In China, a transformation is taking place unlike any other in modern history. The success or failure of the experiment, carried out under the strict supervision of the Communist Party, which has been in power since 1949, would seem to be of direct significance to one quarter of the world’s population… [I]t represents an attempt to transform an overpopulated, underdeveloped agrarian society into the [world’s] third largest industrial power in a very short time and with a minimum of help.—Ost Europa Wirtschaft, 1962 1
Two items at the start. First, experimentation at grand and minuscule levels has characterized state and enterprise practice from the outset of the People’s Republic of China; and second, as the Maoist era has been eclipsed and condemned, overlooking experimentation’s continuity from the 1950s has become customary. In 1967, adding context to Ost Europa’s assessment, a Polish journalist noted that “[t]he Soviet experts who worked in China until 1960 took a dim view of the enormous waste resulting from a multiplicity of abortive experiments and trials.” 2 Still, experimentation continued. Historian Lynn White III summarized the Great Leap Forward as “a gigantic administrative experiment .” 3 However, more recently, the first PRC generation’s devotion to trials and tests has become obscured; a recent study, China Experiments, focused only on later decades: “Local experiments are the hallmark of how China has undertaken all sorts of reforms since the end of the Mao era in 1978.” 4 Not so fast. If anything, Deng-era experimentation represented continuity with practices dating to the early post-Liberation years—from the outset, the PRC was “a socialist experiment .”
Researching this book after studying enterprises in Communist Central Europe brought many surprises, but none so vivid as encountering in the People’s Republic of China extensive support for problem-solving through experiments, investigations, tests , prototyping, trial production, and knowledge-sharing . Enthusiasm for the novel and the ready acceptance of failure , its corollary, rarely animated firms and managers in Poland , Hungary , or Czechoslovakia . Reasons for this difference are scattered through the stories related below, but they likely include the enormous tasks of socialist construction in a huge, poor domain that was hardly a nation (Just try something, anything!), Chairman Mao’s emphasis on research as a key path to knowledge, 5 and the relatively swift apprehension that rote application of Soviet models caused confusion and conflicted with revolutionary values .
Several related questions surfaced while preparing this monograph. How did Communist China’s enterprises do business? How did the People’s Republic manage to construct socialism and pursue industrialization with (next to) no money? What was socialist about socialist agriculture, construction , commerce, and industry? How were investment , technology, or marketing decisions made and implemented? How did enterprise routines form and change in the PRC’s first generation? How could huge deficits in workforce literacy and skills , management experience, and engineering capacity be addressed? How could a balance between expertise and revolutionary values be maintained in workplaces and business relations? How did relationships unfold and alter between center and province, policy and practice, cadre/manager and farmer/worker? What can we discover about what happened inside enterprises in this massive, ragged, and ever-incomplete socialist experiment ? Finally, what might entrepreneurs and managers in the capitalist world, endeavoring to deal with twenty-first-century China, learn from a collection of stories from the first phases of a world power’s trial-and-error construction ? Attempting to answer all but the last is the task ahead.
At the outset, it should be remembered that postwar China faced far greater challenges in building socialism than Europeans did. 6 In the 1930s, Poland , Hungary , and Czechoslovakia all possessed broadly modern infrastructures, sizable industrial capacities, effective if not efficient bureaucracies, and functioning agricultural, extractive, and educational systems. Though in the postwar each sector had to meet the demands of Stalinist planning, all three states had the core capabilities to remedy wartime damage, including widespread literacy , organizational experience, and a critical mass of technicians and skilled workers in manufacturing, construction , and transport. China had few of these assets in 1949, emerging from decades of war that shattered most administrative and business operations. Even Poland was far less dependent on farming than China; it restored transport links, rather than creating them de novo. At base, the People’s Republic needed simultaneously to fabricate a modern economy and a modern state—each an immense task—yet had sparse resources for either. These “start conditions” help account for the decades-long oscillation between politics and performance regarding enterprises, markets , investments , and construction . Learning on the job, Chinese officials undertook multiple “experiments” to test organizational structures and practical methods for fostering economic growth. Unsurprisingly, these steps generated uneven outcomes and conflicts among those promoting rival approaches. Policy implementation triggered a cyclical routine of sectoral growth and institutional development, unwound by policy reversals, setbacks, and recriminations, before support renewed for fresh experiments that could restore “socialist progress.” 7 Moreover, as Audrey Donnithorne has shown, implementation often included interpretation at the provincial, city or county level, leading to quite a diversity of practices. 8
Clearly by 1950, although both China and Central Europe had communist state structures and a socialist-transition economy, most everything else was sharply different. China’s scale was staggering; Guangdong province alone is as big as Poland geographically and held 40 million people by 1960 (Poland , 30M); while some 600 million more resided in other PRC provinces and regions. Although New China’s economy remained massively devoted to agriculture, many farmers continued struggling with poverty well after Communist land redistributions. China had also endured at least three major twentieth-century famines before a fourth erupted during the Great Leap—disasters absent from twentieth-century Central Europe (except in wartime). Parts of China also were weak prospects for growth—most of the West and Southwest, Inner Mongolia, and mountainous districts in the center—whereas population, usable farmland, and urban centers crowded into a broad eastern corridor stretching over 3300 km. from Harbin in the north to Guangzhou in the south. Moreover, China’s technological weaknesses presented lasting obstacles. Agricultural tools remained traditional in the 1940s/1950s, used in hard hand labor. This changed very slowly. The country’s variegated climate/soil/water conditions (and farmers’ settled cultural ways) made introducing “modern” tractors , farm equipment and chemical fertilizers a complex task. So was producing them. Standardizing, maintaining, and repairing agricultural technologies proved elusive for years. Given this, moving ahead depended on agriculture.
These key issues (agriculture’s centrality, persistent poverty, and technological traditionalism) generated long-term problems for the state, enterprises, and managers, especially in acquiring and distributing food for a population increasing an estimated 15 million yearly. National and provincial officials faced tough resource allocations among industry, construction , defense , education, and agriculture. 9 These difficulties intersected with a politically unsettling dependence on foreigners for technological inputs (first, the Soviets, then after 1960, a mix of Japanese, British, French, German, and Central European partners). Importing machinery necessitated exports [foods, handicrafts , materials] to secure hard currencies for payments , a “contradiction” that reinforced the significance of organizational experiments and drives for technical self-reliance .
Three other constraints were almost as important, though each had some positive aspects. First, postwar China had a fragmentary and incomplete infrastructure of railroads, roads , bridges, dams , waterways, electricity , and communications , portions of which had been neglected, damaged, or destroyed. The upside here, however, was that every region had vital candidates for capital construction projects. Second, China experienced repeated cycles of natural disasters: droughts, severe storms (typhoons, monsoons), floods , pest invasions, and earthquakes that repeatedly wrecked programs to provide irrigation , store and distribute water, improve crop yields, and enhance rural living standards . 10 A combination of disasters, plus the withdrawal of Soviet...