This article originally appeared in Monthly Review 35, no. 6 (November 1983)

"When have peasants ever dreamed of owning two-story houses? Out here on the upper veranda we can sit outside in the evening and forget about mosquito bites. In all history there hasn't been anything like this. I support the new policy with all my heart. May it last forever!"

So said former poor peasant and ex-beggar, Yang Jingli. Every time we asked him a simple question his words soared skyward in oratorical flights of praise for the "responsibility system."  He could hardly focus his thoughts on such mundane matters as yield per acre or the price of a fat pig.

    I could understand Yang's enthusiasm. Houyang, the tiny hamlet he called home, had long been notorious as a disaster area. In 1979 its male inhabitants, traditionally so poor that they could not attract brides, included seventeen bachelors. Although they farmed six times as much land per capita as most peasants in China, isolation in a far corner of their home county, incompetent leadership, and recurring natural disasters had driven them out onto the highways to search for alms season after season. Now, four years after disbanding collective labor in favor of family-oriented land contracts, the more skillful husbandmen among them had doubled, tripled, even quadrupled their grain production. More than half the bachelors had already found wives and several ex-beggars had paid cash for concrete-block, tile-roofed, two-story homes that dwarfed the trees round about.

Houyang is one of the showplaces of Fengyang county, the rural backwater that Vice-Premier Wan Li set on a new course in 1979. Since then this hamlet and many of its neighboring communities have enjoyed rising prosperity. Countywide grain production has gone up by 50,000 long tons a year to reach levels 100 percent above all previous records. Public warehouses overflow with rice, wheat, soybeans, and oil seeds that the overburdened railroads cannot move out. Stimulated by these abundant supplies, new processing industries are growing apace, financed by individual peasant investors who have both money and time on their hands.

    I went to Fengyang county in March 1983 to see the best that the new contract system, now all but mandatory in China, had to offer. In a 1981 meeting with Vice-Premier Wan Li I had expressed grave doubts about the wisdom of breaking up collective lands and especially those lands that were already well farmed by competently led, prosperous cooperators. Whereas Central Committee policy statements called for a selective policy, recommending family contracts only where collective management had failed, Shanxi province peasants to whom I had talked said the pressure on all collectives, good or bad, had been relentless. Party leaders were demanding break-up regardless of the circumstances, an all-or-nothing thrust that people called "one stroke of the knife." Wan Li hotly denied that this was the policy at the Central Committee level. "The people are free to choose," he insisted. He nevertheless recommended that I go and take a look at what the contract system had created in Anhui province. Two years later, just as my old friends in Long Bow village finally bowed to extreme pressure and broke up what had developed into one of the most advanced joint farming efforts in China, I finally found the time to travel southward and have a look at what the future might hold in store.

    The first thing that struck me while driving north from the provincial capital, Hefei, was the extreme backwardness of the North Anhui countryside. We seemed to have slipped in time toward the middle ages -- abandoned irrigation works led to clusters of crumbling adobe huts whose age-blackened thatch roofs topped frameless window and door openings. Mud-clogged yards rose only slightly above the level of the stagnant puddles in the street. Swaybacked pigs, lean and worm laden, wandered aimlessly between gangs of restless, unwashed children.

Only the clothing on the backs of the latter belied the general impression of abject poverty. Boys and girls ran about, not in preliberation-style rags, but in fairly well made jackets and pants of printed machine woven cloth. Numerous as they were, the children on the streets were heavily outnumbered by the scores of loitering adults who seemed to have nothing but time on their hands -- the leisure time that is the curse of every backward countryside in the world.

    Production figures for the years before 1979 documented the economic stagnation that underlay the poverty and chronic underemployment we saw all around us. For more than twenty years yields had remained at or below 30 bushels to the acre and per capita gain production in 1977 (1978 was a disastrous drought year) had fallen below that of 1952. Here was a region where for whatever reason cooperation had failed. After two decades of social experimentation the peasants of North Anhui had nowhere to go but up.

    I could only conclude that Fengyang had suffered atrocious leadership in the past. County leaders told me that none of the cooperative policies seemed to work. Local cadres beat their heads against a stone wall of apathy and people on the land dragged their feet in defiance of their own best interests. Yields, after all, depended on sustained local effort. Why should the people with the most to gain do nothing or next to nothing to ensure them?

    Deputy County Chairman Wang Changtai said it was because the link between the effort put out by any given individual and the reward obtained was too tenuous. Peasants simply could not visualize any improvement coming to them personally through hard work. Their goal was to do as little as possible and depend on the state to carry everyone through until spring. When bad weather undermined their meager efforts even the state could not fill the gap. Tens of thousands went out to beg. Wang said that in the past natural disasters -- either droughts or floods -- struck nine years out of ten. On the average 50,000 left home to beg every winter. In the worst years 150,000 went out. Those who went out didn't always come back. Among the males who came back many never found wives. The population grew slowly. In some places it even declined -- a phenomenon that helped set the stage for the success of the new policy. When the time came to divide the land each person got at least 2 mou (1/3 acre) while some got as many as  5 (almost 1 acre). This was from two to five times the national average and provided a relatively secure base for family-style production.

    I found it difficult to understand why cooperation should fail so dismally in Anhui while succeeding so well in many other places that I had visited over the years. A 1980 national survey made by a group of young economists that included the newly appointed second secretary of the Fengyang Party Committee, Wong Yongxi, concluded that in China as a whole 30 percent of the cooperative brigades had been doing well, 30 percent had been doing badly, while in the middle 40 percent had been holding their own, neither chalking up great successes on the one hand nor floundering on the other. Most, though not all, of the successful cooperatives that I had seen were in the north, in or near old liberated areas where the peasants first gave support to the Communist Party because it led the resistance war against Japan or the liberation war against the Guomindang. Years of armed struggle had developed a core of politically aware peasant cadres who later led the land reform and the cooperative movement, and led both fairly well, in many localities at least. Anhui, on the other hand, had gone through no such history. Liberated by northern armies in 1949, Anhui went through land reform under outside leadership in 1952, then without any trial period of mutual aid, plunged into a land-pooling movement that leaped from the lower to the higher stage in the course of a few months. In the lower stage land shares counted when distributing. income, in the higher stage only labor counted. Before the latter could even pretend to achieve consolidation the commune movement carried egalitarianism to unprecedented extremes. Joint tillage never recovered prestige.

