Tag: Free Market

“Far from embarking on a new correct path, Deng was trying to turn back the clock. He wasn’t out to create a new economic system; he sought to restore the planned economy that had existed before the Cultural Revolution. The program he tried to implement after 1978 was based on the “Four Modernisations” Zhou Enlai had introduced in 1963 to revive the countryside after Mao’s disastrous Great Leap Forward. During the Cultural Revolution of 1966 to 1976, the party’s radical elements encouraged renewed collectivization campaigns. Deng sought to reverse those extreme policies, not the planned economy itself.

Deng embraced reforms conservatively, after events on the ground had already made state restrictions obsolete. Upon taking control of the party, he endorsed private ownership of small plots but forbade dividing up collective land to individual households. It was only in 1982, four years after he took power, that households were officially allowed to contract production rights on collective land. He raised the price of grain that farmers compulsorily sold to the state by 20 percent—a substantial concession, but hardly evincing the kind of vision that the title “Great Architect” implies. Indeed, the year after the “great turning point” in April 1979, Deng and the party leadership ordered those who had left the communes to rejoin them.

The planned economy was undermined and subverted from below well before the communes were officially dissolved in 1983. Decollectivization occurred not because of Deng’s vision but because ordinary people, under cover of the Cultural Revolution’s chaos, left the communes. Several years before Mao died in 1976, it had become common for people to strike out on their own in search of economic opportunities. The party’s leadership lamented that the countryside had “gone capitalist,” but it couldn’t reverse that trend. By 1980, half of all production teams in Guizhou province and more than half in Gansu were under household contracts. This system gave farmers secure tenures of collective farmland, which significantly increased both their productivity and health. One cadre in Anhui province likened household contracting, as reported by the historian Frank Dikötter in a 2016 article in The China Quarterly, to “an irresistible wave, spontaneously topping the limits we had placed…it could not be suppressed or turned around.””

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“Deng was not changing history; he was swept away by it. As the historian Kate Zhou wrote in her 1996 book How the Farmers Changed China: “When the government lifted restrictions, it did so only in recognition of the fact that the sea of unorganized farmers had already made them irrelevant.” Ordinary people, not Deng Xiaoping, resisted and reformed the planned economy.

To understand how the party’s control of economic activity slipped, one must look to the history of the Cultural Revolution. Mao’s “Great Leap Forward” of 1958–1962 had devolved into a Great Famine, killing tens of millions of people. While they starved, the party ramped up grain exports to fellow socialist countries in order to increase its international prestige.

This forced farmers to circumvent the state’s orders—one had to lie, cheat, steal, smuggle, or trade on the black markets to avoid starvation. Apart from the party’s loyal hacks, only the lucky or enterprising survived. In the early 1960s, even Mao had to acknowledge that the Great Leap Forward had failed. The Central Committee introduced a few paltry safeguards against extreme collectivization. Villagers were thus allowed to cultivate private plots, but only in their free time.

But Mao soon saw this as backsliding, and he launched the Cultural Revolution to secure his hold on the party. Revolutionary committees took control of China. The People’s Liberation Army was ordered onto the streets, and the Soviet-Sino border conflict was used as a pretext to reassert control over the countryside. Private holdings were once more collectivized on a massive scale. But the party tore itself apart in the process; its organization was vitiated by factional infighting.

The Cultural Revolution broke the party’s apparatus of control—it lost much of its capacity to coerce people’s everyday behavior. During the turmoil, people took back some of their lost freedoms. They expanded private lots, left communes, sold produce for private gain, moved to the cities, and even opened underground factories. It is here that we find the true origins of China’s modernization.”

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“Villagers established private firms and factories throughout the country. For example, the rate of industrialization in the countryside of Jiangsu province in the early 1970s far exceeded the rate of industrialization there under Deng. And it was these rural industries that fuelled China’s GDP growth. Prosperity came not from the cities or from the state-owned enterprises, but from the countryside. The people who worked in these factories had often left the communes on their own initiative, not on party orders. When Deng became paramount leader in 1978, the silent revolution was already well underway.

Not only were factories established, but markets linked rich and poor provinces. And in the coastal province of Guangdong, traders revived overseas trading links, especially once restrictions were eased in 1972. Deng is said to have begun the process of opening up China, but as early as 1974, the amount of money reaching people in Guangdong from overseas was twice what it had been in 1965. Black markets existed everywhere, and although the state maintained rigid monopolies on several key products, almost everything was sold openly on the markets.”

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“Deng recognized that certain changes were inevitable, but his reforms were little more than legalizations of already occurring practices that he was shrewd enough to claim credit for.”