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Essay Number 3
September 1998 
The Structure of a Post-Revolutionary Economic Transformation:

The Chinese Economy from the 1949 Revolution to the Great Leap Forward

thin rule
By Satya J. Gabriel

Mao walks each morning, all the roads are rocky, all the skies
are red, all the winds are coming from the East.
What do the people want from him?
Do they want him to write poetry in the sky?
Do they want him to weave words in the dirt?
He is smiling as he walks by
Because he can smell the manure pit.

The 1949 Revolution resolved the issue of who would control the Chinese government (i.e. the revolution resolved the political crisis generated by the rivalry between the Guomindang (KMD) and the Communist Party of China). The Communist Party of China (CPC) took power in Beijing and the KMD leadership fled to the island of Taiwan. The Chinese leadership, and most prominently Mao Zedong, Zhou Enlai, Liu Shaoqi, Chen Yun, and Chu Teh ("father" of the People's Liberation Army), consolidated power quickly and moved to gain the confidence of the Chinese population, particularly by solving the economic problems that had worsened during the civil war: the civil war had generated low levels of gross domestic output, high rates of inflation, and high levels of urban unemployment. Solving the problem of food shortage and high food prices was a top priority if the new leaders were to achieve social stability, much less expanded popular support for their governance. For this to be achieved, the CPC needed to move quickly to restructure social relationships in the countryside in a manner that would simultaneously make the rural direct producers more supportive of the regime and encourage them to produce critically needed agricultural goods in much larger quantities. 

Ultimately, the success of the Chinese restructuring of social relationships depended upon both the making of appropriate policies and skilled policy implementation. Many of the party operatives or cadres that were employed in the effort to consolidate power and organize the new social structure had spent many years in underground CPC groupings or cells. However, there were also many party organizers who had been engaged in actual governance within territories already under CPC control prior to the 1949 Revolution. These cadre had already experienced and participated in the creation of new institutions, land reform, and the complexities of local politics before the CPC had come to national power. The experience in governing and in constructing the institutional mechanisms of governance and persuasion, primarily in remote rural areas, should not be ignored in making sense of the speed at which the CPC was able to consolidate political control after the 1949 Revolution. Party members, both those experienced in governance and novices (ironically, many of the CPC members who were novices when it came to formal governance had far more experience with urban life, modern technology, and contemporary social theories than those, mainly rural cadre, more experienced with operating a government), were sent into the countryside and the cities to mobilize workers and rural direct producers in the reconstruction of the Chinese political, economic, and cultural infrastructure and the training of local militias. But was the purpose of this restructuring purely to build popular support and encourage greater agricultural production? What was the mission of the CPC? 

As indicated in previous essays, the CPC leaders were no less nationalist than the KMD. Thus, a primary part of their mission was to unify the country and to end "foreign domination." It is probably safe to say that these achievements were no minor feat and one that brought the Chinese communists a certain degree of respect, even among non-communist nationalists. Similarly, the CPC campaign against corruption (part of the "Three Antis": anti-corruption, anti-extravagance, and anti-bureaucracy) was popular among a populace that had experienced or, at least, heard stories of KMD corruption, conspicuous consumption, and heavy-handed bureaucracy (the KMD continued these behaviors in their early years of rule over the Taiwanese population). But nationalism and anti-corruption/anti-extravagance/anti-bureaucracy was only part of their mission. As communists, the members of the CPC wanted to institute their vision of socialism (where socialism is understood within communist ideology as a transitional social state between capitalism and communism).