    According to Wang Yongxi the cooperative movement in Anhui violated two fundamental principles of rural organization: the principle that peasant participation must be voluntary, based on the economic success of local models, and the principle that income must be distributed on the basis of work performed. Party leaders, ignoring these fundamentals, rushed the peasants into advanced levels of cooperation before they saw any convincing evidence of advantages to be gained and set up forms of income distribution that divided earnings more or less equally per capita, without regard for individual effort expended. Inexperienced local leaders, unable to generate any production enthu siasm under the new share-and-share-alike system, ended up using their power to feather their own nests. Periodically those who exposed, challenged, and replaced them, when faced with the same inertia, ended up applying the same values and began to serve themselves rather than the community. When thirty years after liberation Anhui peasants failed to generate levels of per capita production any higher than those with which they started out, men like the current first secretary of the Party Committee, Wang Yuxin, his deputy Song Linsheng, and Deputy County Chairman Wang Changtai decided it was time for an agonizing reappraisal, time to reverse course.

    Wang Yuxin said the decision took courage because what they decided to try out was a variant of Liu Shoaqi's notorious "Three Freedoms, One Contract," a policy denounced over the years as "capitalist road." Wang and his colleagues introduced it in two stages. First they urged the peasants to split their production teams into small groups, each one of which then contracted to grow crops on designated plots of land. When this brought some positive results in 1979, the leaders urged the peasants to go further and contract land family by family according to a system that they called "Da Bao Gan" (the all-inclusive contract). Da Bao Gan can best be described as "render unto Caesar that which is Caesar's while I take the rest for myself."

    Fengyang peasants, frustrated by what they came to look on as their cooperative straitjacket, wanted an average per capita share of land to work, but they did not want production quotas, percentage bonuses, sliding-scale obligations. They wanted to know what the government, the public sector, absolutely had to have from the land in the way of cash and kind. Then they promised to deliver this minimum without question just so long as they could do what they pleased with the balance of their crops.

    Secretary Wang went along with this. At the provincial level Wan Li backed him up, and so the "responsibility system," in the form of the all-inclusive contract, was born. In Fengyang county, where there is more land per capita than almost anywhere else in China, each family got on the average the use of 2 mou (1/3 acre) of land per person. In return for this each promised to pay its national agricultural tax in kind to turn over a small sum for the support of local (brigade and commune) officials, and to sell to the state at established prices the low fixed quotas of grain that tradition had set for every mou. This arrangement, because it demanded relatively little, unleashed the energy and enthusiasm of the peasants and pushed production ahead in striking fashion. Overall grain production figures for the county showed a steady rise:

    "I thought we would get results with this system," said Secretary Wang, "but I never thought the results would be so striking and so sustained. It has been a surprise to me, it has been a surprise to everyone."

    During each crop season after 1979 the peasants got up earlier, worked harder, stayed longer in the fields than before and they accomplished each day much more than they ever had since pooling their land in 1956. As a result they finished off most of each year's work in a few intense months, then stood idle for the remainder of the season. "In our cooperative days," said Yang Chiangli, "we used to work all day, every day, year-in and year-out, but we got almost nothing done -- work a little, take a break, work a little more, take another break. We felt harassed and we produced very little. What we were doing looked like work but in fact we were stalling around. Now we make every minute count. Our labor produces results. We earn a good living and we have time on our hands, lots of time."

    With Deputy County Chairman Wang Changtai's help I examined several household accounts in detail. Here are the figures for Li Wanhua of Zhanglaozhuang team, Zhanglaozhuang brigade, Ershihying commune:

    With eight people in the family Li contracted 22.5 mou or 2.8 mou per person (slightly under 1/2 acre apiece). According to his contract for 1982 he obligated himself to pay 91.74 yuan into the team accumulation fund (to pay local cadres salaries, supply welfare to needy families, etc.), to turn over 545 catties (11 bushels) of grain to the state as his agricultural tax, and to sell 679 catties (13.5 bushels) of quota grain to the state at normal state grain prices. Over and above that he planned to sell 2,392 catties (47.84 bushels) of above-quota grain to the state at prices 50 percent above normal, and to sell 25.5 catties of vegetable oil 498 catties of dried tobacco, 2 fat pigs, and 10 catties of fresh eggs. His actual production far surpassed the above plan and he ended the year with 20,300 catties (406 bushels) of grain, 960 catties of tobacco 600 catties of oil seeds (mostly sesame), and 800 catties (15 bushels) of soybeans, not to mention the returns from such sidelines as pig and poultry raising. His net income from all sources reached 4,800 yuan or 600 yuan per capita, almost twice the county average. Prior to 1979, before contracting began, Li never accumulated enough work points to pay for the family's per capita grain at 520 catties per head supplied by the brigade. He always had to make up the difference by turning over the income realized from the sale of his two pigs. Cash income retained came to less than 100 yuan per person. Li insisted that in those days the family got along, but quite clearly its members were "getting along" much better in 1983.

    At Yaoyin brigade we met a young married man, Yao Yukuo, who had also previously earned only 500 catties of per capita grain and 100 yuan per person in cash a year. Now, with 5.4 mou (just under 1 acre) contracted he and his wife each enjoyed a net income in cash and kind worth 700 yuan, and this after paying taxes that amounted to 20 yuan in cash to the local accumulation fund and 300 catties of grain (worth 60 yuan) for the state. Yao insisted that he worked only about four months out of every year and thoroughly enjoyed the long winter slack. As we talked we sat in his new stone and tile house (stone walls, fired tile roof). Since he had cut the stone himself the house cost him only 3,000 yuan, a sum he had already paid in full.

