Mao’s socialist development model

By Pao-yu Ching

I am going to discuss this topic in two parts. In part one I will explain Mao’s model of development. And in part two, I will explain why the implementation of this model of development is only possible during socialist transition. The explanations in these two parts hopefully will demonstrate the validity of Mao’s model for the 21st century.

Part One: What is Mao’s model of development?

There are two fundamental elements of Mao’s model of development: one is self-reliance and the other is satisfaction of human needs as the goal of development.

I. Self- Reliance

  1. Development based on internal finance

    There are two major dimensions of self- reliance. The first dimension of self-reliance is an economic development that relies on internal financing. In this world dominated by imperialism, underdeveloped countries must mobilize their own resources for development. “Experts” in developmental economics have created the myth that a poor country has to rely on external finance to develop. Fortunately, after what we experienced in the past several decades this myth can no longer fool us, because we have seen the reality. The reality is that relying on external finance has meant that several times more resources have been taken out of our countries than what little did come in. The reality is that our countries have been left in shambles and that we are so much worse off after several decades of “development.” By relying on external finance the underdeveloped countries ended up owing huge amounts of debt to international monopoly capital and to international financial institutions.

    International financial institutions dominated by monopoly capital and imperialist nations have used debt as an instrument to force the Structural Adjustment Program on us. Through the SAP they have been able to dictate our internal economic and political affairs. Countries who have been placed under the SAP lost their autonomy to decide how to use their own resources to produce food and other necessities for their own people. Under the SAP productive resources were shifted from domestic consumption to produce export commodities. Earning foreign exchange to pay interest on the forever growing debt has become the only objective for “development,” while people’s basic needs for food, clean water, medical care, housing and education are nowhere to be found in any “development” program.

    To achieve self-reliance development through internal financing, however, means that domestic resources have to be mobilized. Mao begins his essay of “Ten Major Relations,” by discussing the importance of maintaining a balance between the agricultural sector and the industrial sector of the economy. (267-288). In any less developed country where the industrialization is either lacking or is still in its early stage, resources for development have to come from the surpluses generated in the agricultural sector. However, Mao emphasized that after the transfer of surpluses from the agricultural sector, the agricultural sector, as the economy developed, needs to be replenished with resources from the industrial sector. In a poor country such as China after the revolution, development in industries of metal, heavy machinery and equipment was necessary to lay the foundation for the future. However, Mao made it clear that China had to avoid the Soviet Union’s mistakes by over-emphasizing heavy industry at the expense of the light industry and agriculture, which provide goods to satisfy peoples’ needs.

    After one hundred years of foreign invasion and civil wars, China’s countryside was in ruins in 1949. Besides under feudalism the landlord had over-exploited the land with little or no investment put back into the land. Moreover, for the decades before the revolution China suffered severe drought and flooding, because its rivers and its land had been too long neglected. It took tremendous amount of work to restore agricultural production and to embark on long-term agricultural development.

    In the 30 years of socialist development, China was able to achieve rapid development in agriculture, industry, transport, and construction. The annual growth rate for agriculture, industry and transport, and construction grew at the average rates of 3.4%, 9.4% and 10.7%, respectively during the period of 1952 and 1978 (Rawski, 4). China was able to achieve a balanced growth between industry and agriculture, so peasants’ standard of living in the countryside improved along with that of workers in cities. The peasants worked extremely hard to build the foundation of agriculture, which includes irrigation and drainage system, the basic infrastructure of roads and bridges, land conservation and improvement. In addition the state transferred resources to agriculture by gradually improving the terms of trade in favor of the agricultural sector in trades between the two sectors. The state also gradually reduced the agricultural taxes, and increased state investment in large agricultural infrastructure, such as the Red Flag Canal and Yellow River Project among many others.

