The Chinese Economic Reforms

Stephan Feuchtwang, Athar Hussain, Stephan Feuchtwang, Athar Hussain

• Publisher: Taylor & Francis
• Year: 2018
• Print ISBN: 9781138343917
• eBook ISBN: 9780429798153
• Edition: 1
• Topic: Social Sciences
• Subtopic: Regional Studies
• Index: Social Sciences

This book, first published in 1983, examines the significant economic reforms undergone by China following the death of Mao and the downfall of the Gang of Four. It looks at Chinese economists' conceptions of the necessity for change and compares China's reforms with similar ones carried out by the Soviet Union and Eastern Europe. There is a detailed analysis of the different sectors of the economy which shows how the reforms were carried out in practice.

PART 1

DEBATES AND COMPARISONS

1

CHINESE ECONOMIC DEBATES AFTER MAO AND THE CRISIS OF OFFICIAL MARXISM

Søren Clausen

Looking back at the debates that have been taking place among Chinese economists since 1978, one is tempted to conclude that Chinese economic thinking is a not altogether alien world. In the various scholarly debates, as they are expressed in the eco-nomic journals and at big conferences, one finds protagonists of a ‘tight money’ policy and cuts in public spending, others arguing in favour of a thorough price reform, general concern about inflationary wage pressures, etc. The acute economic problems of China anno 1981 – unemployment plus inflation – are sadly universal, and China’s economic strategists are dealing with those universal problems. No wonder that the economic discourse of China, after the dust clouds of Maoism have by and large settled, gradually takes on a more familiar hue.

This non-uniqueness of Chinese economic thinking is even more striking when one looks at economic developments in the Soviet Union and Eastern Europe in the 1950’s and 1960’s. It can be argued that the development of China closely follows the precedent of these countries, only with a time lag of some 15 to 20 years; likewise, the post-Mao economic debates sometimes duplicate exactly earlier debates in the Soviet Union, Poland, Hungary and other places¹. Is history, after all, able to repeat itself?

The purpose of this essay is not a comparison between Soviet/East European and Chinese economic debates, nor shall I attempt conclusions about the changing orientation of economic policy. My purpose is to take a look at the fact that the various ‘schools’ and trends in Chinese ‘political economy’ are all based on this or that interpretation of Marxism, a Marxism² which is in a constant process of absorption and transformation by the elite, but nevertheless very much alive as framework and structuring element. It is probably in this context of the ongoing sinification of Marxism and the changes in the functions of ideology that the peculiar aspects – if any – of China’s economic thinking can best be demonstrated.

Why bother about Chinese Marxism, one might ask, since apparently the Chinese are busy ‘liberating’ themselves from a lot of it? The point is, Chinese Marxism is an economic paradigm and no mere formality. It provides economists with a framework, a world outlook, basic methodology, biases – much like Keynesianism or monetarism in the West. What is more, in China the ideology of the economists is far more than just an economic paradigm, it is also the central ideological code, vital to the elite in its struggle to provide legitimacy and self-identification.

This is not to suggest that there is fundamental unity in China’s economic thinking; the elite has its internal struggles, too, and in the sphere of economic thinking they have been quite acute at times. Today one finds very different approaches, from ‘market socialism’ to technocratic plan reform to Stalinist orthodoxy, etc. But the various trends and interests all have to express themselves in terms of this or that interpretation of Marxism; and the ongoing debate among these trends is intelligible only in the light of this framework.

The case of Xue Muqiao might serve as an illustration. Xue is a leading economic ideologue in the post-Mao era, his articles are generally given the most prominent position in the Party and economic journals, and his latest book has even been translated into English in full (Xue Muqiao, 1981). In China – and outside China as well – he is usual-ly seen as the main spokesman of the market reformers’. Since the middle 1950’s he has been associated with the Chen Yun group³, consistently arguing a relaxation of the planning structure and the high level of accumulation. He is a ‘liberal’. But he is more than that: looking back at his writing in the transition years of 1976-78, one is struck by the fact that Xue in those not so distant times actually defended certain elements of late Maoist orthodoxy, apparently fighting against great pressure. As late as 1978 he stuck to Maoist con-cepts like ‘to limit the negative effects of the law of value’, ‘restricting bourgeois rights ‘, ‘criticizing new-bourgeois elements’ and the like⁴, at a time when these concepts were rapidly going out of circulation. So perhaps he is a ‘left dogmatist’, too?

