This article is a shortened version of a talk given in London in 1984 and printed in China Now, no. 113, Summer 1985.

After the initial land reform in China, the agrarian system developed into two-tiered cooperatives. By 1958 and the Great Leap Forward these cooperatives amalgamated into a third tier of much larger units which became known as the People's Communes. With certain modifications and policy shifts, these communes remained at the core of rural organization until 1980, when their dismantlement began. Now, most peasant families contract land from local authorities in an arrangement known as the responsibility system.

    To understand the impact of this new system on Chinese agriculture, you have to have a picture of China's countryside. While in the West it is common for farmers to live on farms and work the land around, in China, especially in the north, people instead live in very crowded villages and go out to the fields beyond. When you fly over the North China Plain, you see villages scattered all over, not more than a mile apart, often closer, and each with 1,000 to 3,000 people. These villages are growing while the open land is shrinking, so that you have an increasingly concentrated rural population trying to survive on dwindling land resources. There is less tillable land in China than there was in 1949, but the population has almost doubled.

The responsibility system is in some ways a revival of the policy called san zi yi bao (roughly, three freedoms -- one contract), instituted in 1962 after the debacle of the Great Freedoms were freedom to enlarge the area of private plots, to expand free markets, and to foster small profit-making enterprises, and the one contract was the contract made by each individual family for set quotas of grain to be delivered at state prices.

Throwback to the 1960s?

This system spread very widely in the early 1960s and offers some interesting parallels with today. Of course, freedom to expand private plots pales into insignificance when almost the whole of the land is contracted privately as now. The expansion of markets and the setting up of individual sidelines for profit are the most important adjuncts to the whole policy, but the heart of it remains contracting out the land family by family.

    When the contracts first started, they were temporary and indefinite in term. Later the term was set at three years. Now contracts are for fifteen years, with inheritance rights. If the contractor dies within fifteen years, descendants can inherit the contract and carry it through. This is all but universal in China now. Complications arise because there are many forms of contract. In Anhui, which is where it all began, they are very simple: the peasant contractor pays a certain cash amount which goes to local government, sells a certain agreed amount of grain to the state at state prices, pays some basic taxes, and keeps everything else. There is no percentage of the harvest to hand over, so there is no variable in this system, just a certain fixed sum which the higher authorities must have.

    Other forms are more complicated, often entailing an obligation to turn over grain to the local village office. This grain earns work points, and the contractor gets back a share, with cash distribution once or twice a year. In yet another form, only part of the land is contracted. The community reserves the rest and each peasant agrees to work so many days on this public land. There are also variations where groups can contract. And sometimes the amount contracted is determined by the number in the family, sometimes by the number of ablebodied workers in a family. Most variations revolve around contracting resources out to the family as a production unit.

The big advantage of contracting from the point of view of the  authorities is that it automatically solves the question of reward according to work performed. Each family works on its own resources, and whatever the members raise reflects the work they have put in. The system does not need much planning; it does not take much organizing; it does not take much leadership. There are no accounts to keep, not a lot of meetings to be held -- each family takes care of itself. Also, no one is responsible for poor results except the contractor. The authorities simply give the resources to the individuals and tell them to enrich themselves, and if in five years they are not rich it is their own fault. Certainly no one can blame the authorities.

Fostering Specialization

    Contracting goes along with a wide-open market, which is very important. For instance, a contractor may have a contract to deliver a certain amount of grain, but he does not have to raise that grain himself: he can raise cotton or other crops, whatever he thinks is more profitable, and can buy the grain from somebody else and deliver that to the government to meet the grain quota. That has become quite common in some places, to the point where grain production has dropped off sharply and new regulations have to be established requiring people to raise the grain they owe.

    The market has stimulated all sorts of small sidelines. Under the commune system, where it was badly led, handicrafts were often discouraged and special products were also discouraged. People did not feel free to go to market. With no outlet for the things they made, they just stopped making them. Now with a wide-open market people can start making whatever they want and generally find an outlet for it. So people are specializing in all sorts of things, even strange ones: one peasant is raising scorpions, for example. A lot of people have gone into beekeeping. China is a land of great variety, multiple resources, and remarkable ingenuity and although I do not think that the cooperative system by necessity suppressed this ingenuity -- in many cases it promoted it -- certainly the new policy has unleashed a great deal of individual creativity.

