reflected in the language used by the CCP (“production brigade,” “grain front,” etc.). Linked to this was a tradition of “socialist education” where the “educator” guided the masses who, conversely, were infantilized. This, in turn, eliminated the party cadres’ individual sense of responsibility to a great extent. Under the overriding premise of acting “in the interests of the masses,” these cadres were able to discard their moral scruples (Saich 2004, 219–20).12
Between Command Economy and “Plan Anarchy”: Key Features of the Chinese Economy from the 1930s to the 1970s
To counter the myths that misrepresented the Maoist model of development as the brainchild of an insane dictator, an antibureaucratic idyll of farmers’ communes, and similar, Naughton refers to China’s GDP growth rates, which, compared to India, for instance, were relatively high (Naughton 2007, 140; see also Karl 2010). The average annual growth in GDP between 1952 and 1978 was around 6 percent. Industrial output increased by an average of 11.5 percent per annum between 1952 and 1978 (Naughton 2007, 56). Even as early as 1954, China had an investment rate of 26 percent of GDP, which is rather high compared to other developing countries. Particularly in the years of the Great Leap Forward and the Cultural Revolution, however, there were substantial economic downturns.13
During the course of its national modernization efforts, the CCP was able to build on the remnants of the prewar era (Bian 2005), including the industry that burgeoned in the early twentieth century in colonial treaty ports such as Shanghai, Tianjin, or Qingdao. Although this “enclave industrialization” was, for the most part, externally initiated and under foreign control to begin with, indigenous enterprises rapidly caught up (Hamilton 2006a). By the 1930s, Chinese-owned companies were producing two-thirds of the country’s industrial output (Naughton 2007, 44). In addition, we saw the emergence of large-scale Japanese government-sponsored industrial projects in Manchuria. Thanks to their qualitative importance (heavy industry), these projects played a far more significant role than their 14 percent share of total industrial output in 1933 might suggest.14
From an industrial policy perspective, the precursor of the practice of substantial state intervention and the political power of disposition over companies can be found in the Guomindang government. The relocation of industrial production inland from Shanghai during the Japanese invasion and World War II, for instance, was organized by the Guomindang Planning Commission (Bian 2005, chapters 2 and 3). In the early 1940s, state-owned enterprises in the territories that were not under Japanese occupation accounted for 70 percent of China’s capital. The CCP described the ruling powers at the time—almost in subconscious anticipation of their later impact—as “bureaucratic capitalists” (Au 2009).15
There was also evidence of path dependencies in terms of the organization of labor:
The emergence of the Maoist system in the 1950s was itself the result of path-dependent development based on industrial arrangements that arose during the Republican era under the Nationalist government. In the 1920s and 1930s, a newly established legal framework for industrial relations, along with state-corporatist tendencies, heavy-handed state intervention, and paternalistic practices to curb a high labor turnover rate among skilled workers helped lay down the preconditions for the socialist workplace (danwei) system. (A. Chan and Unger 2009, 6–7; see also Bian 2005, 167–79)
Certain conditions for industrial development were therefore already in place in the form of state ownership and authoritarian collectivism. Following the Japanese occupation, the ruling CCP gradually developed these conditions further—“institutional and ideological evolution, not revolution, explains the basic structure of state-owned enterprise and its ideology in post-1949 China” (Bian 2005, 213). After 1949, the state-controlled economic sectors were largely taken over by the CCP.16 Because large parts of (heavy) industry had already been nationalized by the Guomindang government, the subsequent expropriation policy implemented in the country’s urban centers could be concentrated on light industry. Now the CCP, which at this juncture had already split internally into separate factions, assumed the role of the national power elite as a form of substitute bourgeoisie (Ersatzbourgeoisie). In addition, many senior members of staff from the pre-Maoist Planning Commission continued to be employed under the rule of the Communist Party.
Overall, however, after 1949, China’s new elite was primarily faced with a myriad of unfavorable legacies. The years from 1937 to 1945 left the country with a desolate economic infrastructure, a financial crisis that manifested itself as hyperinflation, and an exhausted population subjected not only to fierce Japanese aggression but also repression under the Guomindang. The economy was also heavily balkanized.17 The decades of Chinese Nationalist rule, of the Japanese occupation of parts of the country, of war, and ultimately civil war meant that the victorious CCP was confronted with an economy that was on the verge of collapse (Herrmann-Pillath 1995, 54–59).
In the first few years following the anticolonial revolution and the victory over the Guomindang, China attempted to imitate Soviet development models (Gey 1985, 15–22). Global economic crises and world war had discredited Western capitalist development policies whereas, at the time, the USSR had the highest growth rates of all major economies. This was commented on retrospectively by Justin Yifu Lin, a former Chinese chief economist and senior vice president of the World Bank: “The collapse of the New York Stock Exchange [in 1929] … triggered a ten-year depression accompanied by enormous mass unemployment throughout the entire Western world. Apparently completely unfazed by this, the Soviet Union under Stalin picked this of all times to fully commit itself to transitioning from a poor agricultural country into a serious industrial and military power. There was therefore great fascination about Communism’s ability to do exactly as it promised” (J. Lin 2009, 56, my translation; see also Osterhammel 1989, 364–69).
China’s pragmatic alignment with the Soviet Union was nevertheless adapted to the country’s somewhat different conditions. It would therefore appear to be more accurate to refer to a distinctive form of Maoist industrialization based “to a certain extent, on a war communism mobilization regime with an emphasis on moral incentives,” characterized by dramatic changes in direction, each of which embodied different styles to foster national development (Gey 1985, 29, my translation; see also Dittmer 1987, 12–61).18
Following the period of economic recovery from 1949 to 1952 and a subsequent land reform (“New Democratic Politics”), the first Five Year Plan comprising a series of command economy adjustments was implemented between 1953 and 1957. In 1955–56, China was effectively a mixed economy. Only after this did we see the start of the top-down creation of collective production units in rural areas that later entered the history books as people’s communes. From then on, in the cities, companies became government-steered production plants, while the decision making took place in sector-specific ministries. Thus, individual business considerations were to be replaced by a focus on the national economy.19
Following a failed national campaign (the Hundred Flowers Movement), the Great Leap Forward20 was announced in 1958. This was aimed at increasing the party’s influence and accelerating industrialization but ultimately resulted in a withdrawal of human and material resources from agriculture, which culminated in a catastrophic, primarily rural, famine, further exacerbated by natural disaster. As a consequence, within the apparatus of power, the group in allegiance with Liu Shaoqi grew in strength. In contrast to the voluntarist policy of the mass lines, this group emphasized material incentives, profit as a measure of success, and the expansion of markets. This policy was later described as a version of the Soviet Union’s “New Economic Policy.” The group backed agricultural development and, within companies, supported the managers over the party committees. After a new growth phase, the Cultural Revolution from 1966 to 1976—with its power struggles between the different factions of the CCP and accompanying mass unrest and military mutinies—ultimately heralded a period of political instability and economic paralysis (see Leys 1972; Dittmer 1987, 77–107; Unger 2007; Walder 2015).
Because