How do these two characteristics fit in with each other? Does he have a clear opinion at all, it might be asked. Of course Xue, being authoritative, cannot be very consistent, since he often acts as a spokesman of the leadership as a whole rather as an individual. But the clue to this apparently blatant contradiction lies in his interpretation of Engels’ Anti-Dühring, with its identification of socialism with the dying away of commodity production and the law of value, Xue’s point being that in the case of China this should be a very long process. In contrast, Xue’s main ideological opponent throughout the last few decades, Sun Yefang, has based himself on an interpretation of Marx’s ideas on ‘time economy’ as they are formulated in certain passages of Capital, with very different implications for the concept of the law of value (we shall return to these gentlemen in a short while).

Both Xue Muqiao and Sun Yefang perform political roles, they represent different strategies and interests. But these roles are performed in a uni-verse of Marxist scholastics, which is not just an outer shell. Somehow, it is reality to these men.

The Stage

In the period immediately following the downfall of the ‘Gang of Four’ the efforts of the political-economic ideologues were concentrated on refuting the political economy of the ‘Shanghai school’ (see P.M. Christensen’s contribution to this collection) and restoring pre-gang orthodoxy. But what exactly was that? How far back to go?

In the ideologically very authoritarian period of 1977 and early 1978, libraries and book stores were systematically purged of economic literature that could be associated with ‘Gang’ viewpoints. Altogether about two dozen books, published in Shanghai, Tianjin and Beijing in the years 1973-76, were taken out of circulation. The operation left very little on the shelves: the ‘Gang’ had had its authoritarian periods, too.

In universities and schools, time-honoured textbooks of political economy from before the Cultural Revolution were reintroduced. But what did these generally quite formalistic texts have to offer to the solution of the economic and social problems of the post-Mao era? In the search for a usable ideology in the field of economic theory, the ideological functionaries were painfully reminded of the fact that before the Cultural Revolution quite different approaches had been in existence beneath the surface of ideological unity. So the search went ever further back in time. For a time in 1977, the economic thinking of late Stalinism was promoted. The anachronism of this project must have been apparent to everybody.

The very concept of ‘ideological unity’ had to be reformed, if the economic theoreticians were to have any function to perform. The outcome was a kind of controlled diversification of the economic-theoretical discourse, or ‘hundred flowers’ as the Chinese prefer to call it. To a large extent the ‘great debates’ in the field of economic theory in the years of 1957-63 were restaged in the years 1978-80, very often with the same people performing the same roles, having been rehabilitated to their old jobs. A wave of publishing started in late 1978.

But getting rid of 20 years of Maoist infiltration of the political-economic discourse cannot be an easy job; one might expect the Chinese ideologists to encounter even greater difficulties than did Khruschev in his ‘half revolution’ against Stalinism. Let us take a look at these difficulties in a simple case study, the debate on the commodity or non-commodity status of the means of production.

The Status of the Means of Production

In an economy such as China’s, there are different forms of transfer and circulation of goods. As for the transfer of means of production, typically from one state-owned enterprise to another, the theoretical question facing the Chinese economists is: what is the nature of such transactions? To put it more exactly: do these transactions have the nature of commodity exchange or not? This question has been the subject of extensive discussion in China in the last few years. Obviously, the answer to the question has a lot of implications for the practical economic strategy to be adopted, particularly to the strategy of ‘market reform’. Within the general paradigm of Chinese Marxism, it is a focal question.

Chinese debates on this subject do not take place in an historical void. Looking back at the whole tradition of ‘the political economy of socia-lism’, it has been a central issue of economic debates at one time or another in most state socialist countries. Also in China, it is not an altogether new question.

The point of departure for Chinese debates on this question is Stalin’s Economic Problems of socialism in the USSR from 1952 and the official Soviet textbook of political economy from 1954, which was a follow-up of Stalin’s book. These two texts came to play an enormous role in the formation of Chinese economic thinking in the People’s Republic, filling up a theoretical vacuum: in the Chinese context, there was very little else to build on at the time.

In a way, that was true also of the Soviet Union at the time, since Stalin’s little book marked the end of a two-decade-long period of ‘every-thing quiet on the theoretical front’. After the conclusion of the great economic debates of the 20’s and the establishment of Stalinism, the Soviet Union was in fact left without any general economic theory, not to mention debates. The purpose of Economic Problems … was to put an end to this situation.

Stalin’s vision of socialism was that of smoothly functioning clockwork; socialism was seen as an independent mode of production based on pub-lic ownership of the means of production, governed by a number of ‘objective economic laws’. Among these, the ‘law of value’ was reintroduced after decades of banishment. It was a ‘law of value’ very different from the one operative in capitalist societies, a tame ‘law of value’, viewed as a useful instrument for the planners, whose job was seen as that of interpreting ‘objective economic laws’ and putting them to good use.