But what exactly was socialism? Given that socialism was only very hazily constructed in the theoretical and polemical writings of "the Left," there was a great deal of latitude for different interpretations of what a socialist China might look like. As was the case with the pre-Stalin era leadership in the Soviet Union, the Chinese leadership spoke with many voices on the issue of how to construct socialism. Some members of the leadership advocated following strictly the Soviet line (which was really the Stalinist line) of tight command of the allocation of inputs (including labor power) and outputs from the central government, an emphasis on rapid industrialization, and strict centralizalization of control over all aspects of industrial enterprise management and capital budgeting. These advocates of "Leaning to one side" put the technological advancement of the nation above such alternative objectives as egalitarianism or the construction of democratic institutions that would encourage mass participation in national and local politics. Many members of the Party were sympathetic with "bourgeois" notions of economic and political development, including those members of the leadership who advocated a "free" market oriented approach to the allocation of inputs and outputs, greater freedom for labor, placing "science" above ideology, and permitting a mixed economy of privately owned capitalist firms, state-owned capitalist firms, self-employment, communist collectives, and other diverse types of enterprises. These leaders could take some encouragement from the early experiments in market socialism in the USSR prior to Lenin's death: the so-called New Economic Policy. And there were a range of variations on these themes. 

Mao Zedong's essay, "On the People's Democratic Dictatorship," established his vision of socialism as the intellectual foundation of the left-wing of the CPC, in the sense that the changes he advocated required the wholesale destruction of pre-revolutionary institutions and their replacement by completely new revolutionary institutions. As one stage of this transformation, Mao called for the rapid eradication of the feudal landlords and the social structure that had supported them. He proposed the establishment of a completely new political, cultural, and economic order, including the establishment of a people's army, people's courts at all levels of jurisdiction, peasant associations throughout the countryside, and workers' councils in industrial enterprises. In the aforementioned essay and elsewhere, Mao reiterated the ultimate mission of the CPC as moving the nation towards communism---a society within which the working classes would democratically control their own collective surplus and the state would diminish in importance (wither away). But like the right-wing of the Party, Mao acknowledged that the transition to communism would take a long and indeterminate amount of time. The dynamic process of moving towards communism was understood in dialectical terms as taking place through a process of contradiction, crisis and crisis resolution, yin and yang, openings and closings: communism would come out of its various opposites through the manipulation of this dialectical process by the communist leadership. Most commentators on China have focused on Mao as the central figure in the post-revolutionary government and in the formation of Chinese communist ideology, but one should not discount the importance of these debates or of the continuation of debates over the history of the post-1949 communist government(s). What my good friend Jonathan Lipman, who teaches Chinese history at Mount Holyoke College, has described as a "Mao-centered" discourse on post-1949 China captures only a partial picture of the revolution and its aftermath. 

Nevertheless, the Chinese government did, to a large extent, follow a Maoist line in its revolutionary transformation of the rules of life in the countryside. The state confiscated the landholdings of feudal lords and some rich (ancient-capitalist) farmers. Rural markets were quickly transformed into more vibrant places of economic and social exchange, as the farmers and artisans gained greater freedom over their productive activities. Communist party officials took the pre-revolutionary strategy of insinuating themselves into village life a step further after the revolution. Virtually every Chinese village had its party operatives or cadres working closely with peasant associations (in most areas these were formed after the revolution as a first step in organizing rural direct producers). The government used these foot soldiers of the 1949 Revolution to encourage greater cooperation among farmers, including the formation of mutual aid teams, marketing cooperatives, tool-making and handicraft enterprises, new irrigation systems, and militia (the CPC still feared outside intervention, as happened after the Bolshevik Revolution in Russia), as well as fostering greater support for the Party and government. This approach also provided the central authorities with eyes and ears throughout the countryside, where no recent central authority in China had been able to have much control.  This political process was reinforced by an economic process whereby the central government provided rural producers with guaranteed markets for their output (via state purchasing agents).  These policies were crucial to the aforementioned process of unification of China under a central authority. 

One of the results of the land reform was to dramatically reduce hunger and malnutrition in the Chinese countryside. Simply eliminating the feudal lords and those dependent upon them freed up an enormous amount of resources that could be put to better use from the standpoint of overall social investment and future productive potential. The role of the feudal landlords as exploiters was exposed by the fact that their elimination had no detrimental impact on the countryside. The lords made no investments in the countryside, did no productive work whatsoever (nor did their hired thugs, family members, or other supporters), and consumed excessive amounts of social output to reproduce their lavish lifestyle. Elimination of the lords and their hangers-on allowed the excess/surplus output to be invested or used to finance the new social institutions and public goods that made life and work easier for rural direct producers, and it allowed for an increase in the living standards of many rural direct producers and their families. 

