How long was China Communist?

In the grand scheme of things, not that long at all.

I’ve been reading a lot about the Soviet Union lately, and there are indeed these two large, multiethnic, Communist states have many things in common. But I’m starting to think that the most important difference might be a very simple one: the fact that Russia and the other Soviet republics were Communist in the strict economic sense–central planning and controlled prices–for much longer than China was.

Central planning in Russia could just be dated from the October Revolution of 1917 to the collapse of the Soviet Union in 1991. A more precise chronology might be from 1918, when the Bolsheviks nationalized industry and centralized distribution of grain, to the liberalization of prices and other economic reforms in 1992. But it’s 74 years either way: that’s two generations.

Think of what that means in terms of life experience: someone who was 25 years old during the Soviet economic reforms of 1985 would have been born in 1960; assuming an average childbearing age of 25 (on the high side), their parents would have been born in 1935, well into the Stalin’s rule. They would have to go their grandparents to find someone with any memory of how to survive in a non-planned economy. By contrast, a Chinese person who was 25 in 1985 would have had parents who had grown up in a non-planned economy, and could pass on useful experience and family business traditions.

I have not come across much systematic examination of this issue, but there’s an interesting discussion in a 1994 paper by Mark Selden, “Pathways from Collectivization: Socialist and Post-Socialist Agrarian Alternatives in Russia” (JSTOR link), who notes that while Chinese farmers eagerly embraced the decollectivization of agriculture, Russian ones did not:

Where does the call for reform or transformation of collective agriculture originate? In Russia pressures for reform have emanated from the highest levels of political authority, specifically, in recent times, Gorbachev, Yeltsin, and some of their close associates. Pressures for change have been weak and resistance strong not only among middle- and lower-level officials, but also among farmers in the collective and state sectors.

Most significant, in contrast to the Chinese experience, is that virtually no pressure for privatization has come from the vast majority of collective and state farm workers, few of whom have thus far shown any inclination to claim land for private cultivation other than the private plots available to collective and state farm workers. Moreover, there has been powerful resistance from collective and state farm administrators who are well-positioned to thwart the reform agenda. …

In recent generations numerous Russian farmers have made the transition from the rhythm of the agricultural cycle regulated by sun and season to the eight-hour day of the industrial worker. They have moved from the sickle to the combine harvest and from animal power to electricity and diesel power, but at the same time many have lost whatever command they and earlier generations may have had of the multiple skills of cultivation, marketing, and borrowing while becoming specialists in one or a few areas of agricultural production. For such people, the combination of wage and welfare guarantees, plus continued access to the private plots that produce approximately 25% of the value of Russian agriculture remains an attractive one. To abandon the guarantees provided by collective and state farms seems to most farmers a risky march toward an uncertain future.

Most important for comparative purposes is the fact that three generations of collective experience eradicated many of the habits, as well as the multiplicity of skills required for effective management of family farms in a market economy. By contrast, while Chinese farmers historically consumed a substantial portion of their harvests within the family, they also had a long and deep familiarity with private land ownership and the workings of local markets. And 30 years after collectivization, as family farms re-emerged in China, there remained an experiential basis, including networks of relationships and historical memories, on which Chinese family farms and market activity could be resurrected.

A 1997 World Bank paper also used a variable appropriately dubbed “market memory” to compare the different starting points and trajectories of transition economies in Asia and Europe; it is defined as the number of years under central planning. I’ve reproduced a table from the paper below:

WPS1866-table

Again we see Russia and Ukraine topping the list with 74 years of central planning experience. The other Soviet republics are given 70 or 71 years, reflecting the fact that the USSR was formally established in 1922, so central planning got a slightly later start in other regions. The Baltic states of Estonia, Latvia, Lithuania, and Moldova were incorporated into the USSR in 1940 as a result of the Molotov-Ribbentrop Pact, and so had 51 years. And then the various Eastern European states became Communist at even later dates, in the aftermath of the Second World War.

