China’s Political Economy

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1. After the Great Leap Forward, Mao was criticized for trying to develop communist relations of production without having developed the forces of production (p. 163-164, Riskin). Explain and use GLF policies to illustrate (Riskin, Chapter 6).

Mao believed that the Chinese could achieve everything provided they have the right attitude. It led him to set targets with minimal time limits. He intensively used ideology to make people believe they are achievable. He believed that socialist relations of production would provide the right attitude. Productive forces at all levels would be put to use by “walking on two legs” (Riskin 117). It meant to combine scattered productive forces through small-scale factories in the rural areas. In urban areas, heavy industries would link the productive forces.

In the GLF period, all goals were considered possible without evaluating constraints, such as time and cost. Riskin (116) elaborates that the GLF policies were set without considering the means that were to be used to achieve each goal. According to (Elster 243), the productive forces are input factors that are used in the creating of good and services. They have the capability to be possessed by an individual or entity.

They can be modified through the ages. Some of the forces of production include raw materials and labor. On the other hand, the relations of production are the links between the forces of production (Elster 244). They are relationships between the input factors that seek to maximize production.

One of the policies of the GLF was to eliminate stratification of social classes through eliminating ranks in the workplace. The GLF advocated for unskilled workers to be trained after working hours. It would enable them to manage their work station (Riskin 120). On the other hand, managers were required to work at lower levels. It was carried out to enable them understand the needs of their workplace. It also allowed the sharing of knowledge between managers and lower-level workers.

The issue of making all workers have equality in the workplace is a communist relation of production. The unskilled and skilled laborers are productive forces. Mao was setting a stage where unskilled laborers are made managers irrespective of their managerial skills (Riskin 120). Mao should have allowed the unskilled laborers to complete their education before allowing them to act as managers. All forms of labor were allocated communist relations of production indiscriminately without qualifications.

Labor was allowed communist relations of production in the steel industry. There were a large number of workshops that were converted to small-scale factories with the ability to manufacture steel. The small-scale steel industry did not have workers with the appropriate technical skills to manufacture the right quality of steel. It was a communist relation of production. Any person could produce steel provided they have the raw materials and a workshop.

Markets are a productive force that determines what will be produced. The small-scale factories were supposed to support the needs of the agricultural industry (Riskin 118). Markets pushed most people to work in other industries rather than agriculture.

Production shifted from agriculture to targeting the non-agricultural industries and transport sector because they offered higher returns (Riskin 137). The end result is that more laborers shifted to non-agricultural sectors (Riskin 119). Communist relations of production would have needed the use of subsidies in agriculture to encourage production.

Distribution networks and supply chains are productive forces because they add value when used. One of the policies was to overtake Britain in the production of steel. During that period, China was in the process of constructing infrastructure. The constructed road network only linked major towns.

The rural areas had to use traditional means of transport to reach markets. Mao had perceived that people would use the traditional means to supply raw materials and distribute end products from the small-scale industries. Later, he learnt that steel could not be easily transported through the traditional means. He had not developed China’s transport network, as a productive force, to support the communist relation of production in the steel industry.

Excessive accumulation was one of the outcomes of the GLF policies. The rate of accumulation had reached 44% of national income by 1959 (Riskin 117). The government encouraged people to make investments resulting in a higher accumulation of capital. Capital is a productive force that requires planning.

The communist relations of production required an increased level of output. There were no standards to ensure that capital was invested only in viable investments (Riskin 129). There was a large accumulation of capital resulting in a high production rate of substandard products. The productive forces missing in the excessive accumulation of capital are planning and regulation of standards.

The accumulation of capital also resulted in more industries set up without adequate sources of raw materials. The accumulation of capital was also against the communist relation where every form of labor is used. The communist policy was that labor-intensive small-scale industries and technological heavy industries should develop simultaneously (Riskin 117). More capital means more machines replacing workers.

Technological capital and technical skills are the forces of production. Adoption of new technology should be done together with the acquisition of technical skills. Mao had goals of increasing output without adequate time to adopt the right technology and technical skills.

Another communist policy is the use of the commune as the accounting unit. Initially, China was organized in collectives. In addition, private cultivation of land was allowed. In the first stage, the communes could consist of about 5,000 households each (Riskin 123). The communes were very large without central planning at any level.

There was no method of collecting and organizing reports that could support the efficient allocation of resources. Data that could be used in planning and forecasting was the missing productive force. The communes formed the relations of production. There were no productive forces to manage the communes of that size.

Mao’s communist system abolished private production without finding an alternative factor to motivate workers in the communes. They replaced profit motive and material gains with other forms of worker motivation, such as emulation campaigns, model workers, and work teams (Riskin 122).

Initially, piece rates and personal bonuses had helped to keep the collectives and individuals more productive. Productivity reduced significantly when the least effective methods of motivation were used. The communes were also large enough for some groups to benefit from the work of others without contributing proportionately.

2. Hart-Landsberg and Burkett argue (chapters 2-4) that market-based reforms in China were not fully planned out, but occurred gradually in reaction to the imperative of market forces. Explain.

The market-based reforms started with the change of leadership in China’s Communist Party. When Deng Xiaoping succeeded Mao in 1978, he became an influential figure of change toward market-based forces (Hart-Landsberg and Burkett 37). The dissatisfaction of the people with the stagnation of the growth after a decade of high growth meant that the economy needed to restructure for international trade.

Mao would have been hesitant to take the steps taken by Xiaoping. Xiaoping led the return of market forces to provide motivation. Hart-Landsberg and Burkett (37) discuss that China had a high average growth rate between 1952 and 1978, despite the disruptions of the Cultural Revolution and the Great Leap Forward. Deng Xiaoping and his allies mainly wanted to increase individual possessions of the privileged. On one hand, the market-based reforms were initiated by a motivation for personal gains. On the other hand, the market-based reforms were expanded by the need to correct contradictions created by initiating a few changes towards market forces.

