Malthus reconsidered

The name of Malthus will forever be associated with the idea of resource constraints on human population growth– which is unfortunate, because his argument appears to have been completely wrong. But I feel a need to compensate a bit for my little essay on those mistakes after reading John Maynard Keynes’ delightful biographical sketch of Malthus. Keynes offers an alternative intellectual history of Malthus, in which the Essay on the Principle of Population appears as a youthful work that gave him much notoriety, but was far from his most significant intellectual accomplishment.

It is difficult to overstate just how good Keynes’ essay on Malthus is: it is wonderfully detailed yet short, warmly sympathetic yet intellectually sharp. (Among other tidbits, we learn the name of Malthus is derived from “Malthouse,” and should be pronounced similarly.) Tyler Cowen has called Keynes “one of the greatest biographical writers in the entire English language.” And indeed I found Keynes’ Essays in Biography to be very good, though the meat of it is really the biographical essay on Malthus and a more extended one on Alfred Marshall; the sketches of British politicians for me were less interesting and insightful.

Keynes claims Malthus as his intellectual forebear, “the first of the Cambridge economists,” on the strength of Malthus’ early attention to the demand side of the economy, and his invention of the concept of “effective demand,” a precursor to today’s “aggregate demand.” As far back as 1820, in his Principles of Political Economy, Malthus recommended “the employment of the poor in roads and public works” as a remedy to economic downturns. But the first appearance of this idea actually came in 1800, in an anonymous pamphlet called An Investigation of the Cause of the Present High Price of Provisions:

Malthus’s conception of “effective demand” is brilliantly illustrated in this early pamphlet by “an idea which struck him so strongly as he rode on horseback from Hastings to Town” that he stopped two days in his “garret in town,” “sitting up till two o’clock to finish it that it might come out before the meeting of parliament.” He was pondering why the price of provisions should have risen by so much more than could be accounted for by any deficiency in the harvest. He did not, like Ricardo a few years later, invoke the quantity of money. He found the cause in the increase in working-class incomes as a consequence of parish allowances being raised in proportion to the cost of living. …

The words and the ideas are simple. But here is the beginning of systematic economic thinking.

Keynes found that Malthus’ economic thinking was best developed in his long correspondence with David Ricardo, a relationship that managed to combine deep and sincere friendship with equally profound intellectual disagreement:

This friendship will live in history on account of its having given rise to the most important literary correspondence in the whole development of Political Economy. … Here, indeed, are to be found the seeds of economic theory, and also the divergent lines—so divergent at the outset that the destination can scarcely be recognised as the same until it is reached—along which the subject can be developed. …

The contrasts between the intellectual gifts of the two were obvious and delightful. In economic discussions Ricardo was the abstract and a priori theorist, Malthus the inductive and intuitive investigator who hated to stray too far from what he could test by reference to the facts and his own intuitions. …

One cannot rise from a perusal of this correspondence without a feeling that the almost total obliteration of Malthus’s line of approach and the complete domination of Ricardo’s for a period of a hundred years has been a disaster to the progress of economics. Time after time in these letters Malthus is talking plain sense, the force of which Ricardo with his head in the clouds wholly fails to comprehend. Time after time a crushing refutation by Malthus is met by a mind so completely closed that Ricardo does not even see what Malthus is saying.

Malthus’ strengths, on Keynes’ account, are his close attention to the realities of economic life and his detailed investigation into practicalities, which gave him insights that Ricardo’s abstractions could not. It’s interesting, therefore, that he characterizes Malthus’ first writings on population as “a priori and philosophical in method,” the precise terms in which he criticizes Ricardo’s arguments.

While Malthus added huge amounts of empirical material to the second edition of the Essay on the Principle of Population, it is clear that the inspiration for the first edition was not empirical. It was more of an abstract conviction, one that arose during a theological argument with his father. William Otter, a friend of Malthus, relates the story in his Memoir of Robert Malthus:

The mind of Mr. Malthus was certainly set to work upon the subject of population, in consequence of frequent discussions between his father and himself respecting another question, in which they differed entirely from each other. The former, a man of romantic and somewhat sanguine temper, had warmly adopted the opinions of Condorcet and Godwin respecting the perfectibility of man, to which the sound and practical sense of the latter was always opposed; and when the question had been often the subject of animated discussion between them, and the son had rested his cause, principally upon the obstacles which the tendency of population to increase faster than the means of subsistence, would always throw in the way; he was desired to put down in writing, for maturer consideration, the substance of his argument, the consequence of which was, the Essay on Population.  

Keynes does not discuss whether Malthus’ theory of population–that it would always grow exponentially while food production could only grow linearly–was actually correct, seeing it mainly as an early example of the power of his intellect. When the early work on population is considered along with the later work on political economy, the intellectual contrast with Ricardo is perhaps not as sharp as Keynes makes it out to be: Malthus too could be bullheaded in holding to his a priori theories in the face of contrary argument. But who among us has not been guilty of that?

Misunderstanding Malthus’ mistake

Few people are as famous for being wrong as Thomas Robert Malthus, the English cleric and early student of population growth. Malthus thought that while population could grow exponentially, food production could grow only linearly. Therefore population growth would always outpace food production, and famine would always then cause population to decline to a sustainable level. In An Essay on the Principle of Population, first published in 1798, he wrote:

We should be led into an error if we were thence to suppose that population and food ever really increase in the same ratio. The one is still a geometrical and the other an arithmetical ratio, that is, one increases by multiplication, and the other by addition. Where there are few people, and a great quantity of fertile land, the power of the earth to afford a yearly increase of food may be compared to a great reservoir of water, supplied by a moderate stream. The faster population increases, the more help will be got to draw off the water, and consequently an increasing quantity will be taken every year. But the sooner, undoubtedly, will the reservoir be exhausted, and the streams only remain. When acre has been added to acre, till all the fertile land is occupied, the yearly increase of food will depend upon the amelioration of the land already in possession; and even this moderate stream will be gradually diminishing. But population, could it be supplied with food, would go on with unexhausted vigour, and the increase of one period would furnish the power of a greater increase the next, and this without any limit.