I’m not sure why China is given 46 years of central planning in the table, which seems like an obvious error. The simplest dating would be from the establishment of the People’s Republic in 1949 to the beginning of economic reforms in 1978, or 29 years. This could probably be fine-tuned, as 1978 was mostly a political landmark. Local experiments in both rural and urban areas did begin then, but the breakup of agricultural collectives did not really take off until 1982, and nationwide changes to the management of non-agricultural companies had to wait until 1984. On the other hand, the beginning of central planning could perhaps be pushed forward until 1952 or 1953: the Communist Party after its victory in the civil war initially focused on stabilizing the economy, and took a few years before moving full-on to nationalization and five-year plans. Still, roughly three decades.

But it’s possible to argue for an earlier date for the collapse of central planning in China, on the basis that during the Cultural Revolution actual government authority over the economy had significantly eroded. The work of the Hong Kong-based historian Frank Dikötter offers some evidence for this:

If the Great Leap Forward had destroyed the credibility of the Party, the Cultural Revolution undermined its very organization. The extent to which ordinary villagers reconnected with the market in the last five years of the Chairman s reign is amply illustrated by evidence from the archives. …

Wealthy regions joined those mired in poverty in a silent revolution that subverted the planned economy. In villages along the southern coast, people raised ducks, kept bees, grew fish, baked bricks and cut timber, always in the name of the collective. By late 1971, in the county of Xinchang, Zhejiang, which housed a population of roughly a quarter of a million people, some two-thirds of all villagers were independent – or “go-it-aloners” in the parlance of the time. Much of this was done with the tacit consent of the local authorities, who rented the land to individual households in exchange for a portion of the crop. A year before Mao Zedong’s death, the habit of leaving the collectives to try one’s luck on private land or in underground factories was described as “widespread” throughout the province. …

Some wealthier villages not only planted profitable crops for the market but also began establishing local factories. This was common in many parts of Guangdong. In Chaoan, just outside Shantou, where entire villages had been reduced to poverty after embroidery was declared to be “feudal” at the height of the Cultural Revolution, historic links with the overseas community were revived after the Ministry of Light Industry lifted the trading restrictions in 1972. Two years later, up to half of the women in some villages once again specialized in drawn work and embroidery. …

The growth of cottage industries in the Yangtze Delta followed old manufacturing habits and trading routes that predated liberation. They were revived as soon as the hand of the state weakened. Much as Shantou had a long tradition in exporting embroideries to overseas markets, for many centuries the villages around Shanghai had specialized in household goods, ceramics, cloth, silk and other handicrafts. … The extent to which rural industry reconnected with its past in the early 1970s is shown by statistics: in Jiangsu province as a whole, industry represented a mere 13 per cent of total output in the countryside in 1970, but a phenomenal 40 per cent by 1976. These factories were often collective, if in name only.

That’s from his article “The Silent Revolution: Decollectivization from Below during the Cultural Revolution“; see also this previous post on how the Cultural Revolution prepared the way for the economic reforms of the 1980s.

So you could even argue that effective central planning in China was only practiced for a couple of decades, and, in at least some places, traditions of rural private industry were already reviving well before 1978. The long-term damage to China’s human capital and institutions from the detour into central planning was certainly significant, but was probably much less than in some other Communist countries. The post-1978 “reform era” is now closing out its fourth decade, and so has already lasted quite a bit longer than the planned economy did.

On this note, spare a thought for the people of North Korea, where Communist rule has now endured 72 years and counting, and is much more regimented and isolationist than the Soviet Union was in its last decades. The experiences of North Korean defectors to the South have already made it clear that the North’s people are very poorly equipped to manage in a market economy–much worse than East Germans were when the Berlin Wall fell.

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There never was a man named Vladimir Ilich Lenin

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Lenin at his desk, 1918

Fun facts for the centenary of the Russian revolution:

The name ‘Vladimir Ilich Lenin’ is a posthumous creation. The living man went by many names, but ‘Vladimir Ilich Lenin’ was not among them.