Xiaoping’s first response was that the dissatisfaction experienced during Mao’s era could be reduced through enhancing the productive forces using markets (Hart-Landsberg and Burkett 39). Markets would promote the efficient use of resources. It would increase productivity, profitability, and eliminate overproduction. The ruling party supported the introduction of market forces to determine the production of goods without consultation with the people, which raises the issue of personal gains by party leaders.

The first reform was to allow the productive units that were organized in groups to pursue the profit motive. State-owned enterprises (SOEs), township and village enterprises (TVEs), collectives, and communes were allowed to produce commodities and sell them on the free market (Hart-Landsberg and Burkett 44). A free market is where the price is set according to quantities supplied and demanded.

Responding to the market created higher prices, which resulted in a need to produce more commodities. The demand for labor intensified. It made the second reform necessary, which created a labor market. Employers were allowed to hire and fire depending on their temporal needs (Hart-Landsberg and Burkett 48). The government also increased the number of workers hired on contract. They were paid lower wage rates and had fewer benefits.

In the third reform, the foreign firms were considered the best workshops to teach local firms how to produce with a profit motive. As a result, foreign firms became a target of the main party. At first, foreign firms were reluctant to invest in China. The government lowered taxes for foreign firms and allowed wholly-owned foreign firms to operate in China (Hart-Landsberg and Burkett 42). It reached a point where private firms were taxed lower rates than public organizations.

Once the foreign firms had set up in China, the process of privatization became a rapid process because the public organization had to compete with foreign firms for profits. At this point, market-based reforms are created by the need to attract capital, technical skills, and advanced technology through foreign direct investment (FDI).

In order to pursue the profit motive effectively, the communes were dissolved and family-based production system became the most common unit of production. It is the fourth reform in encouraging capitalism. Individuals seeking to accumulate their personal wealth became a common feature.

Foreign firms made it necessary to privatize government corporations to increase their competitiveness. The personal gains motive had already set in when the government allowed group factories to sell their products at market prices. There was corruption, which set in through asset stripping of public corporations (Hart-Landsberg and Burkett 58).

The fifth reform is where the government is forced to sell the corporations to individuals to improve their management. In order to allow free investment by locals, they were allowed to own, rent, and sell land that initially belonged to collectives (Hart-Landsberg and Burkett 44). It is the sixth reform that supports market forces. It helps to solve the problem of land demand that would emerge from private firms.

Privatization resulted in less revenue for the government. It resulted in more withdrawal of funds from government-run corporations, which made them less competitive (Hart-Landsberg and Burkett 56). The lack of competitiveness led to further privatization.

At this point, the market-based reforms that started with the quest for efficiency have affected several areas including collectives’ dissolution, privatization, FDI, labor markets, land ownership, and prices of commodities.

In response to the effects of the changes brought about by the reforms, the government was forced to borrow to increase wages for public employees to alleviate the inflation caused by the free markets. The government started to operate in a deficit for the first time since the 1950s (Hart-Landsberg and Burkett 43).

In response to FDI, the government opened more economic zones for foreign firms. In response to foreign firms, the government privatized most of the firms, and remained with only 1000 of the largest firms. The privatized firms were forced to borrow to gain competitiveness that matches foreign firms. The end result is a large percentage of non-performing loans (Hart-Landsberg and Burkett 57). In some cases, the profit motive did not result in an efficient allocation of funds.

In response to the market forces, the local private firms reduced the number of employees enabling them to be competitive. As a result, China was transformed from the communist full employment to the persistent capitalist unemployment. The market-based reforms did not allow redundancy in the workplace. In response to complaints of unemployment, the government sought to encourage an export-based economy. The export-based economy required more foreign firms, which had been offered more favorable terms.

The market-based reforms were not planned out as elaborated through the process. They reforms were implemented one after another in response to the outcome of one reform. The initial step was to increase efficiency by allowing the use of market prices. The productive forces would drive economic growth through efficiency.

Each reform disbanded the communist relations of production. The end result, after all the restructuring processes, is an export-led economy prevailed by foreign firms (Hart-Landsberg and Burkett 89). By targeting exports, the government was responding to the unemployment problem.

The gradual change of communist China to the imperative of the free market shows that market-based reforms have to be implemented in totality. Applying one reform will force the government to implement another or face a crisis in other sectors. For example, if the Chinese government had not allowed a free labor market, all other reforms would count for nothing.

The private firms would not have been able to increase production in response to high prices of commodities. It could have caused prices to be higher. If the government had not borrowed to increase wages, there could have been political unrest.

The government was forced by the market forces to carry out more reforms to prevent crises. However, there was an individual motive that initiated the reform processes. Once the Chinese Communist Party had initiated the first market reform, the other reforms were an imperative of the market forces.

Today, the market is dominated by foreign firms attracted by the low cost of labor (Zheng 148). The economy grows through its competitiveness in the global market enhanced by its ability to produce lowly-priced commodities. However, there is great discontent from the local laborers over the outcome of the reforms. It may lead to more reforms.

Works Cited

Elster, Jon. Making Sense of Marx, New York: Cambridge University Press, 1985. Print.

Hart-Landsberg, Martin and Paul Burkett. China and Socialism: Market Reforms and Class Struggle, New York: Mothly Review Press, 2005. Print.

Riskin, Carl. China’s Political Economy: the Quest for Development since 1949, New York: Oxford University Press, 1988. Print.

Zheng, Yushuo. Challenges and Policy Programmes of China’s New Leadership, Hong Kong: City University of Hong Kong Press, 2007. Print.

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China’s Political Economy

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