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Chinese Road to Socialism: Economics of the Cultural Revolution
Book by Wheelwright, E. L., McFarlane, Bruce
256 pages, Paperback
First published February 10, 1971
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August 23, 2025
Great account of the Chinese economic system and China’s industrialisation after the 60s. As the book argues, it’s impossible to focus only on the economic incentives and planning without also looking at the ideological and political base that was so pervasive in China’s development. Maoism represented a bridge between feudalism and socialism without the need for capitalism; moral incentives and a pushback against crash industrialisation which leads to technocratic and individualist ideas were necessary to China’s development. Local self-sufficiency and decentralised planning also led to the creation of many small and medium scale factories, which often sourced their own raw materials and built their own equipment. This decentralisation may have led to a lower overall productivity but was imperative to developing the moral incentives and strengthening the worker’s link with their work. Workers often were the ones to innovate changes in machines, as there was also an emphasis on developing innovation and creative thought that was skewed toward regional agriculture and specific local needs. This was to avoid the issues that the USSR faced with a creation of a new level of experts and overly centralised planning. The management team were also workers; they would often rotate between labour and management. Labour and practical learning was also emphasised in education. Schools were often blended with practice and learning to avoid the emergence of a class of so called experts with no real practical knowledge. It was also imperative to create a semi-skilled, innovative worker who could participate in party life and be included in the running of the commune or factory. It is this inclusion in political life and direct participation in organization that provided the moral basis for the industrial drive in China.
May 20, 2025
This economic analysis was written after two visits to China during the Cultural Revolution - Wheelwright in late 1966 and McFarlane in April and May of 1968, in and around the peak of the tumults. These visits also included discussions with local economists and political scientists.
The book starts out strong, as it provides context to the economic conditions before the GLF, namely, 1949-1952 (the year in which the land reform was completed) and 1953-1957 (the first five-year plan). An aside, land reform started prior in the liberated areas, for a case study on this, see Fanshen: A Documentary of Revolution in a Chinese Village. The context is crucial as this introduction (and Fanshen, in excruciating detail) provides insight into how poor China really was: In 1949 around 80% worked in agriculture, under 10% of the population held over 70% of the land, the industrial base was smaller than Russia in 1914 and India during her independence, China had also experienced the worst inflation in modern times due to industry having been run down, agricultural production had been reduced, and the transport system and had been disrupted due to decades of war. Fast forward to 1952 and 300 million peasants had benefited from the redistribution. The Joint Economic Committee of the U.S. Congress praised the "Rehabilitation Period, 49-52" giving it "full marks" for drawing China together, establishing economic law and order, and restoring existing productive facilities. The 1953-1957 story is about agricultural co-ops and the Soviet aided industrialization and subsequent withdrawal in 1960, disrupting industry in the process. Industrial output grew between 85.9 to 128.4% during the period.
Subsequently, the GLF (1958-1961) and the reaction to the GLF, the NEP, is covered. First, the GLF, which involved creating communes and the industrial policy of "walking on two legs" (simultaneous development of small, medium, and large industry, as well as the utilization of modern methods and indigenous techniques in production; rapid development in the interior of the country, both within and without communes). The adjustment in factor proportions lead to e.g., improved regional self-sufficiency by reducing transport bottlenecks, forced new technological solutions in small industry, and the creation of less capital intensive industry. This was criticized as having crowded out more efficient industry. The authors argue that this purported uneconomic, highly costly (opportunity cost) did not come at the expense of large industry, and they show that many inventions by small and medium industry was implemented in large industries. The authors argue that the misconception stems from erroneously associating the "Backyard" Iron and Steel Campaign, which was halted because how uneconomic it was, with small and medium common industry, which was not. However, the authors acknowledge the huge mistakes that took place during the time, worsening the natural calamities of the GLF: neglect of water conveyance systems, an excessive focus on irrigation canals whilst neglecting drainage canals. Nonetheless, they show that 16.5 million mou of land were brought under irrigation during the time, and conclude that the advances probably outweighed the mistakes. Regarding the GLF and its crisis years they note that Soviet expertise withdrawal caused turmoil in the productive capacity of Chinese industry, setting back development several years. An aside, when discussing the 1959 and 1960 typhoons, floods, and droughts striking 800 million mou and severely afflicting around 300 million mou, the authors note that food shortages developed, but purport that famine was avoided in 1959 and 1960 due to the commune system (p.54). What? If this statement regarding the specific communes they visited, greater emphasis on the fact is needed lest one yearns to be titled a denialist. Canton, a commune with 51000 people with a history of famine in the 00's 20's and 40's, which they visited, avoided famine (according to local leaders, if one believes them) during the GLF (p. 182). Nevertheless, the various GLP mishaps cultivated into a "rightist" turn in the following years, the NEP.