What should we call him? He was christened, shortly after his birth in 1870, as Vladimir Ilich Ulyanov. ‘Ilich’ is a patronymic, meaning ‘son of Ilya’. And yet, for many during his lifetime and after, ‘Ilich’ conveyed a greater sense of the individuality of the man than ‘Vladimir’. As soon as he started on his revolutionary career in the early 1890s the exigencies of the underground led our hero to distance himself from his given name. The surviving copy of his first major written production – Who are these ‘Friends of the People’ and How Do They Fight against the Social Democrats? (1893) – has no authorial name on the title-page. In works legally published in the 1890s our hero adopted more than one new name: K. Tulin or (for his magnum opus of 1899, The Development of Capitalism in Russia) Vladimir Ilin, a pseudonym that hardly hides his real name. Right up to the 1917 revolution, legally published works by Vl. Ilin continued to appear. …

Our hero acquired his ‘usual literary signature’ around 1901, while serving as one of the editors of the underground newspaper Iskra, when he began to sign his published work as ‘N. Lenin’. Why ‘Lenin’? We have already seen a certain fondness for pseudonyms ending in ‘-in’. But ‘Lenin’ seems to have been the name of an actual person whose passport helped our man leave Russia in 1900. This passport was made available to Lenin, at second or third hand, as a family favour; in the end, he did not have to use it.

‘N. Lenin’, not ‘V.I. Lenin’. His published works, right to the end, have ‘N. Lenin’ on the title page. What does the ‘N’ stand for? Nothing. Revolutionary pseudonyms very often included meaningless initials. But when N. Lenin became world famous, the idea got about that N stood for Nikolai – an evocative name indeed , combining Nikolai the Last (the tsar replaced by Lenin) , Niccolò Machiavelli and Old Nick. In 1919 one of the first more-or-less accurate biographical sketches in English proclaimed its subject to be Nikolai Lenin. President Ronald Reagan was still talking about Nikolai Lenin in the 1980s – and perhaps this name is just as legitimate historically as ‘V.I. Lenin’.

In any event, Lenin never used ‘Vladimir Ilich Lenin’ as a signature. Most of his letters are simply signed ‘Yours, Lenin’ or the like. Certainly Lenin did not bother to hide his real name. In a 1908 letter to Maxim Gorky signed ‘Yours, N. Lenin,’ he gives his Geneva address: ‘Mr. Wl. Oulianoff. 17. Rue des deux Ponts. 17 (chez Küpfer)’. Only in letters to his family and to Inessa Armand does he usually forego his usual literary signature and sign off as V.U. or V.I.

After 1917, when signing official documents in his capacity of Chair of the Council of People’s Commissars, Lenin evidently felt that his family name was necessary, and so his official signature on government decrees was ‘Vl. Ulianov (Lenin)’. Other revolutionaries whose underground klichki (pseudonyms) became famous did not retain their family name in this manner – certainly not J. V. Stalin (born Dzhugashvili).

It seems that our subject, for reasons both personal and official, fought to maintain a distinction between Vladimir Ilich the person and Lenin the political institution.

The quote is from Lars Lih’s Lenin, a short and sympathetic intellectual biography. I also note that Sean McMeekin’s nice piece “Was Lenin A German Agent?” refers to him correctly, as Vladimir Ulyanov alias Lenin.

Reinhard Bendix on the economic dilemma for nationalist politicians

Is there a connection between nationalism in politics and inward-looking, statist economic policies? The examples of China and Russia (and perhaps Turkey) in recent years suggest that there could be.

