ABSTRACT
Processing raw materials is usually more profitable than extracting them. Silk-weaving, ceramics, handicrafts, and other industries had prospered on the Yangzi delta for centuries. Socialists saw that rural factories’ competition with state plants would threaten the Party’s ability to plan the economy and finance government budgets. Reformist or socialist-conservative patterns emerged differently under different local leaders. Rural plants increasingly took inputs and markets that state factories had dominated. The 1970s saw materials shortages. Inflation plagued the 1980s. Contracts replaced plans – but were equally unenforceable. “Dual pricing” and barter, praised by economists, did not solve the state’s problems. Efforts to keep Shanghai a low-price “basin” led to leakage at borders and corruption – and many managers in the city who had Jiangnan rural kin did not care. Supervising corporations no longer “distributed” most inputs or credit. State factory managers invested inland or fought “wars” to get wool, cocoons, paper, lumber, cotton, and other materials. The portion of all Shanghai factory inputs allocated by plan plummeted from about 70 to 20 percent in the mid-1980s. Planners did not wish this drop, but they could not deliver the goods; their budgets were limited, and nonstate factories outbid them. Team or brigade enterprises were later run by villages or towns, and then often by private entrepreneurs.