The NEP aimed to correct the crop failures of the GLF by unfettering market forces, and strengthening management's role at the expense of centralized political cadres. "San zi yi bao", restoring private plots, allowing entrepreneurship for peasants households, allowing enterprise profit and output quotas - expertness over redness. On the individual level, peasants began enriching themselves instead of working for the people, using their leisure time to attend to their private plots or other "sideline" production. The authors credit the growth during the period to NEP, citing that the new incentives boosted productivity. They note, however, that much can likewise be credited to the GLF, namely, prior investments, proportional instead of regressive taxation instated in 1958, the investments in education and health during the 50s.
This is followed up by chapters on the Cultural Revolution whilst discussing some of its economics. I thought this part ventured a bit too much into the political details. Having already read quite a few books on the Cultural Revolution, I gained very little new knowledge. That said, the authors portray the politics and polemics quite well. One gains good insight into what the authors refer as communes, how they taxed, what the wage policy (or non-wage policies) was at the time, how transfers occurred, what happens to retained earnings as well as the moral and ideological goals of the enterprise, in contrast to profits. This period again saw a shift (but not that large) from "expertness" to "redness" in the enterprise, where the revolutionary committees gained more prominence. We also get some insight into the technological policies and innovations at the time. Whilst interesting, inferences and generalizations from these are quite difficult as it is anecdotal. Chapter 10 which focused on the communes was interesting. The authors summarize many important trends: the stress put on water reservoirs during the GLF, how previously uncultivated soil had been terraced making it suitable for cultivation, the subsequent increase in agricultural yields, expansions in education and healthcare where go-getters from urban areas are encouraged to move to the countryside. Lastly, as the authors note (which I think seems plausible) is the fact that although the "backyard" Iron and Steel campaign was an uneconomic endeavor which was discontinued for this reason, the skill obtained from this disaster served as an educational feat for the peasantry with no previous experience or knowledge of iron working to now having the ability of creating agricultural tools from scratch (albeit of poor quality, it is better than nothing). The authors posit that it helped manufacture good quality rice husking machines communally.
Chapter 11 also raises important points about interpreting the Chinese economy at the time of planning. In contrast to the mainstream western view, whereby society ought to be organized through the maximization of consumer welfare, Maoists believe that society ought to be organized from the standpoint of the peasants, and that this is fulfilled only when this portion of society draws a "reasonable" share of the social product. The authors also state that the many noneconomic objectives make it harder to understand. I would add that it also makes it hard to make apples-to-apples comparison using traditional metrics such as GDP. A fair critique of this, considering how poor China was at the time, would be that growth, consumer welfare, should be the priority. Today China has the explicit goal of focusing not only on growth, but on the quality of growth. I believe noneconomic objectives and their validity has an inverse relationship to the amount of people unable to sustain themselves. Is there always a trade-off? Another point, the authors note, is in the lack of institutions and norms that western commercialized nations possess, where China essentially, without these norms or institutions, transformed from a feudal or semifeudal society without having these market institutions or relationships built. I believe some Chinese developments, such as state-owned banks, can be seen and understood from this perspective.