But where does this linkage come from? I recently stumbled across a 1987 article by the sociologist Reinhard Bendix, called “The Intellectual’s Dilemma in the Modern World,” in which he articulates this connection rather well. Here is the relevant passage:

There is a family resemblance between the Third World of today and the poor countries of earlier eras. In the sixteenth and seventeenth centuries, English intellectuals and other people reacted to the economic advance of Holland and the Spanish world empire. In the eighteenth century, German writers reacted positively or negatively to the economic and political advance of England and France. In response to the French revolution, German rulers proposed to do for “their” people–by a revolution from above–what the French people had done at great cost by and for themselves. Russian intellectuals during the nineteenth century took standards derived from Western European developments to form counterimages of czarist realities; and in the twentieth century Russian revolutionaries adopted programs and tactics derived from the French revolution and Marxist theory in their overthrow of the czarist regime.  …

Every idea taken from elsewhere can be both an asset to the development of a country and a reminder of its comparative backwardness–that is, both a model to be emulated and a threat to its national identity. What appears desirable from the standpoint of progress often appears dangerous to national independence. The revolution in communications since the fifteenth century has been accompanied by ever new confrontations with this cruel dilemma, and the rise of nationalism has been the response nearly everywhere. …

The division is deep over which path the country should follow. Perception of advances abroad are reminders of backwardness or dangers and weaknesses at home. Intellectuals attempt to cope with the ensuing dilemma: whether to adopt the advanced model and invite its attending corruptions, or fall back upon native traditions and risk their inappropriateness to the world of power and progress. This dilemma engenders heated debates and ever-uneasy compromises. People want their country recognized and respected in the world, and to this end they cultivate or revive native traditions. … But the desire to be recognized and respected in the world also calls for the development of a modern economy and government, and this effort at development focuses attention upon ideas and models derived from the advanced society of one’s choice.

I owe the reference to Elena Chebankova’s article “Ideas, Ideology & Intellectuals in Search of Russia’s Political Future” in the spring 2017 issue of Daedalus. She applies the Bendix dichotomy to the Russian situation as follows:

This cruel dilemma forces a split within the intellectual scene of second-wave industrialization states, of which Russia is part. Intellectuals of those countries inevitably face an uneasy choice between losing intellectual and cultural independence by admitting their backwardness and adopting the externally borrowed progressive paradigm, or reaffirming nativism and tradition by holding on to the previously chosen path.

The drama for Russian intellectuals is in the quandary of either adopting the ideology of individual freedom and bourgeois liberties, combined with embracing Western ontology, or clinging to the idiosyncratic centralized modes of governance that could conduct modernization and development, albeit in a risky alternative fashion.

The point is simple: economic policies that are perceived as pursuing convergence with “the West” can be difficult to reconcile with nationalist aspirations to have a country walk its own road. And to the extent that good economic policies actually mean “converging with the West,” nationalism can mean fewer good economic policies.

Of course this relationship is not a necessary one: there is no country that does not have some nationalism in its politics, and good economic policies do not actually have to mean (or be perceived as) “converging with the West.” Deng Xiaoping for one found no difficulty in reconciling his strong Chinese nationalism with liberalizing domestic markets and opening up to global trade. It also seems like Modi in India is managing to pursue a similar combination of nationalist politics with economic restructuring.

But countries with a socialist legacy perhaps face the dilemma more keenly — to a large extent the distinctive “Chinese way” or “Russian way” is, thanks to their history, socialism and the planned economy. And therefore appeals to nationalism can shade more easily into statist economic policies.

In any case, I found this old Bendix article surprisingly useful for thinking about these current questions. It is rather difficult to find online, so I’ve put a copy up on this site; you can download the PDF here.

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Reinhard Bendix

The divergence over the Great Divergence is narrowing

Stephen Broadberry, Hanhui Guan, and David Daokui Li have updated their impressive paper compiling estimates of Chinese per-capita GDP over about one thousand years (“China, Europe and the Great Divergence: A Study in Historical National Accounting, 980-1850“), with results that help shed light on one of the great debates in economic history: just when and by how much did incomes in Europe start to overtake those in China?

Our estimates indicate that Northern Song China was richer than Domesday Britain circa 1090, but Britain had caught up by 1400. Also, China as a whole was certainly poorer than Italy by 1300, but at this stage, it is quite possible that the richest parts of China were still on a par with the richest parts of Europe.

