Agricultural capitalization threatens China, and the peasantry is splitting apart
Recently, Yan Hairong, a scholar at Hong Kong Polytechnic University, and four young scholars published a striking special feature in Open Times, attempting to voice a view different from the mainstream on the issues of agriculture, rural areas and farmers. In their eyes, Chinese agriculture is undergoing unprecedented change.
They not only criticize the mainstream model of agricultural development, but also engage in dialogue with Huang Zongzhi and He Xuefeng. These two well-known experts on agriculture, rural areas and farmers hold that Chinese agriculture is still dominated by smallholders or small-scale operations, and that the smallholder economy is not only reasonable in value and function, but also possesses tenacious vitality in reality. He Xuefeng calls this view the smallholder economy school.
In contrast, Yan Hairong, Chen Yiyuan, Sun Xinhua, Chen Hangying and Huang Yu hold that the capitalization of Chinese agriculture has already opened up the path of agricultural capitalism, and that the drive for capital accumulation and social differentiation in the countryside accompany the transformation of Chinese agriculture. In this process, although smallholders are still numerous, they are losing their subjectivity and beginning to be directly or indirectly subordinated to capitalized agriculture. It is precisely this danger of agricultural capitalization that they want to draw people's attention to.
"Urban industrial and commercial capital pouring into the countryside on a large scale to compete with the broad masses of peasants for interests, rather than forming a complementary relationship with them, is the new challenge currently facing the issues of agriculture, rural areas and farmers."
In Yan Hairong's view, the old issues of agriculture, rural areas and farmers -- peasants are truly poor, rural areas are truly bitter, agriculture is truly dangerous -- focused on the disadvantaged position of peasants, rural areas and agriculture in urban-rural relations and national policy; whereas in the new issues of agriculture, rural areas and farmers, peasants are no longer a single whole, but are clearly differentiating and splitting apart.
Is agricultural modernization the way out for Chinese agriculture? What kind of agricultural modernization conforms to China's national conditions? For a long time the mainstream model has been large-scale and capitalized, namely the New World model represented by the United States, yet China has a large population and little land, and is not suited to such a model. The worship of the market has turned capitalized agriculture and chemical agriculture into the only path of agricultural modernization, but is this really so? The Paper's reporter interviewed the above five scholars on a series of questions.
The Paper: In 2006 the central government formally abolished the agricultural tax, lightening the tax burden on peasants. In your view, what are the new severe challenges facing the issues of agriculture, rural areas and farmers today?
Sun Xinhua: It should be said that after the abolition of agricultural taxes, the burden on peasants was greatly reduced, and the state also invested large amounts of pro-agriculture funds in the countryside, opening a new era of "industry repaying agriculture" and "cities repaying the countryside." It should be said that peasants farming have caught an excellent era. But in this process, urban industrial and commercial capital marched into the countryside on a large scale; governments at all levels, under the slogan of developing large-scale operations and modern agriculture, also adopted various means to encourage and attract urban industrial and commercial capital to go to the countryside to transfer peasants' land, and moreover tilted various state pro-agriculture projects mainly toward land operated by urban industrial and commercial capital. Thus the interests that should have been shared by the broad masses of peasants were seized by urban industrial and commercial capital.
As a result, although agriculture has improved in some indicators, for example with substantial increases in mechanization, scale, marketization and labor productivity (land output rates have not necessarily risen and in many cases are even falling), what does this have to do with peasants? Many peasants not only can no longer share in agricultural interests and the state's resource inputs, but also have to leave their homes to make a living elsewhere, causing villages that originally had a certain vitality to continually decline.
So I think that urban industrial and commercial capital pouring into the countryside on a large scale to compete with the broad masses of peasants for interests, rather than forming a complementary relationship with them, is the new challenge currently facing the issues of agriculture, rural areas and farmers, and this is extremely unfavorable to peasants, rural areas and agriculture.
Yan Hairong: Although the central government's policy of abolishing the agricultural tax helped reduce the burden on peasants, the original issues of agriculture, rural areas and farmers have evolved into new ones. In my view, the new issues of agriculture, rural areas and farmers include peasant differentiation, agricultural capitalization and the rural ecological crisis. The old issues of agriculture, rural areas and farmers -- peasants are truly poor, rural areas are truly bitter, agriculture is truly dangerous -- mainly focused on the problem of the weak subject position of peasants, rural areas and agriculture in urban-rural relations and national policy. In the new issues of agriculture, rural areas and farmers, what we see is the splitting and mutation of subjectivity. Peasants are no longer a single whole, but are clearly differentiating; this is a basic fact.
