Part IV Population, Labour and Urbanisation

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1 Part IV Population, Labour and Urbanisation

2 Introduction The population issue is the economic issue most commonly associated with China. China has for centuries had the largest population in the world, and the economic significance of this has been debated in the West since the seventeenth century. On the one hand, observers have noted the vast economies of scale, the minutely efficient division of labour, and the advantages of concentration. On the other, the adverse and declining man: land ratio and the mortality consequences of food problems and natural catastrophes are clearly negative aspects of the population issue. Between the mid-nineteenth century and 1948, the population growth was approximately one hundred million; an annual growth rate of only 2 per cent per year. However, high mortality associated with civil collapse, war and failure of development, was the key factor in this slow advance. Fertility rates remained quite high and, with improved health care, were capable of rising. Thus the establishment of firm government and improved health and social welfare provisions were clearly capable of both reducing mortality and of raising fertility. Under these conditions, accelerated population growth of the kind familiar in many developing economies must occur. The early view of the Chinese Communist Party on this matter was that there was no serious problem. It is notable that as late as 1955, the Five-year Plan document contained no discussion of population issues. There were two reasons for this confidence. First, western population theory associated with Malthus was regarded as a product of capitalist society, and hence as providing policy advice irrelevant to a socialist society in which new economic institutions would transform the prospects for economic growth. Second, the Chinese looked back at Soviet experience in the two pre-war Five-year Plans. During this time, Soviet population growth rates were above those for western Europe, and yet were seen by the Chinese as having been consistent with rising standards of living. This view of Soviet experience was inaccurate and irrelevant, but was none the less sincerely held. In one sense, however, there was concern with population matters in the early fifties. Economic planning required that accurate data be obtained, and this was the motive for China's first official census in The census seems to have revived discussion of 289

3 290 The Foundations of the Chinese Planned Economy population issues, but the official view of the population problem remained firmly optimistic. No difficulties were foreseen during the First Five-year Plan (1953-7) in either employment or living standards. It was believed that industry would generate substantial new employment possibilities and that the China of the future would be one in which large-scale urbanisation would take place. As the Plan years unfolded, doubts began to accumulate as to whether a laissez-faire policy was appropriate in population matters. Unemployment and food control became major sources of anxiety, and as the planners looked toward the prospects of the Second Plan ( ), the conflict between investment and consumption became acute. Wishing to accelerate development, the planners wished to maximise investment, but began to realise the conflict between this and an accelerating population growth which, in its early stages, had the effect both of increasing the size and the degree of dependency of population and was, therefore, a major drain on resources. The controversy on this issue burst out in 1957 in the Hundred Flowers movement. The 'rightists' in this campaign were those in favour of cautious economic policies and population limitation. In the anti-rightist campaign of autumn 1957, not only were the views of the anti-natalists condemned, but so also was the profession of demography. As a result, no serious demographic study took place for many years, and as late as 1977, major population policies were being formulated without any professional advice. There are two other groups of economic problems that are closely related to population: those associated with the labour market and urbanisation. Employment, in particular, is clearly a demographicallydetermined problem in the long run, and employment issues related also to wage and other matters of labour planning. Urbanisation is concerned with both the geographical and functional distributions of population, and these were important issues of urban policy in the 1950s. Even Mao, despite his peasant and rural orientation, had assumed that urban growth, based on industrial development, was the inevitable path for China, but by the late 1950s this was being questioned and radical new policy initiatives were in the making. Our first document, published in 1953, is a good example of the early optimistic view of population. One notes that theoretical considerations leading to optimism are strongly supported by data on the very rapid growth of the economy experienced in the post-war recovery of The author underlines the point that not only are death rates falling under the new government, but that birth rates

