As a result of Mao Zedong’s strong assertion of the enthusiasm of the masses for collectivization, local officials across rural China pushed farmers into collectives against their will. This was not just against the stated official policy but also lead to unexpected problems. What were these problems?
In pushing China’s peasants into these new, larger and more fully socialist farms, local officials had violated the Communist Party’s longstanding principles of voluntarism, patient persuasion, and leadership by example. Rich and upper-middle peasants were ordered to join the collectives, and their land and other property was now subject to total confiscation. Those who balked were punished.
The collective farms were large, impersonal units of production. Far larger than the co-ops that preceded them, each new collective encompassed, on average, 100 to 200 families—roughly 500 and 1,000 people. In most cases, a collective farm was physically coterminous with the village itself, so that the administration of village and collective farm were effectively merged into one.
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Income Distribution in the Collective
Within each collective, the distinction between mine and thine was largely obliterated. All major property was collectively owned. All income was distributed according to work points, based on the socialist distribution principle of, “from each according to his ability, to each according to his work; he who does not work, nor shall he eat.”
The only vestiges of private property that remained were the tiny, scattered garden plots within a family’s courtyard, which were used to grow vegetables to supplement the family’s diet, along with one or two chickens and the occasional pig raised within the family’s compound. All else was owned in common.
Resentment and Free-Riders
The coercive aspect of accelerated collectivization meant that there was now, for the first time since 1949, widespread alienation and resentment in rural China. Rich and upper-middle peasant families, about 20 to 25 percent of the rural population, deeply resented their enforced pauperization. Even the poor and lower-middle peasants, suffered from diminished motivation to work in the new, large-scale, impersonal collectives.
In a classic case of what economists call the “free-rider problem,” work points earned by each collective farm member had their cash value determined by the net value of the farm’s total harvest. Thus, each family’s income depended, in substantial measure, on the quality and quantity of the labor performed by all other farmers in the collective.
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Dilution of Incentive
With as many as 500 or 600 able-bodied peasants in a single collective, personal responsibility was very difficult to assess and monitor let alone to assign to individuals or families. Hence, the incentive to work diligently was correspondingly diminished for each individual. The strength of that disincentive was being directly proportional to the size of the collective: The bigger the collective unit, the weaker the incentive to work hard.
Under this system, people tended to just go through the motions in their fieldwork. Content to free-ride on the efforts of the others, they paid scant attention to the quality or efficiency of the work performed.
Largely as a result of these two factors—resistance to collectivization by rich peasants and a widespread free-rider problem—the collectivization of the mid-1950s failed to yield the anticipated farm output. Agricultural production limped, rather than leapt forward, with growth rates barely reaching 2 or 3 percent annually, hardly enough to keep pace with China’s rapidly burgeoning population.
Despite clear evidence that free-riders were undermining the effectiveness of China’s collective farms, Mao steadfastly denied that there was any such problem. In his belief system, the worker-peasant masses could be educated to understand the benefits of working for the good of the collective, rather than for themselves. “Serve the people,” was Mao’s oft-repeated mantra.
But the reality of the free-rider problem was not lost on the chairman’s close associates, in particular Communist Party Vice-Chairman Liu Shaoqi and Party General-Secretary Deng Xiaoping, the number two and number five ranking officials in the Communist Party hierarchy.
Both Liu Shaoqi and Deng Xiaoping recognized the disincentive effects of large-scale collectives. But in Mao’s view, the failure of the collectives was due to sabotage by rich peasants and counterrevolutionaries, rather than to the flawed motivational logic of collectivization itself.
1956: Year of Growth
The year 1956 marked an important turning point in China’s post-revolutionary development. In that year, the transition to socialism was basically completed. Landlords, counterrevolutionaries, rich peasants, and rightists had been dealt a severe blow; and private wealth and property ownership were largely a thing of the past.
Although agricultural growth was painfully slow, the industrial economy had surged as a result of Soviet aid. Consequently, between 1953 and 1956, the economy as a whole expanded at a reasonably healthy rate of six-and-a-half percent annually.
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Eighth Communist Party Congress
In a generally celebratory mood, Chinese Communist Party leaders convened the Eighth National Party Congress in September of 1956. It was the first such Congress to be held since the founding of the PRC.
For most of those in attendance, there was a palpable sense of satisfaction in the achievements of the past half-dozen years. Speaker after speaker praised the fruits of China’s economic and political transformation. For most party cadres, it was a time to bask in the ostensible superiority of socialism.
Many leaders now called for an extended period of economic relaxation, consolidation, and adjustment to correct existing flaws and imbalances in the socialist system. Rather than pushing impulsively ahead, they believed it was necessary for the country to catch its collective breath.
From Socialism to Economics
In a rare display of self-satisfaction, party Vice-Chairman Liu Shaoqi confidently declared that the question of “who will win in the struggle between socialism and capitalism … has now been answered.”
In a similar vein, the official resolution of the Eighth Party Congress stated that henceforth the country’s principal task would shift from winning victory in the struggle between the proletariat and the bourgeoisie, to redressing economic imbalances between “the advanced socialist system” and the “backward forces of production.” In other words, class struggle was now to be superseded by economic development as the country’s number one priority.
Common Questions about the Free-Rider Problem in Collectivization
The collective farms were large, encompassing 100 to 200 families—roughly 500 and 1,000 people. In most cases, a collective farm was physically coterminous with the village itself, so that the administration of village and collective farm were effectively merged into one.
With hundreds of peasants in a collective, personal responsibility was very difficult to monitor. Hence, the incentive to work diligently diminished. So, people tended to just go through the motions, with scant attention to the quality or efficiency. This was the free-rider problem that plagued collective farms in China.
Largely as a result of two factors—resistance to collectivization by rich-peasants and a widespread free-rider problem—the collectivization of the mid-1950s agricultural production only limped, with growth rates barely reaching 2 or 3 percent annually.