The dynamics that Malthus described did hold true for most of human history. Technological improvements allowed the number of people that could be supported off the land to increase, but that increase in population absorbed most of the increase in output and average living standards did not rise much–exactly as Malthus predicted. Before the industrial revolution, there is little evidence of any sustained increase in per-capita income over time. Nonetheless, Malthus stopped being right not too long after the publication of his book. The last two centuries or so of modern economic growth show that the production of food, and other goods and services, can in fact grow exponentially for sustained periods thanks to technological progress. (Gregory Clark’s A Farewell to Alms is a very clear exposition of the Malthusian model for prior human economic history, and how the industrial revolution transformed it.)

Thomas Robert Malthus (by John Liddell, 1834)

One of the most interesting ideas in Charles Kenny’s compact and lively new history of humanity’s struggle with infectious disease, The Plague Cycle, is that this common understanding of how Malthus was wrong is itself wrong. Malthus’ mistake was not simply a failure of imagination, the inability to imagine exponential technological progress. Kenny argues that Malthus’ mistake was even more basic: in fact, food production has never operated as a real constraint on human population growth:

For most of the time civilization has existed, pestilence has wiped out far more lives than famine and violence combined—so much so that Malthus’s proposed final limit of land and resources as the check to human numbers has rarely been approached. Disease has usually kept populations below the levels that could have been supported given agricultural technologies at the time.

Kenny credits Ester Boserup, a Danish economist and consultant to the United Nations, for the insight that food production was always more capable of improvement than Malthus assumed, and that the potential for bringing more land into production, and making land more productive, was hardly ever exhausted. In her 1965 book The Conditions of Agricultural Growth, she argued that population growth actually makes higher agricultural output possible through intensified cultivation (for those who, like me, were not aware of Boserup’s work, there’s a useful review at EH.net.) Malthus’ argument that improvements in food output were only linear rather than exponential was therefore wrong before the industrial revolution, as well as after it.

Something clearly operated to keep human population in check before its explosion over the last couple of centuries. But it was generally not starvation. The real problem is that population growth begets population density, and population density, in the absence of sanitation, antiobiotics, and other checks on infection, begets disease and death:

Earth scientist Jed Kaplan and colleagues suggest that less than one-half of the land currently used for food production was used in 1600 and less than one-third in 100 CE. It is true that making more of the land available takes more work—sometimes brutally hard work, and that risks malnutrition. Again, some land couldn’t be cultivated without innovations, including heavy plows and irrigation. Nonetheless, it seems clear that throughout most of history the number of humans on earth fluctuated far below the maximum possible.

Instead, we should probably thank (or blame) the regulatory mechanism of infection for limiting populations. As the number of people grew, population density drove up disease rates. This thinning mechanism was, in most places, probably the most powerful check on the number of people, particularly during the centuries that humans have been farmers. …And when infectious death declined in the nineteenth and twentieth centuries, population, urbanization, intensification, land use, and prosperity all climbed to historically unprecedented levels worldwide.

Although there’s a lot of interesting history in Kenny’s book, I’m not sure he does enough with this insight. To me it seems a fairly important finding that the foundation of modern technological civilization is the ability to control infectious disease. (To be fair to Malthus, he did discuss disease as one of the mechanisms that acted to limit human population growth, but he generally discounted its importance relative to food supply.) Modern economies are all fundamentally dense, urban economies–the US is 82% urban, China 60%–and this population structure cannot be sustained without a set of technologies and practices that manage infectious disease.

When industrialization and urbanization happened without those controls, as they did in early 19th-century Britain, they led to actual declines in living standards and life expectancy. Rampant disease in pre-industrial cities like ancient Rome killed off residents faster than they could reproduce, requiring a continuing inflow of migrants to maintain their population. If our current systems for controlling infectious disease weaken or fail, therefore, we’re in trouble. That may be a remote tail risk, but it seems at least as serious a tail risk as, say, an asteroid crashing into Earth, a possibility that seems to get a lot more popular discussion. Kenny acknowledges the risk, but ever the optimist, quickly brushes it off:

Given how many infections we share with animals, how many animal diseases may be only a few mutations away from infecting humans, and how rapidly viruses and microbes in particular can mutate and then spread in a connected world, new global pandemics will surely continue to hurl themselves at humanity. Ronald Barrett and colleagues from the Department of Anthropology at Emory University in Atlanta have gone as far as to suggest that the emergence and re-emergence of disease threats owing to globalization and antibiotic resistance is a sign that we’re entering a “third epidemiologic transition” comparable to the rise of infection at the dawn of civilization and its fall in the last century and a half. That (hopefully) goes too far, but it certainly suggests the scale of the risk we need to confront.

The Malthusian fear that physical resource constraints could stop economic advance and population growth has been a persistent one in economic thinking over decades (and one to which I must confess making my own contribution). Kenny’s book suggests we should have instead been working to better understand and manage the fundamental biological systems on which our civilization depends.

The definitive book on China’s industrial policy is also free

Once an obscure topic, China’s industrial policy now gets attention from heads of state. The entire US-China trade war waged by the Trump administration was, in formal legal terms any way, justified as a response to distorting industrial policy. Understanding industrial policy seems to be a requirement for participating in current intellectual debates about China.

