Land Policy, Farm Management and Agrarian Reform in China under Socialism

Abstract This paper explores the rationale for Chinese land policy and for agricultural collectivization with special reference to the development strategy of the People’s Republic of China. This rationale is at variance with the "conventional wisdom" offered for socialist agriculture. For our argument, scale economies considerations were adapted to apply to Chinese farming. Management and institutional features of the Sovietstyle collective farm adopted by China are analyzed for consistency with the requirements of the Chinese nation-building design. It is shown that collectivization can be harmonious, in static analytical terms, with the imperatives of "forced-draft" (heavy) industrialization under central planning. Unfortunately, in dynamic terms, collectivization entails performance- monitoring costs that tend to rise over time. Risk-taking is impaired when called for by innovations. Systemic efficiency loss mounts. This is especially true in China, for the following reasons: (1) For historical reasons, China’s "initial conditions" in agriculture were most unfavorable (compared with those in the Soviet Union where the development strategy with its collectivization appendage was bluprinted). (2) The interaction of these conditions with system requirements exacerbated the negative dynamic consequences of collectivization. Maoist appeal to ideological mass campaigns as a substitute for the lack of incentive on the farm proved futile in the long run, leading instead to political or policy cycles in agricultural productivity. Long-term deterioration in total factor productivity in agriculture began to turn intersectoral flows of resources against priority industry. Agrarian reform became inevitable. It required only the passing of Mao to trigger it. The paper concludes with an analysis of the reform.