ABSTRACT
The success of China’s rural development is really that of rural industrialization: by 2010, rural industries in China employed 159 million workers and produced a total output value of 46 trillion yuan (MOA 2011).2 China’s success in rural industrialization is puzzling not only because it has been so rarely accomplished in other developing countries, but also because it represented such a decisive break from China’s own path of under-development in the pre-revolution and late imperial eras. Many studies have tried to explain this puzzle. Those that
explain the success as primarily driven by either private enterprises (Huang 2008) or foreign investment (Whiting 2001) not only fail to see the historical context that made reform-era rural industrialization possible, but also neglect the crucial role played by publicly owned TVEs and local states (Oi 1999). Other explanations that highlight how rural industrialization policies during the Maoist era laid the foundation for rapid industrialization during the reform era are far more convincing (Bramall 2009; Putterman 1997). However, even these works, which focus on the industrial capacity and skills base created in rural areas, overlook the changes in how industrial production was organized in rural China during the Maoist era. I argue that another important legacy of the Maoist rural industrialization is that it decisively changed the balance between householdbased petty commodity production and industrial production using wage labour in the latter’s favour, and thus switched rural China’s development in the reform era onto a path that depends heavily on wage labour. In an influential recent book, MIT Professor Yasheng Huang (2008) puts forward a radical re-interpretation of China’s rural industrialization experiences, in which he argues that ‘the overwhelming majority of TVEs, even at the early stage of the reforms, were actually private’ (Huang 2008, 77), and thus, China’s rural industrialization miracle was a manifestation of the classical theorems of economic development about private-sector dynamism (Huang 2008). This argument, besides flying in the face of his own data,3 overlooks the profound sociopolitical differences between wage employment and family production. From a neo-institutional perspective, what is puzzling about China’s rural development is the issue of property ownership; hence the debate is between those who praise the advantages of public ownership (Stiglitz 1994; Che and Qian 1998) and those who laud private-sector dynamism (Huang 2008; Whiting 2001). Yet, I contend that, for understanding social change in rural China, it is far more useful to focus instead on the changes in the form of production. The economics literature, in its focus on the many similarities of household businesses and privately owned TVEs, has missed a fundamental difference between them: the former is household-based petty commodity production; the latter can be characterized as labour-hiring capitalist production. Thus, by lumping tens of millions of household businesses together with labour-hiring enterprises, Huang (2008) conflates two distinctive historical processes and significantly overstates the dominance of private ownership. The growth of household businesses is simply the revival of the traditional household-based petty commodity production that has long existed in rural China. By contrast, the growth of labour-hiring firms represents a break from the past – it gives rise to capitalistic wage labour and the ensuing social differentiation of the peasantry and transformation of rural households’ production and reproduction. Historically, non-farm wage employment in rural China had been suppressed by household sideline production bonded with family farming. If this is the case, what factors have enabled wage employment in rural enterprises – regardless of whether private or otherwise – to grow so rapidly after 20 years of collectivization? The rise of industrial technologies that cannot be employed on a family
scale and allow larger-scale enterprises to outperform family production certainly created more space for labour-hiring firms to grow. But what collectivization did was more crucial: it provided the collective labour-hiring firms and future private firms with the much needed capital accumulation, entrepreneurial and managerial talents, and a relatively healthy and literate rural labour force – thanks to the socialist state’s investment in improving rural human capital – that was accustomed to wage work conditions (Putterman 1997; Bramall 2009). At the same time, collectivization also suppressed household-based sideline production, which in the past had depressed the growth of labour-hiring firms with its lower labour cost. The curtailment of rural households’ sideline non-farm activities started during the land reform (Bramall 2009). The collectivization campaign in the 1950s further consolidated traditional handicrafts production by rural households into small collective enterprises run by brigades and communes known as commune-and-brigade enterprises (CBEs). In the collectivized rural economy, after much of the surplus was extracted by the state to fund its industrialization plan, the rest was concentrated from rural households into collective units, which could then be invested in collectively owned industrial firms (Putterman 1997). By the end of 1959, this over-zealous development of CBEs had increased the total number of workers employed in CBEs to 18 million across the country (Yan 2007). After a period of rapid decline following the disastrous Great Leap Forward, CBEs started to rebound in the late 1960s. By 1979, roughly 1.5 million CBEs, employing over 29 million workers (about 9 per cent of the total rural employment), accounted for 30 per cent of the total gross output value in rural China and 15 per cent of the national industrial output (MOA 1985) – an industrial foundation rarely found in the rural economies of other developing countries. The consolidation of handicraft and industrial production previously spread in hundreds of millions of rural households into larger-scale production in collective CBEs amounted to a dispossession of rural households of their means of non-farm production and the partial proletarianization of the rural labour force by an industrializing state in lieu of the capitalist class. As a result, the collective period irreversibly switched rural China’s non-farm economy onto a path that diverged from the traditional model of family-based industries to one based on wage employment in supra-familial firms. Even when the decollectivization reform revived household-based sideline production, it could no longer hold back the growth of labour-hiring firms as had historically been the case. The growth of household businesses during the reform era has been strong: from ten million units in 1985 to 21 million in 2010, and from a total employment of 23.5 million persons in 1985 to 60.8 in 2010 (MOA 2011). But it is essentially a continuation of the traditional pattern of household-based sideline production of various types of handicrafts and petty commodities. What sets this period apart from pre-revolution China is the rapid growth of non-farm rural enterprises using wage labour, which, in 2010, numbered 6.2 million and employed nearly 100 million workers.4 In pre-revolution China, household-based
industrial production, because of its advantage in labour use intensity, depressed the growth of labour-hiring enterprises. But in the reform period, thanks to the advantage in capital and technology that the labour-hiring CBEs gained during collectivization, wage employment in rural enterprises took off despite continued competition from household businesses. This rise of labour-hiring firms, which changes both the social organization of production and the social nature of a huge number of producers, is far more consequential to China’s rural society and economy than the ownership structure of these firms. It not only turned rural industries into the main engine of growth for the rural economy and rural household income, which sets China apart from other developing countries; it also altered the dynamics of rural households’ social reproduction. Now, except for a minority of households (at most 15 per cent)5 that continued with household businesses, the rise of labour-hiring firms bankrupted the traditional model of half-agriculture-half-handicraft household production. Instead, it introduced labour commodification into the lives of a vast number of rural households, and made them dependent on wage employment for their social reproduction. It also started the social differentiation of the Chinese peasantry by creating new classes of labour. These changes, as I intend to show here, have profound impacts on social relationships and social structure in rural China.
