When “Side-Occupations” Showed the Way 

There was great excitement in China over the award of a Nobel Prize to a Chinese pharmacologist for deriving the antimalarial drug artemisinin from a plant used in traditional Chinese medicine (TCM), as Denis Normile reported in Science from Shanghai. Was this a victory for traditional Chinese medicine (TCM), as the government maintained?

The question at last week’s press conference announcing the Nobel Prize in Physiology or Medicine sparked a frisson of tension in the staid Stockholm hall…. [A] Chinese reporter asked: “Can we say this is the first time you award [recognition to] TCM?” “We are not giving a prize to traditional medicine,” shot back Hans Forssberg, a member of the selection committee. TCM was a source of inspiration, he explained, but the prize was for discovering a new drug.

Something of the same tension in attitudes towards theory and practice in economic matters was to be glimpsed last week, as well. The Royal Swedish Academy awarded its annual prize in economic sciences – a Nobel Prize in all but name – to Angus Deaton, of Princeton University, for contriving measures of wellbeing that make it somewhat easier to analyze and discuss.  The award was warmly welcomed by the profession.

Meanwhile, Du Runsheng died, at 102. “Du must be the least known [applied] economist who personally lifted hundreds of millions out of poverty,” mused agricultural economist C, Peter Timmer, an emeritus professor (Stanford, Cornell, Harvard, the University of California at San Diego) with wide experience in Asia, in an email exchange. Reported  the Beijing-based online news service of  Caixin media group: “He outlived the critics who silenced him for twenty years” during the Cultural Revolution. Aside from former Wall Street Journal reporter Andrew Batson’s blog, Du’s passing went mostly unnoticed outside China.

The roots of  China’s explosive growth since 1978 remain a considerable mystery to most outside of Asia. Similar rapid industrialization and nation-building in Germany and Japan in thre nineteenth century produced a series of disastrous wars in the twentieth century.  Thus global strategists, as well as economists, financiers, business executives, and entrepreneurs, maintain a lively interest in China’s growth in the twenty-first.

The thirty years after 1949, when Mao Zedong drove Guomindang forces from the mainland to Taiwan and completed the Chinese Revolution, and the years since 1978 are usually treated separately, as if some radical disjunction occurred in December 1978 when, after plenty of intrigue but little disruption, China’s moderrnization plan was spelled out to the nation.  (Mao died in 1976.) “Four Modernizations” were announced at the Third Plenum of the  Eleventh Central Committee meeting, in agriculture, industry, science and technology, and national defense.

In the West, the news that China had ordered three Boeing 747s  and given Coca-Cola the green light to open a bottling plan in Shanghai, ending the monopoly conferred a few years earlier on Pepsi-Cola,  was all but eclipsed by the Vietnamese invasion of Cambodia.   It was in January 1980 that vice premier Deng Xiaoping, by then second  in line behind Hua Guofeng, visited US president Jimmy Carter at the White House amid a certain amount of fanfare. But the message was largely lost when  he returned home in time for China’s invasion in February of northern Vietnam, a client-state of the Soviet Union, China’s bitterest rival. Ronald Reagan was elected in the autumn.

Within a few years, it was clear that China’s Great Leap Outward would be the real news.

Four incremental reforms made it possible, according to How China Became Capitalist, by the late Ronald Coase, of the University of Chicago, and Nin Wang, of Arizona State University  (Palgrave, 2013): private farming, township and village enterprises, individual entrepreneurship, and the creation of Special Economic Zones.

It was Du who led the agricultural reform.

In The Course of China’s Rural Reform, an essay  for the International Food Policy Research Institute, in 2006,  he explained how he did it.  Hua had opened a window, Du wrote; what  opened the door was the Household Responsibility System, which permitted peasants to opt out of their communes. Its folk-pop mantra: “Household contract – keep straight on and don’t turn back, hand over enough to the state, keep enough in the collective; whatever is left is yours.”