Basically, Stalin’s contemplations on the theoretical problems of value remained faithful to the general consensus of the early economic debates of the 1920’s. Despite numerous contradictions (viz. the Bukharin-Preobrazhensky debate) the generally accepted idea was that of an irreconcilable conflict between capitalist value and elements of socialist economy. In Stalin’s version, too, value was seen fundamentally as an alien element in the socialist economy, but unavoidable due to the fact that there was not yet a single state ownership comprising all sectors of the economy. There still had to be exchange between the collective and the state sector. But on the other hand, with planning supreme, ‘ … the law of value has no regulating function in our socialist production’ (Stalin, 1972: 19), its influence being restricted to the sphere of circulation. Particularly in relation to exchange within the state sector, the ‘law of value’ was thus seen as an outer shell, in contrast to the essentially socialist nature of the economic functions.

In China, these ideas of Stalin were introduced as infallible dogma and applied to a very different reality, the reality of the gradual transformation of private industry into state industry and private farming into collectives. Liberating the regulation of production from the ‘law of value’ became a practical task. As expressed by Xue Muqiao in 1953 – already then a leading spokesman – ‘The sphere of influence of the law of value (jiazhi guilu qi zuoyong fanwei) has already without doubt been somewhat restricted, and in the future it shall be restricted even more’ ⁵.

In connection with the general crisis of the Soviet bloc in 1956 (and for a number of other reasons, not to be discussed here), the Chinese leadership began to drift away from the mainstream of development in the state socialist countries. It became possible, even mandatory, to find one’s own feet, also in the context of economic theory. The first expression of this fact was Mao’s famous speech on Ten Major Relationships, and in the following years some aspects of Stalinist dogma came to be challenged in China – from both the Left and the Right.

To mention the latter first, Sun Yefang – the enfant terrible of Chinese economic theory – had opened up the attack already in late 1956, suggesting that planning and statistical work should actually be based on’ the law of value ⁶ rather than restricting or negating it. In the following years Sun developed this notion into a full-fledged theory of value under conditions of a socialist economy, particularly in his major work on value from 1959 ⁷. From a slightly different point of departure, Gu Zhun in 1957 advocated making fuller use of the law of value to activate the powers of self-interest in the service of production ⁸. Both of these approaches are very much alive in Chinese economic debates today.

As for the first-mentioned challenge, the one from the Left, 1958 saw a renaissance of what was essentially classic Bolshevik thinking (a prime example of which is Preobrazhensky’s economic thought): Socialism was perceived as the ongoing struggle against remnants of capitalism, among which was the ‘law of value’. Arguments in this direction were put forward by people like Chen Boda, Zhang Chunqiao ⁹ and, notably, Mao Zedong, in his ‘Reading Notes on the Soviet textbook of “Political Economy”‘, a lengthy commentary on the first full Chinese translation of the above mentioned official Soviet textbook, written by Mao around 1960¹⁰. The Leftists did not, however, tackle the question of the status of the means of production in any concrete or precise way. An in-dication of Mao’s line of thought in those years was offered at a symposium on economic theory in Suzhou in 1979, when it was revealed that Mao had opposed Stalin’s axiom of the non-commodity status of transfers within the state sector, reportedly with the argument that this axiom was an expression of ‘lack of trust in the peasants’¹¹

The first few years following the debäcle of the Great Leap Forward saw a lively debate on questions of economic theory; it was in fact the First Golden Age of Chinese economic thinking, and most of what is now the stock of economic thought was developed in those few years in the early 1960’s. But when a new ideological Ice Age came around in 1963-64, Stalin’s value concept emerged unharmed. And this situation remained unchanged for about a decade.

The Cultural Revolution did not produce much in terms of economic theory, apart from a heap of vicious attacks on Sun Yefang and other unorthodox thinkers (these criticisms were in fact not very substantial from a theoretical point of view …). It was left to the Shanghai school, headed by Zhang Chunqiao, to formulate theoretically the experience of the Cultural Revolution, shaping an economic platform of the Left. In a number of publications appearing in 1975 and 1976, Stalin’s above-mentioned axiom on the non-commodity status of the means of production was finally challenged once again. The message was: the means of production are in fact -in a certain sense – commodities, submitted to the regulation of the law of value, since even within the state sector each enterprise functions as a relatively independent unit, with its own profit-and-loss calculations, et...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Tables and List of Figures
• Additional Information
• Map of China
• INTRODUCTION: Stephan Feuchtwang and Athar Hussain
• Part 1 DEBATES AND COMPARISONS
• Part 2 THE REFORMS IN PRACTICE
• Notes
• References
• Index