    Most prosperous of all the peasants we met was old Yang Changli, the former beggar from Houyang, who so annoyed us with his oratory. In 1982 he contracted 42 mou (7 acres) for eight people and harvested:

    After winning 10 bushels of grain as a prize for his record-shattering production Yang's total grain holdings reached 726 bushels, or more than 20 long tons. In addition he harvested tobacco (2,000 catties), peanuts (1,000 catties), rape seed (400 catties), hemp seed (50 catties), mint oil (20 catties). With his surplus grain and screenings he fed three fat pigs, sixteen suckling pigs, thirty ducks, and twenty-nine chickens. Both ducks and chickens laid eggs which he sold for cash.

    Yang's net income, after deducting all costs including taxes, topped 10,000 yuan, for a per capita income of 1,250 yuan. Rich beyond his wildest dreams he plunked down 6,000 yuan cash for his new two-story house, then bought three Shanghai bicycles and a sewing machine on the side.

    The three families described above were doing better than most. All of them surpassed the county average for per capita income by 100 percent or more. But the average per capita income in the county had doubled in four years' time and signs of this sharp increase made themselves evident everywhere. Most conspicuous were the many new houses built by individual families, the enormous new enclosed theaters built by communes, the bulging warehouses at the state grain stations, and the lively buying and selling at the rotating farm markets. Deputy County Chairman Wang liked to stress less conspicuous things like the 5 million yuan annual increase in private productive capital -- tools, machines, carts, and work buffalo; the sharp annual increase in peasant-owned bicycles, sewing machines, watches, and radios. Collective productive capital showed a parallel rise, pyramiding at the rate of 1 million yuan a year, the most conspicuous addition here being the 500 kilometers of power line built in four years, an amount equal to the total kilometers previously built. Each community not yet provided with power made a per capita assessment for this purpose. Everyone in Houyang had contributed 15 yuan. Concrete poles, ready for erection, lay along the road to the county seat. The road itself was new and had also been built by subscription.

    Houyang's Yang Chingli boasted that he meant to concentrate on grain production and break all his old production records in the years to come. It seemed obvious, however, that in the realm of grain Fengyang county was approaching a plateau. With over 60 bushels of wheat and over 100 bushels of rice per acre unit yields were pushing the limits set by the state of the art. If incomes were to continue to rise expanded livestock production, other rural sidelines, and many small industries must soon make their appearance. That also seemed the only way to employ the thousands who were idling away their winters without gainful employment.

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    For promising examples of sidelines production Deputy County Chairman Wang took us to see Gaojen commune. There 7,300 ablebodied laborers farmed 31,875 mou, an average of 4.5 (over 2/3 of an acre) per person. Since one man or woman to every 10 mou would be enough, commune head Li figured that he had 3,500 too many workers on the land and was busy encouraging the establishment of every possible sideline. So far Gaojen people had set up eighty-three enterprises that employed some 2,500 people while more than 1,000 still remained jobless. Families started most of the enterprises, three to eight households joining up, pooling capital, and going into the production of such things as cement blocks, clay tiles, asbestos tiles, fired brick, phosphate fertilizer, fish ponds, flour milling, oil pressing, starch making, and stone crushing. Several had also set up construction companies. Individual families joined brigades and communes to set up a number of larger joint stock companies that financed, among other things, three mechanized stone crushing plants and one medium-sized flour mill.

    We went to see the flour mill, capitalized at 41,000 yuan. To build it the commune put up 4.5 mou of land valued at 2,000 yuan and 24 shares of stock valued at 1,000 yuan apiece. Individual families bought 15 shares of stock at 1,000 yuan apiece. Each share of stock bought by a family carried with it a full-time job in the plant plus one full vote at the shareholders meeting of seventeen (fifteen workers, one delegate from the commune, and one delegate from the local team). The meeting chose a management committee of three, which in turn hired a manager. During the last eight months of 1982 the flour mill turned a net profit of 10,812 yuan, distributed 23 percent as dividends and put the balance into an accumulation fund destined for new investment. The workers made 58.2 yuan a month in wages plus a year-end bonus of a pair of leather work shoes valued at 17 yuan per pair.

    "What are the advantages of such a plant?" asked commune chairman Li. "It provides employment for surplus labor, an outlet for surplus funds, and an opportunity for democratic management. Every worker owns stock and every stockholder has a vote."

    This last point was not unimportant. One of the continuing problems with rural cooperatives in China has been one-person rule, the abuse of power allocated from above, in units seen as part of the foundation of the state. These new enterprises, financed from below and outside the state system, are run by those who own them. If the manager does not suit the shareholders who are also the workers, they fire the manager. When the stockholders of one new stone crushing company were looking for a manager they stipulated that at least 65 yuan a month in wages per worker power allocated from above, in units seen as part of the foundation of the state. These new enterprises, financed from below and outside the state system, are run by those who own them. If the manager does not suit the shareholders who are also the workers, they fire the manager. When the stockholders of one new stone crushing company were looking for a manager they stipulated that at least 65 yuan a month in wages per worker and 196 yuan in dividends per share per year (30 percent of the anticipated 57,500 net profit) had to be provided. This accomplishment would earn the manager the right to nominate the staff, sign contracts with workers, fire them if they violated their contracts, and receive twice the bonus allocated to each worker. (I forgot to ask how a manager could fire a worker who was also a shareholder.) If on the other hand the manager failed to meet the level of wages and profits stipulated the difference had to be made up out of his or her own pocket. A manager who did not make up the difference faced charges, arrest, and a sojourn in jail!