In Xinhua's answer, "peasants" are still treated as an undifferentiated whole, and this is precisely a misunderstanding that we should dispel from experience to concept. Those who "compete for interests with the broad masses of peasants" are not only urban industrial and commercial capital that has gone to the countryside, but also large growers endogenous to the countryside.
Figures from the National Bureau of Statistics show that, in terms of rural per capita net income, in 2012 the income of the highest 20% of peasant households was 8.2 times that of the lowest 20%. Further research also shows that between 2001 and 2011, the income of the highest 10% of rural residents by per capita net income grew twice as fast as that of the lowest 10%.
Some people believe that rural differentiation is mainly caused by working or doing business elsewhere, and that differentiation in agricultural operation is not significant. This is actually not the case. In the ten years of the new century (2001-2011), the Gini coefficient of agricultural operating income was larger than in the previous ten years (1991-2000), that is, the gap in agricultural operating income has shown a trend of widening. In fact, since rural reform, central policy has been driving peasant differentiation, encouraging the emergence of large rural households and specialized households, and helping to create today's new types of agricultural operators; this is a process from quantitative change to qualitative change.
Along with peasant differentiation, agriculture has already begun to be capitalized. We hold that in agricultural capitalization, the accumulation of large households and specialized households arises from peasant differentiation and can be regarded as a bottom-up capital dynamic; by comparison, capital going to the countryside is a top-down capital dynamic, and there are also new types of operators -- such as many cooperatives -- that combine these two dynamics. How should we view agricultural capitalization? The mainstream welcomes and encourages capitalization. Scholars of the "smallholder economy school" oppose capital going to the countryside and oppose the government helping capital go to the countryside, but encourage or tacitly accept bottom-up capitalization in the countryside. Professor Huang Zongzhi holds that Chinese agricultural capitalization has not caused proletarianization, that is, the proportion of agricultural wage labor is very low, only about 3-5%. However, our research finds that the proportion of agricultural labor hired by new types of agricultural operators is about 20-30%. The gradual concentration of land and the significant increase in wage labor -- which is also a manifestation of peasant differentiation -- give China a tendency toward agricultural capitalism.
The huge challenge facing rural China is the environmental and ecological crisis. Chemical agriculture, which relies heavily on chemical fertilizers, pesticides and plastic film, is already the largest factor causing non-point source pollution in China. For example, per unit area, China's use of chemical fertilizer is 1.93 times the internationally recognized safety limit. The environmental and ecological crisis threatens public health and the sustainability of development in both urban and rural areas.
Huang Yu: As Yan Hairong mentioned, our country's "chemical agriculture" has already caused serious pollution, yet the state has not yet attached importance to this. Factories polluting the environment may not necessarily affect production, but agriculture cannot be sustained without a healthy ecological environment. In addition, the state's current support for agriculture, apart from subsidies, is often delivered in the form of projects. On the surface, project bidding is open and fair, but a single project application is at least a hundred pages, which ordinary peasants find very hard to produce. Therefore projects are mostly monopolized by leading enterprises, and ordinary peasant households find it hard to obtain them.
The Paper: Can agricultural modernization do without large-scale operation and capitalization?
Chen Hangying: The way out for Chinese agriculture must inevitably be modernization, so the question is not whether agricultural modernization is China's way out, but what path of agricultural modernization China should choose.
The path our country currently chooses is to realize agricultural modernization with capital as the dominant factor, which is the so-called "New World model" or the "old agricultural paradigm." This agricultural modernization brings many problems; the first is that it does not conform to China's basic situation of a large population and little land, and what is even more serious is that it will put us back on the old path of proletarianizing and semi-proletarianizing the broad masses of peasants, and bring serious environmental problems and ecological crisis. These problems it brings are ones we cannot afford to bear, whether at the social level or the natural level.
So, can we seek another path of modernization beyond the current capital-dominated agricultural modernization?
