by Satya J. Gabriel

In the last essay, I indicated that the Great Leap Forward, no matter how well intentioned a strategy, led to disastrous results. Droughts and floods destroyed crops at a time when many rural laborers were already distracted by the somewhat chaotic attempts of Party cadre to reorganize rural productive life (according to a blueprint that was untested).[1] In addition, the opposition of some rural direct producers to a shift from self-exploitation to feudal exploitation (in the misnamed communes) resulted in a sharp fall in rural productivity. These factors resulted in a sharp contraction in supply (a upward shift in the supply curve). The contraction in supply resulted in food shortages. Food shortages heightened the risk of social unrest. (Throughout Chinese history, it has not been uncommon for food shortages to act as a catalyst in peasant rebellions against the ruling authority.) According to standard microeconomic analysis, the solution to the resulting shortages would be a rise in prices. The rise in prices would stimulate more output and eliminate the shortages. However, a rise in prices would not have solved the immediate problem faced by the Chinese population. Agricultural output requires time to adjust and in the intervening period, hunger and starvation would occur. Higher prices would have simply acted as a rationing mechanism that would have determined who would go hungry. It is likely that more people would have suffered hunger and starvation under flexible price adjustment than under the tightly controlled pricing system and government-run rationing based on household size because, under price rationing, those with more money (primarily urban dwellers) could have consumed more than under household-based rationing, leaving even less food for those with relatively less income. Instead of lots of people having relatively little but enough to keep from starving, some would have eaten relatively well and more would have starved. Indeed, Amartya Sen (who was recently selected as the 1998 Nobel laureate in economics) has pointed out that, under flexible pricing, famines can result simply from a fall in the incomes of the poor without the need for natural disasters as catalysts. Thus, the result of flexible price adjustment in the face of conditions like those in China during 1960 would have worsened already bad conditions and increased the possibility of social unrest. 

The danger of unrest in a nation as vast and populous as China, particularly given the hostility shown to China by the United States and the continued anti-communist rhetoric coming from the exiled Guomindang leadership on Taiwan, was serious enough that economic failures could act as the catalyst for a sea change in the Chinese leadership.[2] The Great Leap Forward had provided a concrete manifestation of the Maoist ideology and its failure called into question the legitimacy of that ideology. In a manner similar to the way Mao and the Left had gained control of public policy after the failure of the first Five-Year Economic Plan (FYEP), the CPC modernists/Stalinists quickly moved to displace the Left after the disaster of the Great Leap Forward. (Liu Shaoqi had already taken over as the top official in the government prior to the official conclusion of the Great Leap Forward, although Mao retained his chairmanship of the Party.) In the villages, many rural cadre, Mao's foot-soldiers, were criticized, dismissed and replaced by more Stalinist Party operatives. The management of the communes was turned over to "professional" salaried managers, replacing the ideologically chosen commune leaders of the Great Leap Forward period. The bureaucracy was restored to prominence and the Soviet-style planning system put back into operation. 

Soviet planners were not surprised by the failure of the Great Leap Forward. They had predicted its failure and by the summer of 1960 all Soviet technical advisers had been called home as a demonstration of the Soviet leadership's opposition to Maoist "deviations" from the Stalinist orthodoxy. According to the Stalinist logic, economic growth can occur if and only if investment in heavy industrialization is promoted. Investment in heavy industry, along traditional "industrial revolution" lines, requires what Preobrazhensky (one of the early Bolshevik leaders) called "primitive socialist accumulation." This term does not come directly from Marx. Marx had a long discussion in Capital, volume 1, of "primitive capitalist accumulation" within which the early capitalists acquire the resources necessary to establishing a capitalist economy. Primitive capitalist accumulation, as described in Marx's historical accounts, included theft, slavery, dispossession of peasants from their land, the corrupt use of the state to secure wealth, and other forms of brutality and criminal behavior. Marx was arguing that capitalism, based on free labor markets, had been predicated on the existence of a prior period of savagery within which a class of haves and have-nots was created. It was only by this predicament that a free labor market of people willing to sell time-pieces of their life could have come into existence. In other words, Marx understood that wage labor was not a natural state of human life, nor would human beings always willingly sell hours of their life in a labor market, like selling apples or sausages in a village market. Wrenching changes in social conditions were necessary to push people into participating in a labor market. It is interesting, then, that Preobrazhensky would have introduced a concept of "primitive socialist accumulation" and he did try, at one point, to repudiate it. Nevertheless, this notion seems at the heart of the justification for Stalin's brutal subjugation of the rural direct producers in the USSR and the transfer of surplus from the countryside to the industrialization campaign. The Soviet economists and planners, who believed that China should follow the Soviet example, favored a policy of steady extraction of surplus from China's agricultural sector to its industrial sector (from countryside to the cities) to finance industrialization. The logic, if not the brutality, of so-called primitive socialist accumulation, had been central to the FYEP. Soviet planners and academics were appalled at the Maoist policies of shifting the emphasis from heavy industry to the development of light industry in the countryside and were highly critical of this approach (even claiming that it was utopian and inconsistent with Marxism). Modernist Marxists within the Communist Party of China (CPC) agreed with this point of view. 