4 Population, Labour and Urbanisation 291 are nsmg. None the less, any problems of that kind are seen as temporary, and he is confident that 'through planning these problems will be gradually resolved'. In the case of employment, the author quotes Soviet urbanisation rates (full urban employment assumed), and looks also to new, labour-intensive agricultural techniques to absorb any rural labour surplus. Ma Yinchu's article of October 1957 was written in circumstances very different to those of the earlier article (Document 2, 'A New Theory of Population'). Ma was China's most famous living economist at that time. The first problem according to Ma, was to ascertain what the facts actually were. And then, drawing on a variety of data, he cites evidence that suggests that fertility and natural increase rates were above official, national data. Looking ahead, Ma sees fertility kept high by a combination of traditional social values and new welfare incentives, while public-health measures reduce mortality dramatically. Theoretically, Ma rejects Malthusianism as being conditioned by a mode of society that is now history, and he focuses his attention on the contemporary dilemma of the relationship between population, investment and economic growth. He also has important observations on the dangers of a capital-intensive investment strategy that limits labour absorption and is, therefore, inappropriate in China. It is interesting that Ma does not place much importance on the potential of international economic relations to be a major factor in future growth. In this he seems not fully to have appreciated the Soviet role in China and to have something in common with the selfreliance ideology of the 1960s. Looking to the future, Ma's policy prescriptions are for more and better data, education to remould social norms, and a programme to make available the means of population limitation. In the anti-rightist campaign, Ma was viciously attacked, but never recanted his views. A good example of an anti-rightist article is that by Li Pu, published in the same month as Ma's article (Document 4, 'Do Not Permit Rightists to Make Use of the Population Problem'). The main focus of the attack in this case is the famous anthropologist Fei Xiaotung. A crucial aspect of this controversy is argument about the nature of the transition through socialism to communism and the speed with which this ought to be accomplished. In the socialist transition (which began in 1954) the official theory was that ownership should remain partly private in the early stages and rewards should be related to labour effort. These institutional characteristics,

5 292 The Foundations of the Chinese Planned Economy it was argued, reflected the imperatives of Chinese poverty. As this is slowly overcome, more advanced communist institutions can be introduced. It is suggested here that the rightist argument (consistent with the old theory of the transition) was that population growth was a cause of poverty and hence an obstacle to further institutional change. Thus for them (the rightists), 'the future is dark and there is no solution'. The anti-rightists, however, were beginning to shift ground and argue that further institutional change was necessary immediately, and that this would produce economic abundance which could be enjoyed and created by an even larger population. Thus in this way, population controversies were directly linked to the main political and ideological issues of the day. The basic Chinese views on labour and wages in the early 1950s were that unemployment would not be a problem, and that a differential wage system was an indispensable part of the nonagricultural employment system. By 1957 it was clear that labour absorption was a problem. Even the major agricultural collectivisation movement of 1956 had not apparently increased the absorptive capacity of agriculture as hoped, and the poor job-creation characteristics of modern industry had been revealed before then. Song Ping's article was a major turning-point in policy thinking on these matters (Document 5, 'Why We Must Implement a Rational, Low-wage System'). He starts off by realistically emphasising China's comparative poverty and by insisting that money wage increases need to be supported by rising output that ensures that such increases are real. Song Ping also emphasises the significance of the growing gap between rural and urban incomes. Song Ping's main policy prescription is that urban incomes (in the formal, large-scale sector) should in future grow much more slowly than they had in the past. In this way, peasant migration would be controlled (because income differentials between peasants and workers would be smaller), and resources saved in the wage bill would generate more jobs by being diverted to the investment budget. It is interesting to note that in this article there is no utopian demand for egalitarian policies; what is sought is a modification of Soviet practice. In reality, this programme proved to be unworkable. Maoist ideology and an unforeseen deceleration of growth combined to make its implementation impossible. Documents 6 and 7, give graphic accounts of the need for more effective measures to control the growth of urban populations. The Gongren Ribao article was the key national newspaper leader on this

6 Population, Labour and Urbanisation 293 subject (reprinted many times), while the Shanxi article describes the problem from a local viewpoint. Both articles vividly describe the statistical dimensions of the problem and outline the food, housing, social and other consquences of this rapid growth. Both articles presage the continuation of the 'sending down' movement, and the Gongren article is stiii holding out hope that collective farming would be a factor in the expansion of rural employment opportunities. This article also points to the significance of a general re-evaluation of agriculture and its role in the economy. The final article in this Part is concerned with urban strategy in its widest sense. It asks the practical question: how large should cities be? and it also discusses the broader theoretical issues of the relationship between urbanisation and socialism. There have, in reality, been two traditions in Marxist thought on the urban issue. There is the tradition of Lenin and Stalin, which emphasises that large-scale, concentrated modes of development and urbanisation are the hallmark of modernity in all societies. This was the tradition that influenced the Chinese in the early 1950s. To escape from it, the author of this document unearthed the lesser-known tradition of Engels and primitive Marxism which had a powerful bias against the large-scale city. According to this tradition, the smaller city is the key to a future in which social and economic differences between urban and rural places will be eliminated. The author tries valiantly to reconcile the theories of these traditions, but is unconvincing in his efforts. His policy prescriptions are for a new limit to be put on large cities and for development to concentrate on cities of less than people. He sees the dangers of losing the benefits of scale and concentration, and hence proposes the linking of smaller to larger urban centres, thereby creating a continuum from large-scale metropolitan centres to rural villages. Events showed that some of these ideas were not feasible, while others (such as satellite development and the ceiling on cities of 1 miiiion) were officially enforced policy for many years.

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