Chen Yiyuan: Today's advances in agricultural technology, especially the promotion of agricultural mechanization, have indeed greatly raised agricultural productivity, and this has come into contradiction with China's agricultural operating situation of less than ten mu of land per household on average; we do indeed have a need for scale. I agree with Hangying's view that what we need to discuss is not whether we want "agricultural modernization," but what kind of "agricultural modernization." In today's policy discourse, "agricultural modernization" is basically equated with "capitalization" and "large-scale operation," or in other words agricultural scale operation led by "capital," whether leading enterprises, cooperatives, specialized large households or so-called family farms.
Although these types of entities differ in their specific operating methods, their basic logic is consistent: they use a considerable proportion of wage labor and aim at maximizing profit and expanding reproduction. They are already qualitatively different from the agricultural production of ordinary peasant households, which aims at maintaining livelihood. Among these types of entities, there is the form of external capital going to the countryside such as leading enterprises, and also the form of capital endogenous to rural differentiation such as family farms, corresponding respectively to the top-down capitalization and bottom-up capitalization dynamics pointed out in Teacher Yan Hairong's article and mine.
The state has subsidized and supported these new types of agricultural operators, and the intensity of support has increased rather than decreased in recent years; however, even without government subsidies, some enterprises and large growers have, through constant trial and error and failure, found operating strategies suited to themselves and are able to make profits. In other words, the emergence of such operating entities is by no means accidental because of state policy support; their existence has already become a structural force, and this increasingly powerful force is transforming the relations of production in rural China.
Unfortunately, this capital-led scale operation constitutes our only imagination of agricultural modernization today. Although the agricultural operating model of the people's commune era has been much criticized, it needs to be discussed by returning to the historical background and international environment of that time, so I will not elaborate here. Can the agricultural model of the collective era become an alternative imagination of agricultural modernization? Concentrate village collective land to achieve moderate scale operation, give play to the advantages of mechanization, distribute according to work within the collective, and gradually accumulate; when accumulation reaches a certain stage, establish the collective's own agricultural product storage and processing enterprises, so that a small part of the labor force remains in the field of agricultural operation while the rest of the labor force is organized in the collective's industrial enterprises, so that the value-added returns of agriculture remain in the village collective and are shared equally by each collective member. Can taking laborers -- rather than profit -- as the subject of scale operation become another path of agricultural modernization?
Sun Xinhua: I also think agricultural modernization is certainly the way out for Chinese agriculture, but the key is what kind of agricultural modernization conforms to China's national conditions. As Yiyuan says, for a long time the mainstream model recognized and practiced by the mainstream has equated large-scale farms, that is, capital-led scale operation, with modern agriculture. This is in fact only one path of agricultural modernization, namely the New World model represented by the United States; in the New World countries there are few people and much land, which is relatively suited to this model. Moreover, a prominent feature of this model is that it is "large and coarse," and its unit output rate is not high, although labor productivity is relatively high.
China, by contrast, is a country with a large population and little land; our broad masses of peasants need to farm, and our country's food security requires safeguarding the unit output rate of land. These all limit our country from taking the large and coarse New World model, and make it more suited to taking the agricultural modernization model of traditional countries, that is, realizing agricultural modernization by continuously improving the socialized service system on the basis that small producers are the main body of agricultural operation.
So, if modernization certainly cannot do without scale operation, scale operation need not necessarily be the scale operation of agricultural production; it can also be achieved through "small production + large cooperation."
The Paper: How do smallholders become proletarians and semi-proletarians? What does this mean for this group?
Sun Xinhua: It is precisely the widespread practice of capital-led scale operation in our country, with its large population and little land, that has led to the proletarianization and semi-proletarianization of smallholders. Capital-led scale operation necessarily requires concentrated, contiguous, large-area land transfers, while the peasants who transfer out land are themselves differentiated: some work or do business elsewhere year-round and are willing to transfer their land to capital to obtain higher rent; many more peasant households are unwilling to transfer, some hoping to farm themselves, some wanting to take in some land themselves, and some who although not farming for the time being may still farm in a few years. This constitutes a contradiction with capital's demand for land transfers.
In reality, capital-led scale operation is not only a demand of capital, but also a good way for local governments to produce achievements and create highlights, so local governments help capital carry out large-area, concentrated, contiguous land transfers, and their main method is to adopt various measures to force peasants to transfer land. Of course, in reality a small number of capitals also directly force peasant households to transfer out the land in their hands with the help of village cadres and local gray and underworld forces. That is, the proletarianization and semi-proletarianization of peasants is necessarily against the will of peasants.