The improved income for rural direct producers helped to stimulate more demand for the products of self-employed artisans and self-employed farmers, improving their incomes. The positive circular and cumulative effects (to borrow a phrase from Gunnar Myrdal) helped to reduce overall poverty in the countryside even further. The rural population became better nourished, better clothed and sheltered, healthier, and more productive. China became one of the most egalitarian societies in the less industrialized world, the envy of many advocates for rural poor around the world. The rural population that had been somewhat indifferent to the communists, except in that they were preferred to the KMD and the feudal lords, was won over by the willingness of the CPC to put its actions where its rhetoric had been --- in the redistribution of wealth and power away from old elites to the rural poor. 

There was a gender element to this revolutionary change. There were many women among the cadre sent to work in the villages and one of the results of the CPC-led organizational efforts was to weaken feudal constraints on what women were able to do in the villages. Greater freedom for women had always been an important element of communist ideology in China, although it had taken a backseat to gaining the support of rural men during the revolutionary period. With the success of the revolution came a renewed interest in freeing women from feudal political, cultural and economic bonds. Towards this objective, the CPC government passed a series of laws that gave women more rights to own land and to seek divorce from abusive husbands. And the importance of female CPC cadre serving in the villages as experts should not be underestimated as an impact on the thinking of both adults and younger people in the rural communities. During the Great Leap Forward at the end of the 1950s (discussed in essay 4) the CPC leftists would extend their attack upon traditional gender roles. One of the distinctive elements of the communes[1]and of the Great Leap Forward, as a broader attempt at social transformation, was the expansion in the role of women in economic and political life. Women played important roles in the communes, often at the top levels of management, and the Great Leap Forward represented a full-scale assault on the traditional, feudalistic household by drawing more women into the community-wide efforts to build new economic arrangements. The Maoist theoretical framework that served as the foundation for the Great Leap Forward recognized all labor, whether male or female, as valuable to the national economy. This is a very different worldview from that which had traditionally prevailed in the countryside (and in the cities) which discounted the value of female labor and creativity. For a time, and especially under the influence of the left-wing of the CPC, the liberation of women was an integral objective in the overall mission of socialism. 

The CPC had the example of the Soviet Union to use as an politico-economic model and/or counter-model in its efforts to construct socialism (or what Party members described as socialism). The Soviet leadership had tried more than one approach over the history of the USSR. For instance, there was the New Economic Policy (NEP) approach under Lenin, Bukharin, and others, wherein Russian farmers and rural artisans were given a great deal of freedom to engage in self-exploitation and to sell their goods in relatively unfettered markets. The NEP represented a first attempt at what would later be called market socialism. There was also the Stalinist (war communism) approach of a powerful central government taking command over the allocation of products and labor power.  The Chinese leaders who had survived the KMD's attempted extermination were disinclined to follow the Stalinist approach, at least in the countryside, for fear of alienating the rural population and perhaps planting the seeds for future rural unrest. 

At first, the CPC seemed to have settled on a more NEP-like strategy, including providing farmers with a guaranteed market for some of their output, buying rice, grain, and other basic goods through state purchasing stations (established in 1952) for resale in the cities and towns. This was important because it solved two immediate problems of the revolutionary government: the need to support rural farmers and to provide relatively cheap food for workers in the cities. Also, by more generally taking control over mass merchanting, the government gained the means for directly controlling the pricing and allocation of key commodities. This direct control over the marketing of key commodities reduced the possibility of unplanned price inflation -- which had been a serious problem for the KMD government. However, this arrangement was not always to the advantage of the rural direct producers. The state had extraordinary market power in these key commodities and could virtually dictate prices to direct producers. The state also had monopoly control over the sale of key inputs to direct producers. This situation provided the state with the means to "cheat" direct producers by setting the purchase prices for ancient output too low and the sale price for ancient inputs too high: creating what has been described in the literature as a price-scissors effect. Some have argued that the price-scissors was deliberately used a mechanism for extracting surplus resources from the countryside for both investment in industrialization and subsidization of urban worker real incomes. 

