Experimenting with Market Socialism

Yoshie Furuhashi furuhashi.1 at osu.edu
Sun Jul 23 18:03:52 PDT 2000


At 2:47 PM -0500 7/22/00, Ken Hanly wrote:
>Date: Sat, 22 Jul 2000 14:47:11 -0500
>From: Ken Hanly <khanly at mb.sympatico.ca>
>Reply-To: pen-l at galaxy.csuchico.edu
>
>Interesting this is the first time that China has been mentioned in the
>context of planniing. Shouldn't exactly the same Hayekian problems exist
>there? But it is never once mentioned by Justin or anyone else until now.
>Why is that? In some ways, particulalry in agriculture, China is a better
>model of complete planning. A considerable amouint of USSR agricultural
>produce was from small plots and there was always a contradiction between
>the self-interest of collective farm dwellers who made money from private
>plots and the need to increase labor and production on the collective farms.
>I am not familiar with the details of development in Chinese agriculture but
>there certainly was a transition from co-ops to collectives. Was this
>accompanied by declines in production etc.?
> Cheers, Ken Hanly

***** Frontline Volume 16 - Issue 21, Oct. 09 - 22, 1999 India's National Magazine on indiaserver.com from the publishers of THE HINDU

COVER STORY

Experimenting with market socialism

At this stage, China perhaps needs to think afresh about the direction in which the anti-egalitarian market reforms have been taking its hard-won Revolution.

UTSA PATNAIK

THE 20th century will surely be counted by China as one of the most momentous in the history of its ancient civilisation; and indeed China's rise from the status of a poor, humiliated semi-colonial nation to an independent, vibrant and confident nation p oised to emerge as the second largest economy in the world is of great moment for the course of world history. As China celebrates the 50th anniversary of the formation of the People's Republic after the victorious Revolution, one wonders anew at the enormous transformations that the great civilisation has undergone in the last century alone.

Successive images and events flash through the mind: the humiliation of the Triple Intervention by the Western imperialist powers, Beijing students in the May 19 Movement, the 21 demands made by the Japanese, the seizure of Manchuria, the peasant movement in Hunan, the Canton uprising, Chiang Kai-shek's annihilation campaigns against the Communists, the incredible Long March by a band of ill-clad and ill-equipped revolutionary soldiers with only handfuls of millet to sustain them physically but fired by the resolve to survive and wrest victory from retreat; the long guerilla war, land reforms in the liberated areas, and final victory over the Japanese and the Kuomintang, enabling the initiation of the historic second experiment in the world of an autonomous strategy of building socialism. The consternation in the advanced capitalist world at that time when China "went Communist" and the joy of the majority of the populations in the Third World at the victory can now only be imagined.

The Chinese have written their own history in bold strokes in this century; after the formation of the People's Republic of China (PRC), they have also demonstrated to the world that under socialism it is possible for a very poor nation to reach basic health care not only to the urban but also to the rural population, to provide education to all, to ensure not only food security but an improving standard of life to those who were the poorest in the old society. At this point some will talk of the "famine" of 1959-61; we will discuss this at length in a moment. All analysts of Chinese development history in the last half century, even those hostile to socialism, are forced, however reluctantly, to accept that in terms of human development indicators - food security, advances in health and education, lowering of income poverty, in short, in promoting the welfare of the people - the record is outstanding, in fact better than that of developing capitalist countries with 10 times the per capita income of China. All socialist economies, including Cuba of course, have a very good track record in this respect; but the case of China acquires importance owing to the sheer enormity of the problems that were tackled and the huge size of the population that has benefited.

There is a widespread misconception, however, that the gains are mainly to be traced to the period of market reforms from 1980 onwards and that there was little improvement in the period of Maoist egalitarian policies followed in the preceding three decades - from 1949 to 1979. Nothing could be farther from the truth; in the earlier period, not only was the share of investment in income raised greatly (from about 15 per cent to 35 per cent of national income) and a diversified industrial base established, but there was a sharp lowering of both the death rate for the general population and of infant mortality rate, accompanied by large gains in literacy, above all owing to the improvements in villages where the majority of the population lived and which tend to be the most neglected areas in other developing countries.

The basis for this improvement was precisely the socialisation of property (through cooperative and later commune organisation), which enabled a collective welfare fund to be set up, as also egalitarian distribution policies, especially as regards foodgrains and other necessities. Because the subsequent policies of Deng Xiaoping, which were implemented from 1980, were fundamentally different in content, calling for "combating egalitarianism" and "breaking the iron rice bowl" while doing away with collective operation of land, all the achievements of the earlier period have been deliberately sought to be downgraded since that time. In this effort, most Western academics with their hostility to socialism have participated eagerly; some who were all praise for earlier policies switched their views with remarkable alacrity to correspond with the changed government and political line in China. While China has performed much better than India, it is widely believed that China had a more severe famine than India ever had, during the "Great Leap" period in which millions are said to have died; the figure of 27 to 30 million famine deaths is frequently quoted. The main source of this figure in India is Amartya Sen's writings and speeches, which are more widely known and reported than are the basic sources, the work of Western scholars, which he uses. The argument made by him is that the absence of press freedom in China explains the fact that the world did not have any inkling at the time that such a massive famine had taken place.