For these peasants, the consequences are necessarily miserable; only a small number of peasants see their living conditions improve somewhat after being forced off the land, while for most it is far worse than before. They either exhaust themselves laboring yet still have far lower economic income than before, or have nothing to do, with body and mind finding no place to rest and time impossible to pass.
Huang Yu: In the past ten years, one obvious change we have seen in the countryside is that capital going to the countryside has become increasingly common. This trend became more obvious after the 2008 financial crisis. As exports slowed and the manufacturing sector itself faced a crisis of declining profit rates, much urban industrial and commercial capital began to invest in the countryside.
Of course, much of this capital obtained its start-up funds for investing in agriculture mainly through implicit support such as state low-interest or interest-free loans. The state hopes that this capital can promote the "modernization" of agriculture and solve the food security problem through mechanized production.
But the environmental crisis encountered by this kind of industrialized production goes without saying here; the more serious problem is the social problem caused by machines displacing labor. Millions upon millions of peasants (workers) devoted their whole lives to building China's "modernization," only in the end to be replaced by machines. In an era when "dead labor" exploits "living labor," where will the broad masses of "proletarianized" laborers go? This is a question that both scholars and the state have to face.
Chen Yiyuan: Today this capital-led scale operation is gradually making its impact on rural society more prominent. As far as land transfer is concerned, policy propaganda often points out that peasant households that transfer land to companies or large households will obtain three incomes: one is the land transfer fee, one is the income from working as agricultural hired labor for the enterprise or large household -- in land transfer agreements there is often a clause stating that when the enterprise or large household hires workers it must give priority to peasant households that transferred land -- and one is the state's agricultural subsidy. There is also propaganda saying that after transferring land to enterprises or large households, peasant households can go out to work with peace of mind and can obtain more income from working.
In fact, to say nothing of the fact that capital, in order to maximize profit, necessarily reduces labor costs as much as possible and replaces labor with machinery; moreover these enterprises or large households usually do not hire local peasant households, because local peasant households can too easily unite to form a confrontation with the enterprise/large household, which is not conducive to labor supervision. Even if they go out to work, can today's degree of industrialization in China accommodate so much rural "surplus labor"? When these laborers "liberated" from the land enter the cities and cannot find work, and return to the countryside with no land left, what then? This is a question screened out in the mainstream discourse on land transfer.
Perhaps some say that policy now advocates "moderate scale operation," which will not displace too much labor, but as said earlier, under increasingly fierce external competition, will "moderate scale" be a stable state? Will operators under "moderate scale" not differentiate? Will they not be eliminated or "upgraded" in competition?
These questions can be further discussed, but as far as my current investigation goes, the answer is not optimistic. I believe it is precisely in this process that the part of peasant households whose land is transferred become proletarians and semi-proletarians. Even peasant households not involved in land transfer likewise face the problem of proletarianization and semi-proletarianization.
Chen Hangying: To answer the question of the proletarianization and semi-proletarianization of peasants, a primary premise is to first discuss China's "peasant" group, which Teacher Hairong also mentioned. In current academia, whether mainstream economists or pro-smallholder scholars, a serious defect is that they ignore the internal differentiation within China's peasant group; in their accounts, China's peasants are still a homogeneous group relative to urban residents, still the smallholders of the early reform and opening up. But in fact, after the baptism of "de-peasantization," the internal differentiation of the peasant group is already very significant. We can no longer regard peasants as a homogeneous whole and casually talk about 900 million peasants.
With this premise, we can discuss which part of the "peasant" group is becoming proletarians and semi-proletarians. In my view, the peasants becoming proletarians and semi-proletarians are mainly ordinary peasant households that are "half worker, half farmer." As for the causes that lead these ordinary peasant households to continual proletarianization and semi-proletarianization, I think Teacher Hairong's and Teacher Xinhua's discussions are already very clear: they are mainly caused by the capital-led path of agricultural modernization. My investigation finds that three entities -- agricultural input dealers, large agricultural households, and agricultural product processors and sellers -- have combined with one another into an interest community, occupying the dominant position in the pre-production, mid-production and post-production links of agriculture and controlling most of the resources in agricultural production; they are the leaders of capitalized agriculture. Meanwhile the land resources and labor resources in the hands of ordinary peasant households are continually flowing toward the former group, so that in production, services and sales they are in a subordinate semi-proletarianized position.