    In addition to the balance between the agricultural sector and the industrial sector, Mao explained the importance of the balance between the city and the countryside (“Ten Major Relations”). The balance between agriculture and industry, of course, is the key for the balance between the city and the countryside. By the mid-60s, along with growth in agricultural production, small-scale industries were set up by the production brigades and the communes in the countryside. In most areas peasants were engaged in productive work all year round in agricultural production and/or in building infrastructure, and/or became workers in industries. The balance between city and the countryside, as Mao meant it, goes beyond just a more equalized income between the city and the countryside. He emphasized that in the countryside, the education and cultural level had to be raised so that the gap between life in countryside and in the city could be narrowed. After the commune was established in 1958, elementary and junior high education spread quickly and by the end of the 1970s, most communes had junior high schools and most counties had high schools. Moreover, the health services in the countryside improved both in its accessibility and its quality. The improvement in health and education was especially significant after the Cultural Revolution. Medical personnel from cities came to conduct training programs to improve the quality of health services. The barefoot doctors network reached members of production teams and made basic medical care widely accessible.

    The correct policy of not over-taxing agriculture in order to achieve higher rates of growth solidified the strong alliance between workers and peasants. The improvement in health and education in the countryside helped narrow the gap between life in cities and in countryside. China’s development during the socialist transition is exactly the opposite of what we see in the less developed countries today. In most of these countries the agriculture sector has been milked dry and land has been consolidated by large land holders and in many cases to produce export crops, so peasants have been left with no choice but to find livelihood in cities. They have become the large pool of cheap labor that benefits foreign and domestic monopoly capital in the pursuit of profit by gaining a foothold in the international market. Most of the people, who migrate to cities, however, cannot find any gainful employment so they can barely survive. In addition the state subsidizes large enterprises in the agricultural sector for their export production. This kind of development policy deprived both workers and peasants their right to utilize the resources of their own countries to support themselves. It is no wonder that most workers and peasants in these countries live amid such devastated condition.

    I would like to emphasize again the importance of self-reliance on internal finance. When a country is dependent on external finance, it becomes impossible to find any balance between the sectors, even if the political leaders are still somewhat inclined to maintain such balance. The constant and relentless pressure for the country to service the debt makes promoting exports to earn more foreign exchange the ultimate goal of all countries including those, which in the early post WWII decades, declared their political and economic independence from the imperialist countries.

  2. Development based on independent technology

    The second dimension of self-reliance in China’s development model is reliance on its own technology. Mao, of course, saw the importance of technology in economic development, but he explained often in his talks and writings that for a poor country like China to catch up with the West, China had to develop its economy by walking on two legs. This means a country can learn advanced technology from the West, but in the process of adopting this advanced technology it has to evaluate critically how such technology would fit its own development needs. Walking on two legs also means that a poor country has to make use of different levels of technology in order to conserve its scarce capital resources.

    The overwhelming majority of less developed countries have bought into the lie that they must rely on technology imported from advanced capitalist countries. However, once a country becomes dependent on imported technology, it must then adopt and accept the logic of capital and the way capital defines efficiency. If we follow the logic of capital, efficiency is achieved when 80 out of 100 workers are laid off and the remaining twenty work eighty hours a week. After the 1979 reform China has increasingly depended on imported technology. It is based on this logic of capital that China has restructured its former state enterprises.

    This dimension of self-reliance is of critical importance and it is related in self-reliance in internal finance. When we contrast the self-reliant development model and the one based on external finance and imported technology, the difference is clear. When a country becomes heavily indebted to international monopoly capital and the international financial institutions, then it has to forgo all other development objectives and to use whatever means are necessary to export in order to pay interest on debt. However, when a country’s production concentrates on exporting either agricultural products or industrial products, it must use advanced technology that is currently controlled by the monopoly capital. Since China has adopted capitalist development, it has been phasing out older capital equipment from almost the entire textile industry. It has relied on external finance (either direct foreign investment or borrowed money) to import the newest technology in textiles in order to make products that can compete with Taiwan, South Korea, and many other countries in the international textile market. As many textile factories closed down and tens of thousands of workers lost their jobs, China’s textile industry has become dependent on the export markets, dependent on external finance and dependent on imported technology, all of which are tightly controlled by international monopoly capital.

