UCLA

This study rejects the conventional wisdom that the Chinese commune was an economic failure remedied by decollectivization. Instead, it argues that over time improvements in the institution's remuneration and agricultural research and extension systems began a rural development process that substantially increased agricultural output over a sustained period. It uses national and provincial level data and applies basic insights from both the classical and neoclassical economic traditions to show how changes made to the commune beginning in 1970 contributed to increased rural economic development and improved agricultural output.

The commune's coercive extraction of household resources financed agricultural capital accumulation and the development of technological innovations, which increased output, thus generating the agricultural surpluses needed to kick-start a long-run cycle of productive investment and sustained output growth. Although the commune system kept rural households living in austere - often subsistence-level - conditions, it succeeded in increasing rural development and the rate of technical innovation in agriculture, and, in turn, agricultural productivity per unit land and per unit labor. Simply put, it was under the commune that for the first time in history hundreds of millions of rural Chinese acquired the basic skills and capital necessary to get their foot on the first rung of the development ladder.

China's new leadership abandoned the commune for distinctly political reasons. An alliance of rightists and liberal reformers led by Deng Xiaoping destroyed the system to consolidate their newfound political power. The campaign to abandon the commune gained momentum throughout the late 1970s culminating with the system's gradual elimination between 1979 and 1983. Unified by anti-leftism and a desire to solidify their tenuous grip on power, Deng's coalition set out to boost rural household incomes, end Maoism, and modernize the military. Each of these three interrelated policy goals removed one "leg" of the commune's tripartite economic, political and military support structure: its mandate to extract household savings for capital investment, its cohesive collectivist ideology, and military political backing, respectively. Without these supports the system collapsed.