    At Gaojen commune new industries fell far short of providing employment for all. But in a lonely backwater at the opposite end of the county we visited a brigade where due to special circumstances every able-bodied person had full off-season employment. This brigade occupied a site near a big lake where the acreage of reeds almost equaled the acreage of arable land. Each family contracted, in addition to their per capita farm land, some reed land, and the reeds they cut and stored provided year-round work weaving mats. The average worker could weave at lest two mats a day worth 2 yuan apiece wholesale. The constant weaving combined with work on the land brought in the highest average income per capita in the whole county: 900 yuan a year. Here peasant families were building new houses by the dozen, buying bicycles, radios, television sets, and walking tractors. Their village lay way off the beaten track beyond the back of nowhere and seemed to be slowly sinking into the mud of the lake shore, but they displayed high spirits and an enthusiasm for modernization. All the families we talked to had ambitious plans for the future. They were planning two-story houses primarily because they wanted to convert ground floor space into mat-weaving workshops. They expected electricity to arrive within a year. This lakeside community demonstrated the income potential of a well-matched farming/sideline combination and the importance of year-round work as an income booster. Labor power remains China's most abundant resource. The big problem is putting it to work.

    Everywhere we went in Fengyang county people talked most about and expected the most from one crop: rice. The newest thing in rice culture was hybrid seed with a yield potential well above 100 bushels per acre. Some brigades were already specializing in hybrid rice seed, which they sold at 2.5 yuan per catty. Rice requires water. At least half the water came from large-scale irrigation works created by the mass movements of the 1950s. The rest came from small lakes, ponds, and catchment basins built locally over many years. Taken together they stored water that could irrigate about one-third of the county's arable land. In contrast to the disarray so evident in the counties to the south, almost all the water works, the canals, the sluices, and the pumps in Fengyang seemed to be in operating condition. Had all this been contracted out along with the land? And if so, how?

    Deputy County Chairman Wang assured us that the people still owned the water system collectively. Communes and brigades organized the distribution of water as needed, but in contrast to the past no one got water without advance cash payment. To learn how this system worked we went to the large Fengyashan reservoir on the western edge of the county. There low rolling hills suddenly gave way to two large mountains that provided a perfect dam site. With a water surface of 146 square kilometers the reservoir held some 125 million cubic meters of water, about half of which could be tapped for irrigation. The reservoir was currently supplying water to 89,000 mou (almost 15,000 acres) and stimulating striking increases in the yield of rice. At Yingjian commune, one of five supplied by the reservoir, yields had gone from 51 bushels to the acre in 1978 to 118 bushels to the acre in 1982. Deputy County Chairman Wang said the yields went up after peasants contracted the land out because (1) the peasants worked harder, (2) they bought more fertilizer (four times as much as in 1978), (3) they planted large areas to high-yielding hybrid rice, and (4) they watered every field carefully (paying for every cubic meter in advance made this a necessity).

    The reservoir, built by collective labor in the year of the Great Leap Forward, remained a state unit. The staff, hired by the county, was supposed to finance both daily operations and capital improvements through the sale of water and fish, but prior to 1979 neither product yielded much income. When peasant collectives needed water county officials had little choice but to order it released. Recipients promised to pay for it later but very few ever kept their promises. Every year the county had to invest 3,000-4,000 yuan to stock the water with fish but poachers took so many of them that the official annual catch never realized enough cash to pay for the fingerlings.

    In 1979 all this changed. First the reservoir staff put irrigation water on a pay-as-you-go basis. Teams, brigades, and communes down below had to collect cash in advance from peasant users at .50 yuan per 100 cubic meters. At the same time they organized a water watch, team-by-team, brigade-by-brigade, to make sure the water reached each locality. The reservoir staff, cash in hand, released enough extra water to cover all losses due to evaporation and seepage and kept up the flow until each family got what it paid for on its home fields. Water revenues went up from 6,000 yuan in 1978 to 49,000 yuan in 1982 and put the reservoir for the first time into the black.

    Next the reservoir staff reorganized the fishing industry. The reservoir as a state unit entered into contracts with three nearby communes and five shoreline brigades and sold development shares at 2,000 yuan apiece. The reservoir put in three shares, each commune bought one, and the five brigades together bought one. This brought in enough money to stock the lake with fingerlings. With money of their own invested the local people kept a sharp eye out for poachers, drove off those they discovered (one man drowned trying to escape capture), and shared a fish catch that surpassed 100 tons. At 800-1,000 yuan a ton, each unit received tens of thousands of dollars. Here suddenly they had a sideline worth developing. Manager Chen estimated the potential future catch at 200 tons. Deputy County Chairman Wang thought the total could be pushed to 1,000 tons if only they found ways to feed the fish and stocked species that thrived at different depths on waste material from the segment above.

    Our quick survey of the county -- four intense days of visits to advanced units north, south, east, and west -- revealed a countryside on the move, production, both agricultural and industrial, rising, incomes rising, and the quality of life improving. Everyone attributed the progress to the "responsibility system," to family contracts that linked individual effort to immediate returns and provided every worker with a strong incentive to produce. The results seemed to confirm the theory but county leaders dealt only in passing or not at all with the many factors unrelated to material incentive that had also made impressive production records possible.

    The most important objective factor undergirding rising yields is the water conservancy infrastructure -- dams, irrigation works, river dykes -- created by the collective labor of the past. Peasants built much of this infrastructure during the Great Leap, a movement derided by proponents of the "responsibility system" as ultra-left, voluntarist, and adventurist, but without that Leap how much water would there be to distribute in Fengyang today? Long before the Great Leap millions also worked to remold the Huai River basin. They built reservoirs to store run-off water and dykes to control what the reservoirs could not retain. Without this massive effort could anyone now hope to control floods on the lowlands along the treacherous Huai?

