origins of the Tiananmen protests in China in 1989. My textbooks all very much emphasise the role of Deng Xiaoping's economic reforms. In particular they all replicate the following reasoning from Silenced Scream: a Visual History of the 1989 Tiananmen Protests. Donna Rouviere Anderson, Forrest Anderson. p. 1:
Now, my understanding is that, in a market with shortages, well connected individuals buy legally at low prices and sell illegally -on the black market - for high ones, which induces inflation. Is there a reason, why a two tier system should suffer from this more than a fixed price system? After all, in both cases, one has to subvert the dictated prices to reap the benefits!
Or did I perhaps misunderstand the envisioned process and is he not talking about black markets?
I would understand the claim that the fluctuating prices in the two tier system would induce inflation, but I don't understand the process described above.
I just found this quote explaining the nature of the two tier system a bit more:
A dual-price system was introduced, in which (State-owned enterprise reform 1979) state-owned industries were allowed to sell any production above the plan quota, and commodities were sold at both plan and market prices, allowing citizens to avoid the shortages of the Maoist era.