However, unlike the Soviet Union, where Stalin had squashed all dissent and created a monolithic (modernism with a Stalinist face) view of what constitutes Marxism, in China there remained a vigorous debate within the CPC and among intellectuals as to what constitutes "socialism" and what was the best path to creating a better society. In addition, as I've stated elsewhere, the Maoist notion of permanent revolution continued to carry some intellectual weight. And, to their credit, the CPC modernists were not nearly as dogmatic as their Stalinist counterparts in the USSR. They did not cling to a social dynamic by which the the correct path from one form of society to another would be played out. The CPC modernists allowed for the possibility of multiple "correct" public policies (or governmental strategies) to bring about such a transition. The Stalinists acted as if they had found religious Truth, but the debates within the CPC leadership showed a healthy skepticism about the existence of singularly correct answers to the questions at hand.

The modernists (or, alternatively, the pragmatists) within the CPC had learned some important lessons from the failure of the FYEP and the few successes of the Great Leap Forward period (and there were some successes). They understood that the success or failure of policies designed to restore agricultural growth would be critical to the ability of the CPC to remain firmly in power in China or, at the least, to the Party's ability to manage social unrest. If they followed the Soviet line rigidly, this would mean intensifying coercion of rural direct producers in order to extract a larger surplus to finance the heavy industrialization scheme. They would have to follow the Soviet path of "primitive socialist accumulation." But what if the rural direct producers resisted? The Party pragmatists knew, from the Hundred Flowers Movement, of the intensity of anger against the Party. They understood that the food shortages and other hardships that came out of the Great Leap Forward period would only have exacerbated this negative social environment. Thus, rather than taking a Stalinist road, the Party's pragmatist leadership decided (and this is why they might be better described as pragmatists than conservatives or Stalinists) to follow a more Leninist or Bukharinist approach to development. They pursued a set of policies similar to those of the New Economic Policy of the pre-Stalinist USSR. The version of Marxian theory they adhered to was grounded in an assumption that social change followed a predictable path from more primitive forms of society to more modern forms: feudalism was more primitive than capitalism and capitalism more primitive than socialism. Communism was the end point, or telos, of this teleological path. However, while the path of the transitions was predictable, the time frame for transition was not. Thus, the pragmatists could argue that it was necessary to adopt capitalist practices in order to modernize society, but could not provide a timeline for the transition out of capitalism and to a more nonexploitative society, which was the stated mission of the Communist Party.

The CPC modernists argued, as they had traditionally, for attaching a high priority to improving the efficiency of the Chinese economy. Indeed, efficiency (in the form of greater social value of outputs per value of inputs deployed) was viewed as the strongest indicator of modernity. In the modernist version of Chinese Marxism, the transition from socialism (which was, by definition, a mixed economy of sorts) to communism (wherein exploitation would be ended) would take an extended period of time and could not occur at all unless the Chinese economy attained a high degree of productive efficiency. Nevertheless, the pragmatists had changed their view of the role that agriculture would play in achieving this efficiency goal. Unlike during the FYEP, when agriculture was in an inferior position vis-a-vis industrialization in the plans for allocating resources and promoting economic growth and development, in this new period of pragmatist dominance of public policy, agriculture was elevated to a position equal to that of industry. Agriculture was now considered "the foundation" of the national economy, although industry remained the "leading sector." The idea was that the development of agriculture and industry were complementary and that a necessary although not sufficient condition for further industrialization was improvement in agriculture. At least this is what the pragmatists were stating publicly.

The pragmatists recognized that social attitudes must be taken into consideration in the development of public policy, both the attitudes of urban workers, professionals and bureaucrats, and the attitudes of rural direct producers. They understood the popularity of what we have called self-exploitation and that if productivity was to rise in the countryside, one way to bring this about might be to let the rural direct producers engage in self-exploitation. Thus, one of the policies adopted in the aftermath of the Great Leap Forward was to grant rural direct producers use rights to more land which could be used for self-exploitation. In other words, the CPC modernists decided pragmatically (despite the perceived primitive nature of the "ancient mode of production"/self-employment) to support an extension of self-employment in the countryside as a means of improving agricultural output. This decision was viewed as supportive of the modernization drive in so far as it would foster higher productivity, the development of market relationships, and the channeling of surplus value to the industrialization project. Such pragmatism would come to define the theoretical and public policy output of the modernists for the next twenty plus years.