    Other great engineering works will be necessary if Fengyang farmers hope to break through to new levels of crop production in the future. But can such works be carried out within the framework of the "responsibility system"? Can funds be raised to pay people to do individually for cash what they once did collectively for work points? In the past people invested their labor on projects that promised future benefit. They reaped the returns months or even years later. Now peasants demand payment by the day or by the month. Where will the necessary funds come from?

    It came as no surprise to hear that labor supply presented no problem. I have already described how thousands of people now idle their way through the winter months waiting for spring planting time to come around again. Collectives once put their idle labor to work as a matter of course, a routine that wasted labor, so the charge goes, because peasant morale was so low. But did that waste really surpass the waste represented by the unused labor power of today?

    Deputy County Chairman Wang assured me that huge projects are still possible. During the high water season of 1982 when the Huai River threatened to flood its banks, county leaders sent 30,000 people to work raising and strengthening the dykes. The county paid out no money but instead assigned every family, every individual, a quota to fulfill. Each individual who fulfilled his or her quota was free to go home. The work went fast and well, Wang said, much better than the collective work of the past.

    This dyke work seemed to me, however, to be a special case. The Huai River in flood presents a clear and present danger to all inhabitants within its reach. County officials can mobilize people without pay to protect themselves from the river's backlash. But can they mobilize these same people without pay to build something useful to the future? And if they can do so will others not denounce the project as a revived form of leveling, another way to "eat out of one big pot"?

    A second major factor undergirding Fengyang's rising yields is a national grain pricing system that generously rewards anyone who sells more grain to the state than his or her annual quota calls for. One or another variant of this system has been in effect for a long time. It is not something initiated by the post-gang of four leadership, as some recent reporting implies. As the system works today, above-quota grain sells at prices 50 percent higher than the national standard. Because Fengyang peasants produced so little in the past their quotas had always been low. As soon as they managed to push yields up they began to harvest above-quota grain and to sell it at premium prices. Premium prices swelled incomes and enabled the peasants to invest more in production, which in turn pushed yields still higher. As yields continued to rise the amount of grain sold at premium prices soon outweighed the amount sold at standard prices. The extra income served to further accelerate the upward spiral. Today more than 80 percent of the grain produced in Fengyang county is above-quota grain and sells at 50 percent above the standard price. This means that China as a whole is subsidizing agricultural investment and crop production in Fengyang. Wealth is flowing in at an unprecedented rate, a rate that cannot be sustained over the countryside as a whole. The "responsibility system" set this process in motion by unleashing peasant initiative, but once the process started extra profits derived from selling grain above its normal price added a whole new dimension to the local economy. As funds poured in people invested many of them in draft power and supplies for increased crop production and reaped benefits that went way beyond the added increment of human labor expanded. Attributing all progress to the "responsibility system" obscures the impact of the high prices for above-quota grain that fueled so much of that progress.

  Money without supplies, of course, could not accomplish anything. A third major factor contributing to higher yields since 1978 has been the rising level of technical and material support -- support that did not exist or existed only in embryo in the 1960s. When I asked the peasants for specific reasons why their yields went up they all said "the incentive to work provided by the contract." But when I countered with the suggestion that hard work alone could hardly quadruple yields on any piece of land they all said, "Of course, we bought more fertilizer."

    It turned out that they are now not only buying and applying four to five times as much fertilizer per acre as before but they are also applying phosphorus along with nitrogen for the first time (potash they still neglect). More fertilizers coupled with more complete fertilizers have had a startling effect on yields. When I asked why they had not bought more fertilizer in the past they said they had always been too poor. But surely the state had long been prepared to loan money for the purchase of plant food. I suspect that ten years ago no adequate supplies existed. If cooperating peasants had somehow found money for fertilizers in the past they could not have exchanged it for such an abundance of materials in any case.

    When I asked if there were any other good reasons for rising yields the peasants all said "good seed." They praised several varieties of winter wheat but spoke most enthusiastically about that truly significant breakthrough -- hybrid rice. Hybrid rice, which has just about doubled the yields obtained throughout the county, was not available five years ago. The "responsibility system" came along just in time to seize this new technology and put it to work. The technology in turn helped make the "system" look good. Can one say that the old-style cooperatives could not have used hybrid rice to advantage? I think not. The history of the introduction of hybrid corn in Shanxi many years ago indicates the opposite. Pursuing the topic of the material base for high yields, the peasants also cited timely pest control. Every family, it seems, now owns a packsack sprayer for applying insecticides and fungicides to rice, wheat, beans, and tobacco. When problem insects or fungi show up the people go out and annihilate them within a few hours. In the past whole teams had only one or two sprayers. When I asked, "Why so few?" the people replied: "We couldn't afford more. We were too poor."

    Perhaps the "responsibility system" is the catalyst that makes all contributing factors productive. Perhaps without it the villages of Fengyang would continue to stagnate. It must be remembered, however, that Fengyang production started at such an abysmally low level that it could only go up. After four years the peasants are only now reaching levels of crop and sideline production that many other counties in China reached long ago through collective effort. The real test of the new system will come when local peasants try to push beyond such levels to heights as yet unscaled in Fengyang or elsewhere. Playing catchup ball, bringing into play all the material factors that have matured in China in the last two decades, is relatively easy. Breaking through to new levels of achievement will be much harder.

    At the provincial capital of Hefei commune leaders told us that they were beginning to bump up against the upper limits of the production they considered possible on the land. To maintain momentum and guarantee further rises in living standards they looked to specialization, much of it involving livestock -- poultry keeping, dairying, cattle feeding, pig raising, rabbit raising, bee keeping -- and to nonfarm sidelines such as the large hotel that one brigade had already begun to operate. Almost every specialty the officials mentioned required intensive manual labor, as did every form of crop culture they talked of promoting. None of them seemed to be thinking in terms of raising the productivity of labor on the land through mechanization. Yet this is probably the most important way to guarantee not only rising living standards but further gains in per-unit yields.

