china's economy: an aspect

Social Scientist

China's Economy: An AspectAuthor(s): Arun Prokas ChatterjeeSource: Social Scientist, Vol. 13, No. 9 (Sep., 1985), pp. 53-60Published by: Social ScientistStable URL: http://www.jstor.org/stable/3517493 .

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ARUN PROKAS CHATTERJEE*

China's Economy An Aspect

IN CHAPTER I of the Development of Capitalism in Russia, Lenin referred to the relation between the ruin of the small producers and the development of

capitalism. He said, quoting from Das Capital, that "the expropiation and eviction of a part of the agricultural population not only set free for industrial

capital the labourers, their means of subsistence and material for labour; it also created the home market."

But the contradiction is here that unless the attachment of the peasantry to the land is broken, the development of capitalism which is a progressive step in the progress of society compared with the stage of feudalism is not

possible. In the preface to the Second Edition of the work, Lenin further said that the basis of the final transition from otrabotki (share-cropping system) to

capitalism is the free development of small peasant farming. It appears that China, being faced with the problem of industrialization,

has been groping for a system since the 1950s which will liberate the peasant masses from servitude to land and take them onwards on the path of modernization and industrialization. Obviously, in a socialist regime, the elemental law of capitalism could not be allowed to operate leading to ruination of small peasants and thus to creation of not only a home market for the

indigenous industry but also setting free for industrial capital the labourers, their means of subsistence and material for labour. Lenin himself said that

"infinetely diverse combinations are possible of elements of this or that type of capitalist evolution and only hopeless pedants could set about solving the

peculiar and complex problem arising merely by quoting this or that opinion of Marx about a different historical epoch."

China learnt from her own experience that the establishment of large communes and placing farm land and other means of production under

public ownership did not solve the problem of modernization. According to their statistics, production dropped drastically as a result due to communiza- tion of agriculture.

One of the reasons was the decline in the enthusiasm of the peasants. In an article on "China's countryside under reforms", Mr. Du Runsheng, Director of the Rural, Policies Research Centre under the Secretariat of the

President,West Bengal Association of Democratic Lawyers, Calcutta



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Communist Party Central Committee, said that, though the gains from the advanced cooperatives on the Soviet model, in which all farm land and other major means of production came under public ownership, could not be ignored, yet, on an overall appraisal, it would be "hard to say that the people's commune campaign from 1958-59 was a success". One reason he cites was that too much concentration of labour force, egalitarianism and pooling of vast areas of land under uniform management stifled the peasants' enthusiasm. The situation was aggravated by the Cultural Revolution from 1966 to 1976. During that revolution, commune members' private plots, family side lines and free markets were cut off as "capitalist tails". According to Mr. Du, Agriculture met a dead end due to these factors.

It appears that after the Cultural Revolution and after the destruction of what the Chinese call "the counter-revolutionary Jiang Qing clique", the Chinese leaders began to think about the means to develop and modernize Chinese agriculture. In 1978, the Chinese Communist Party convened the Third Plenary Session of the Eleventh Central Committee and mapped out a new road of development of Chinese agriculture. The outline of the pro- gramme as mapped out through numerous documents issued by the Com- munist Party is in the words of Mr. Du, as follows:

"(1) To map out a socialist road suited to Chinese society and search for an economic pattern, which helps fully develop the productive forces and is acceptable to the local people.

(2) To encourage mutual aid between the city and country-side for joint development. Industrial development should consider what agriculture needs and what the peasants can afford. Industry should serve agriculture. Township industries should also be properly developed to absorb surplus labour and narrow the undue gap between the city and the countryside.

(3) To secure a well-rounded development of the rural economy. The development of the rural economy should be co-ordinated with the development of society. Some areas and some people should be allowed to get rich first while other places and other people should be given help to prosper together. The countryside should develop not only agriculture but industry, trade and other undertakings to a degree. At the same time, education, health services and scientific undertakings should be developed.

(4) To co-ordinate the development of production with the protection of the ecological environment so that agricultural resources could be used rationally to avoid exhausting them."

The main emphasis was on the development of commodity production. It is well-known that the development of commodity production begins the development of capitalism. But the Chinese social scientists refused to con- cede that the development of commodity production is only a concomitant of capitalist development. According to them, commodity production can



CHINAS ECONOMY

serve either capitalism or socialism. Commodity production can, according to them, stimulate and enliven the existing productive forces, provide all the products needed by China's huge population and thus enrich and con- solidate the material basis of the socialist system.