Overall, the authors are clearly sympathetic to the Maoist cause. Thus, this needs to be complemented with other material. Whilst I agree with many of their reasonings, the passage of time has proven us that the "demonstration effect" of consumerism is a temptation too strong for even the best of us to resist. Because so is, forcing Mao Tse-tung's visible bond upon a people, whom, when given the freedom to choose opt for Adam Smith's visible hand, is suboptimal. The "red" periods, however noble their cause, must thus also be portrayed in this light, something the authors failed to do completely. That said, I still liked the book.
The book starts out strong, as it provides context to the economic conditions before the GLF, namely, 1949-1952 (the year in which the land reform was completed) and 1953-1957 (the first five-year plan). An aside, land reform started prior in the liberated areas, for a case study on this, see Fanshen: A Documentary of Revolution in a Chinese Village. The context is crucial as this introduction (and Fanshen, in excruciating detail) provides insight into how poor China really was: In 1949 around 80% worked in agriculture, under 10% of the population held over 70% of the land, the industrial base was smaller than Russia in 1914 and India during her independence, China had also experienced the worst inflation in modern times due to industry having been run down, agricultural production had been reduced, and the transport system and had been disrupted due to decades of war. Fast forward to 1952 and 300 million peasants had benefited from the redistribution. The Joint Economic Committee of the U.S. Congress praised the "Rehabilitation Period, 49-52" giving it "full marks" for drawing China together, establishing economic law and order, and restoring existing productive facilities. The 1953-1957 story is about agricultural co-ops and the Soviet aided industrialization and subsequent withdrawal in 1960, disrupting industry in the process. Industrial output grew between 85.9 to 128.4% during the period.
Subsequently, the GLF (1958-1961) and the reaction to the GLF, the NEP, is covered. First, the GLF, which involved creating communes and the industrial policy of "walking on two legs" (simultaneous development of small, medium, and large industry, as well as the utilization of modern methods and indigenous techniques in production; rapid development in the interior of the country, both within and without communes). The adjustment in factor proportions lead to e.g., improved regional self-sufficiency by reducing transport bottlenecks, forced new technological solutions in small industry, and the creation of less capital intensive industry. This was criticized as having crowded out more efficient industry. The authors argue that this purported uneconomic, highly costly (opportunity cost) did not come at the expense of large industry, and they show that many inventions by small and medium industry was implemented in large industries. The authors argue that the misconception stems from erroneously associating the "Backyard" Iron and Steel Campaign, which was halted because how uneconomic it was, with small and medium common industry, which was not. However, the authors acknowledge the huge mistakes that took place during the time, worsening the natural calamities of the GLF: neglect of water conveyance systems, an excessive focus on irrigation canals whilst neglecting drainage canals. Nonetheless, they show that 16.5 million mou of land were brought under irrigation during the time, and conclude that the advances probably outweighed the mistakes. Regarding the GLF and its crisis years they note that Soviet expertise withdrawal caused turmoil in the productive capacity of Chinese industry, setting back development several years. An aside, when discussing the 1959 and 1960 typhoons, floods, and droughts striking 800 million mou and severely afflicting around 300 million mou, the authors note that food shortages developed, but purport that famine was avoided in 1959 and 1960 due to the commune system (p.54). What? If this statement regarding the specific communes they visited, greater emphasis on the fact is needed lest one yearns to be titled a denialist. Canton, a commune with 51000 people with a history of famine in the 00's 20's and 40's, which they visited, avoided famine (according to local leaders, if one believes them) during the GLF (p. 182). Nevertheless, the various GLP mishaps cultivated into a "rightist" turn in the following years, the NEP.