Thankfully, Barry Naughton has written a short and highly readable book, The Rise of China’s Industrial Policy, 1978 to 2020, that explains its history and functioning. Even better, it is available as a free PDF download from the Centro de Estudios China-México at the Universidad Nacional Autónoma de México. Based on a series of lectures, the book has a conversational tone and jargon-free style that is rare for this subject matter, a topic both highly technical and highly politicized.

Naughton’s argument is plainly stated in three short sentences:

Until 2006, China never had “industrial policy.” Since about 2010, China has had industrial policy on a massive and unprecedented scale. The outcomes of post-2010 industrial policy in China have not been adequately studied and are as yet unknown.

A prominent economic historian of China–his textbook The Chinese Economy is the standard–Naughton argues that industrial policy on its current grand scale is a very recent development in post-1978 China, and not at all part of the “China model” responsible for its decades-long growth miracle. He sees current policies as a departure from past practice, rather than as part of the deep structures of Chinese socialism.

Powerful targeted industrial policies in China have been generally absent (1978-2005) and have sometimes been overbearing (2010-present), but they have never been a crucial component in explaining rapid Chinese economic growth. That doesn’t mean that government doesn’t matter, or that distinctive Chinese approaches have not been important: it does, and they have been. Indeed, it should be intuitively obvious that the impact of a large-scale fixed investment effort, massive investment in human resources, and the presence of thousands of growth-promoting local governments competing with each other will be much greater than the impact of government efforts to directly intervene in the sectoral development pattern of the economy. Of course, these are not mutually exclusively choices. But targeted industrial policy is still utterly unproven in terms of its impact on China’s development. It may turn out, 20 years from now, to have been a huge success, but as of today, there is very little evidence for its importance or success.

Naughton admits his own skepticism of the benefits of large-scale industrial policy, but his main point is that neither scholars nor the Chinese government have a solid understanding of the actual consequences. The scale of resources being mobilized by industrial policy is enormous, and thus clearly poses some economic risks. He thinks that China was well on its way to being a global technological powerhouse before the introduction of all of these industrial policies, thanks to its highly competitive manufacturing sector and skilled technical workforce. So to him, it is not obvious those risks were worth taking:

It is unclear to what extent Chinese policy-makers have considered the technological, economic, and international risks of their
industrial policies. It appears rather that policy-makers have been seduced by the vision of a technological revolution and a substantial re-ordering of global strategic relations and have rushed ahead with an aggressive and decisive round of industrial policies. At a minimum, this is an enormous gamble. As stated repeatedly in this essay, Chinese would in any case have emerged as a technology giant over the next decade or two. It is not necessarily beneficial to have government forcibly attempt to accelerate the process, creating substantial additional risk, waste, and conflict. Indeed, it may end up seriously retarding the global benefits that are potentially available from new technologies, particularly if the world ends up partitioned into competing technological blocks.

Plainly, the Chinese government thought that the risks of not carrying out industrial policy were also great. And Naughton does a good job of explaining the intellectual framework that has justified their large-scale interventions. I found the book helpful and clarifying.

The wisdom of the village Party secretary

In 1984, the Taiwan-born and US-trained anthropologist Huang Shu-min left his family in Iowa to live in a village on the Chinese island of Xiamen, just outside the city of the same name. By that time Chinese villages had already benefited from a few years of reform, and the changes underway were dramatic. Huang was impressed by the visible improvements in living standards, but also somewhat depressed by the constant presence of official propaganda and the regimented controls over daily life. At one point, he recounts trying to express this conflict to a villager:

“I must say that living conditions here are probably much better than what one might see in India or in Africa. To me, this seems to be directly related to the tightly controlled but highly efficient administrative system that one finds in China. The fundamental contradiction then is between economic development and human liberty. In order to achieve quick development, sometimes citizens of less-developed countries, such as China, may have to forgo some of their individual freedom. The problem I weigh is how to draw the delicate balance between collective interests and individual freedom.

In the Chinese context, it’s hard to imagine a more anodyne statement. These days, the effectiveness of China’s authoritarian state and the correctness of its tradeoff between liberties and development have been taken for granted by a generation. What you expect to happen here is for Huang to receive enthusiastic agreement and a lecture on the virtues of China’s system. So it’s pretty interesting that his interlocutor, the village Communist Party secretary Ye Wende, actually pushes back sharply against the whole framing:

Ye looked at me wearily. “I don’t know anything about India or Africa, nor do I know where you have picked up this great idea about the conflict between economic development and liberty. The only thing I know is based on my personal experience, and it seems to run counter to what you said. The more political controls imposed on the peasants, the less they want to work. On the other hand, when the national government shed itself of most controls in the countryside and gave peasants more free choice, they responded with greater enthusiasm and higher production.

This may not be true for all of China. But in Lin Brigade, at least as far as I can tell, it was only in the 1970s, when people realized the absurdity of political campaigns in the countryside and stopped cutting each other’s throats, and when the national policy became more flexible toward peasants, that we were able to achieve genuine development. If you don’t realize this point, you will never be able to understand current agrarian reform, either at the national level or in this village.”

That exchange is from Huang’s 1989 book, The Spiral Road: Change in a Chinese Village Through the Eyes of a Communist Party Leader. It’s an unusual document, consisting entirely of extended interviews with Ye, who recounts an oral history of his village from the 1950s on. Bits like that offer a reminder of how different the intellectual environment was in China during the 1980s.