I may once again hark back to the preface that Lenin himself wrote in

July 1907 to the Second Edition of his Development of Capitalism in Russia. He said that a genuine capitalist revolution requires smashing the feudalist features of agricultural economy. Of course, there is another way in which feudalism might be replaced by capitalism. That is through "the internal metamorphosis of feudalist landlord economy". But there "the entire agrarian system for long retains feudalist features". On the other hand, where the landlord economy is destroyed by revolution, "the basis of the final transition to capitalism is the free development of small peasant farming, which receives a tremendous impetus as a result of expropriation of landlords' Estates in the interest of the peasantry." But, "the more completely the vestiges of serfdom are destroyed the more rapidly does the disintegration of the

peasantry proceed." Such disintegration leads, as has already been said, to small peasant farming, impetus to commodity production and, therefore, "the establishment of the most favourable conditions for the further accom

plishment by the working class of its real and fundamental tasks of socialist reorganization."

The Chinese Communist Party appears to have thought that, unless they proceed through the path of small peasant economy and commodity production, it may not be possible for them to do away with the feudal path anc, abolish what they call "the backward subsistence style of production" because as has been said by another present day Chinese economist, "the socialist system cannot be consolidated on the basis of a subsistence economy."

The Contract-Responsibility System For this purpose, they introduced the contract responsibility system.

This system functions in two ways. (1) Many households sign contracts with the collective for a certain area of farm land, forests, orchard, fish ponds, pas- ture land, for a processing workshop, with the basic means of production remaining under public ownership. The households are asked to hand over

part of their products and income to the collective, while the collective economic organisations control and guide their activities. The households that enter into such contracts are called contracted households. The contracted households are considered part of the collective economy. They are taken to be a form of management of the collective economy and are of a socialist nature.

(2) Some households, however, manage business of, say, poultry farm-

ing, pig raising, transport business or trading on their own without the colle- tive providing the basic means of production. They are called self-managing households. They are the owners of their means of production as well as of what they produce. This is certainly independent private peasant economy

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adjusting itself to the prevalent State economy through supply and marketing contracts. But, according to the Chinese, this form of management is a com- plement of the socialist economy allowed by law to exist as such, a comple- ment to the socialist public ownership. The Chinese do not deny the dangers of capitalist restoration arising from such peasant economy. According to one of them, "the nature of the specialized households is connected closely with politics, economics, law and other social factors. With sound legislation, reasonable tax laws and better social management, specialized households, both contracted and self-managing, and integrated economic operations can play up their strong points while avoiding their weak points, and be helpful to socialism, and maintain their socialist nature. But bad social management and unreasonable distribution of benefits will cause the appearance of a capitalist tendency in the management of the contracted households and the combined operations." The last sentence is important recognizing as it does the risk of emergence of capitalism.

The Chinese claim that this form of contract responsibility system is a new creation by Chinese peasants under the Party's leadership. Under this system the socialist nature of ownership of farm land is maintained but it is contracted to individual peasant household. By this process centralized management is integrated with decentralized management. Decision making, in the days of commune, used to be subjective but that is no longer the position inasumuch as the decision making power is entrusted to the actual producer. "Anything that is suitable for the peasant households should be done by the peasants themselves." According to the Chinese, for effective production the manager and the producer should be one and the same.

The contract responsibility system has also removed egalitarianism, because payment is made according to work done. The habit of "eating from the same big public pot" is done away with. The contract responsibility has also altered family traditions. A report by Mr. Wang Ge appeared in China Daily. According to that report which gave the result of survey of 38 families, 27 out of them have set up job responsibility for the members of the family itself and those of the family who work more receive more. According to the survey, the incomes of all the 38 families have risen and in 1983 the income per family rose from 10,000 to 30,000 yuans. (1 yuan is equal to Rs. 5 approximately).