Similarly, Peter Nolan and others have argued that a massive famine took place during the collectivisation drive in the Soviet Union in the 1930s. In general, the thrust of the argument is that collectivisation produces famine and that the absence of a " free" press as in capitalist countries, prevents anyone outside these countries from knowing about it until much later - when liberal Western scholars painstakingly uncover the facts through their research. Since collective ownership and production form the very essence of socialist production relations, this appears to constitute a damning indictment of socialism. The picture is complicated by the fact that in China itself, some of those earlier termed "capitalist roaders", who were always opposed to egalitarian principles of distribution and who wanted to dismantle the rural communes (which were indeed dismantled from 1980 onwards), seized upon the alleged massive "famine" as one argument for an ex post justification for doing so, regardless o f the fact that they themselves, despite their active involvement in political life, were apparently quite ignorant at that time that such a massive famine which led to 27 million to 30 million deaths, had taken place in their own country.

It would be instructive to look at how exactly this estimate of "famine deaths" has been arrived at. In China in the period of 1959-61 there was indeed a large shortfall in agricultural output, as much as 15 per cent from the normal level in 1959 and 25 per cent from the normal in the next two years, and this decline did in fact coincide with the "Great Leap" when the transition from advanced cooperatives to the people's communes took place. At that time a number of reasons, including drought in parts of the country, floods in others and attacks by pests, were put forward for the fall in output. No one, including members of the foreign diplomatic corps stationed there, or the ideological critics of collectivisation within the party, at that time sugges ted that there was massive famine. In India too the 1960s were difficult years and output shortfall owing to drought in 1965-67 was severe, although less so than in China, and it was combined with rapid inflation which eroded real wages and raised poverty levels to 60 per cent of the population, according to available World Bank estimates.

When we look at the estimates made by U.S. scholars of death rate and birth rate for China during the years 1959-61, we find that the death rate rose sharply in a single year, 1960, by as much as 10.8 per thousand compared to 1959. But because China in the single preceding decade of building socialism had reduced its death rate at a much faster rate (from 29 to 12 comparing 1949 and 1958) than India had, this sharp rise to 25.4 in 1960 in China still meant that this "famine" death rate was virtually the same as the prevalent "normal" death rate in India which was 24.6 per thousand in 1960, only 0.8 lower. (All vital rates quoted here are from Carl Riskin's China's Political Economy: The Search for Development Since 1949). Further, in both the preceding and the succeeding year India's crude death rate was 8 to 10 per thousand higher than in China. Of course, each economy has to be judged in relation to its own internal performance; and no doubt the rise in the death rate during the worst years of output shortfall is a bad blot for China on its otherwise very impressive record of rapid decline and good food security.

Indeed the death rate would not have risen as much as it did despite the output shortfall, as Riskin argues, if the government had not bungled and continued to procure foodgrains from farmers. After 1961 the death rate again fell very steeply and reached 9.5 by 1966, a low level not achieved by India until three decades later in the mid-1990s. But is it correct to say that "famine deaths" in China totalled as much as 27 million to 30 million; and that absence of press freedom meant that China's then leaders, despite being aware of such massive deaths, were so cynical and depraved that they could mislead the world successfully? In a recent article published in the Bengali-language journal Anushtup, Badruddin Umar has provided a powerful and explicit critique of the widely accepted argument put forward by Western scholars and popularised by A. Sen on large famine deaths (and hence also a critique of others like P. Nolan). Umar argues that there is a contradiction in saying that the very state in China which had demonstrated its commitment to people's welfare through measures to reach basic health services and ensure food security to the poor, and which had achieved a much faster reduction in infant mortality and the death rate in the very first decade of independence than had India, could conceivably have wilfully suppressed information it had of such a large number of "famine deaths". We think there can be a more realistic estimate of mortality, and we also think of why no one, including the Westerners in China, even noticed that mortality was higher during these years.

Most people will accept that in order to qualify to "die" in a famine, and become a famine-death victim, it is necessary to be born in the first place. But over 16 million of the estimated 27 million "dead" in China's famine were not born at all! Most of those non-experts, journalists and others who accept and propagate the "massive famine deaths" in China argument do not themselves realise that people who were never born at all are being included to arrive at a grossly inflated estimate of "famine deaths" in China.