The NEP aimed to correct the crop failures of the GLF by unfettering market forces, and strengthening management's role at the expense of centralized political cadres. "San zi yi bao", restoring private plots, allowing entrepreneurship for peasants households, allowing enterprise profit and output quotas - expertness over redness. On the individual level, peasants began enriching themselves instead of working for the people, using their leisure time to attend to their private plots or other "sideline" production. The authors credit the growth during the period to NEP, citing that the new incentives boosted productivity. They note, however, that much can likewise be credited to the GLF, namely, prior investments, proportional instead of regressive taxation instated in 1958, the investments in education and health during the 50s.
This is followed up by chapters on the Cultural Revolution whilst discussing some of its economics. I thought this part ventured a bit too much into the political details. Having already read quite a few books on the Cultural Revolution, I gained very little new knowledge. That said, the authors portray the politics and polemics quite well. One gains good insight into what the authors refer as communes, how they taxed, what the wage policy (or non-wage policies) was at the time, how transfers occurred, what happens to retained earnings as well as the moral and ideological goals of the enterprise, in contrast to profits. This period again saw a shift (but not that large) from "expertness" to "redness" in the enterprise, where the revolutionary committees gained more prominence. We also get some insight into the technological policies and innovations at the time. Whilst interesting, inferences and generalizations from these are quite difficult as it is anecdotal. Chapter 10 which focused on the communes was interesting. The authors summarize many important trends: the stress put on water reservoirs during the GLF, how previously uncultivated soil had been terraced making it suitable for cultivation, the subsequent increase in agricultural yields, expansions in education and healthcare where go-getters from urban areas are encouraged to move to the countryside. Lastly, as the authors note (which I think seems plausible) is the fact that although the "backyard" Iron and Steel campaign was an uneconomic endeavor which was discontinued for this reason, the skill obtained from this disaster served as an educational feat for the peasantry with no previous experience or knowledge of iron working to now having the ability of creating agricultural tools from scratch (albeit of poor quality, it is better than nothing). The authors posit that it helped manufacture good quality rice husking machines communally.
Chapter 11 also raises important points about interpreting the Chinese economy at the time of planning. In contrast to the mainstream western view, whereby society ought to be organized through the maximization of consumer welfare, Maoists believe that society ought to be organized from the standpoint of the peasants, and that this is fulfilled only when this portion of society draws a "reasonable" share of the social product. The authors also state that the many noneconomic objectives make it harder to understand. I would add that it also makes it hard to make apples-to-apples comparison using traditional metrics such as GDP. A fair critique of this, considering how poor China was at the time, would be that growth, consumer welfare, should be the priority. Today China has the explicit goal of focusing not only on growth, but on the quality of growth. I believe noneconomic objectives and their validity has an inverse relationship to the amount of people unable to sustain themselves. Is there always a trade-off? Another point, the authors note, is in the lack of institutions and norms that western commercialized nations possess, where China essentially, without these norms or institutions, transformed from a feudal or semifeudal society without having these market institutions or relationships built. I believe some Chinese developments, such as state-owned banks, can be seen and understood from this perspective.
Overall, the authors are clearly sympathetic to the Maoist cause. Thus, this needs to be complemented with other material. Whilst I agree with many of their reasonings, the passage of time has proven us that the "demonstration effect" of consumerism is a temptation too strong for even the best of us to resist. Because so is, forcing Mao Tse-tung's visible bond upon a people, whom, when given the freedom to choose opt for Adam Smith's visible hand, is suboptimal. The "red" periods, however noble their cause, must thus also be portrayed in this light, something the authors failed to do completely. That said, I still liked the book.
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June 17, 2025Western liberal economists *SHOCKED* by the MORAL SUPREMACY and MATERIAL EFFECTIVENESS of Maoist thought in ECONOMIC PRACTICE !!!! (REAL)
(My non-joke review- an excellent outside look at Maoist economic practice from the 1970's. I wanted to hear more about their technological marvels in different small factories!)
(My non-joke review- an excellent outside look at Maoist economic practice from the 1970's. I wanted to hear more about their technological marvels in different small factories!)
October 13, 2021
cute non marxist but sympathetic account of how the cultural revolution worked economically.
Displaying 1 - 4 of 4 reviews