    Another problem became blatantly obvious during and after the international crisis of capitalism in1997. This problem has caused great injury to people in many Asian countries, which opened up their economies after several rounds of APEC (Asian Pacific Economic cooperation) meetings and after those in charge put their countries in full force behind the development of exporting industries. The creation of excess capacity is nothing new and it has always been the byproduct of capitalism. Excess capacity means that in pursuing more profits, capital is invested in productive facilities, which produce goods in quantities far beyond people’s ability to buy. The excess capacity created during 1910s and1920s overwhelmed the worldwide capitalist system and led to more than a decade of Great Depression from 1929 until the beginning of WWII. It took the Second World War to destroy all the excess capacity so the production could again take off after the war. By the early1970s the problem of excess capacity returned and intensified which prompted the post-war capital accumulation crisis in the 1970s, 1980s and 1990s. Since the end of the 1970s the monopoly capital with the help of international trade and financial institutions has been able to shift the costs of excess capacity to less developed countries. Before, during and since the 1997 crisis people in many Asian countries have borne the triple burden of paying the interest on the foreign debt borrowed to build the exporting facilities and the cost of having these facilities destroyed as excess capacity. There were and still are too many pairs of shoes, too many shirts, too many computer components, too many house-wares that either have no place to go or can only be exported and sold at prices much below the production costs. Yet at the same time many people go hungry because there is too little food available at prices people can afford. The third burden was whatever foreign exchange these countries were able to earn from exports left the countries in a matter of days during the financial crisis, when both foreign and domestic speculative capital fled the countries to avoid losses in the devaluation of local currencies. Each individual state was totally incapable of preventing the capital flights, because its financial sector had gone through rounds of liberalization and deregulation imposed by the international financial institutions under the Structural Adjustment Program.

    By relying on its own internal finance and independent technological development, China was able to develop rapidly during the thirty years before 1979. China was able to develop sophisticated technology in its industrial sector and some degree of mechanization in its agricultural sector. Agricultural mechanization took the hardest manual work out of farming and dramatically reduced the intensity of farm work. Between 1957 and 1978, the rural power consumption increased at an annual rate of 21 percent, and the horsepower per hectare from three types of machinery (irrigation/drainage equipment, tractors and power tillers) increased at an annual rate of 24 percent. (Rawski, 82) “These figures show that three types of equipment alone now provide Chinese farmers with mechanical power somewhat larger than the 0.69 horsepower per hectare of cultivated land available to Japanese farmers from all types of power machinery in 1955 (Rawski, 83). A model based on self-reliance had made it possible for China to develop its economy during the socialist transition, to better the lives of its people, and to consolidate the alliance between workers and peasants. (Hsu and Ching)

II. The Goal of Development is Satisfying Human Needs

The second fundamental element of Mao’s model of development is satisfying human needs as its goal. This goal is diagonally opposed to the goal of capital accumulation. When satisfying human needs is the goal of development, we see things in an entirely different light. Investment in the steel industry will be seen as building the capability of producing machinery and equipment for light industries that will produce consumer goods and services in the future to satisfy people’s needs. Or, investment in steel can also be seen as providing the raw material for agricultural machinery that will make future farm work easier for the peasants. On the other hand, in the overwhelming majority of less developed countries today, investment in steel is to be weighed against other kinds of investment depending on their rates of return. The returns on different kinds of investment will depend on the export market for the products. In the last few years, many less developed countries, which had invested in steel, tried to export their steel only to find out its price in the international market fell drastically. Facing over supply of steel and lower steel price, United States protected its domestic market by setting up anti-dumping measures to block steel imports. Steel is only one of many products exported by less developed countries that have suffered lower prices and the effect of growing protectionism by imperialist countries.

When satisfying human needs is the goal of development, every effort is needed to make sure that the most urgent needs are met first. It is only common sense to figure out that people must have enough food to eat, clean water to drink, shelter to live in, and basic medical care for their health.