The difficulties created by this transfer of surplus from the countryside also, ironically, served as one of the rationales used by the CPC to encourage larger scale production/increased cooperation among agricultural producers.  The CPC cadre argued that collectivization would place farmers in a stronger position to reduce costs and increase the surplus available for rural development, including providing for social services (urban workers were guaranteed employment and their danwe provided these social services --- subsidized by surpluses extracted from the countryside --- while rural direct producers had to provide their own surplus resources for such social services).  The "learn from Dazhai" campaign was the leftist exhortation of rural direct producers to form cooperative production units similar to that which was created in the model community of Dazhai (in Shanxi Province).  The greater the level of concentration of rural production, the less difficult it was to account for rural produced resources.  Thus, increased scale production was also beneficial to a central government desiring more efficient and effective control over rural inputs and outputs and the rural surplus.  This was certainly what the Party leadership had learned from Dazhai.

Control over the sale of most inputs and outputs, especially industrial products, also gave the CPC-led government the means to indirectly control many of the activities of private-capitalist firms.  This allowed for a persistence of both state and private ownership in the capitalist sector --- a policy promoted by Party leaders who accepted the traditional Marxian teleology in which capitalism had to be fully developed prior to any transition to nonexploitative economic relations (broadly referred to within these essays as either the rightwing of the CPC or as modernist Marxists). Many of the remaining private sector capitalists may have believed that this policy of creating a complex web of interdependence between agencies of the state (both productive enterprises and the bureaucracy) and the private sector might bode well for their future prosperity or at least survival.  During the early period of the new regime, this "mixed economy" approach may have, therefore, reduced the dangers of counter-revolutionary activities, since it appeared to be in the interest of the surviving private sector capitalists to cooperate with the government. 

Lets examine this "mixed economy" approach in a bit more detail.  In the cities, the CPC followed a pragmatic blueprint by which banks and many, though certainly not all, industrial enterprises were confiscated from their private owners (primarily members and sympathizers of the KMD who had already fled the country).  Many private capitalist enterprises, particularly those engaged in "light manufacturing" were allowed to operate (with government oversight -- regulation of wages, prices, and working conditions but private appropriation and distribution of the capitalist surplus). Thus, state-owned and privately owned capitalist firms operated together within the Chinese industrial sector.  The workers continued to work as wage labor employees of these firms, both the state-owned and private versions.  Although workers councils were established to provide workers with a voice in certain matters, primarily social benefits provided by the firms (both state-owned and privately-owned), the control over the cash flow generated by the state-owned enterprises was in the hands of government ministries (who also appointed enterprise management) and the cash flow generated by the privately-owned enterprises remained in the hands of their privately appointed directors.  Free market transactions between buyers and sellers continued to play the primary role in determining those cash flows.  The internal governance of the surplus flows within state-owned capitalist enterprises was certainly in keeping with the Soviet version of "socialism" where public ownership of the means of production was deemed a sufficient step in the early stages of the transition to communism, but full-scale communism would have to wait until such time as the productive forces were deemed advanced enough to support allowing workers to control their own profits.  As the primary capitalist entity in the nation, the state would, according to official ideology (again, this idea was borrowed from the Bolsheviks), use its control of the social profits to finance the construction of the country and the establishment of the conditions necessary to the eventual transition to communism. 

More pragmatically, the government used its resources to finance the military and the growing bureaucracy, to direct development towards heavy industry, to direct resources to the more economically depressed regions and areas where the dislocations caused by the civil war had been particularly severe, and to subsidize urban consumption and employment at levels that would reduce the risk of social unrest. As was the case in the Soviet Union, the government not only controlled the profits generated in industry but would also control the allocation and pricing of the outputs and inputs of industry, both state-owned and privately owned enterprises. This would be carried out eventually (by 1953) via a central plan that was then imposed on all industrial, extractive, transport (particularly the railroad system), and state merchanting enterprises. The result, as in the Soviet Union, was a boost in output, often of goods of poor quality and in quantities not in accord with need, but always cheap. 