The best books I read in 2020

It’s been an exhausting year for me, not a great one for reading. I resorted to a lot of escapist fiction and comforting re-reads to keep going. Still, I made some pretty good new discoveries that I am happy to recommend. The favorites below are listed in roughly the order I read them:

Nonfiction

  • Claud Cockburn, A Discord of Trumpets. The endlessly entertaining autobiography of a British journalist who was born in Beijing, spent his childhood in England and Hungary, and worked in Germany and the US. A feast of snarky one-liners, but also good first-hand account of events like the 1929 stock market crash.
  • Freeman Dyson, The Scientist as Rebel. The first and possibly best collection of Dyson’s essays for the New York Review of Books; invigorating reflections on science, politics, and history. Every one follows his cardinal principle: “It is better to be wrong than to be vague.”
  • Hou Li, Building For Oil: Daqing and the Formation of the Chinese Socialist State. A unique blend of bottom-up and top-down history, and very well written in spite of the academic title and pricing. Actually one of the best books for understanding life in the early People’s Republic. (More discussion here.)
  • Michael Schmidt, Gilgamesh: The Life of a Poem. A deep appreciation of the oldest work of human literature that confronts its strangeness and mysteries head-on.
  • Neil S. Price, The Children of Ash and Elm: A History of the Vikings. Fascinating on both the broad sweep of the Vikings’ impact on the world (much bigger than I had ever realized), and the often-surprising details of their daily life.
  • Don Kulick, A Death in the Rainforest: How a Language and a Way of Life Came to an End in Papua New Guinea. An anthropologist’s first-person account of three decades of off-and-on visits to a remote village; alternately funny, sad, and angry, but above all honest. There should be more anthropologists’ books like this.
  • Zachary D. Carter. The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes. This very engaging account of Keynes’ career and thought explains how his economics fit into a broader philosophical and political project.

Fiction

  • Robert Charles Wilson, Spin. A classic piece of what-if science fiction that brings the expansive drama of cosmic time down to human scale.
  • C.J. Samson, Dissolution (and its sequels). Page-turning historical thrillers that also happen to be deeply researched and critical accounts of the cruel politics and ideological orthodoxy of Tudor England. Malcolm Gaskill’s appreciation in the LRB is a good guide.
  • Lydia Fitzpatrick, Lights All Night Long. A troubled youth travels from one isolated oil-industry town in Siberia, to another, in Louisiana.
  • M. John Harrison, The Sunken Land Begins To Rise Again. A profoundly unsettling book involving water, conspiracy theories, and miscommunication. Harrison’s prize-winning prose is spectacular, every sentence precisely turned.
  • Paul Howarth, Only Killers and Thieves. Two boys confront violence on the Australian frontier; consistently compelling though often brutal.
  • Susanna Clarke, Piranesi. This tale of a man finding meaning in repetitive acts inside confined spaces was, in retrospect, highly appropriate pandemic reading.
  • Emily Wilson, trans., The Odyssey. It’s been a while since I’ve re-read Homer, and it felt like a complete rediscovery thanks to Wilson’s translation. What struck me was how concrete and physical the language is, and how focused the poem is on morality and duty rather than adventure. Her enlightening introduction alone is worth the price of admission.

Previous lists: 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012

The upcoming Westad-Chen book on China’s long 1970s

The book that Odd Arne Westad is now working on sounds very interesting. It’s a collaboration with his fellow historian of the Cold War, Chen Jian, on China’s “long 1970s.” Their project tackles the late 1960s to the mid 1980s as one unified period, rather than dividing them into the conventional eras of the Cultural Revolution and Reform and Opening. The overarching question is a basic one: how and why did China make that transition from revolutionary politics to economic growth?

In a webinar last week organized by the University of California, San Diego, Westad said they still have three chapters to write, but was able to summarize some of the book’s main arguments. One of them is the importance of “change from below, from outside the state and Party sectors.” The following passages are from my notes of Westad’s remarks, slightly rearranged for readability:

It’s pretty clear to us that much of the economic transformation of China during the long 1970s originated in the south. It’s most visible in Guangdong and parts of Fujian. This is a fascinating story. It’s something that starts after the first, most intense phase of the Cultural Revolution is over.

It’s a kind of market revolution carried out in desperation by people and families who knew a bit about a how a market economy would operate, and were deathly afraid that things would move back to a situation like the Great Leap Forward. There are these small businesses that come up, completely against any regulation, already in 1972 and 1973, based on a barter economy and links to Hong Kong and Southeast Asia. This vanguard was already in place when reform from the center was launched.

One example we use is the No.3 Memory of Lenin Tractor Repair Factory in Zhuhai, which already in 1973 had started repairing tractors outside the plan. It would take tractors that needed to be repaired from other units, repair them on the side of the plan, and then get payment in kind. That payment in kind was then either bartered further within Guangdong, or smuggled downriver to Hong Kong. By 1973 this unit had a Hong Kong bank account. If this had been discovered at the central level, these people would have been shot.

We are not arguing that the specific models of economic and social transformation that you see in Guangdong were then put in motion at the central level. But it primed units to behave in ways they had already prepared for. That made it possible for them to get one step ahead in Guangdong. They could develop very quickly into very profitable companies.

This is really significant for China’s history over the next generation. Without these moves that had privileged certain areas and certain units prior to 1978, that development would have taken a very different course. With one exception, all the units that we looked at have since become constituent elements of some of the largest companies in China.

The tractor factory with a Hong Kong bank account is amazing! It reminds me of Frank Dikotter’s 2016 article “The Silent Revolution: Decollectivization from Below during the Cultural Revolution,” which uses archives to give numerous examples of people leaving collectives to raise crops or run factories on their own initiative, often with the implicit or explicit toleration of local officials.