I explained earlier how Mao understood the dialectical relationship between development in agriculture and development in heavy and light industry. The balance between the sectors is crucial to develop the economy, so that basic human needs could be met. In China, between 1949 and 1952, land reform in the newly liberated areas gave hundred of millions of peasants a plot of land for the first time in their lives. Although holdings averaged only 0.2 hectares per capita, peasants cultivated their land with great enthusiasm. The output of both grain and cotton rose rapidly between 1949 and 1952. However, by 1953 grain production became stagnated and cotton production decreased sharply. As I explained earlier, China’s natural environment for agriculture was fragile and land was infertile because of ravages of war and neglect in the one hundred years before the revolution. Three years after the land reform, the peasants’ enthusiasm alone could no longer increase production. The poor and lower middle peasants households – 60 to 70 percent of China’s peasantry – did not even own a plow, let alone other farm tools or draft animals. When bad weather hit in 1953 and 1954, many of these peasant families again had to borrow money. When debt started piling up, they were forced to sell their land. China’s experience after the land reform showed that small landholding was not a viable way to develop agriculture. If the collectivization of agriculture had not taken place, land holding would have again been consolidated in the hands of rich peasants and a new (or old) land owning class. (Hsu and Ching)

Through several stages of collectivization leading to the formation of the communes in 1958, the peasants were able to pull their resources together, so scarce resources could be used more efficiently to increase output. As industry developed, it provided increasing quantities and varieties of industrial input to agriculture, ranging from simple farm tools in the earlier years to the sophisticated agricultural machinery, irrigation equipment and chemical fertilizer later. With their hard work and gradually increasing help from the State (lowering agricultural taxes, better terms of trade and increasing state investment, and input from industries) agricultural output increased steadily to provide better diet for both peasants and workers. The crop purchase and distribution system assured adequate food rations even for the poorest city residents. With rapidly increasing employment opportunities and low food prices in factory canteens, workers’ diet improved significantly. In terms of long-term development, Chinese peasants also spent tremendous amounts of time and energy in land conservation work, in construction of irrigation and drainage system, in road and bridge construction. In the twenty years since the formation of the commune, their hard work and China’s development policy changed the whole landscape of China’s countryside.

At the same time as people’s diet was improving, China made rapid progress in other areas that improved people’s health. Before the revolution, China was called the “sick man of Asia.” However, in only one decade and a half after the revolution China was able to eradicate most of the infectious diseases, which included cholera, diphtheria, tuberculosis, typhoid fever, smallpox and many others. Before the revolution, the outbreaks of these diseases and malnutrition had been the main reasons for the high death rates. These diseases were eradicated by relying on the masses. Mobile medical units toured the countryside and the cities explaining the nature of these diseases to people and persuaded them to change their sanitary conditions in order to prevent them. There were many mass campaigns to eradicate different illnesses. There were also mass campaigns to kill flies, mosquitoes and other carriers of diseases. People’s enthusiastic participation in these campaigns showed how they wanted to be in charge in changing their own conditions. By the end of the 1970s, even World Bank reported that despite of China’s low per capita GNP, its the death rate had dropped to the level of developed countries. According to the same report, China also did far better than almost all less developed countries in reducing the infant mortality rate and in raising the percentage of children enrolled in primary school (Sidel and Sidel 92-93). China was “sick man of Asia” no more. China was able to accomplish this, because it devoted a lot of resources to make satisfying human needs as the goal of development.

In contrast when the Structural Adjustment Program is imposed on Third World countries today, they are required to cut government expenditures. The first items to be cut are usually food subsidies and health care for the poor, which were already too low to provide any meaningful protection. In a US national public radio report, Michael Kremer, an economic professor at Harvard, said that in some parts of Africa, 90 percent of children carry intestinal worms which can be easily treated with medicine that costs about one dollar a year. The reporter added that still many countries can not afford the medicine. For example, “it would take 10 percent of Kenya’s health budget to treat everyone with worms.” (Morning Edition, April 10, 2001) In the same report, Ronald Bayer from Columbia University, school of Public Health, said that diarrheal diseases and tuberculosis kill more than two million people a year, malaria kills more than one million people a year and measles kills almost one million people a year. However, these professors from prestigious American universities are unable to understand the problem of ill health faced by the poor in Third World countries today. A few more dollars will not cure the ills of people, when they lack a clean water supply and adequate nutrients. In the world of imperialism, a poor dependent country must forgo its priority of meeting even the most basic and urgent needs of its people. The ills Third World people suffer goes far beyond x amount of dollars donated by kind hearted people from rich countries. These ills are deeply rooted in the systematic exploitation under imperialism. Therefore, to cure the ills of people we have to indict and to eliminate imperialism.