The contract responsibility system has given rise to diversified economy. Due to intensive farming by individual peasant households, all the able bodied members of the family may not be required for farming work. They are thus released from agricultural production and accordingly, they switch to other types of work. Individual household forming becoming more efficient, a surplus of labour has been generated. This labour force is taking up new ways of commodity production like local processing industries. The products of their activities get channelized for sale through the net work of rural supply and marketing cooperatives. As reported in China Daily by Fei Xiaotong, the sociologists have found that China's recent agricultural development has allowed industries to flourish in small townships. In 1983,

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industrial enterprises inJiangsu's rural township contributed in taxes 1/8th of the Provincial Government Revenue. Moreover, much of the profit of the rural industries go to support agriculture in a big way. In the period from 1979 to 1983, it is calculated that more than 20 per cent of the profits from

Jiangsu's rural industry were invested in agriculture and local welfare. Moreover, development of such rural industries has meant that a member of the rural family who is not required for farming is working in such industries. According to statistics, profit from rural industry is responsible for an additional 35 yuans for each rural resident. Such rural industries have also prevented large-scale emigration of work force from the village to the city. During the emergence of capitalism in Western Europe and elsewhere, we witnessed ruination and pauperization of the small peasants and the surplus labour so created emigrated into the cities. Any historian knows about the influx of "vagabonds" into the cities of England during the Industrial Revolution. These "vagabonds" in search of employment in towns and cities often became lawless and English law cruely dealt with them. "Vagabonds" were often awarded capital punishment. In China's socialist set up, that has not been allowed to happen because surplus labour is finding employment not only in rural industries but also in other brenches of diversified economy such as poultry farming, pig raising, etc.

Individual private peasant economy is, therefore, leading in China not to pauperization of surplus labour but is releasing them for industrial growth and development. They are a driving force in the development of commodity economy or commodity production. At present not all of them engage in other forms of agricultural activities like cash crop cultivation, livestock or polutry breeding, fishery, transportation, commerce and service trades. Using new techniques and intensive methods of farming, the peasant households produce more than they need for themselves and market the surplus of their products. In this way, these peasant households have become important suppliers of rural commodities. It is they who are transforming China from a society of sluggish rural economy to a land of large-scale commodity economy.

Over ninety per cent of the peasant households in China, particularly the self-managing ones, are now carrying out the responsibility system of production and are also amassing large wealth and property. Some households are getting rich quick. Questions have been, and are being, asked in China itself on the issue of polarization or the issue of eventual restoration of capitalism if the present responsibility system is encouraged and allowed to flourish. To the question of polarization, the Chinese retort that their aim is to make the people rich. But all the people cannot become rich at the same time and simultaneously. According to Mr. Du, "to let all people eventually get rich, it is necessary to let some get rich first."

Let others get rich gradually. "To prosper together does not mean pros- pering simultaneously." Again, "The way to rule a country well is to first let the people to get rich quick. Only when the people become well off can the country become powerful."

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Mr. Du goes on to say, "In our country, the privately owned enterprise is not an independent socio-economic form and so cannot possibly become

capitalist because China has a socialist system with political power at the hands of the people. Farm land and other resources are owned either collectively or by the whole people. Big factories and banks are government- controlled so that the economic means are sufficient to keep China's socialist economy in a dominant position."

Mr. Du held a Press Conference with foreign reporters and some foreign guests and several questions were addressed to him. To the question whether the new rural economic reform would lead to capitalism. Mr. Du answered, "The economic reform is to improve management in the rural areas within a socialist framework. It is only a partial change in policy. It does not make any fundamental change in China's socialist system, so its leading to capitalism is out of the question."

To the question, what is the aim of the rural economic reform, Mr Du answered, "The form underway in China is, first of all, to find a socialist road which is suited to her conditions, namely, a big population and a backward

economy. We cannot just copy the experience of other countries."

To indicate what the rural reform has achieved, Mr. Du placed in his Press Conference some facts and figures. I quote. "In 112 of the 2000 coun- tres across the country, last year's grain output doubled that of 1978. The

average annual per capita income was 270 yuan in 1982. In 1978, some 33

per cent of farm households had an average per capita income of less than 100 yuan, by 1982 this had dropped to 2.7 per cent. Correspondingly the

percentage with per capita income above 300 yuan went up from 2.4 in 1978 to 36 in 1982. The per capita value of agricultural products and commodities

produced in the countryside in 1982 amounted to 130 yuan or 90 per cent more than in 1978..."

To the persistent question whether the responsibility system will not widen the gap between the rich and the poor, that is to say, polarization, Mr. Du admitted that the gap sometimes may be quite big. "For instance, the annual income of one family may reach tens of thousands ofyuan" (emphasis mine). But, according to Mr Du, they cannot use this as capital to exploit others. For, the main means of production, namely, land, water works and

large tools and equipments continue to be collectively owned.