    Along with the free market goes the freedom to set up individual or cooperative enterprises for profit. Shareholding industrial cooperatives are much in order today, and many people are pooling capital and setting up enterprises that resemble joint stock companies. Along with this goes the right to hire and fire people. At first the government set limits on the number of employees permitted in a private enterprise. For a while it was said you could hire six or eight people; then you could hire as many people as you wanted as long as they were family members -- not a very stringent restriction since in many Chinese communities everyone has the same surname and could be called a relative. Now even those restrictions have gone out the window and hiring is essentially unlimited.

    The tremendous increase in marketing has provided an income for large numbers of people as peddlers and sellers as well. You see things you have not seen for twenty years in China: grown men sitting in front of three apples or four pears trying to sell them on the street. You didn't find ablebodied people doing that kind of task in China five years ago. For a time there were efforts to regulate peddling and various definitions of what constituted peddling as distinct from profiteering. One definition specified that as many goods as can be loaded on a bicycle was peddling and not profiteering, while taking the goods by train or truck would be speculation. Now, anything goes.

    Finally, people now have the right to buy and own productive equipment privately, like tractors or machinery, trucks, processing equipment, and so on. Such ownership is now very widespread.

    Probably 98 percent of all the land in China has been contracted out and that even applies to a large sector of state farms. State farms were set up to demonstrate modern production or simply to reclaim waste land. In Northeast China they were part of a major effort to establish a grain based in the virgin lands. Many state farms no longer operate as a single management unit: their resources are simply rented to the staff, who raise whatever they like and pay rent, called a "contract price," and the rent collected shows as profit to the farm.

Economic Results

    While I do not think grain production has increased as much in the last few years as has been claimed, clearly grain is not in short supply. The price of free market grain is dropping and approaching that of state  grain, which would not happen if there was any major shortage. Furthermore, some people are feeding a great deal of livestock -- 12,000 hens or 125 pigs per family --

something they could not do if grain were not available. The situation is particularly good with coarse grains such as maize, sorghum, and so on, which people do not like to eat. In the past most people had to eat these, but now they eat wheat and rice and feed more coarse grains to livestock.

    But in some places there has actually been a big decline in grain production; people have shifted to other things or even abandoned land. In parts of Hunan, for instance, they just left the land and went off to find some other work.

    At the same time, "economic crops" have really shot up; cotton production has doubled, and oil seeds and other special crops such as fruit and vegetables have shown significant increase. Yields in China, which good cooperatives once got and which outstanding individuals now get are close to world yield levels, as high as the best farmers in Europe and America. So there will not be some quick way to double this and double it again.

    But while these good results are quite well publicized, other consequences are less well known. One of these is the fragmentation of the land, which is quite extraordinary. One of the most promising things in the collective system in terms of future modernization was the fact that the land had been put together in a very practical way. Fields were large; machines, if they had them, could have gone to work easily in China, as there was the physical base for modernization. Now that base no longer exists. The land is much more fragmented than it was before land reform.

    One reason for this of course is that there are twice as many families on the land. Another reason is that officials tried to do the contracting fairly. This meant that almost every family in the village got a piece of each quality of land. Every family also got a strip of the near field, and a strip of the far field, so that each big piece was cut into hundreds of small strips. Since the original fields were big, and access is necessary to each small strip, they gave each family a piece stretching from one road to the next, which means a long and narrow strip. The same area might be reasonable if it were shaped as a square, but all these strips cause great difficulties. Many are so narrow that even a cart can't go down them, which means that everything has to be carried in and out on a carrying pole. Also, there are endless quarrels about strip widths and cheating: "I robbed a furrow from you and you robbed a furrow from me." The courts are loaded with lawsuits concerning land use and irrigation rights and so on.