To conclude Part I, I would like to add that when a country pursues self-reliant development, it does not mean it has to rely totally on itself without trade with other nations. China had always maintained that it welcomed trade as long as it benefited both trading partners and was carried out on a basis of equal treatment. For many years China was not able to trade with many countries, because the United States had imposed a trade embargo on China.

Part Two: Why is the implementation of Mao’s model of development only possible during socialist transition?

I would like to answer this question by addressing the following issues:

I. Relationship between Imperialism and the Client State

The first question that we must address is why during the first thirty years after the revolution China was able to pursue a self-reliant model of development while almost all Third World countries could not. At the end of WWII, countries, which just won or had earlier won their political independence from colonial rule all vowed to develop their economies independently. The political leaders in these countries all had witnessed and understood the exploitation their countries had suffered under colonial rule. They saw how the colonial rulers enriched themselves by extracting their resources and leaving them poor and undeveloped. They also understood that without economic independence they could not achieve political independence. The majority of these countries had chosen the import-substitution strategy of capitalist development. They had followed the model of the advanced capitalist countries like United States, Germany and Japan. A country, which adopts the import-substitution strategy uses measures to protect its domestic industries until these industries can develop to the point of being able to compete with imports from advanced countries. However, they only came to realize later that time had changed. The power of international monopoly capital with the backing of the imperialist states and international trade and financial institutions proved to be too strong to resist. In the wake of the debt crisis in the early 1980s all these countries were placed under the SAP for the debt they owed. All of their efforts to develop their economies independently collapsed. Political leaders including those who might still have patriotic inspiration surrendered, because the national bourgeois as a class found it more advantages to cooperate with the international monopoly than to put up resistance. Actually any attempt to resist was handled with by brutal force. Countries, which had great hopes in the early decades after the World War II, lost both their political and economic sovereignty as nations.

In 1940 Mao wrote in his essay – “On New Democracy.” that China was a semi-colonial and semi-feudal society and its liberation had first to go through the stage of democratic revolution. However, Mao said that this democratic revolution, which he termed the new democratic revolution, would have to be led by the proletariat as opposed to the old democratic revolution led by the bourgeoisie. In the struggle for leadership in the new democratic revolution the proletariat ally itself with the peasants to consolidate political power and complete the democratic revolution. Under the leadership of the proletariat the struggle continues and it will eventually lead to the socialist revolution.

From the experiences of the past half a century, we have to conclude that in the less-developed countries, capitalist development, first the import-substitution strategy and later the export-led strategy has failed miserably. The domestic capitalist class has proven to be too weak to fend off the control of international capital and its representing imperialist states. Most people who live in most underdeveloped countries today in the dawn of the 21st century are no better off than their 19th century forebears under colonial rule. We also have to conclude that in the age of imperialism it is not possible for any less developed country to develop a capitalist economy not controlled by international monopoly capital and the imperialist powers. China’s experience has proven that if the proletariat has the political power, a country can follow a model of development that is based on self-reliance, a model whose goal is satisfying people’s needs. That is to say Mao’s development model can only be carried out, when the proletariat has the political power. When the proletariat is in charge, the development can only be socialist.

II. Proletarian Politics in Command

The second reason that Mao’s development model can only be implemented during socialist transition has several dimensions. The dominant factor in each of these is proletarian politics in command. Even in the stage of democratic revolution, it is of utmost importance to emphasize proletarian politics in command. Throughout land reform, the policy was to rely on the poor and lower middle peasants. In other words, worker-peasant alliance was based on how the leadership of the proletariat could strengthen itself by allying with those peasants who were most in favor of progressing to the next stage of the revolution. If proletarian politics had not been in command, the land reform could have resulted in an alliance between the rich peasants and the then still small industrial capitalists and rich merchants who had controlled the grain supplies in cities and towns. As I explained earlier, by 1953, at the same time land consolidation had already begun to take place, the alliance between the capitalists and merchants in cities and rich peasants in the countryside was also developing. This was when the Central Committee of the Chinese Communist Party decided on the unified purchase and unified sale of grain by the state. This policy gave the state a monopoly over grain sale and thus it was a fatal blow to the connection between rich peasants and grain merchants. If that policy had not been implemented, it would have been more difficult to carry out the collectivization of agriculture. It is not true, as some would like to believe, that if it makes sense for the peasants to pull resources together for more efficient use by organizing cooperatives, then, it “naturally” happens. Instead it was a class struggle, and the key to this success was the proletarian politics in command. The rich peasants were terribly unhappy, because as different stages of collectivization took place, they could no longer hire farm labor to work for them to accumulate enough grain for sale. With the state controlling the grain supply, they could no longer sell any grain to the merchants for a profit. Eventually they were left with no other choices but to join the cooperatives.