Mr. Du also admitted that there was hiring of agricultural labour and confessed that it was a new problem, but pointed out that the number of people that could be hired was restricted now to two helpers or five apprentices. He assured, however, that "even though some workers are hired, this can't

grow into capitalism on an equal footing with socialism in China". (emphasis mine). In elaborating the idea that the contract responsibility system is not the same as small scale individual peasant economy, Mr Du stresses that it is

imperative for peasant households to gradually become specialized ones. "We take the degree of division of labour and the level of commodity production as important indicators of a thriving rural economy."

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But, as Mr. Du himself indicated, permitting some to get rich quick would be of no use unless others, namely, the poor, did also get the oppor- tunity to become rich and well-off. For these poor peasants, Mr. Du suggests the panacea of co-operation. At the press conference itself, this question was raised and Mr. Du said that such peasants can pool their resources, man-

power, funds and technology to operate trades and industries and

occupations like mining, transportation, special types of farming and animal

husbandry through co-operatives. Such opportunities are available in modern China and, according to Du, "This ability to freely form new enterprise is a great change of very positive significance."

To put it simply and without verbiage, modern China under Deng X;ao

ping is in a big way set on the road to modernization and such modernization is being brought about by restoring initiative to individual households and

peasants, by encouraging 'capitalist' entrepreneurs though under strict res- trictions of'sound legislation' and 'reasonable tax law'.

Mr. Du has rapped on the knuckles the pessimists who are nervously scared by thoughts of possible rise of capitalism. He has said that the contract

responsibility system is not to be identified with small scale individual peasant economy. China, according to him, is encouraging diversified economy through specialized peasant households, that is to say, through different households engaged in different types of production. In this way the Chinese Communist Party is trying to bring about a gigantic division of labour across the country. We know about division of labour in the era of capitalism between factories and between individual workmen of the same factory. China is introducing division of labour among peasant households, thus pulling up by the roots feudal economy which is based upon self-sufficient and self- reliant and complete production units. By this means of division of labour and thereby an immensely strengthened commodity economy, China dooms to extinction all forms of feudal economy and is effectively extinguishing all vestiges thereof. Moreover, by diversified commodity economy and by guarding the predominantly socialist way of life, the Chinese Communist Party is helping the people of China to skip the stage of

capitalism and start off on the road to socialism without any let or hindrance by any "subsistence level of economy" inherited from pre-liberation semi- feudal society.

By developing the job responsibility system, it is hoped by the Chinese

experts that agriculture in China will turn from scattered small households into a vast technically advanced business with substantial production. According to a Xinhua despatch, the Chinese goal is "that a miniority of the chinese peasants contracting land should be able to provide the country with

ample commodity grain, oil, cotton, sugar and other farm produce" and that this should free the large majority of peasants to work in other trades like processing industry, building industry, transport and communication and other new services. In fact, according to statistics, one out of every six peasants in

Jiangsu province is now working in rural industry.Jiangsu province has more than 52000 rural enterprises and, in 1983, industrial production reached

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15.8 billion yuan, which was 28 per cent of the province's industrial total. In the 1960s, 92 per cent of rural income came from farming and side line production, whereas in 1983, rural industry accounts for 40 per cent of rural income.

The character of the country side is itself changing. Big rural towns are

springing up and one can see department stores, cinemas, theatres, hos-

pitals, water works, banks, schools, hotels and gardens in the rural towns.

Steadily, farming is becoming mechanized and, in the first half of 1983 itself, total area under mechanized cultivation was more than 13 million hectares, an increase of 200 thousands hectares over 1982. More than 2000 machines, that could not be used earlier and had to be put in cold storage, were brought back into service. Use of large and medium tractors increased by 19000 or 7.4 per cent, small tractors increased by 63000 or 36.7 per cent. Ninety per cent of small tractors were bought by the peasants themselves. Whereas, in the past, machines like rice transplanters were purchased by the state and collective farms but could not be used due to the apathy of the

peasants, now, survey reveals that in a single county, namely, Ningan county, the peasants themselves have bought more than 1000 rice transplanters.

In 1983, China produced for her 1000 million people 387 million tons of grain, 4.6 million tons of cotton, over 10 million tons of oil seeds, 14 million tons of pork, beef and mutton and 5.4 million tons of aquatic products like fish. It is stated that from 1978, agriculture has been switched to

high gear. According to statistics, during the period from 1978 to 1983, the annual increase in agricultural output averaged 7.9 per cent, almost 2.5 times the annual increase from 1953 to 1978.

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china's economy: an aspect

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