By the seventeenth century, however, China as a whole was already substantially behind the leading European economies in the North Sea area, despite still being the richest Asian economy. Even allowing for regional variation within China, it is clear that the Great Divergence between China and Western Europe was already well under way by the first half of the eighteenth century, before the start of the Industrial Revolution.

Although this clearly contradicts the early statements of California School writers such as Pomeranz (2000) and Wong (1997), it is broadly consistent with the later views of Pomeranz (2011), who accepts that his early claim of China on a par with Europe as late as 1800 was exaggerated, and is now willing to settle for an earlier date between 1700 and 1750.

We think this is encouraging, because it shows how engagement between researchers using primarily quantitative methods and those who tend to put more weight on qualitative methods can result in a new consensus that challenges the original position of both sides in a major debate.

The California School were right to claim that, taking account of regional variation, historical differences in economic performance between China and Europe were much less than was once thought. However, the early claims of the California School went a bit too far: China and Europe were already on different trajectories before the Industrial Revolution, as European economic historians have traditionally maintained. The Great Divergence did not begin as late as the nineteenth century.

But you don’t have to take their word for it; Kenneth Pomeranz himself has weighed in with a blogpost reviewing some of this recent research:

A recent paper by Stephen Broadberry, Hanhui Guan and David Daokui Li suggests that Britain must have overtaken the Yangzi Delta in per capita GDP by the first quarter of the 18th century. This is, of course, materially different from my claim in The Great Divergence that the Yangzi Delta had not fallen significantly behind until well into the second half of the 18thcentury, and maybe not until 1800…

I think it is noteworthy that a debate between an early and a late 18th century divergence represents a considerably different intellectual landscape than the one we would have if we relied on Maddison’s GDP numbers, or on the non-quantitative work of David Landes, Deepak Lal, and various others – or for that matter, on an earlier attempt by Guan and Li to estimate comparative GDPs, which had previously claimed that a huge gap already existed in the 15th century. …

Admittedly, that is far from the rough parity I had originally suggested at 1800, and would now be inclined to put at somewhere around 1750 instead; there are some plausible adjustments that I think would narrow the gap further, but that is not really the point for now.  Instead I would emphasize that despite continuing disagreements and continuing data problems – the latter of which will probably never be fully solved – we have made some progress in narrowing the range of plausible answers about when and how much divergence occurred in these terms.

On the whole I see this as an example of the virtues of quantification in social science: when disagreements are about empirically measurable quantities, rather than abstract principles, it should be easier to resolve them. But still, how often does that actually happen in economics?

broadberry-china-table

Welcome to the land of soft openings

I’m about halfway through Ian Johnson’s The Souls Of China: The Return of Religion After Mao , but it’s already clear it’s the China book of the year. Not just because the subject matter is fascinating and undercovered, but also because it is packed with insights about all aspects of contemporary China.

I hope to blog more about the discussion of religion later, but for now I really want to share the following passage, which despite being more or less tossed off as an aside is a fairly profound insight into how China works:

China is the land of soft openings: projects are first announced to big fanfare, structures erected as declarations of intent, and only then filled with content. In this sense, developing a new ideology to unify China is similar to building a shopping mall: the deal is publicized, the building goes up, a few stores open, but only years later are all the shops and restaurants open for business, and only after a number of anchor tenants have gone bankrupt. This makeshift model differs from how Westerns like to see projects–envisioned and planned thoroughly, then completed according to that design. But it has its own logic. If viable, the project goes ahead; if not, backing out is easier.

Keeping this pattern in mind is a good way to maintain a clear head when dealing with the latest grandiose Chinese announcement.

The frenzy of commentary on China’s Belt and Road Initiative has, for instance, generally not done this. Much of this makes the fundamental mistake of not understanding that the initiative is indeed in soft opening mode, and talking about it as if it is a massive and detailed plan for infrastructure development (it isn’t). On the other hand, that doesn’t mean that it’s correct to take all the official rhetoric about shared prosperity at face value, as too many ludicrously overwrought op-ed pieces have. A makeshift structure that gets filled in over time is, I think, exactly the right way to think about it.