China’s experience shows that when proletarian politics was in command it was possible to implement policies so grain was no longer a commodity, nor was land, nor was farm labor. (Grain, land and farm labor at least lost major characteristics of being commodities.) In most Third world countries today, all agricultural products are commodities to be sold for profits. Large numbers of people who are in need of food but have no money to buy food. They have no money to buy food, because they lost their land when land was consolidated into large commercial farms to produce exporting crops, or land was taken away from them to be used for mining or tourism. When they were forced off their land, they had to sell their labor power as a commodity. However, the large mechanized commercial farms do not require many workers to operate, and the few they do hire can only earn very low wages. Thus, these former peasants either lost their means to earn a living or are paid wages too low to buy the products they actually produce. Thus, Brazil, the largest exporter of soybeans, which is an important source of protein, also has half of its children malnourished. According to Oxfam’s project report, since Chile’s fish and seafood exports took off in the early 1970s, the per capita consumption of animal protein by the late 1980s fell by 15 to 25 percent, and caloric intake fell by 10 to 22 percent. The per capita consumption of fish and seafood of Chileans fell from 6.3 kg in 1973 to 4.4 kg in 1986. (Coote, 144) Fisher-folks who catch fish and workers who process fish are too poor to buy enough fish for their own consumption. Yet, some of the fish Chile exports are made into fish meal for animal feed in developed countries.

As I just explained when food ceases to be a commodity (or at least lose the major characteristics of being a commodity) then it is possible to produce food for its use value, which is to satisfy the needs of people. Only when food ceases to be a commodity is it possible to place food production for domestic human consumption as the highest priority in the use of agricultural resources. As soon as China adopted capitalist development and linked itself with the international market, much of the richest land and other resources in the Yangtze delta area were converted into planting mulberry trees for silk worms. China has since exported such large quantities of products made of silk that the prices of silk products in the international market fell through the bottom.

During the socialist transition, the continuing struggle is how to move away from commodity production. Commodity production has to obey the rule of producing exchange value, which means making the largest exchange value possible for profits. However, during the socialist transition in many cases commodity production has to continue. The challenge is how to restrict it so it will not take over every sphere of production. According to Mao, during the socialist transition instead of following the law of value blindly (producing the largest exchange value) the state could take advantage of the law of value. Mao used the example of pork production to illustrate his point. He said that pork production in China still had the commodity character, because peasants produced pork mainly for sale. Yet the quantity of pork produced was no longer regulated by the demand for and supply of pork. Rather, the state decided the quantity of pork needed according to the economic plan. However, in order for people in the cities to have pork to eat, peasants had to raise a certain number of pigs each year. When the state set the price it paid to the peasants for the pigs and the price of feed it sold to the peasants, it had to adjust the prices of both to make it worthwhile for the peasants to raise pigs. If the price of pigs were set too low and/or the price of feed were too high, peasants would simply refuse to raise pigs (Mao, 1967, 117). In this example as well as in many others, proletarian politics has to be in command. The alternative is what the current regime in China has done since the 1979 reform. When pork becomes a commodity and when China’s market is linked to the international market, then pork production is dictated by the same rule as Brazil’s soybeans, Chile’s fish and China’s silk.

In the state owned sector the same challenge exists; however, here the state has much more freedom to allocate resources according to the economic plan. For example, when China set mechanization of agriculture as one of its development priorities, the state was able to sell machinery and equipment to the agricultural sector at “prices” below the production “costs.” In fact both the “price” and the “cost” deviate from calculation used in a capitalist enterprise. Another example is when the state had transferred technology nationwide from more developed to less developed areas. When China decided to industrialize the western provinces for a more even development geographically, the state relocated machinery and equipment as well as engineers and workers from the technologically more advanced factories in areas like Shanghai and the Northeast to the newly built factories in the West. China was able to disperse technology for faster and more even development. This was actually described by people as “having an old hen laying eggs all over the place.” This kind of technology transfer can only be done when each enterprise is not a separate entity with a goal of maximizing its own profits.