The historian Jonathan Spence, of Yale University, long ago identified the vital passage from the Third Plenum communique:

The rapid development of the national economy as a whole and the steady improvement of the living standard of the people of the whole country depend on the vigorous restoration and speeding up of farm production, of resolutely and fully implementing the policy of simultaneous development of farming, forestry, animal husbandry, side-occupations and fisheries, the policy of taking grain as the key link and during an all-round development, the policy of adaptation to local conditions an appropriate concentration of certain crops in certain areas, and gradual modernization of farm work.

To this Spence added:

The key phrase here was “side-occupations,” those myriad of local initiatives in growing and marketing grains, fruit, vegetables, livestock and poultry, that had so often been the target of “leftist” planners and  cadres seeking to root out a stubborn peasant “capitalist streak.” Such small plots of land, the plenum statement added firmly, along with domestic “side occupations” and “village fairs,” were necessary to socialist production and “must not be interfered with.”

Whereupon the Central Committee raised by 20 percent the state price paid for grain quotas, cut the price of fertilizers, insecticides and farm machinery by 10-15 percent, and raised food subsidies paided to urban workers just enough to insulate them from changes in the countryside. The documents that Du prepared for the Central Committee would be placed “No. 1” on its docket for five years in a row.

As sometimes told, Du’s is standard story: a land-use visionary in the early 1950s, whose  ideas quickly fell out of favor during Mao’s catastrophic Great Leap Forward; who was sidelined in a quiet job in Beijing that had nothing to do with farm policy, until he was sent to the countryside to work during the Cultural Revolution.

What that leaves out is Du’s extensive military experience during China’s war with Japan and its subsequent battles with the Guomindang.  He joined the Communist Party in 1936, and participated as a political officer in several major military campaigns. As China-watcher Batson puts it, “Both roles would have meant being involved in quite a bit of violence.” They also would taught Du classic guerilla tactics: the value of plasticity, experimentation, accountability and timing. Mao is said to have evaluated him as “a timid and conservative man.”  But Ru served too loyally  and knew too much, to be dismised altogether. He outlived the Chairman by nearly 40 years.

Are the guerilla governance innovations of its revolitionary and Maoist eras (1927-1976) important for understanding China’s economic success? Some scholars think so.  In Mao’s Invisible Hand: The Political Foundations of Adaptive Governance in China (2011), Sebastian Heilmann, of the University of Trier,  and Elizabeth Perry, of Harvard University, collected essays in which experts argue that improvisational policy style and highly adaptive institutions explain a good deal of China’s success in circumstances in which many expected the nation to fail. (The doubters are still looking for a crash, or at least stagnation.)  Perhaps the Chinese economy has prospered by embracing the tactics that brought the Communist Party: an authoritarian chain of command, to be sure, but one highly experiernced with improvisation.  As Kathleen Hartford, then associate professor of political science at the University of Massachusetts at Boston, argued in “Socialist Agriculture is Dead! Long Live Socialist Agriculture” in 1983, in an article cited by Du himself in 2006,  “We are likely to see in future not a ‘return to capitalism’ in the Chinese countryside, but a reaffirmation of collectivist values.” And so it has proved to be.

The agricultural transformation is not all good news. The Economist this week has a editorial (Pity the Children) and an extensive Briefing, (Little Match Children), on the plight of some 70 million children who have been left behind in rural areas with grandparents, foster-care, or simply abandoned by parents among the estimated 270 million who in the last generation have left their villages for cities in hopes of finding high-paying jobs. Such children “make up a disproportionate share of the population in the countryside, where children are four times as likely to be short for their age as urban ones, a measure of malnutrition,” the anonymous correspondent writes.  Such children pay a disproportionate price for China’s rapid growth.

Nobel laureate Deaton would point out that, despite the pain, the gain in general well-being has considerably outweighed the cost imposed on those children. Sure enough, the Chinese government has launched pilot programs to train a corps of minimally-equipped child-welfare directors, otherwise known as “barefoot social workers,” in five provinces.

Traditional Chinese Social Policy, like Traditional Chinese Medicine, may not have much of a scientific grounding. But it seems to work.  Its practices, like the enormous TCM formulary, probably contain institutional arrangements that will turn out to be of great interest to scientific economics.

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