    That Chinese provincial and regional leaders now downgrade mechanization is hardly accidental. Even though years ago collectivization created a material base for tractor farming; even though recognizing this Mao put mechanization high on the agenda as early as 1958, very few functionaries at any level ever paid serious attention to it. Now that the "responsibility system" has broken up the material base by fracturing the land into countless small strips it is very difficult for anyone to take machinery seriously. Carving up the land has destroyed all economies of scale and has rendered meaningful mechanization all but impossible.

    "Our land is foothill land," said Deputy County Chairman Wang as we drove through a wide, flat plain that ended finally against the dykes of the Huai River. "If we use machines at all they must be small, multipurpose machines adapted to hillside fields," he added. Yet on that day, throughout the day before, and on the day after, we drove through one spacious flat after another before arriving at rolling land that was almost as well suited to mechanization as the plain from which it emerged.

    Defying logic, Wang continued to talk about foothills and small machinery, as if mechanization must start at and be tailored to the most forbidding terrain in the county instead of the most favorable. By concentrating on the difficulty of mechanizing the broken land at the fringes of his domain Wang avoided coming to grips with the adverse geographic consequences of the "responsibility system," with the disruptive effect of contracts on the size of fields on flat land. Mechanization had to fit the whole county, he seemed to be saying, or fit none of it. Thus it did not matter if the new policy destroyed the main factor favorable to machine agriculture, the wide sweep of the collective fields over most of the county in the past.

    Wang predicted that as the peasants prospered they would buy machinery, form small groups for joint tillage, and put together plots of land large enough to make mechanization meaningful. Such a development may occur, but the natural obstacles are formidable. It took the momentum of a tremendous mass movement backed by the entire party to unify the land 25 years ago. Now that it has once again been broken up into millions of fragments so that each family can contract an equal per capita share, can those families stitch more than a fraction of it back together again?

    If they cannot, what hope is there for raising labor productivity on the land? Clearly the "responsibility system" in Fengyang has unleashed some significant productive forces, but it has also thrown up some formidable material barriers to their long-range development. It is difficult to see how the peasants, now competing rather than cooperating as family units, will overcome these barriers.

    New theories defining agriculture as a uniquely individualistic occupation have added ideological barriers to any future joint tillage, barriers that may prove to be as formidable as the material ones. County leaders have now concluded that farming is inherently unsuited to collective action and centralized direction. Because the process of crop and livestock production takes months to run its course, because along the way unforeseen variables inevitably force split- second changes in course, because changes in course require the immediate and thorough implementation of remedial measures, the process demands a high degree of flexibility, independence, and self-motivation. Only the most direct link between the process and the producer will do. Any dilution of that link, any deferral of responsibility, will lead to apathetic, business-as-usual, wait-until-tomorrow attitudes that invite disaster.

According to this new general theory only dispersed family management satisfies the requirements set by nature for production in the countryside. Wang Yongxi, Fengyang's second secretary, presented the idea as if it expressed an economic law, a law like that of supply and demand. "After trying so many things over so many years and failing so badly with a variety of collective arrangements, we are forced to conclude that centrally led cooperation in agriculture stands in contradiction to the very essence of the process it attempts to promote. There is something about the cycle of production in farming from planting to cultivating to harvesting that is incompatible with central direction and mass participation. All our failures in the past stem from one primary failure, our failure to recognize this principle."

    Wang's extraordinary conclusion overthrows completely all those earlier maxims around which the Communist Party organized collective agriculture to begin with. In 1956 Liao Luyen summed them up:

    "Cooperative farming, by pooling land, wipes out borders and unnecessary paths between fields and so brings more land under cultivation (5 percent more on the average).

    "Cooperative farming makes it possible to carry out water conservancy projects, water and soil conservation, and land and soil improvement on a large scale. Cooperative farming makes it possible to transform arid land into irrigated fields, and barren and waste land into fertile soil.

    "Cooperative farming makes it possible to use the full abilities of all men and women, those who are able-bodied, and those who are not fully able-bodied, and those who can do light tasks, enabling them all to engage in many fields of work to help develop production in agriculture, forestry, cattle breeding, subsidiary occupations, and fishing.

    "Cooperative farming makes it possible to have single management of the farm, to cultivate crops best suited to the various types of soil, to put more labor power into improving the land, to improve cultivation by deep plowing and careful weeding, better techniques of sowing and planting; to improve the organization of field work; to improve the yields per mou."

    The rejection of the above propositions may sound like total repudiation for cooperative agriculture, like a platform for return to the traditional desperate go-it-alone peasant tillage of the past. The advocates of the "responsibility system" deny it. They see the new system as socialist in form, a system that gives individual initiative a chance to develop inside a collective framework. This framework includes public (state) ownership of the main means of production, the land, which cannot be bought, sold, rented out, or rented in. It also includes a collective support network, the peasant-owned supply and marketing cooperatives that with backing from the state deliver all critical supplies and market most if not all the commodities produced. The macrosystem, the innovators say, is collective. Within it, at a micro-level, the peasants plan, invest, and labor individually because agricultural production demands personal attention to every detail. This, so the argument runs, is socialism tailored to China's unique rural situation.

    Without getting into a debate over whether the system qualifies as socialist or not, one can grant that it is working reasonably well and quite fairly in Fengyang after four years, but one can also foresee that the dynamic individualism unleashed by family contracts may rise to challenge and eventually overthrow the collective integument that now supports and contains it. Many long-range questions remain unanswered.

    From the social point of view the main question is that of polarization. One of the primary arguments in favor of collectivization when it was launched in the 1950s was that it would forestall social differentiation, block the break-up of rural society into exploiting and exploited classes. The peasants, so the cooperators argued, would all rise together. In practice collectivization did forestall polarization, but in too many cases no significant rise occurred. All remained poor together, eating out of one pot that wasn't anywhere near big enough and, worst of all, wasn't growing.