Buying a tractor in 1975

It seems as if the book’s focus will be less on high politics and foreign relations than one might have guessed from their previous works: Westad is the author of, among other things, a survey of China’s foreign relations entitled Restless Empire: China and the World since 1750, while Chen is the author of Mao’s China and the Cold War. But the Cold War context of this period clearly informs their analysis. Here are some more interesting comments from Westad:

It’s very unlikely, at least to me, that Chinese reform would have been as successful if it weren’t for the Cold War, if the US did not have an interest in facilitating China’s economic reform and economic growth. What the Americans found when they started coming back to China was just how far behind China was in terms of economy, technology, science. US leaders from Nixon to Reagan believed they had China as a partner in putting pressure on the Soviet Union, but they discovered quickly that China was far too weak to play that role. So that put great pressure on them to help China develop. The fact that the Chinese state after 1976 made use of the security links with the US to get the technology and credit it needed is of crucial importance.

The reserve army of rural labor

Friedrich Engels introduced the idea of the “reserve army” of labor in his The Condition of the Working Class in England, an impassioned combination of journalism and political polemic produced in 1845. As he watched the ebb and flow of business cycles in early days of British industrialization, he realized that the number of workers employed by profit-seeking capitalists would also have peaks and valleys:

From this it is clear that English manufacture must have, at all times save the brief periods of highest prosperity, an unemployed reserve army of workers, in order to be able to produce the masses of goods required by the market in the liveliest months.

Workers are on “reserve” because they are not required all the time, only some of the time. Ultimately, the reserve army of the unemployed functioned to keep labor costs down and thereby maintain capitalists’ profits. Engels and Marx elaborated on the idea in The Communist Manifesto of 1848, in which their description of workers as an “army” emphasizes how unfree they are:

Masses of labourers, crowded into the factory, are organised like soldiers. As privates of the industrial army they are placed under the command of a perfect hierarchy of officers and sergeants. Not only are they slaves of the bourgeois class, and of the bourgeois State; they are daily and hourly enslaved by the machine, by the overlooker, and, above all, by the individual bourgeois manufacturer himself.

I thought of this idea of the reserve army of labor after reading Dexter Roberts’ new book, The Myth of Chinese Capitalism. Somewhat in the spirit of Engels’ book, it’s a journalistic expose of the conditions under which China’s working class labors, and a polemic about what keeps them in those conditions. (Full disclosure: along with a number of other China-watcher types, I am thanked in the acknowledgments for the book.)

The focus is on rural migrant workers, in particular a family from Guizhou whose experiences Roberts tracks across multiple provinces and several years. The point is not so much that migrants labor in sweatshops, although their employers do not come off too well, but that they are systematically denied opportunities to better themselves. He argues that China’s rural migrants constitute a deliberately maintained underclass whose “marginal status was necessary to buttress fast economic growth and lift living standards for those new middle-class urbanites.”

Roberts puts most of the blame for this not on capitalists but on institutions and systems maintained by the government, in particular the much-maligned household registration, or hukou. His reporting vividly brings to life the daily indignities created by the hukou system, and how it warps and limits the life choices of migrants. Other issues include the government’s repression of independent labor unions and its continued controls over the use of rural farmland. In combination, these systems limit migrant workers’ bargaining power with employers and keep them part of an unfree reserve army of labor.

While very much a work of contemporary reporting, his book also makes a few ventures into history. These are necessary because the hukou and related policies did not originate with China’s turn to market economics in the late 1970s, but date instead to the high socialism of the 1950s. The push for Soviet-style industrialization, he argues, also required the deliberate maintenance of a rural underclass in order “to ensure cheap raw materials for industry and food for elite urbanites.” Those same socialist practices were simply repurposed in later decades to serve a different kind of industrialization drive, one led by private investors and export manufacturing. Looking at the full history of the Chinese government’s treatment of its rural citizens, he concludes:

In an irony little discussed then or even now, the biggest beneficiaries of Mao’s peasant revolution would be the cities and the people who live there—not the countryside. The rural masses post-1949 would become second-class citizens, their primary purpose in the new system to support the cities.

The coercion of rural labor is indeed a theme that runs through much of the history of Maoist China. The reserve army of rural labor was in many cases literally an army: in the 1960s and 1970s, rural residents were organized into militias that could, if needed, rise up and confront any foreign invaders. These could number in the hundreds of thousands of people in a single province. But militia members were not just drilling on the weekends to prepare for possible invasion: they were also deployed as forced labor to “wage shock attacks and rush construction of key projects,” as Covell Meyskens describes in his indispensable book Mao’s Third Front (previously discussed here).

The Third Front drive to build industry and infrastructure across inland China in fact relied mostly on rural workers, who did not have to be paid as much as higher-status urban workers. Meyskens estimates that while 3.9 million urban workers participated in the construction of Third Front projects between 1964 and 1980, another 11.1 million workers came from rural areas. It is rather striking that Mao’s drive to industrialize on the cheap also required a reserve army of rural labor to keep costs down and accommodate surges in activity, just like 19th-century British manufacturers.

Given all this history, I started to wonder why Roberts chose as his title The Myth Of Chinese Capitalism, since capitalism is generally acknowledged to be pretty good at the exploitation of labor. The myth that is more effectively exploded by his book is the myth of Chinese socialism, which no longer appears as much of an equalizing force.

Zhu Rongji nostalgia and Li Peng’s legacy

One of themes running through Superpower Showdown, the instant history of the US-China trade conflict by Bob Davis and Lingling Wei, is nostalgia for former Chinese premier Zhu Rongji. Two decades ago, Zhu was a strong advocate for China’s entry into the WTO and pushed hard for China’s government to accept difficult reforms in order to grasp that bigger prize. “When China needed to change to join the World Trade Organization, Zhu was able to win President Jiang Zemin’s support and push through reforms that eliminated thousands of state-owned firms, even though that produced massive layoffs,” Davis and Wei write.