This pragmatist public policy choice showed the flexibility of the Deng Xiaoping modernist leadership within the CPC. They did not view self-employment as the best (most technologically efficient) way to produce agricultural (or any) output. They believed, as most Marxists and non-Marxists, do that self-employment is a relatively backward way to organize work and appropriation. (There is also a long history within Marxism of assuming that self-employment leads inevitably to capitalism [see Lenin's The Development of Capitalism in Russia for the classic argument along these lines], even though history provides many examples of self-exploiting direct producers fighting against the advance of capitalism.) However, the leading modernists, such as Liu Shaoqi and Deng Xiaoping, were also pragmatists. Perhaps capitalist or feudal agriculture might have had a better cost curve than ancient (self-employment oriented) agriculture in a world where work effort is merely a function of technology employed. However, work effort is also a function, among other factors, of class process. In the China that the CPC leaders faced, rural workers wanted to be self-employed and would work harder if given the chance to be self-employed. In an environment of food shortages, it was the pragmatic thing to do to grant them some of what they wanted.

The growth of self-exploitation in the countryside resulted in rapid and significant output growth. The severe food shortage was corrected relatively quickly, relieving social tensions. The Chinese government, now under the direction of Party pragmatists, used its control over input and output merchanting (the sale of most commodities had to go through state-run merchanting enterprises) to keep the prices of industrial products relatively high and to hold back prices of agricultural output. This condition is often referred to as a "scissors" in which farmers find that they must pay high prices for the goods they need for their family's livelihood and as inputs to production but receive relatively low prices for the goods they produce. If you will recall that the government owned and operated most industrial enterprises, then you can see that the relatively high prices for industrial goods would have guaranteed the government relatively high revenues for the sale of goods for which the price elasticity was relatively low. Given the lack of ready substitutes for many of the industrial goods sold by the government, then the price elasticity would have been relatively low for many industrial goods. On the other hand, the inputs used by the government in manufacturing would have included many raw materials produced in the countryside. The government kept the prices of these inputs low --- meaning it paid the rural direct producers relatively little for the fruits of their labor. Thus, the government, acting as a monopsonist and monopolist, found a way to give the rural direct producers more productive freedom --- the freedom to engage in self-exploitation on an expanded scale --- and at the same time squeeze more resources from them via this scissors effect. This was rather clever. It showed that the pragmatists who had gained power in the Party and government were somewhat disingenious in their support for rural direct producers. They were still using them, albeit in a manner that created less resistance than the crude Stalinist approach.

The changes in the countryside also increased income inequality. Some ancient (self-exploiting) direct producers were successful enough that their lifestyles began to approximate that of "rich peasants" from before the 1949 Revolution. This consequence of expanded self-exploitation is consistent with Lenin's arguments in The Development of Capitalism in Russia. Lenin argued that the dynamics of self-exploitation would inevitably lead to a division among self-employed direct producers: some direct producers would be successful and accumulate wealth, others would fail and be driven into poverty, lose their landholdings, and be forced to seek alternative ways of making a living. This dynamic, according to Lenin, would lead to the successful direct producers employing the unsuccessful: a wage labor market would develop. Thus, capitalism would evolve out of the ancient economy and flourish. Fear of this evolution from self-employment to capitalism has often served, in nation's governed by communist parties, as the basis for opposing self-exploitation. However, this trend towards inequality could easily be exaggerated. For the most part, rural life was still dominated by the feudal communes and most direct producers lived under fairly similar conditions. In addition, there were clear political impediments to the development of a large-scale, rural wage labor market, a precondition for the growth of capitalism in the Chinese countryside. 

Nevertheless, the extension of rights to engage in self-exploitation made life in the communes more acceptable to many of those who had most strongly opposed the original shift from self-exploitation. In addition, the government made a stronger effort to invest in the economic infrastructure of the countryside --- new roads and bridges were built and electricity was extended over most rural areas --- resulting in both a direct improvement in living standards and in productive potential. These policies lowered the level of animosity towards the CPC and government among the rural people and perhaps even restored some of their previous popularity. 

NOTES

[1] It is likely that the droughts during the late 1950s would have been worse if not for the sizable public investment in irrigation and flood control carried out during the post-revolutionary period and particularly during the Great Leap Forward when labor could be more easily mobilized for such public infrastructure projects. Nevertheless, critics of the Maoist era have attempted to minimize the positive impact of the rapid expansion in irrigation and some have even argued that over-irrigation and/or poorly planned irrigation may have contributed to flooding during the 1950s.

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[2] The hostile international context within which China's leadership confronted crisis foreclosed certain options, just as it pushed them in the direction of other options. For example, the CPC-lead government in Beijing did not have the option of importing grain to alleviate hunger and malnutrition. This forced the CPC leadership to seek alternative solutions that would quickly and efficiently stimulate domestic agricultural output. If the leadership had the option of imports, they might have opted for less dramatic changes in policy.

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Copyright © 1999 Satya J. Gabriel, Mount Holyoke College.  All Rights Reserved. 

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