    Reacting to this deplorable state of affairs, advocates of the "responsibility system" now boldly advocate the idea that "some must get rich first." Such a principle obviously favors the young, the strong, the healthy, the smart, and the aggressive. I asked what measures could prevent a handful of ambitious peasants on the rise from taking possession of the best means of production other than land -- draft animals, carts, tractors, pumps, threshing machinery -- and using these to exploit their less fortunate neighbors. In the lower stage coops of the 1950s a peasant with two animals could live without working. Could not a peasant with several tractors do so today? And if the tractors were passed on to the next generation would not the family perpetuate its privileged class position?

    Deputy County Chairman Wang did not see this as a serious issue. In the past, he said, there were 27,000 needy families in the county, some 30 percent of the total. (He defined "needy" as families with less than 700 catties of grain per capita per year and less than 50 yuan per capita cash income.) Now, he said, there are only 1,021 such families in the whole county and the government gives them ten different kinds of special aid designed to keep them from sinking. The aid is as follows:

    (1) Each state and local cadre takes personal responsibility for one needy family; studies its situation, and gives advice.

    (2) Needy families pay no taxes.

    (3) The county sets aside 50,000 yuan to help the needy buy fertilizer, chemicals, improved seeds, and other necessities.

    (4) The county allocates 30,000 yuan for low-interest production loans to the needy, setting the interest rate at 1 percent instead of the 4.8 percent charged by the bank.

    (5) Communes and brigades allocate an additional 30,000 yuan for similar production loans.

    (6) Schools collect no fees from needy scholars.

    (7) Needy families have the right to buy animal feed at reduced prices and to sell their grain to the state at any time, even when the State Grain Company, due to local oversupply, stops buying from the public.

    (8) Needy families pay no doctors' fees (they still pay for medicine).

    (9) The supply coop guarantees all necessary fertilizer to the needy. Others have to buy fertilizer where they can find it.

    (10) Livestock specialists give needy families free help and waive fees for breeding services, the sterilization of young pigs, etc.

    Wang said senior citizens without descendants also received special help:

    "We give each one 700 catties of per capita grain, 6 catties of vegetable oil, a ton of grass, straw, and stalks for fuel, 30 yuan for clothes, 30 yuan for medical care, and 40 yuan for spending money. This amounts to 300 yuan of aid each year and with this aid the senior citizens can take care of themselves."

    "One of the motives behind such aid," he added, "is to strengthen the birth control campaign. When young people see that old folks without descendants can survive they feel less pressure to have children and especially the sons who will support them in their old age."

    To illustrate local policy toward needy families Wang took us to see Chen Defang, a widow with four children who was farming 17 mou (almost 3 acres) of land. She owned five sections of new housing, complete with some good furniture, shared a water buffalo with a neighbor, and was raising two pigs that she estimated would be worth 200 yuan apiece when grown. With help from her brother, her sister, and her sister-in-law (her own seventeen-year-old son was away at school) she had raised 133 bushels of wheat and rice (an average yield of 47 bushels per acre) and had sold half of it to the state (80 percent of this at premium prices). Although her income far surpassed the standards set for the needy she got special aid from the county, the brigade, and the team because her husband had been killed in the brigade stone quarry while doing collective work. She paid no taxes, no fees for education for her children, and no fees for medical care (medicines excepted). The county supplied her with a ton of mixed fertilizer, most of it free, while the brigade gave her 180 yuan, and the team 72 yuan, to defray production expenses. The county also gave her a "needy family" book that entitled her among other things to sell grain to the state at any time. Looking closely at this book Deputy County Chairman Wang began to scratch his head. She had sold much more grain than she had harvested. Most of this grain belonged to neighbors who had borrowed her book so they could sell their grain with ease. They had presumably paid her something for the privilege. Embarrassed by exposure, Widow Chen assured Wang that she would not abuse her book in the future.

    What Deputy County Chairman Wang described and demonstrated to us was a sort of safety net for the disadvantaged. It was financed primarily by the taxes and cash contributions made to local brigades, communes, and county governments by all member families as part of  the obligation they undertook with their land contracts. Yet it seemed that by itself, such a safety net could hardly prevent polarization or forestall exploitation. One of Widow Chen's neighbors already owned two tractors. Hauling freight on the road each tractor could earn 2.8 yuan per ton kilometer and gross something like 1,000 yuan a month. These 15-horsepower, 4-wheeled diesels, with small 2-ton wheeled trailers to match, cost 4,900 yuan per set. Any peasant could buy one and pay for it in full with hauling fees in less than six months. During the planting and harvest seasons a tractor-owning peasant could also do custom work for his neighbors -- plowing at 1-1.5 yuan per mou and threshing at 2 yuan per hour. With diesel oil at .30 yuan per catty and consumption at 1-2 catties per hour net income could be high. Did this net income figure, I asked, include some rip-off of the neighbors' wealth?

    Wang denied any such possibility. He saw these earnings as a legitimate return on the capital invested, as a reimbursement for legitimate operating expenses and as payment for the skilled labor expended. He defined exploitation as unearned income derived from speculation (playing the market), loans at usurious rates, or any attempt to revive the land rents of old. Payments by peasants to each other for services performed did not, by definition, involve exploitation. Wang based this conclusion on a theory widely held and propagated in China today concerning land ownership. In Chinese agriculture, the argument runs, the principal means of production is land. Exploitation has arisen historically based on the private ownership of land. Since the land is now held in common and no one can gain the use of more than a fair per capita share, no material base for exploitation exists and no such problem can arise in the future.

    Given the history of the rise of capitalism this is an ingenuous theory, to say the least. Under capitalism the primary means of production has never been land, but machinery, plant, and industrial capital. By controlling such resources entrepreneurs have been able to profit from wage labor. Private ownership of the land hinders rather than advances this ability, forcing entrepreneurs to share their profits with a non-productive class of landowners. Numerous economists, from Karl Marx to Henry George, have argued that nationalization of the land would create ideal conditions for capitalist development. Various bourgeois revolutionaries have also advocated this, but historically the capitalists  as a class have always made compromises with their landholding opposition to secure cooperation against the even more radical demands of the newly formed working classes.