Ever since then, successive US administrations, up to and including the Trump administration, have searched for a similar figure they could work with to drive further liberalization of the Chinese economy. They have never found one. “Washington needed another Zhu Rongji,” they write, but “none was on the horizon.” To this day, especially among foreigners, Zhu is often seen as the hard-charging reformer who remade the Chinese economy through sheer force of will, a hero who achieved significant market liberalization.

At this point, it’s clear Zhu’s advocacy of WTO accession for China was the correct strategic choice: it led to massive gains in China’s global export market share, while fears that Chinese farmers and domestic companies would be swamped by foreign competition proved unfounded. But for all his charisma, it is too simplistic to think of Zhu as a heroic figure with a widely celebrated legacy. It’s worth recalling that out of the seven people who have served as Premier of the People’s Republic of China, Zhu had the second-shortest tenure: a single five-year term (1998-2003), exceeding only Hua Guofeng’s truncated four-year tenure (1976-1980). On many of the issues most closely associated with Zhu, his positions have since been reversed or weakened by successive Chinese administrations. It is not an accident of history that a Zhu-like figure has not risen again.

Zhu Rongji and Bill Clinton

Zhu paid a serious political price for how the WTO negotiations played out. In an episode recounted in detail in Davis and Wei’s book, Zhu visited Washington in April 1999 at a low point in the negotiations, and made a strong offer to get them restarted. President Bill Clinton nonetheless rejected it, and, in a major breach of protocol, publicized the specific terms Zhu had offered. They went well beyond what other Chinese leaders had expected. The US bombing of the Chinese embassy in Yugoslavia in May further poisoned the atmosphere for making concessions to the Americans:

The combination of Clinton’s rejection of Zhu’s WTO offer followed by the embassy bombing badly weakened the premier. As soon as Zhu returned home from his U.S. trip, committees under Li Peng’s National People’s Congress questioned whether Zhu had gone too far in offering concessions. Wu Jichuan, the head of the Ministry of Information Industry, threatened to resign over Zhu’s offer to open the telecommunications industry to foreign competition. At a meeting of senior Communist Party officials, Zhu offered Mao-style self-criticism, or jiantao, for his U.S. trip. He said he was too anxious to get a deal done, said a senior government official at the time.

The rest of the Chinese leadership made sure that Zhu would not go freelancing again, and set clear limits on what he could offer. The WTO deal that the US and China eventually agreed on did not go as far as Zhu’s April 1999 offer; notably, Wu Jichuan prevailed in his insistence that foreign companies be essentially blocked from the telecommunications market. Today, with the US and China locked in a conflict over mobile-phone apps and semiconductor technology, it is hard to imagine there are many Chinese officials who think Wu Jichuan was wrong about that and Zhu Rongji was right.

The domestic economic reform most closely associated with Zhu’s spells as vice-premier and then premier was the downsizing of the state sector, which began around 1995 and accelerated in 1998-2000. Zhu allowed local governments to close or privatize underperforming state firms, and oversaw mergers and consolidation of the larger companies controlled by the central government–a policy summarized by the slogan “grasp the large, release the small”. As a result, the number of people employed by state-owned enterprises fell from 77 million in 1995 to 42 million in 2003, the end of Zhu’s term.

There is some evidence that Zhu expected or hoped that the downsizing process would continue after he left office. According to William McCahill, who worked at the US Embassy in Beijing during Zhu’s tenure and is now a senior fellow at the National Bureau of Asian Research:

When Zhu Rongji left the post of premier in 2003, he foresaw the number of central government-owned SOEs shrinking in five years from around 180 firms to around 15, all operating in national security areas like telecoms and energy.

What actually happened was that the downsizing of SOEs slowed and then stopped almost immediately after Zhu left office. In March 2003, the government established a new organization, known as Sasac, to supervise SOEs. At the Third Plenum in October 2003, the Communist Party approved a new architecture for economic policy that focused on “preventing the loss of state assets,” a pejorative term for botched privatizations. Within two years Sasac effectively brought a halt to management buyouts and other common methods of SOE privatization, and they have never resumed. The number of centrally owned SOEs directly supervised by Sasac has now fallen to 97. But all of that shrinkage has come from merging those companies into larger conglomerates that would be more effective national champions, and their numbers have been little changed in recent years.

While Zhu Rongji focused on encouraging competition among different SOEs in order to energize the domestic economy, more recent administrations have instead emphasized reducing competition among SOEs and building up larger entities that can more effectively take on Western multinationals.

The layout of China’s state sector today perhaps owes less to Zhu than to Li Peng, his predecessor as premier and frequent sparring partner in internal economic debates. According to Sarah Eaton’s excellent 2015 book The Advance of the State In Contemporary China, as early as 1991 Li presided over an effort to identify 100 SOEs as “large enterprise groups” that would receive special government support to become a team of stronger, more competitive companies. That idea continued to be influential during Zhu’s tenure, and beyond:

In particular, ‘grabbing the large’ – one half of the most controversial policy of ‘grab the large, let go the small’ (zhua da fang xiao 抓大放小) – carried forward the essential aims of the large enterprise strategy championed by Premier Li Peng in earlier years. In general terms, the idea was to focus the state’s resources on supporting a group of ‘elite SOEs’ that would anchor a trimmer, fitter state economy.