Therefore, it was a major step when the Soviet Union went through its revisionist reform and when China started its 1979 reform to capitalism. One of first items on the reform agenda was to make each enterprise a separate entity which would be responsible for its own profits and lose. In China after 1979 new teams of management came on board in these “state owned” enterprises charged with the responsibility of profit making for its own enterprise. The new management had been given the authority to hire and to fire; thus labor power once again became a commodity for sale. Before the capitalist reform in the state sector, China’s new regime had already dissolved the commune system in the collective sector. This had been done to break the alliance between the workers and the peasants. The conclusion we can draw from these experiences is not that that socialism has failed, but that the proletariat lost its political power. Surely there were mistakes made during the socialist transition that require careful evaluation and correction, but when the proletariat lost its political power the opportunity to make changes vanished. Therefore, we cannot emphasize enough the importance of proletarian politics in command.

III. Socialist value vs. Capitalist Value

Another reason that Mao’s model of development can only be carried out during socialist transition is that socialist value is an inherent part of this development model. One of the most important socialist values is the goal to end all exploitation. This means that people are entitled to all the fruits of their labor, and not to have part of it taken away from them. Therefore, during the socialist transition, distribution has to be made according to the labor one contributes instead of the quantity of capital one possesses.

However, the socialist value to end exploitation has to be grounded in the socialist economic base. In other words, the means of production have to be changed from privately owned to publicly owned. In China, the state nationalized all industries in 1956 and from then until1979, workers earned eight different grades of wages based on their skills and seniority. The eight different grades of wages were applied nationwide with slight adjustments made according to the costs of living in different cities. Between 1956 and the Cultural Revolution, the former capitalists had received some fixed dividends from the enterprises they sold to the state. After the Cultural Revolution dividend payments were stopped. Workers in state enterprises were guaranteed jobs, so there was no fear of unemployment. When state enterprises did not operate on the basis of profit making and wage funds were transferred directly from the central government, there was no reason for each enterprise to lay off workers in order to cut costs.

In the collectively owned sector, distribution according to labor contributed was realized at the stage when the organization of cooperatives reached a higher level. This was achieved before the formation of commune in 1958 and at that point, the production teams bought farm tools from rich peasants who had been paid a share of the output the team produced. From then on until the commune was dissolved gradually by the 1979 reform, peasants received income based on the work points they earned.

During the early stage of socialist transition there will still be differences in wages, because different kinds of labor still exist. However, all efforts have to be made to achieve equality. During socialist transition, China had made great strides, albeit with much resistance from its intellectual elite, in reforming its education system so that workers and peasants could have equal opportunity for education.

The socialist value of building a nation is to rely on the masses and that is diagonally opposed to the capitalist value of relying on a small number of elite. Moreover, under capitalism the capitalists rely on carrots and sticks alternately to get people to work. Under socialism it is the political consciousness of the working people that releases great energy. China was able to develop rapidly because people believed they were in charge of their own destiny and they were part of the larger vision of building a new society. Precisely this kind of spirit and vision motivated peasants in Dazhai to overcome the most severe natural adversaries to build a long-term sustainable agricultural base.

Another important socialist value is cooperation versus the capitalist value of competition. The example of technology transfers I gave above shows the importance of cooperation. Even though the state had the power to relocate resources and people from more to less developed areas, the transfer of technology could not have taken place if people had not been willing to go. Under capitalist development the direction of migration would be just the opposite. People would move to places where they could have better chances of advancing themselves. Since the United States provides the best opportunity for the elite, it has a concentration of brain power of people coming from all over the world. Another example mentioned above is the simultaneous use of different levels of technology, or what Mao had said about walking on two legs. Low level backward technology along with advanced technology was used in China, when old machinery and equipment could produce useful products. If, instead of cooperation, competition prevails, newer and more advanced technology would drive out the old and backward technology. This is exactly what has just happened to the textile industry in China.