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    What after all is Wang's "legitimate return on the capital invested" by the tractor owner? Is it not income channeled to him as the owner of a vital means of production which the recipient of the service must pay for at rates that reflect the going rate of profit? When the owner of the tractor is also its driver the exploitative element in the relationship may be obscured but it exists nevertheless. If the owner of the tractor hired someone to drive it a second form of value skimming would be added -- the exploitation of wage labor.

    One can agree with Deputy County Chairman Wang that payments to a few individuals for the services they render with privately owned machines is not very threatening. One can even argue that promoting private ownership of small means of production of this type and guaranteeing the profits that accrue to their owner-operators is essential to the development of China's economy today. But it borders on obscurantism to deny the exploitative potential of privately owned machinery while concentrating all fire on private land ownership as the source of class differentiation.

    Newly developing trade channels can also open the road to exploitation and polarization. The biggest individual incomes in Fengyang now derive, as might be expected, not from agricultural production but from money made buying and selling commodities on the open market. Wang told us of one man in particular who was channeling thousands of yuan into his pocket selling the mats we saw woven by the lake to buyers in the Northeast. This trader paid as high as 3.2 yuan per mat (the official price was 2 yuan) and sold them a thousand miles away for considerably more, making in a season as much as 20,000 yuan profit. Officially he was just another individual who had a contract with the commune -- this one authorized him to handle its trade in mats. He paid 10,000 yuan annually for the contract and in return received a letter of introduction from the commune and drafts from the local bank to finance purchases and transportation costs. Because he made 20,000 yuan above all costs, the state taxed him heavily, demanding as much as 15,000 as its share. This still left him 5,000 yuan in a county where the average per capita income was 345. He could plow this money back into his own business, put it in the bank to draw interest, or buy shares in some of the new industries under construction. Whatever he did with it, the income derived from the investment must be classified as unearned and must eventually accumulate as a substantial capital holding. How long could this man be called a mere peddler? Surely the commercial freedom that now pervades the market threatens to throw up some merchant princes.

    The new industries we saw at Gaojen commune also seemed to open paths to serious differential enrichment. Buying a share brought with it the right to work in the new flour mill, but how long will mill workers remain the principal shareholders? Suppose the original shareholding worker retires, and suppose the heir has no interest in the mill but inherits the original owner's share and vote. Does the new owner not become an absentee owner, a coupon clipper drawing income from the neighbors' labor? One can foresee a process of differentiation here that with the passage of time may generate a class of owners who profit from the mill and a class of workers who operate it. Investing a share seems to be generating productive forces at an accelerating rate, but it is also opening the road to living without working.

    Polarization may be the most disturbing negative threat posed by the "responsibility system," but it is by no means the only serious one. The system has led to severe disruption of the birth control campaign, declining school attendance, flagrant misuse of land, and indiscriminate felling of trees. It has also led in many areas to the open robbing of ripe crops, right out of the fields. Families with land under contract need children to help with the farm work. They circumvent regulations to give birth to more children than the state allows and as their children grow they often keep them out of school to supplement adult labor. Many families build houses without permission on the land they have contracted, while others bury dead relatives in the middle of the best plots, reducing the tilled area. Family members also open sloping wasteland that should never be tilled and they cut trees along the public highways and canals at night for building material and for furniture making.

    When I asked Wang about these problems he did not deny that they existed but treated them as temporary aberrations that can and will be brought under control. He said that the birth rate had risen sharply after the land was divided, but with incomes rising and a stepped-up campaign for family planning now organized from above, it was slowing down again. He said that school attendance had dropped from 95 percent to 88 percent but had now jumped back to 90 percent. As the peasants became more prosperous they began to think once more about the importance of education for their children. He said that many people had built houses illegally on contracted land but that county authorities had stepped in and stopped the practice. He pointed out a pile of building stone in an open field, obviously in preparation for some new construction, but said that the owner had already been warned that he could not build there and had agreed to remove the stones. As for graves on productive land, we saw far too many of them, both old and new. Wang made no claim to having solved this problem but said that the practice was illegal. We also saw many stumps of freshly cut trees beside the highway and long stretches that contained no trees at all, though trees had been planted in the past. Wang said that to combat this form of vandalism the county was parceling out the highway embankments to individual families as part of the "responsibility system" and predicted that the trees would survive better in the future. We saw very little hill land and so could not estimate how much of it the peasants were rashly opening up to uncontrolled erosion. As for the robbing of crops, all Fengyang leaders and peasants to whom we talked flatly denied that it was a problem. "Who would want to take grain these days?" they asked. "We all have more grain than we can sell. We stack it up in the street outside our houses, and no one takes it. No, robbing grain is not a problem here." I assume that they spoke the truth but I could not understand why the open robbing so endemic in Shanxi ever since family contracting began had never plagued Fengyang. Perhaps the enthusiasm and thoroughness of the county leadership had established a different climate for law and order there.

 Is Wang right about the future? Can the many problems outlined above be brought under control as he insists, or are they contradictions built into a new system that proudly proclaims "a few must get rich first"? I find it hard to judge such a question at this time. Observing Fengyang the problems appeared minor in contrast to the accomplishments, but in other areas this relationship appeared to be reversed. What seemed to make the least sense was forcing everyone to break up collective work on the land. Why not preserve those cooperatives that have been successful and let them compete with contracting individuals? Why not make room for some variety in social organization and see which system produces the best results in the long run? One may make such a plea, but in China it seems the wind of policy can only blow from one direction at a time and the knife of implementation has to cut a clean slice all the way to the bottom of the pile. In the Middle Kingdom pluralism has no precedent.