The simplest way of summarizing China’s SOE policy since Zhu left office is that it gave up on the “release the small” part of the policy, but has redoubled support for the “grasp the large” part. The combination of social unrest among laid-off SOE workers, and public criticism over corruption in the privatization process, had made continued SOE downsizing politically untenable by the 2000s. But the economic upheavals of the last two decades have generally only reinforced Chinese officials’ belief that SOEs play a necessary role in stabilizing the economy. Xi Jinping’s public commitments to keep making SOEs “stronger, better and bigger” are just the latest iteration of a line of thinking that is at least three decades old.

The conventional take on Li Peng has been that his conservative socialist economics were overruled by Deng Xiaoping, and lost out to Zhu Rongji’s liberalizing forces. Looking at how China’s state sector has evolved over the last couple of decades, that story does not seem completely right. Li Peng has clearly had a lasting legacy, and helped fix the state-capitalist direction of China’s economic strategy.

Battling bureaucrats: an appreciation of *The Sandbaggers*

My greatest TV viewing pleasure over the last year or so has been The Sandbaggers, a British spy drama that originally aired from 1978-80. The show is so good that I could not bear to binge-watch it, but instead carefully rationed out the episodes as little treats to myself (I watched it via Britbox). But now I’m done, sadly, and will have to wait for a while before I can indulge in a re-watch.

What makes The Sandbaggers so good? To start with, cracking scripts and a compelling lead performance by Roy Marsden as Neil Burnside, the director of operations of Britain’s Secret Intelligence Service (commonly known as MI6, though it is never called this on the show). The writer of most of The Sandbaggers, Ian MacKintosh, had a background in intelligence work, which gave the series a lot of credibility and some notoriety back in the day.

In an interview for Robert Folsom’s book The Life and Mysterious Death of Ian MacKintosh: The Inside Story of The Sandbaggers and Television’s Top Spy, the actor Jerome Willis, who played Burnside’s immediate superior, put his finger on another one of the show’s special qualities:

“One of Ian’s great skills as a writer was almost completely to exclude exterior scenes. The regular settings were Burnside’s office, “M”’s office, Matthew Peele’s office, the Foreign Office and the Operations Room. This gave a highly claustrophobic effect, very suitable for a spy series and gave the occasional action scenes even more impact.”

For today’s viewers, those occasional action scenes will mostly seem comically simplistic. Although Burnside’s agents are deployed to various European capitals and locations behind the Iron Curtain, limited budgets meant that various areas around Leeds have to stand in for these exotic spots. (It is perhaps a commentary on the capital stock of 1970s Britain that a few scenes shot in crumbling socialist tower blocks did look pretty convincing to my eyes.) The real action in the The Sandbaggers is in the endless arguments that take place over the telephone and in the office. The energy of the show flags whenever the characters step out of doors.

Burnside is a mid-level bureaucrat, sitting above a team of agents that he can deploy at will, but below the true authorities to whom he must constantly justify his actions. The predicament of middle management is the show’s true subject, not the exploits of the dashing agents–most of whom are well-adjusted and likable people, quite different from the often unpleasant and obsessive Burnside. He is inevitably thwarted from exercising his best judgment by political considerations, or office politics, or simple differences of opinion, and must scheme to get his way. A passage from Folsom’s book captures the dynamic well:

The Sandbaggers never varied from its primary theme: In practically every episode, Burnside has to confront the machinations of his own government before dealing with the Soviets and the Cold War. He considers anyone who gets in his way to be a foe. When the government interferes, as it invariably does, he deals with them in any manner he can to gain an edge, whether his actions are right or wrong, moral or immoral, ethical or unethical.

It is this focus on the inner workings of bureaucracy that makes The Sandbaggers a more lasting work of art and not just a piece of Cold War nostalgia. It is one of the best portrayals of unprincipled bureaucratic infighting I have ever seen on screen. In most of the episodes the bureaucratic battling is over some real thing happening in the world, and the fact that Burnside is usually smarter and better informed than his opponents allows us to, mostly, root for him, or at least sympathize. For me, though, the show’s apex is possibly “Operation Kingmaker,” the last episode of the second season. It is the story of the covert campaign Burnside wages to influence the choice of the next head of SIS, an effort in which he is obviously in the wrong.

A couple of the episodes in the third season felt off to me, more conventional and superficial (MacKintosh died in an airplane accident in 1979, before he had finished writing all of the planned episodes). The problem was precisely their departure from that “primary theme.” In one episode, Burnside confronts his superiors because he wants to more vigorously support the Soviet dissident movement. And in the final episode, Burnside tries to sabotage his own government’s negotiations with the Soviet Union because he doesn’t agree with the goal. These episodes portray Burnside as an idealist, which feels like a departure for such a cynical realist.

More fundamentally, they broke with the premise of the show: that Burnside’s real battles are not with enemy agents or foreign regimes, but with his own colleagues who stand in the way of him doing his job as he sees fit.

The true enemy is always within.

China’s security fears and the Cold War economy

Now that the US and China are widely, if perhaps inaccurately, said to be entering into a new “Cold War,” stories of the original Cold War can feel particularly relevant. The timing for Covell Meyskens’ new book Mao’s Third Front: The Militarization of Cold War China is thus pretty good: its central subject matter is how geopolitical tensions and fears of conflict affect countries’ economic strategies.

The Third Front was a nationwide campaign, running from roughly 1964 to 1973, to prepare China to fend off military invasion and aerial attack. It was essentially a crash program to build industrial and transportation infrastructure in remote parts of the nation’s interior. Mao feared that China was too reliant on industrial capacity scattered along the coast, where it could be easily targeted by bombers and nuclear missiles. The facilities necessary for China’s military to survive a protracted war therefore had to be built in locations that were “mountainous, dispersed and hidden.” Coastal areas were also the most likely to be first occupied in any invasion of China. Leaders recognized that China’s poorly-equipped military would be outmatched in a direct confrontation with either the US or the USSR. China’s military doctrine thus called for making the interior serve as a “rear defense area” in the event of an invasion: their forces would fall back and regroup in the interior, much as the Communist guerrillas had during the Japanese invasion of the 1930s.