    Fragmentation has not affected yields that much yet, because peasants are still farming with hoes, after all, and it really doesn't matter with hoe agriculture whether the strip is a yard wide or 10 acres in one bloc -- except that it involves much more labor. Peasants are just working harder, working more hours, putting in more effort; there is a general speedup in agriculture and this extraordinary effort is maintaining yields or even raising them.

Destruction of Resources

    The long-term destruction of resources that belong to the collective is one of the worst results of the new system. In many cases, collective assets were simply broken up and sold to individual bidders; when it became clear that the collective's property was going to be contracted out, people came and dismantled whatever belonged to them jointly, including the headquarters, school, any publicly owned machinery, and so on. They took window frames out, doors off, and the beams out of the roof. In Horse Square commune, near Long Bow, there was a big public piggery. We photographed what remained of it after it was dismantled. It was no great structure to start with and no one of course got rich raiding a few beams from it but it was quite a mess when they got through. When Long Bow had to join the system, the leaders met in secret and put the militia on guard so that the entire property of the collective would not be dismantled while they were meeting to decide what to do. In that case they avoided destruction.

    Destruction has also increased sharply in terms of the environment. Trees have been cut down in great numbers, and around Beijing, even telephone poles and powerlines have been cut down, for the wood, because of the great furniture market that exists in the city. And in the mountains north of Beijing land of all kinds has been opened up; people opened up land on 45-degree slopes.

    I've traveled on the same train north from Beijing for four summers, and I never saw the mountains opened up as they are now. The slopes might have been overgrazed, but at least they were not tilled. If they were covered with brush there might have been a small amount of firewood cut there, but now there are huge areas being opened and tilled with a hoe and planted to crops. This can perhaps be done for two or three years and then the slopes will be finished. The soil on those slopes is in great danger. Other cropped areas that should never be plowed will be destroyed by wind erosion. Houses are rising up and graves are appearing in the middle of good crop land. People are burying their dead in the fields as they did in the old days, they are burying people in the land that they contract as if it were their own.

    When you raise questions about these ravages people tell you it is a matter of controlling abuses, resolving them with new laws and alert police action. But some of these people are getting so prosperous they will be able to defy the laws and pay off the police.

Hired Hands Make It Work

    The whole thrust of the new policy is supposed to enable the socialist principle of distribution, "to each according to his work," to be realized. But since each family can contract more capital goods, and even more land than they can operate themselves, they can hire others to do the work. People told me proudly of a man in northern Shanxi who had contracted 750 mu (well over 100 acres). I said he must have a lot of machinery, but they said no, he doesn't have any machinery, he hires the labor. And in a brigade north of Taiyuan 80 mu (12 acres) of rice land had been contracted by one couple, along with almost 10 acres of other crop land, again hiring people to work the land.

    The size of some of the new private enterprises is constantly growing. The paper showed a picture of the first peasant in China to buy a car, a woman. Her enterprise is egg production, and she is raising chickens and marketing eggs on her own. From the figures it is quite clear she has at least 12,000 hens, and her family cannot supply enough labor power to raise that many hens. I would estimate she has ten or fifteen people working in that enterprise, so she is hiring quite a few.

    Another peasant mentioned in the press was making sausage. He had four family members. But his sausage business grew so much that a few months ago he hired four skilled workers, each of whom brought an apprentice. By any definition of the past, if a family hires more labor than it contributes itself, it is a rich peasant family.

    At the start, of course, the contractor maintains the old relationships. The wage equivalent of the work-points people used to earn is paid by the contractor, who takes a modest amount as his own salary. But no one has control over later developments. Long Bow had six gardens -- each of them about six acres -- with fifteen people sharing work and income. The gardens were contracted to the highest bidder and then each contractor hired fifteen people to do the work at well below standard wages.

    In addition, there is an enormous growth in the number of middlemen or commission merchants. These people are in control of resources and handle transportation. For instance, there is a man who has responsibility for moving all the cement out of the cement mill in Long Bow and bringing in all the raw materials. He hires the carts that haul the goods. If the cart is local -- that is to say, if it belongs to a village resident, he gets 10 percent of the earnings of each load. If it is not local, he gets 20 percent. A man like this is making big money.