More importantly for the government, perhaps, is that the central plan provided an expedient means for raising government revenue and of controlling inflation. In the last years of KMD rule, it had become difficult for the nationalist government to raise sufficient revenues to meet the demands of policing civil conflict, financing a massive bureaucracy, feeding widescale corruption (KMD officials were notorious for stealing from the government coffers), and paying the wages of the KMD army. The KMD solution had been to print more money (with no concomitant increase in real goods and services) which had triggered hyperinflation. Hyperinflation had added to the miseries of urban life under the KMD and the CPC was determined not to reproduce this mistake. Thus, the CPC-controlled government used its role as primary capitalist appropriator to siphon needed revenues into the government, kept tight control over corruption to reduce the overall cost of administration, and coordinated the activities of a wide range of enterprises to meet the immediate needs of a post-civil-war reconstruction. 

This first attempt at planning the Chinese economy as a whole was constructed with strong support and influence from Soviet advisers in 1953. The plan was largely based upon the Soviet model of economic development, with heavy emphasis on large-scale industrial enterprises and related development of mining, power, and transportation infrastructure. The plan encompassed not only the new state-owned and controlled enterprises but the remaining private industrial enterprises, as well. All industrial inputs and outputs would be under the indirect command of the central authorities. In the rural areas, the plan called for the creation of large-scale state-owned and controlled farms (in order to more tightly control the rural surplus for purposes of financing urban industrialization). In order to fund this plan, it was necessary to shift significant amounts of social resources (labor time, raw materials, available machinery, vehicles, etc.) from existing use to employment in the construction of new factories, facilities, and infrastructure. Given that this shift of resources would have initially been along an existing production possibilities frontier (without either tapping unemployed resources or increasing the productivity of workers in the effected sectors), rather than an expansion in that frontier, you can imagine that this shift would likely have had a negative impact on output in those sectors of the economy from which resources were drawn. This was, in fact, the case. As in the Soviet Union, the shift of resources into so-called heavy industry, mining, and infrastructure resulted in sharp drops in output of some consumer goods. This was considered by the government planners to be a necessary short-term sacrifice as the economic base of the economy was improved (and the longer term increase in average productivity was brought about --- shifting the production possibilities frontier outwards). In other words, the assumption of the planners was that the short-term trade-off by shifting resources along the production possibilities frontier (or, perhaps more accurately, shifting them along a path somewhere below the full-employment frontier) and trading off consumer goods for more heavy industry would ultimately result in a outward shift of the production possibilities frontier, allowing for greater production of all products and services. This was the underlying assumption of the FYEP in China, as it had been the underlying assumption of the economic plans adopted in the Stalinist Soviet Union. 

In keeping with the Soviet model of development, which had sacrificed resources and people in the rural areas to the cause of industrialization, the FYEP shifted resources out of agriculture and into heavy industry, mining, and infrastructure. In the USSR, this was coupled with the use of brute force to make the rural direct producers operate more efficiently, i.e. produce more with less. Although economic historians who have studied the Stalinist-era in the Soviet Union do not always agree on the relative success or failure of this policy, it does seem clear that many rural direct producers did not comply with the demands of their urban-based Bolshevik masters. The rural direct producers in the USSR often destroyed farm machinery and sabotaged crops in protest of the way they were being treated. In China, the CPC could not afford to alienate the over eighty percent of the population that lived in the countryside by following this Soviet approach, particularly since it is ambiguous whether it actually worked. Perhaps even more importantly, the faction within the party leadership that is associated with Mao was clearly not willing to follow a strict Stalinist line when it came to rural economic, political and social development. Mao had written that it was necessary to forge a grand alliance of urban workers and rural direct producers in order to create a unified, Socialist China. This meant respecting the rural population in a way that might have been envisioned by some pre-Stalin-era Soviet leaders, such as Bukharin, but which was completely unimaginable under Stalin. Thus, when the shift of resources out of agriculture resulted in a fall in agricultural output, increased migration from the rural areas into the cities, and a worsening of urban unemployment then the CPC leadership had to seek a more creative solution than the Stalinist approach of naked coercion that had been applied in early Soviet history. 

