China's Socialist Economy

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China's Socialist Economy CHINA KNOWLEDGE SERIES CHINA’S SOCIALIST ECONOMY XUE MUQIAO REVISED EDITION FOREIGN LANGUAGES PRESS * BEIJING CHINA’S SOCIALIST ECONOMY (Revised Edition) XUEMUQIAO This is an important work on China’s socialist economy by one of China’s leading economists. Combining theory with practice, he discusses the historical experiences and lessons in more than three decades of China’s socialist revolu­ tion and construction and examines a series of its major economic problems that remain unsolved or have been solved only partly. Subjects dealt with include: the system of ownership under socialism, the distribution system of “to each according to his work” and the reform of the wage system, commodity and money, the function of the law of value and price policies, the planning of the national economy, the reform of the economic management system, China’s road to modernization, class struggle and contradictions among the people. The author also devotes special attention to the rational distribution of the labour force and the employment problem, and to the relationship between national construction and the people’s livelihood. The first edition of this volume appeared in 1979. In 1983, in the light of the new situation in China’s socialist economic construction and the in-depth development of economic restructuring, the author made a substantial revision of his book, which is a must for those interested in China’s socialist economy. jig CHINA BOOKS & Periodicals, Inc. 2929 24th Street • San Francisco, CA 94110 415/282-2994 • FAX: 415/282-0994 infnlSlrhinohnnlfc rnm f'/itnln n AitstilstUIn CHINA KNOWLEDGE SERIES CHINA’S SOCIALIST ECONOMY (Revised Edition) XU E MUQIAO FOREIGN LANGUAGES PRESS BEIJING First Edition 1981 Revised Edition 1986 ISBN-0-8351-1592-5 (Hard Cover) ISBN-0-8351-1703-0 (Paperback) Copyright 1986 by Foreign Languages Press Published by the Foreign Languages Press, 24 Baiwanzhuang Road, Beijing, China Printed by the L. Rex Offset Printing Co. Ltd. Man Hing Industrial Godown Bldg., 14/F. No.4, Yip Fat St., Wong Chuk Hang, Hong Kong Distributed by China International Book Trading Corporation (Guoji Shudian), P. O. Box 399, Beijing, China CONTENTS PREFACE TO THE REVISED EDITION i INTRODUCTION iii Chapter I China’s Socialist Revolution and Socialist Construction 1. Particularities of China’s Socialist Revolution 1 2. Guidelines for China’s Socialist Construction 7 3. The Stages of Socialist Development 12 Chapter II Placing the Means o f Production Under Socialist Ownership 1. Building Up the Socialist Stage Economy — the Leading Sector 18 2. The Socialist Transofmration of Capitalist Industry and Commerce 24 3. The Socialist Transformation of Agriculture Under Individual Ownership 30 4. The Socialist Transformation of the Handicrafts and Small Businesses Under Individual Ownership 35 Chapter III Two Systems of Socialist Ownership f. Important Differences Between the Two Systems 41 2. Socialist Ownership by the Whole People at the Present Stage 45 3. Socialist Collective Ownership at the Present Stage 51 Chapter IV The Distribution System Under Socialism: “To Each According to His Work” 1. Labour in a Socialist Society 60 2. “To Each According to His Work” — An ObjectiveNecessity 66 3. Wages in Enterprises Owned by the Whole People 69 4. The Reform of the Current Wage System 74 5.. Personal Income Under Collective Ownership 81 6. Correct Handling of Differences in Living Standards 88 Chapter V Commodity and Money Under Socialism 1. Effective Use of the Commodity-Money Relationship 93 2. Commodities Under Socialism 98 3. Commodity Circulation Under Socialism 104 4. Money Under Socialism 114 5. The Development and Disappearance of Commodities and Money 119 Chapter VI The Law of Value and China’s Price Policy 1. The Law of Value in a Socialist Economy 122 2. Use of the Law of Value 128 3. Prices and China’s Price Policy 131 4. Reforming China’s Price Control System 140 Chapter VII Planning the Socialist Economy 1. How to Plan the Economy 147 2. National Construction and the People’s Livelihood 155 3. Rate of Economic Development and Ratios Between Different Economic Departments 161 4. Employment of the Country’s Labour Force 168 5. Balancing the National Economy 174 6. Business Accounting Under Socialism 180 Chapter VIII The System of Economic Management in a Socialist Country 1. Changing the System of Economic Management 186 2. Reforming the Management of State Enterprises 193 3. Reforming the Organizational structure of the National Economy 203 4. Economic Readjustment and Managerial Reform 213 Chapter IX Socialist Modernization of the National Economy 1. China’s Road to Modernization 220 2. Modernizing Agriculture 228 3. Modernizing Industry 2£6 4. Achieving the Objective of Socialist Modernization 247 Chapter X Class Struggle and Contradictions Among the People 