As for what proletarianization and semi-proletarianization mean for ordinary peasant households, I do not agree with Teacher Xinhua's view. Proletarianization and semi-proletarianization do not necessarily represent a decline in living standards, but rather mean that this group is in a position of being exploited and squeezed in the relations of production in which it finds itself, and in urban-rural mobility has to accept a family life of "wife and children separated."
The Paper: Regarding the current mainstream academia on agriculture, rural areas and farmers, what view do you most want to refute?
Sun Xinhua: That agricultural modernization is scale operation and capitalization.
Yan Hairong: I think the view and policy that urgently need reflection are the worship of the market, letting the market play a decisive role in resource allocation. This involves the question of how to position food. We know that national security, livelihood security and ecological security are public goods, and food is closely related to these public goods, so the state also treats food security as a national policy; since this is so, food should have the character of a public good and should not be entirely a commodity.
What also needs reflection is the longing for capitalized agriculture, the belief that capitalized agriculture and chemical agriculture are the only path of agricultural modernization with no alternative. In fact, this old agricultural paradigm has already encountered challenges to sustainability; internationally, innovation in agricultural paradigms has already begun, and the United Nations designated 2014 as the "International Year of Family Farming." We should not cling to the old, but should explore new paths beyond the traditional smallholder economy and capitalized agriculture.
Chen Hangying: To refute the view of worshipping the market, especially the view that importing food is equivalent to importing land and water. This view completely equates a public good like food with an ordinary commodity, and lets the food security of a country and a nation be at the mercy of the market. The example of the crushing defeat of our country's soybean industry in Northeast China is already enough to show the unreliability of relying on the market. We need to remember General Secretary Xi's words: "The rice bowl of the Chinese people must be held firmly in the Chinese people's own hands." And to hold it firmly, we cannot rely on the American-style capitalized agricultural path currently being practiced. Under this path, on the one hand, severe inequality arises, with resources such as land and labor continually concentrating in the hands of a few, while the broad masses of peasants are continually proletarianized and semi-proletarianized. Even if any new agricultural technology appears, in the end it can only become a tool for capital to extract surplus value. On the other hand, this path also brings an increasingly serious agricultural ecological crisis. In order to increase output, predatory extraction of groundwater and excessive use of chemical fertilizers and pesticides have already brought the danger of pushing the agricultural ecology to the brink of collapse. So we must choose a path of sustainable ecological agricultural modernization that benefits the broad masses.
The Paper: If you wanted to reverse this process, what do you think is the one thing most urgently in need of change?
Sun Xinhua: What is most urgently in need of change is: the blind worship of the New World model and the excessive belittling of China's smallholders.
Yan Hairong: What I think is needed is to break the superstition about the market and about capitalized agriculture.
Chen Hangying: Strengthen the collective "unified" side of the household contract responsibility system that combines unified and separate management. Whether it is the "separation of three rights" or the confirmation of land rights, current policy is continually perfecting the individual "separate" side. And the village collective's rural land ownership, as the subject of "unified" management, is continually being hollowed out by individuals' contracted management rights. The current situation of "unified and separate not combined" has already caused the construction and management of basic, public water conservancy and other agricultural production infrastructure to stagnate. Even if the state invests huge sums in farmland improvement projects in various places, after the projects are completed they fail to play their due role because of the lack of management. Therefore in these respects the village collective's "unified operation" must be strengthened. Strengthening the village collective's "unified" side is also conducive to truly uniting the broad masses of ordinary peasant households, strengthening their producer sovereignty, so that they are not "fighting alone" in the market and exploited by various "middlemen," and we will also hear less news such as "cheap vegetables hurt farmers," "cheap fruit hurts farmers" and "cheap milk hurts farmers." Moreover, the collective's "unified operation" also has more conditions to abandon unsustainable chemical agriculture and turn to sustainable ecological agriculture, which, while ensuring ecological and environmental security, also ensures food safety and safeguards consumers' food sovereignty. And for the state, it also helps ensure national food security and agricultural security and safeguard national food sovereignty.