Among developing countries, the Republic of China in Taiwan (hereinafter Taiwan) has been experiencing economic growth accompanied by improving income distribution. Between 1964 and 1980, the average annual growth rate of the real gross national product was 9.92 per cent (Council for Economic Planning and Development (CEPD), 1982, p. 23). In the same period, the income ratio between the top 20 per cent and the bottom 20 per cent of families dropped from 5.33 to 4.17 and the Gini coefficient decreased from 0.36 to 0.30 (CEPD, 1982, p. 54; Directorate‐General of Budget Accounting and Statistics, 1980, (DGBAS), p. 44). To put it somewhat dif‐ferently, in 1964 the lowest fifth of households received 7.71 per cent of total personal income, and the highest fifth 41.07 per cent. But in 1980, the income share of the lowest fifth increased to 8.82 per cent while that of the highest fifth decreased to 36.80 per cent. The condition of greater equality in income distribution appears more obvious in the capital city of Taipei. In 1981, for instance, its Gini coefficient was estimated to be only 0.28 (Taipei Bureau of Budget, Accounting and Statistics, 1981, (TBBAS), P. 24).

Wage reform is an important aspect of Chinese economic reform. The success of wage reform is likely to depend upon the following understanding: Neither use of the efficiency‐oriented market wage system nor use of the equity‐oriented planned wage system can solve the dual problem of economic growth and income distribution. A synergy of the two systems will therefore be needed. Such a synergetic wage system, which simultaneously solves the dual problem of production and distribution, can expedite the rise of social productivity – the fundamental mission in the preliminary stage of Chinese socialism. In other words, wages should be differentiated, and the differences should be related to workers′ effort and society′s demand for them. These differences, however, need not be very large.

The collapse of the Soviet Union and the success of the US economy at the end of the second millennium do not necessarily mean the end of socialism. In fact both capitalism and socialism are beneficial for a unitary human development, which consists of both material and spiritual development. Capitalism, with its emphasis on self‐interest and individual freedom, has been crucial to material development. But socialism, with its preference for other‐interest and collective necessity, is conducive to spiritual development. Thus, what is needed for further development of the human race is a unitary economics that synergizes capitalism and scoialism.