The measurement techniques seem designed to mislead, to talk about the "death" of people who were never born. How is this absurd situation possible? It has come about because not only the rise in the death rate but also the accompanying sharp fall in the birth rate is being taken into account when estimating "famine deaths". The birth rate in China declined and fell to a low of 18 per thousand in 1961 compared to 29.2 in 1958. (After 1961 it rose at a faster rate than it had fallen, to reach a peak of over 43 by 1963). The rise in the death rate during 1959-61 compared to the bench-mark year 1958 implies that there was indeed a total excess mortality of about 10.5 million persons over the three-year period 1959-61 in China. This is the correct estimate of excess deaths, but this order of "famine deaths" is not quite spectacular enough for liberal scholars. (Had India lowered the death rate after 1962 at the same pace as China, over 6 million deaths per year could have been avoided here over a period of three decades.) Therefore, the decline in the birth rate which was very steep during these three years, is taken into account and the babies which would have been born if the decline in birth rate had not taken place are added on by them to arrive at a nearly three times higher estimate, which is then called the "missing millions" and identified with "famine deaths".

The fact that at least 16.5 million of the alleged famine victims were never born seems to be a minor point for those who want to talk about massive "famine deaths" totalling at least 27 million in China and thereby discredit collectivisation. To the lay mind with its robust common sense this cannot be anything but tendentious academic sophistry. That periods of food shortage do lead to decline in fertility is a fairly well-established proposition. Periods of mass mobilisation of males, for military service, for example, also get reflected in a decline in the birth rate. There was no military conscription at this date in peacetime China, but there was massive mobilisation of both male and female workers for a stupendous construction effort during this period of early commune formation. The established peasant family living and work patterns were radically reorganised with the formation of the communes; large bands of men and women set out in teams and brigades for constructing water management systems, cleaning up the environment and eradicating disease-carrying organisms, afforesting hills, terracing and bunding and so on. They spent weeks at the work-sites, and there were communal kitchens and creches to look after children in these years. It is not surprising if this disruption of normal family life in the interests of construction may have also contributed greatly to the observed decline in the birth rate as birth decisions were postponed. With the stabilisation of the new system, dismantling of communal kitchens and reversion to family life the birth rate again surged to unprecedented levels, peaking at 43.4 in 1963, as though the people were scrambling to make up for the earlier decline.

As regards the genuine excess mortality during China's difficult years, while shortages were very real and visible, famine was not easily visible, including to the Westerners resident at that time in China, because China by then was an egalitarian society, not a class society. The undoubtedly severe rural food shortage was not concentrated in a sharp drop in consumption by the members of a particular deprived class like poor peasants who then died in the sight of all, while others had more than enough to eat, as typically happens with famine in class societies. Food shortage, while it was severe, was spread out over the rural consuming population much more evenly, and therefore, we can hypothesise, may have led to higher rates, but not immediately or obviously visible higher rates of mortality in those segments which remain vulnerable even in an otherwise largely income-equalised society - such as parturient mothers, infants and the aged. Paradoxically, the very success of egalitarianism in distributing the burden may have contributed to the invisibility. It is a mistake to think that all real trends are visible to the individuals living through the events at the time.

Thus even though we ourselves in this country have lived through the period when the infant mortality rate has fallen greatly, it is a matter we are convinced of not from our direct experience of it but after the numbers have been counted and presented to us. China's leaders were not guilty of willful suppression of knowledge of the higher mortality; the knowledge itself was built up much later than the events, and the correct estimate as we have seen is about one-third of the highly sensationalised esti mates which are still being circulated.

On a visit to China in the early 1980s, during the time the inflated "famine deaths" were being talked about in the West, this author mentioned these estimates and asked some very senior Chinese economists about their own experience of this period. They were extremely surprised and said that while there were cases of more deficiency diseases than usual, they were not aware of widespread famine deaths. It should be noted that those who designed the above-mentioned unique measure of "famine deaths" by including unborn babies, seem to be very reluctant to apply it to non-socialist countries. Their method, if impartially and honestly applied, would produce more than one episode in this century of large "famine deaths" - by their own definition - in the West European countries, which saw not only a rise in civilian mortality but also a decline in the birth rate during the time of wartime shortages. Even the accurate definition in terms of rise in the death rate is never applied by them to talk about famine in countries which are no longer socialist. Thus, in Russia, comparing 1994 with 1990 with the data given in World Bank publications, we find that the death rate rose from 48.8 to 84.1 per thousand able-bodied persons (that is, excluding children and the aged), the infant mortality rate rose, the birth rate also fell to a level below the death rate so that the population has been declining. Male life expectancy fell drastically as that country plunged into "shock therapy" to usher in a capitalist paradise and succeeded only in halving its national income. No one can say that the press is under censorship in Russia today or that the estimated vital rates are not known. But not one of those eminent economists, experts and others who have deafened us with their estimates of "famine deaths" during the Soviet or Chinese collectivisation, have bothered to apply the same method to the current Russian data.

With the transition to market socialism in China too some of the welfare gains of the three decades of egalitarianism have slowly been reversed, as reflected in the rise in the infant mortality rate. There is a new emergence of large-scale unemployment and the proliferation of urban slums of migrants from the villages. As China celebrates the achievements of its half century of independence and building of socialism, its people perhaps need to reflect afresh on the direction in which the last two decades of anti-egalitarian market reforms have been taking their hard-won Revolution. Much has been achieved; but the vision of an alternative society still remains to be realised.

http://www.the-hindu.com/fline/fl1621/16210150.htm *****



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