    The authorities claim that peasant income has now doubled -- quite an achievement. But the figure may not have been corrected for inflation, because it is clear that this period has seen a sharp rise in prices as well -- city people are complaining about food prices being much higher.

    What is involved in all of this is not just income differentiation but class differentiation. Those who get rich first preempt the high ground and end up exploiting those who have lagged behind. There is also something troubling going on with regard to the so-called free market. In one case a gang took over a tomato market where peasants were bringing in fresh tomatoes, forcing the peasants to sell their produce behind a building and then selling directly to the people in the market themselves. I'm not sure how widespread such strongarm methods are, but they are ugly, and they are expanding.

    Any system that disregards limits on the amount of resources that can be contracted does not end up distributing rewards based on work.

performed. What develops is a system that bases rewards on the amount of productive resources contracted. The capital controlled soon outweighs the work done.

Gruesome Customs

    The new system also radically affects the quality of life: the more the system reflects the old economic relations or turns toward traditional economic relations, the more traditional culture and customs revive. This was brought home to us rather gruesomely in Long Bow by the death and burial of two old peasants last August. Ordinarily, people bury the dead as soon as possible, particularly in August! But now almost everyone that has a death in the family goes to the soothsayer or oracle in the village for a proper date for the burial. It is important not only where but when you bury a person, the stars have to be right. And this oracle turns out to be someone who was once sort of regarded as the village fool; they called him ba mao, which means "eight dimes" (since there are ten dimes in a dollar, eight means not all there). Somehow he inherited a book of oracles from his grandfather and he is now the chief seer of the village.

    This fellow told the bereaved they should bury the body eight days after the person died. On the day of the burial -- they don't bury the body till seven o'clock in the evening, about when the sun starts to go down -- they display the coffin in different parts of the village and play music all day long. They hired a big band, and of course the bigger the band, the more prestige to the family; the more glory to the dead ancestor. This was really a sight because the corpse created such a stench that they could not play near it, so they had to leave it down the street about a hundred yards. As they played, some sort of gall was dripping from the coffin and making a puddle in the street and the flies were coming from all around. When they went to move the coffin after two hours of playing in one place they had to pour sorghum liquor all over the coffin to kill the odor and drive the flies off before they could get close enough to pick it up. It takes sixteen men to carry a coffin and they all had to get pretty close to it. Then they would move it down the street, set it in another place, and play for another two hours -- another puddle of gall formed. This happened twice in the summer of 1983.

    I also saw the revival of many traditional entertainments. There were 7 million people involved in amateur drama in China two or three years ago and now that is down to about 2.5 million. But there is a big rise in professional acts of all kinds, much of it rather low-level, like putting a snake in one nostril and bringing it out of the mouth, erotic dancing, and things like that. There is a real shift in the cultural output in rural areas.

More Labor Leaving Agriculture

    One thing that interests me particularly is the enormous shift of labor out of agriculture that the new policy has brought about. I have long argued for mechanization, and over the years was always told, "We have too many people; how could we possibly do it?" And of course my view was that they should begin in places such as Long Bow which are suburban and where there is alternative employment for the released labor, and where the community is prosperous. Begin there, and work outward to solve the technical problems. It would progressively spread and maybe 20 percent would do it first and another 10 percent later, and then another 20 percent, and so on over many years. But no one ever listened to those arguments. And now the responsibility system has thrown about 30 percent of the people off the land in one year: the people who did not contract land. Of that 30 percent, only half have found anything else to do as of January 1984, so there is an enormous displacement based not on technical advance but simply on economic and social policy. No conceivable mechanization plan could have done that on that scale in that time. Say there are 300 million people engaged in farming in China. A third of that would be 100 million, and half of those unemployed -- that is 50 million people. Where are they all? Of course, they are living off other family members or relatives or friends. They are not out looking for work, so this displacement is hidden.

    All of this recalls some of the problems that emerged with the New Democracy program in China in the 1950s: the mixed economy was fostering capitalism in some sectors, generating polarization, displacement, and other problems. The solution in those days was to move toward collective agriculture. Now the government is reestablishing a mixed economy with a growing private sector. It is quite dynamic, and I think quite unstable. The question is: Which way will it go?