p T. Feferkon (GDR)
p China’s record since the Ninth Congress of the CPC shows that its national economy has in effect been divided into two spheres: a military sphere, comprising a narrow range of sectors, which are directly controlled from the centre and receive the bulk of the financial resources, machinery and skilled personnel; and the civilian sphere, which largely operates on the principles of decentralisation and selfsufficiency. The latter is made to “rely on its own strength”, that is, has to make do without any centralised credits or investments. At the same time, however, a large share of the national product it creates goes to carry out militarist programmes. This means that the whole Chinese economy has been geared to the Maoists’ Great-Power hegemonistic purposes, leading to its lop-sided development.
p The central authorities exercise direct control over these areas:
p a) all large-scale industry, including the arms industry, large factories in the light and heavy industry, and also some of the medium-size enterprises;
p b) the central transport and communications system (one of the first economic moves during the “cultural revolution" was to put the army in control of all the railways and airlines);
p c) the banking system;
p d) foreign trade;
p e) wholesale trade, notably the marketing of the means of production turned out by large-scale industry;
92p f) the system of grain, cotton and oil-bearing crops procurement (instructions issued by the CPC Central Committee, the State Council, the Military Committee and the “Group for the Affairs of the Cultural Revolution" on January 18, 1968, prohibited state enterprises, educational establishments and other organisations from purchasing these products on the markets or in the “people’s commune" of their own accord);
p g) research institutes and higher educational establishments of military significance (let us recall that most of the research for military purposes was not affected by the “cultural revolution”).
p These sectors provide a direct economic, scientific and technical basis of power for the Mao group. These are, for the most part, sectors of material production closely allied with military production. Large enterprises in the light industry should also be included, for they, too, are an important source of state accumulation of financial resources and provide supplies for the army and population.
p The local authorities exercise control over:
p a) agriculture, in the matter of achieving the targets set by the state;
p b) local industry (the smaller enterprises above all);
p c) handicrafts;
p d) local transport;
p e) retail trade;
p f) most schools and health establishments.
p Under Maoist plans, designed for the utmost concentration of all the material and manpower resources for the achievement of Great-Power goals, these sectors, employing more than 85 per cent of the total population, have been vested with a range of important economic and political functions.
p First of all, they are a source of finance for the centrally run sphere.
p The official figure for the agricultural replacement fund in 1955-57 was 24-26 per cent of the sector’s gross product. The present figure is about the same. Another 60 or so per cent of the overall value of agricultural production goes into remuneration (in cash and kind). This means that the surplus product amounts to about 15 per cent of the gross value of agricultural production, which, when calculated on the 93 basis of the estimate for 1966 (a total of 60,000 million yuans), comes to about 9,000 million yuans.
p On the strength of the same data, 7 per cent of the gross value, that is, 4,400 million yuans, goes in direct taxes. The subordination of schools and health establishments to local organs of power (ranging from provinces to people’s communes) means the withdrawal of an additional share of agriculture’s surplus product.
p The price spread for industrial and agricultural products is an indirect way for the central authorities to accumulate a large part of agriculture’s surplus product (through the sales of farming machinery, fertilisers, pumps, tractors, and so on) and a part of the necessary product (through the sale of consumer goods to farmers), with about 80 per cent of the total output in the light industry being realised in the countryside.
p Thus, agriculture is on the whole a substantial source of accumulation for the financing of the centrally run sphere.
p The locally run sectors also have an important role to play in providing raw materials for industries, the light industry above all. There are figures to show that 80 per cent of the latter’s output is made of farm produce.^^1^^
p The locally run sphere also serves, directly and indirectly, to provide manpower for the centrally run sphere (indirect manpower supply implies massive employment of peasants and handicraftsmen in primitive ways of producing technical parts, which makes it possible to economise on investments in the centrally run sphere. Thus, the so-called street industry accounts for 80 per cent of all electronic components and devices and 50 per cent of all components for the production of machine-tools and electrical machines in Heilungkiang Province^^2^^.
p A most important function of the locally run sectors is to provide work for the steadily growing population, notably, the urban dwellers who are forced to move into the countryside. Since the Peking leaders’ economic policy cannot serve to satisfy the constantly growing need for work places, the Maoists have decided to tackle the employment problem chiefly through more extensive agricultural production and establishment of primitive small-scale industry. Hence the 94 rationale of individual self-denial and the attempts to force a low ceiling on the people’s living standards.
p The locally run sphere also has to lay the groundwork for mechanisation in farming.
p Here, the Maoists have laid stress on local small-scale industry, in the people’s communes in particular, with emphasis on their own, local resources. Though officially proclaiming the need for rapid mechanisation in agriculture as a prerequisite for raising labour productivity and an important factor in the consistent implementation of the socalled major strategic line—“to get ready for war and natural disasters, everything for the people"—the Peking leaders have themselves come to realise that the solution of the problem is still a very long way off. Hungchi (No. 2, 1970) wrote: “Further transformation of the countryside along socialist lines .. . implies a gradual expansion of the people’s communes’ accumulation funds, development of industry in the people’s communes and gradual mechanisation and electrification of agriculture in line with the country’s industrialisation.”