 

(Disclosure: Ian is a friend and former colleague, so I was predisposed to like his book. But I’d recommend it anyway.)

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What I’ve been listening to lately

  • Nicole Mitchell – Awakening. Jazz flute often gets a bad rap, but recently I’ve been appreciating how amazing it is in the hands of a master–Rahsaan of course, and the wonderful James Newton. Nicole Mitchell is right up there in the pantheon, and here performs some spectacular vocalized solos in a tight small group backed with guitar, bass, drums.
  • Iggy Pop – Post Pop Depression. Just found out that Iggy Pop put out a new album last year–and surprise, it’s actually good! The backing band is spare and effective, reminiscent of some of his 1970s classics, and Iggy’s mournful baritone is still great.
  • Craig Taborn – Daylight Ghosts. I hadn’t heard Craig Taborn before, but was drawn to this recording because the group includes Chris Speed and Chris Lightcap, who are among my favorites in this generation of jazz musicians. While I haven’t fully digested this unusual, atmospheric and complex recording yet, it’s very worthwhile, evoking minimalism as often as jazz.
  • Steve Lacy Meets The Riccardo Fassi Trio – Dummy. It’s unusual to hear Lacy in the relatively traditional context of a piano-bass-drums backing group, and they do help sand down some of his rougher edges. This is a great, lively recording, often quite lyrical but also with a punchy version of “This Is It,” one of my favorite Lacy tunes.

Why most older Chinese women do not work

Here is an interesting paper by Wenchao Jin with a good account of why Chinese women stop working at such an extraordinarily young age. I like that it is attentive not only to the details of public policy but also of social institutions:

In 2013, the employment rate among 55-64-year-old urban women in China stands at 27%, well below the rates seen in most other countries at all levels of development. The urban female 55-64 employment rate is around 50−55% in the UK, Thailand (which has similar GDP per capita to China) and the Philippines (which has lower GDP per capita). …

The first and foremost explanation is the low pension age for urban women. The biggest public pension schemes set the formal retirement age at 50 for female workers and 55 for female ”cadres” or managers, and 60 for men. However, there are different rules for people with special circumstances like disabilities and compliance is not perfect, so the age at which a woman becomes eligible for a public pension can be as early as 45 or as late as 60. According to the China Health and Retirement Longitudinal Study 2011, 90% of current female pensioners completed the retirement process by 55. …

The second explanation of low employment rate among older females is their adult children. First, (expected) financial transfers from children when one is old and frail reduce the need to accumulate a large stock of assets through working. About 60% of women in their 50s live with their children, and about 70% receive financial support from their non-coresident children in the last year. There is some evidence that the financial transfers from children respond to parental incomes. Thus, transfers from children have a wealth effect as well as an insurance effect, both of which have implications for parents’ decisions on labour supply and saving.

Moreover, demands from adult children for domestic services such as grandchild care mean less time is available for paid work in the market. In urban China, the majority of women have grandchildren before 60 and, conditional on having grandchildren, the majority spend time looking after their grandchildren for an average of more than 30 hours a week. Moreover, I find that urban female employment is significantly negatively correlated with having grandchildren (conditional on her own age, education and so on), and this correlation comes from those women with more educated children. This is consistent with the hypothesis that parents cooperate with their adult children when choosing between market and domestic labour supply and leisure.

Older women are thus both pushed out of the labor force by the official retirement age, and also pulled out by demands of family. At least the first of these factors is likely to change over time, as the Chinese government has confirmed it plans to gradually raise official retirement ages for men and women. (The normal retirement age for women in most OECD countries ranges from 60-67.) The model developed in the paper suggests the effects of this change would be extremely large:

Raising the female pension age from its current level (which varies across individuals and has a mean of 50.6) to 60 would increase the employment rate by 28 percentage points on average over age 50-59. The average age at which women leave the labour force would also increase from 52.9 in the baseline to 55.7.