The unique Chinese solution was to create, as part of the Great Leap Forward, a new form of state-feudalism that was euphemistically called "collectivization" or the creation of communes.  The term "communes" implies the creation of an institution within which the communist fundamental class process prevails.  However, the communist fundamental class process implies that the direct producers collectively appropriate and distribute the surplus product created within the enterprise. This was certainly not the case within the communes. Workers clearly did not control their own collective surplus. It is also clear that the communes were not capitalist institutions within which workers were hired at a wage to work for a period of time mutually agreed upon between the workers and the enterprise management. Rural direct producers were obligated to work in the communes. The commune management was appointed by the government, although it was not until the later period of the Great Leap Forward that the commune management would be fully bureaucraticized (with most of the commune administrators selected from urban cadre). The surplus generated by the communes was under the control of the government. The obligatory relationship wherein workers were required to serve the state within the communes, i.e. to produce a surplus for the state, constitutes a feudal relationship. This was no different from feudal relationships within which the feudal direct producer was obligated to serve an individual feudal lord or the Catholic Church or any other non-state economic agent. We can, however, use the additional adjective "state" to describe this form of feudalism in order to highlight the fact that the feudal "lord" was, in this instance, the government. 

There is no doubt that if it was generally understood that the government was instituting this new variant of feudalism more opposition might have arisen. Indeed, it might not even have been possible to create this institutional structure for the appropriation of surplus labor. However, the CPC was clever in using the term "commune" because it created an illusion of collectivity or, at the least, the idea that collectivity was the ultimate goal of the new institutional structure. This provided an ideological justification for centralizing control over rural labor and the fruits of that rural labor. 

But the creation of the so-called communes did not provide a complete solution to the problem of generating a sufficient rural surplus to finance the industrialization process. Rural direct producers did not always accept the ideology upon which the commune structure was constructed. Many of these rural direct producers had been working for themselves, as self-employed (ancient) producers. Most of these direct producers found the communal structure inferior to their old way of life. They preferred self-exploitation to the feudal exploitation of the communes, even if the appropriator of the surplus was the state and the state claimed to be using this surplus for the public good. And consequently, many of these producers worked less hard for the communes than they had for themselves. The surplus was constrained by this failure to motivate the direct producers to work harder. On the other hand, the centralization of control over labor and the fruits of labor meant that the state could more effectively and efficiently determine the composition of rural output and take possession of that output for redistribution in ways consistent with the FYEP. Perhaps, for the purposes of furthering planned development, this was sufficient. In the long-run, however, the old problem of productivity would persist and require alternative strategies. 

One reason the Maoist-centered discourse has created a somewhat distorted view of Chinese development and politics since the founding of the people's republic in 1949 is that there were many spirited debates within the CPC leadership over strategies for building the economy, in particular, and the nation, in general. Mao's position on these issues carried a great deal of weight, of course. But there were other voices. Some supported greater reliance on the Soviet model of development. Others supported greater freedom for the rural direct producers (as Bukharin and others had similarly argued for more freedom for rural direct producers in the early years of the USSR). In many ways, the failure of the FYEP to sufficiently boost agricultural output helped to turn the tide of sentiment in favor of Mao's arguments (and the arguments of those who had a similar approach to that of Mao). 

Over the years from the introduction of the FYEP in 1953 until 1957 these debates raged on and the data on the results of the FYEP were used as raw material by both sides. More and better trained cadre were sent into the countryside to try to stimulate more productivity. The plan was modified several times to take into consideration the concrete conditions faced by enterprises, workers, and the government. Nevertheless, rural supply curves simply did not shift outward as rapidly as anticipated. Demand for agricultural products and products that required agricultural inputs continued to expand in the cities. The government, acting as the wholesale buyer of the agricultural output and the merchant of the finished goods, could have simply raised retail prices to dampen demand and force an equilibrium (so to speak), but this would not have been received favorably by consumers in the cities and likely would have resulted in less support by urban dwellers for government policies. The need for legitimation of the CPC-led government continued to be of vital importance in these early years after the 1949 Revolution. (Can you think of other possible solutions to this problem? We will discuss this problem in greater detail in class.) 