In view of the need to mechanise farming, the Maoists have demanded that industry should supply it with the means of production at low prices, so taking some account of the objective connections between the centrally and the locally run spheres. This can do nothing, however, to prevent agriculture from falling back still further, because in “relying on their own strength" the communes are very slow to build up the resources they need for mechanisation. This will be seen, for instance, from a comparison between gross production in industry and agriculture in 1952 and 1966 (thous million yuans):
Agriculture Industry . . 1952 48.39 34.33 1966 60 135-140 Increase (per cent) 25 300Finally, the locally run sectors have to build up stocks and ensure that the individual territories are self-sufficient in every way, so that in the event of war or natural disaster each could rely solely upon its own resources and also be a source of supply for other areas. In concentrating on in-
95 dependent local industrial systems, the Maoists have chosen a patently ineffectual economic way. The issue of Hungchi quoted above says: “If the plan were based on the law of value, the districts, provinces and cities would be unable, in the light of the need to prepare for war, to build up any industrial system.” This means that industrial systems of this kind require additional outlays which are not recouped in economic terms. But Mao Tse-tung and his followers are prepared to put this burden upon the national economy provided they realise their militarisation plans and strengthen their own rule.p Another fact showing that independent industrial units are being set up by way of preparing for war is that factories are required to be ready to switch from civilian to military production at a moment’s notice.
p All that is convincing proof that the locally run economic sphere has a fairly important role to play in the Maoist concept. In 1970, measures were taken to press ahead with its development, so that the share of small enterprises in overall production in, say, nitrogenous fertilisers was up from 12 per cent in 1965 to 43 per cent in 1971. Large and medium-size plants producing nitrogenous fertilisers have, on the contrary, reduced rather than increased their output over the past five years. This invites the conclusion that with lop-sided emphasis on the centrally run sphere, capital investments in that sphere itself are being further concentrated in the sectors that are most closely linked with arms production or are quicker than the rest to accumulate the necessary capital.
p The Chinese leaders’ economic policy rests on the “walk on two feet" slogan, which says that “while working for the priority development of heavy industry, it is necessary simultaneously to develop both industry and agriculture, and the light and heavy industries, and to make use of centralised administration, all-round planning, division of labour, and co-operation, and simultaneously to develop both the locally and the centrally run industries, large, medium-size and also small enterprises, and foreign and national production methods.”
p The slogan confirms our thesis that the Maoists have in fact divided the national economy into two spheres, which 96 they seek to develop by different methods. Their differentiated economic policy is aimed to overcome the contradiction between the initially weak economic basis and their proclaimed goal of rapidly turning China into a powerful country with a modern industry, agriculture, armed forces, science and technology. By splitting the economy in this artificial manner, the Chinese leaders have in fact gone against the economic laws of socialist development, embarking on a policy to militarise the whole national economy.
p One should, however, bear in mind that the Maoists have also taken some notice of various general economic laws, so giving proof of their economic pragmatism. That is why one cannot rule out the possibility that over the next few years China could well boost its production, especially in industry. Besides, the present line could also be adjusted in various ways on the basis and within the framework of “Mao-Tse-tung thought”, even to the extent of some material concessions to the working people.
p The Chinese leaders have already sought to ease the contradictions which are an objective result of uneven development in the two spheres. Here are their guidelines for small-scale industries: “Use foreign machinery wherever possible and our own machinery wherever not; go over from our own to foreign machinery; combine our own and foreign machinery. Use large-scale equipment wherever possible and small-scale wherever not; go over from small (enterprises) to large ones; (develop) first simple and then complex enterprises.” Another slogan with a similar message is “To Devote Attention to Complex Use”.
p Apart from seeking to accelerate the development of small and medium-scale industry on the basis of local initiatives, the Maoists have also tried to overcome the contradictions between their Great-Power purposes and local interests by demanding stronger centralised rule and scrupulous fulfilment of state targets.
p What could be the effects of a sustained line of this kind?
p The Maoists have been trying to ensure priority development of heavy industry by increasingly drawing on accumulations in the light industry and agriculture. But 97 growing deductions in favour of the state tend to slow down the development of agriculture and also to stem that of the light industry, which processes farm produce. Since accumulations are being siphoned off from agriculture, it will have to go on concentrating on grain production for years to come, leaving technical crops and animal farming in the background. Slow growth in agriculture will also hold back any increase in purchasing power among the farmers, whose needs are being met chiefly by the growing local industry. This means that effective demand for the products of large enterprises in the light industry will be curtailed, something that is bound to hold back trade between town and country, and subsequently deepen the disproportions between industry and agriculture, which could eventually lead to an all-round slump in growth rates or force the leaders to give more backing to agriculture.
p The numerous small and medium-size enterprises will need more raw materials, electric power, fuels, machinery, spare parts, and so on—a need which cannot be fully met from local resources. Large-scale industry, on the other hand, cannot provide small-scale industry with all the means of production, and this is already making the existing disproportions more acute.
p The isolated nature of the fairly independent local units is a brake on the development of production both within the individual areas and the national economy as a whole, for specialisation of production—an important efficiency factor—is confined to very narrow limits. The line to develop local units serves to keep the various regions apart and hinders the development of a national market. It also blocks any further advance towards an organised and conscious working class.
p The two-way split of the economy widens the gap between industry and agriculture, industrial workers and peasants and workers in large-scale and small-scale industries. As production and capital investments in large-scale industry are put in top gear and the working people’s living standards are levelled out in that sphere as well, there is a growing gap chiefly in the degree of organisation, education and class-consciousness. But despite the Maoists’ attempts now and again to substitute farmers for a part of the 98 factory workers or to rotate the working people in some other manner to prevent the development of the working class into the leading political force, the process is an inexorable one.
That is why the section of the Chinese working class employed in large-scale industry bears the main responsibility for returning the PRC to the socialist road.
_ - _ - _p ^^1^^ Chingchi Yeanchu, No. 10, 1962.
Notes