1. Class Struggle in a Socialist Society 259 2. Contradictions Among the People 265 3. People’s Democracy and the Correct Handling of the Contradiction Between the Leadership and the Masses 272 Conclusion Objective Laws of Socialist Economic Development 1. Marxist Theory on the Building of Socialism 279 2. Economic Laws of Socialism 286 3. Economic Laws and Man’s Initiative 296 INDEX 303 PREFACE TO THE REVISED EDITION The present edition is a revision of the first edition published four years ago. The revision has been made necessary by the fast political and economic developments in China in the last four years, which have given rise to new problems, views and policies that have made many of the arguments presented in the first edition out of date. As we all know, the recent changes in China have taken place under the policy set forth by the Third Plenary Session of the Eleventh Party Central Committee in December 1978, which called for emancipating our minds, seeking truth from facts, and doing everything in the light of China’s realities. Things have been set right in all spheres of national life under the guidance of this policy. As far as this book is concerned, its basic orientation remains correct because the text of the first edition was finalized in the spirit of the Third Plenary Session. I intended to bring it up to date twice, in the summers of 1980 and 1981, but I dropped the idea because things were still developing. Then the latest developments in Party policy were summarized in two essential documents, i.e., Hu Yaobang’s report to the Twelfth Party Congress, “Create a New Situation in All Fields of Socialist Modernization”, and Zhao Ziyang’s “Report on the Sixth Five-Year Plan” to the Fifth Session of the Fifth National People’s Congress. So I decided to go ahead with a revision of this book, and finished the job in a month. As far as I can see, the major shortcomings of the first edition have been eliminated from the present version, and the views expressed in the rest of the book are essentially correct. But there are bound to be oversights because of the limited time available for revision. And there must be other shortcomings, especially when one considers the new problems that have cropped up in our economy. China’s economy has been guided through a most difficult period and shifted to a course of steady and healthy development. But there ii PREFACE TO THE REVISED EDITION are still many hard nuts to crack, and it takes time to effect a basic turn for the better in our finances arid our economy as a whole. Initial results have been achieved in readjusting the economy, but these are unstable and remain to be consolidated and placed on a sound basis. The successes in the structural reform of our economy are outstanding, particularly in agriculture, but we still have to work out a comprehensive and circumspect plan and solve many problems, both theoretical and practical. Compared with the first edition, the present one is a bit larger and contains some repetitions. This shortcoming remains because of the press deadline. Thanks are due to Su Xing, Wu Kaitai and He Jianzhang, who assisted me in the revision. Xue Muqiao March 1983 INTRODUCTION I thought of writing a book like this more than twenty years ago. In 1955, the Propaganda Department of the Chinese Communist Party’s Central Committee assigned me the job of co-authoring with Yu Guangyuan and Sun Yefang a textbook on political economy. As a kind of spadework, I wrote in collaboration with Su Xing, Lin Zili and others The Socialist Transformation o f the National Economy in China, a book published on the tenth anniversary of the People’s Republic in 1959.* After that I found little time for research on key questions of socialist economic construction, and what I did outside my regular duties before 1966, the first year of the “Cultural Revolution” (1966-1976), found expression in about two dozen articles and a dozen speeches. In 1978 the People’s Publishing House in Beijing offered to publish a collection of articles I wrote during the period from the founding of New China to the eve of the “Cultural Revolution”. As requested, I selected over a dozen major articles and compiled them in a book, published in April 1979 under the title Theoretical Questions o f the Socialist Economy. It is by no means a comprehen­ sive work and, judged by today’s standards, it is both ideologically weak and faulty in some respects. Nevertheless, it does touch on the important aspects of the socialist economy and, furthermore, reflects the level of my understanding at the time of writing. This may be regarded as my first venture into the subject. During the “Cultural Revolution”, I spent all available time reading through the Selected Works o f Marx and Engels, the Selected Works of Lenin and Marx’s Capital along with a further study of the Selected Works o f Mao Zedong.
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