The plan was also a failure in industry. The managers of state-owned enterprises had been instructed to meet certain production (output) quotas. They were not required to produce output that met any reasonable quality standards. Consequently, supply curves shifted in accordance with the FYEP, but the output was of inferior quality (resulting, in some cases, in a negative impact on product demand) and there was no real attempt to match supplies with existing demand (which is not simply a quantitative measure) for products. Inventories built up. Prices did not act as signaling mechanisms for informing firms of the effective demand for their output or of the building imbalances in the economy. There was no incentive for managers to improve productivity or product quality. They simply wanted to meet their quota: the managers wanted to get the supply curve out to the point at which they would be rewarded as "good managers" by their superiors higher up in the government bureaucracy. In other words, the managers of these Chinese industrial enterprises adapted to existing rules of the economic "game," just as their counterparts in the USSR had done (just as all managers of enterprises do in specific political, economic, cultural, and environmental conditions). Among the consequences of this motivation system were: i) significant waste of inputs in the drive to meet supply targets; ii) unhappy consumers, who could not get what they wanted (in terms of quality and sometimes quantity, as well); iii) unhappy wage laborers because, under these conditions, wage increases (and associated increases in standard of living) were constrained; iv) unhappy rural direct producers who could not receive adequate prices for their output (and who would later be forced to participate in the feudal communes); and, v) unhappy government bureaucrats who "lost face' when the plan ultimately failed. 

Mao recognized the failure of the FYEP and the public backlash against the Soviet-influenced strategy of development the CPC had adopted. In his struggle with the right-wing of the CPC, he believed that the manipulation of this dissention could be a powerful weapon. It would not be the last time Mao would use "the masses" as a force to batter the more conservative elements of the CPC into submission, to make his vision of "socialism" the dominant one within the Party and government. In this case, Mao unleashed the so-called "Hundred Flowers Movement," in which the public was given the freedom to express their displeasure with the results of the first FYEP. The result was a barrage of criticism of the government from ordinary citizens. This reinforced Mao's position in opposition to a strict Soviet-style approach to development (which the "leftists" had already successfully undermined by the introduction of the communes, among other policies), but was not sufficient to completely eliminate this approach from the toolbox employed by government bureaucrats. (After the leftists gained the upper hand within the CPC, they had no more use for the cultural openness of the "Hundred Flowers Movement" and it was abruptly terminated.) 

The second Five-Year Economic Plan (SFYEP) represented a softening of many of the policies embodied in the first plan---less surplus would be extracted from the countryside for investment in industry, for example, but it was still basically the Soviet approach. Nevertheless, the SFYEP was still-born. Mao and his faction took advantage of the dissention within the CPC, sparked by the criticisms of the "Hundred Flowers Movement" and the failure of the first FYEP. The government moved sharply off the Soviet track of development and into the so-called Great Leap Forward. 


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[1] Communes were created by combining land that had been divided among a variety of self-exploiting direct producers. This combined land would be farmed "collectively" by the farmers under the direction of cadre appointed by the state. In addition, new light industrial and farm input related enterprises (such as fertilizer plants) would be created and situated within the boundaries of the communes. Mao and the leftist elements of the CPC sought to simultaneously decentralize industrial production and to collectivize farming. The former objective would weaken the power of the bureaucracy over industry and the latter would push farmers to develop a "socialist" consciousness, or at least that was the effect anticipated by Maoist theory. The creation of more vertically and horizontally integrated production on the communes would also contribute to the overall self-sufficiency of China, which was another objective of the Maoists. In this regard, we should not underestimate the importance of Mao's belief that China would inevitably be attacked by the "Western" capitalist powers (perhaps with the KMD on Taiwan acting as the forward shock troops) and that self-sufficiency in the countryside might be critical to the self-defense of the nation. Thus, the communes served not only the ideological and political objectives within the Maoist version of how socialism is developed, but also served one of the objectives of Maoist strategic military theory.

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