China’s grassroots market liberals

The history of China’s reform era is inevitably a history of individuals: China started making different decisions after 1978 because different people were making the decisions. Much of the standard historical narrative focuses on the top leaders, figures like Deng Xiaoping and Chen Yun, who came to power after Mao’s death and led the country in a different direction. As the Chinese economist Wang Xiaolu writes in his recent book, The Road of Reform 1978-2018 (王小鲁, 改革之路:我们的四十年), those old Communists were realists rather than utopian theorists, who “had not learned theories of the market economy in a classroom, but because of their rich life experience were able to see clearly where China’s future lay.”

Wang’s book helps flesh out that standard narrative by focusing on a different group of people, the lower-level researchers who helped the government draft, implement and decide on its policies during the 1980s. Wang himself was one of these researchers, and his recollections are the liveliest and most interesting part of his book. He conveys the ferment of that early period, when old hierarchies were overturned and inexperienced youngsters were thrust into positions of responsibility. Here he recalls how he made his own transition into the official intellectual world (my translation):

In the second half of 1978, the newly established Chinese Academy of Social Sciences established a “writing group” on the recommendation of vice president Yu Guangyuan. The mission of the writing group was to criticize the extreme left theories promoted by the Gang of Four over the past decade. The writing group edited and published an unscheduled internal publication called “Unfinished Drafts.”

The journal was named by Lin Wei, the head of the writing group, and signaled toleration, so that some controversial articles could be published. Lin Wei had served as the director of the theory department of the People’s Daily in the 1950s. In 1959, he was labeled a “right-wing opportunist,” but was rehabilitated after the Cultural Revolution. He was open-minded, pragmatic and tolerant; his hiring policy was not to ask about academic qualifications, resume and background, but boldly appoint young people.

During the Cultural Revolution, I spent more than six years in production teams in the countryside in Shanxi, and then spent four years as a worker in mines and factories. Before the Cultural Revolution, I had only completed junior high school and had never set foot inside a university. It was only because an article I had written on reform had been selected by the writing group that I went directly from the factory to work as an editor at “Unfinished Drafts.”

Another person who took a similar route to end up at “Unfinished Drafts” was Wang Xiaoqiang. He had worked on rural production teams in Shaanxi and Henan, and later studied tractors and worked in factories. For the two of us, all of our knowledge of social science came from our own study while we were in the countryside and factories. At that time, there were many young people like this who, driven by the broad trend of reform, directly entered the research field from the grassroots.

At the time, such “internal” publications were important channels for distributing ideas and research findings among people working in the government. Wang says that, over 1979-80, “Unfinished Drafts” published several research surveys on the situation of rural households in Anhui, where the first experiments in the household responsibility system were taking place, that helped convince government officials to endorse the reform. A group of like-minded researchers also formed the “Rural Development Research Group,” which carried out extensive on-the-ground surveys in the early 1980s. They eventually received more formal status:

In 1984, the Premier of the State Council [Zhao Ziyang] approved a plan to assemble several younger researchers from different agencies into a research institute under the leadership of the State Commission for Restructuring of the Economic System. The backbone of the research team came from the Rural Development Research Group, who had spent several years doing surveys and research on rural reform. There were also many who had been among the first students to take the university entrance examinations in 1977 and 1978, and then received degrees. Many of those researchers had spent the Cultural Revolution laboring in the countryside or in factories, and had a deep understanding of the grassroots situation. You could say that being “down to earth” (接地气) was one of the special characteristics of this research team.

What these groups of researchers had in common was a deep commitment to the market-oriented reforms that rolled back state controls and gave people the means to better themselves. But they had this commitment not because they had “learned theories of the market economy in a classroom,” but because they had extensive first-hand experience in the failures of socialist economic organization.

Working for years on production teams in farms, mines and factories gave them a deep understanding of how and why those structures were dysfunctional, and convinced them that China needed to find an alternative. These intellectuals drew what authority they had not from academic credentials–which they did not have, and which it had been largely impossible for anyone in China to obtain during the years of the Cultural Revolution–but from their demonstrated ability and personal experience. (I am reminded of Branko Milanovic’s remark that people who have led boring lives are unlikely to be very good social scientists).

I agree with Wang that this cadre of what you might call “grassroots market liberals” does deserve some of the credit for the success of the China’s first couple of decades of reform. Their unique background and perspective helped China avoid what Richard Bendix called the “polarization of the modernizers and the nativists” in developing countries. In his 1987 essay, “The Intellectual’s Dilemma in the Modern World,” Bendix pointed out that intellectuals in developing countries who want their country to advance often derive their ideas and models from developed countries (and indeed were often educated abroad). This means their proposals for reforms are often opposed domestically for implicitly disparaging their own country’s traditions and identity: “what appears desirable from the standpoint of progress often appears dangerous to national independence.”

The grassroots market liberals could avoid this trap because they were not using their foreign academic credentials to lord it over their local colleagues, or advocating that China adopt a set of foreign ideas. They were arguing for practical changes to obviously dysfunctional institutions, and did so mainly by presenting on-the-ground evidence that market reforms, such as allowing township and village enterprises, improved the lives of ordinary people. The grassroots market liberals were eager to learn from examples outside China, and were often eager collaborators with international institutions like the World Bank, but they could credibly present market-based institutions as being a Chinese solution to a Chinese problem.

These days, the protagonists in the domestic debate over China’s economic reforms are somewhat different. The grassroots market liberals are still around, but the new generation of scholars and researchers have more academic credentialing and more exposure to intellectual trends outside China. Those are not bad things exactly, but it is hard for the new generation of economics PhDs–who did in fact “learn theories of the market economy in a classroom”–to match the moral authority and life experience of the grassroots market liberals. Today, many of China’s best-known proponents of further market reforms have ties either to the financial industry, or extensive foreign connections. That means they can be, fairly or not, more easily criticized as self-interested or unpatriotic.

I wonder if this sociological change may be one of the reasons why the progress of market reforms in China has slowed (or reversed, according to some) in the last decade or so.

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