[codeshaman]

The system (capitalist or communist) determines to a great extent all kinds of curious behavior in people.

Like reporting numbers.

In communism, people are incentivized to inflate the positive numbers and deflate the negative numbers, because the primary goal is to maintain a good and submissive relationship with the higher-up party chief. The higher-up has the same incentive before his higher-up.

If you fall from grace with your higher-up (by not being able to achieve the numbers planned by the party), then your career is over (and possibly that of your family and business partners too). So you have to give him those numbers. If you do, he will take care of you and with time, you will grow.

Then there's another property of communism: people steal.

Not only you have to report higher productivity than the set goal, you also have to cover up for all the stealing that took place below you and the "favors" you make to the higher-ups.

Of course this is illegal, but when people start doing this, they become partners in crime and now it's about life an death. Falling from grace can actually mean doing hard time in jail or even getting the capital punishment.

This system works well when the economy grows - the pressure to perform beyond expectations is increased with each layer of bureaucracy and is more than just about "job security" - it's about survival - so people have to produce those numbers.. even if it means lying.

Of course the hard work is done by the same oppressed "working class" that the system was supposed to help in the first place.

Now, I have no idea what's going on in China and if these properties apply to their particular flavor of communism, but I suspect they do, because this is how human beings have to behave in that game to win.

And that means that the numbers reported by the government are probably off by quite a bit and it's possible that even they have no idea what the real situation is.

[seren]

You can probably replace communism by capitalism in most sentence of your post. Regarding the incentive to inflate numbers, think about quarter report, or of things like Enron, Volkswagen or Autonomy (which was sold as an inflated price).

The main difference is that in an autocratic system, it is easier to not get caught by using force to silence oppositions or whistle blowers. In a working democracy with some kind of transparency and regulation, you can't lie for ever. (But then you can still say you are flabbergasted by what the auditors have found and you will do everything in your power to find out why such shocking activity took place and restore the public confidence in your company)

[naveen99]

Corporations have a bigger principal agent problem. But in capitalism you also have privately owned businesses which doesn't have as much bloat. And the corporations have to compete with these.

[toxik]

I don't quite follow, why would a communist society have more incentive to lie about statistics? This seems like quite a big leap. As somebody else noted, during the beginning of great leap forward, there were huge misrepresentations about crop yields and similar things -- but this was _not_ due to a one-party system per se, it was because the farmers had promised bigger yields due to the now "modern" communist methods of planting crops and similar things. Everybody bought into the idea, and when it failed to come through, nobody wanted to take blame.

[snowwrestler]

I don't think that communist societies have more incentive to lie about statistics. But they have less incentive to catch lies about statistics, because there is less competition. If the government collectively manages all the means of production, then all the routes to power go through the government. If the government chooses to lie about statistics, who else has the power or opportunity to challenge it?

In a capitalist system, it's possible for private citizens to achieve financial success without going through the government, collect and publish their own information, and in doing so, challenge and influence the government.