The Third Front was kept entirely secret until the 1980s, and has received limited attention from scholars even in more recent years. Barry Naughton wrote a classic article about it in 1988, but it has never really become part of the standard historical narratives of the Mao era. One of the very best books on Maoist China, Andrew Walder’s China Under Mao, does not even mention the Third Front. This is an oversight, as Meyskens makes clear that the Third Front was the main industrial policy of China for at least a decade. The great virtue of his book is to bring this hidden history to light in comprehensive fashion: it covers everything from the deliberations of Mao’s high councils to the shortages of baby formula on Third Front construction sites.

The Third Front definitely changed the shape of China: before and after the Third Front campaign, the targeted provinces accounted for 30% or less of nationwide investment spending; during the campaign, that share rose to around 50% (see chart). The remnants of the numerous Third Front projects scattered around the country can still be seen today; there are some striking photo collections on Meyskens’ website of old Third Front facilities in Sichuan, Hubei and Shaanxi. It’s not all a legacy of decay, though: some industrial sites that were launched during the Third Front are still going strong today, such as the Panzhihua Steel factory in Sichuan.

In official Chinese accounts, the Third Front is now considered the first in the long lineage of the regional development campaigns the Communist Party has mounted to bring prosperity to China’s poor interior provinces. One recent example is a retrospective of the first 70 years of the People’s Republic published by the National Bureau of Statistics in 2019. Because of the Third Front, it says, “a number of railway, oil, machinery, electricity and other projects were built in the central and western regions, effectively improving the weak development foundation in the central and western regions.” That kind of focused investment in infrastructure and industrial projects was also characteristic of the Great Western Development campaign that Jiang Zemin launched in 1999.

But to recast the Third Front as just a regional aid program wrapped up in some Maoist slogans is to miss its real driver: fear. The Third Front was not an economic development program with some security benefits. It was a crash program to put the Chinese economy on a war footing and prepare for what was believed to be imminent attack. At the time the Third Front was launched, Mao’s disastrous Great Leap Forward was still fresh memory, and most of the government was focused on trying to get the civilian economy back to normal. Other leaders had little appetite for signing up for another one of Mao’s crash industrialization programs. What changed their mind was the stepped-up US intervention in Vietnam after the Gulf of Tonkin incident in 1964. Suddenly, a US-led invasion of China from the south seemed like a realistic possibility; and Mao’s falling-out with Stalin had made a Soviet-led invasion from the north also seem a real risk.

Building Third Front projects was hard: it required mobilizing hundreds of thousands of workers and scarce resources to build things that were technically difficult, in inaccessible locations, at impossible speeds. There were easier, better and more efficient ways to develop the economy, and every analysis of the Third Front has concluded that it led to many failures and enormous waste (even an official government review in 1984 found that only 48% of projects were successful). The only possible justification for such a waste of resources was that it was necessary for the survival of the nation.

The Third Front helps make clear just how central security fears were to the organization of the Maoist economy–as they were also to the Soviet economy. In his review essay “Foundations of the Soviet Command Economy 1917-1941,” the historian Mark Harrison remarks that “Economists have tended to describe the Soviet economy as a developmental state that provided civilian public goods and pursued civilian economic growth, although inefficiently.” This perspective is fundamentally misleading, he argues, because Stalin was not really pursuing consumer welfare or economic development. The Soviet command economy was in essence a war economy: state ownership of industry, collectivization of agriculture, political purges and the all-pervasive security state were all necessary because the economy “had to be organized for defense against internal and external enemies acting together.”

That phrase also describes China in the 1960s quite well. A big reason why China under Mao systematically failed to develop the economy was because Mao was, mostly, not really trying to develop the economy. He was instead obsessed with political campaigns against real and imagined enemies inside and outside the country. And although Mao was paranoid, he did have enemies. Meyskens reminds us that the Cold War was only really cold from the perspective of the US, which carefully avoided direct conflict with the Soviet Union; from China’s perspective, it was pretty hot:

Similar to Moscow, Beijing also did not think of the Cold War in John Lewis Gaddis’s famous phrase as a period of “great power peace.” They considered the postwar world to be in a period of ongoing conflict in which China had directly fought against America in the Korean War, the capitalist camp constantly besieged socialist states, and the United States and European countries regularly interfered militarily in decolonization and the affairs of postcolonial states.

It is therefore impossible to separate China’s later successful economic development from changes in the international environment. If China’s leaders had continued to feel threatened militarily by both the US and Soviet Union, they may not have been able to focus on civilian economic development rather than military preparations. Meyskens suggests that the turning point for China’s economic development came with Richard Nixon’s visit in 1972, and the subsequent commitment by both sides to avoid military conflict. Soon after, the Third Front campaign was downgraded in importance, and planners began to direct more resources to light industry and consumption rather than defense and heavy industry.

Of course, it took many more years, and Mao’s death, for the leadership to settle on a coherent and successful program for developing the civilian economy. But, as Deng Xiaoping saw clearly, they would not have been able to de-militarize the economy without confidence that China’s borders were secure. Deng’s project of enlisting the US as a de facto partner of China against the Soviet Union was thus the necessary international condition for domestic economic reform and the opening to foreign trade. Meyskens’ essay on “the profound national consequences of international military tensions” makes for fascinating reading, but it is hard not to find its lessons troubling at a time when the US and China appear stuck in an escalating geopolitical rivalry.