Henry Ford II once said, “Obsolescence is the hallmark of progress.” It means that the accumulation of capital depends on continuously making useful equipment obsolete. The key of the process is competition. Andy Grove, who was the President of Intel, when Intel opened their new facility in New Mexico, to make the new Pentium 5 chip, said, “This is what we do, we eat our children and do it faster and faster. That is how we keep our lead” (Byster). Capital accumulation depends on the constant phasing out of the existing technology. That is why it is so important for the international monopoly capital to protect its intellectual property rights and why it insists on putting TRIPS (Trade Related Intellectual Property Rights) in the WTO (World Trade Organization) rules and regulations. Major multinational corporations have been able to use their new technologies, which are protected by the patent law so they have the monopoly over them, to drive out the older technology in Third World countries by competition. Then before their patents expire, they already have even newer technologies to replace them. This behavior of madness, destruction, and total disrespect of labor (living and dead) and resources is the way to maintain the monopoly control over itheir technological lead, which is essential to attain high level of profits. This is not just happening in computers but it also in the pharmaceutical, bio-technological, and other industries.

Since socialism is in for the long run for the future of human kind, another important socialist value is to conserve and to preserve. This means according to socialist value that we value all resources from the earth and use them carefully even though these resources do not have price tags on them. When China made production in the state sector deviate from the production of commodities so that individual state enterprises could move away from the profit motive, it used a different set of standard to judge their performance. Each state enterprise set a production target for the year based on the actual figures of the previous year. As compared to the previous year the enterprise should aim at: “producing more, producing faster, producing better quality products and using less resources.” Making better quality and longer lasting products and using less resources are both ways to conserve and preserve.

To the contrary, capital accumulation requires planned obsolescence, which demands abundant supply of cheap resources. Therefore, capitalist production must resist any effort to conserve and to preserve. It also means that capital has to consume whatever resources are now available at faster and faster speed and to continue relentlessly exploring for more cheap resources. This is why people in the Third World countries suffer the consequences of having natural resources continuous robbed, and when more and more manufacturing production is relocated to our countries, we also suffer environmental disasters that require several future generations to clean up. Capitalist development has lasted this long because monopoly capital with the help of their imperialist states has been able to drain our resources and dump us the garbage. There cannot be capitalism without imperialism and vice versa. Therefore, we cannot fight imperialism without fighting capitalism. When some NGOs want to be given seats in the WTO negotiations or to add green/blue clauses in the WTO agreement, they are not fighting imperialism. Instead they simply want to be given a part in managing imperialism.

In this paper I explained China’s model of development and I then explained why it is only possible to carry out this model of development during socialist transition. My explanations are based on the concrete experiences in China during the socialist transition after the revolution. I do not intend it to be a step by step model for all developing countries to follow, because each country has its own concrete conditions. However, I do think the fundamentals in this development model, and its implementation during socialist transition are as valid today as they were half a century ago. This is why I believe that the Maoist socialist development model is definitely viable in the 21st century.


  1. Byster, Leslie, “Impact on the Environment and People’s Resistance,”
  2. Proceedings of Citizens’ Perspectives Conference Series on: Cross-Border Capital Expansion and People’s Resistance, at Marygrove College, Detroit, Michigan, on 8 April, 2000, p. 30
  3. Coote, Belinda with Caroline LeQuesne, The Trade Trap, Oxfam Publication, 1996
  4. Hsu, D. Y. and P. Y. Ching, “The Worker-Peasant Alliance as a Strategy for Rural Development in China,” Monthly Review, March 1991, 27-43.
  5. Mao Zedong, “On New Democracy” (JANUARY, 1940), in Selected Works of Mao Zedong, 1964, 655-704.
  6. Mao Zedong, Mao Tsetung Si Shan Wen Sui (Long Live Mao Tsetung’s Thought) published in Japan, 1967.
  7. Mao, Zedong, “Ten Major Relations” (April 25, 1956) in Selected Works of Mao Zedong Vol. V (in Chinese), 1977.
  8. Rawski, Thomas G., Economic Growth and Employment in China, Oxford University Press, 1979.
  9. Sidel, Ruth and Victor W. Sidel, The Health of China, Beacon Press, 1982.

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