Rural construction may be a way out of economic crisis
On the morning of October 26, renowned expert on agriculture, rural areas and farmers, and director of the Center for Rural Reconstruction at Renmin University of China, Wen Tiejun, delivered a speech at the “Human Thought” conference in Beijing titled “A Century of Rural Reconstruction in China——Gradually Understanding the Objective World through Rural Practice,” systematically reviewing another path in China's century-long modernization process: the history of China's rural reconstruction centered on self-governance and rural rebuilding.
Wen Tiejun, now 64 years old, has always emphasized in his academic orientation that intellectuals should step out of their studies, discard preconceptions, and personally immerse themselves in research and construction of China's real problems. He has proven his attitude through his own practice: the Rural Reconstruction Center at Renmin University that he heads already has 200,000 person-times of volunteers and more than 10 rural development projects.
Wen Tiejun intends to blaze a development path different from radical modernization, and the theoretical confidence behind this comes first from the rural construction experience left by rural reconstruction pioneers over the past century, and second from his entire set of political economy understandings about China's development mode.
De-radicalization: Development Exploration in an Era of Economic Crisis
In this development stage currently called “China's rise,” it is actually still “you and I today repeat yesterday's story.” Today's China is facing the overproduction crisis of the capitalist world in 1933. The reason the crisis has not yet occurred lies in two aspects: first, China already completed in the Qin Dynasty the great unification that Europeans still crave today. A huge continental country can shift excess production capacity toward inland construction. This is precisely the thinking behind the state's proposals of “two vertical and three horizontal” and “five vertical and seven horizontal” when overproduction was first encountered in the late 1990s. Even today's “Belt and Road,” and the establishment of the Asian Infrastructure Investment Bank, shifting the production capacity of excess industrialized mass production toward inland and even Central Asian and West Asian basic construction, all originate from this line of thinking.
This line of thinking is quite similar to the new nationalism in Roosevelt's New Deal at the time. From encountering overproduction in 1998 to now, over 15 years, the state has already invested approximately 15—20 trillion. Taiwan or South Korea, because of their narrow territory, have no way to shift excess production capacity toward their own basic construction, so they can only transfer it to the mainland. The mainland absorbed the overproduction of various other small economies, thereby continuing to sustain itself for 15 years.
The next method for continued maintenance is urbanization, transforming several hundred million rural people into urban people, artificially expanding the city as a huge capital carrier. This is our development strategy today.
The problem is that overproduction ultimately created the great economic crisis in the West and led toward war. World War II destroyed the production capacity formed by all overproduction-type countries on Europe, this small peninsular continent, and the victors of World War II were precisely the countries with the advantage of vast continental territory: the United States and the Soviet Union. Thereafter formed the Cold War order of duopolistic geopolitical monopoly, and this framework is still continued by our entire ideological and theoretical circles today, very difficult to break through.
Even if you use Cold War ideology and post-Cold War ideology to give some specious explanations of the history of the second half of the last century, can we continue to cross the river by feeling the stones afterward? No. Because ahead is the vast ocean of financialization.
Finance has liquidity, and derives concentration and short-termism. This “new three characteristics” is consistent with the “old three characteristics” proposed by critics of capitalism at the time, namely parasitism leading to decay and moribundity. Financial capital can complete settlement in 0.6 seconds, and every online transaction of virtual financial capital can be calculated in milliseconds. Its high liquidity causes any real economy, resource economy, or natural economy to be defeated before it——because you take too long, and even the shortest real economy is still lengthy.
As we move toward this stage of overproduction, the last stone we touch is the Roosevelt New Deal. After World War II, the United States possessed more than 60% of the world's gold and could issue global currency. Does China have the conditions to pursue globalization led by financialization? Look at Asia, whether South Korea, Japan, or our brother Taiwan, none can enter it.
Asia is a continent of indigenous peoples. When the West advanced colonization, in Asia it colonized only some small economies. The only one in Asia fully colonized was the Philippines, colonized for 400 years. Japan is still 100% indigenous. The entire Korean Peninsula is 100% a single ethnicity. China, India, and the South Asian subcontinent are all indigenous. Only when indigenous populations in the United States and Australia were less than 5% could so-called modern systems be established. Young friends, our generation dreamed, and only with difficulty reached the moment of waking from the dream. Do not continue walking down our path of nightmares. Crossing the river by feeling the stones, feeling all the way to now, how should we respond to globalization and financialization? A small number of elite friends already have green cards in their pockets and have sent their wives and children abroad. They are bare businessmen, bare officials, bare professors. But not everyone can send themselves abroad. What about those who remain?
Therefore, in this century-long process of radicalization, some less radical people tried to take an alternative path——the century of rural reconstruction accompanying the process of China's formation of national sovereignty.
Before the 1950s, China was merely a traditional continental country completely lacking governance capacity and damaged. After 1950, it was a sovereign state that, after three land wars, relatively speaking had no severe negative externalities.
What are the negative externalities of a sovereign state? Developing countries are deeply stuck in development bottlenecks and cannot extricate themselves, often because most of their countries formed sovereignty through transactions, causing the economic resources for maintaining sovereignty to be occupied by multinational corporations. This negative externality makes the cost of maintaining sovereignty a transactional process. Supporting so-called modern polity institutions such as parliament, the presidential system, the national defense army system, and Western-style higher education are all high-cost. Today, for most modern developing countries used as case studies, more than one-third of their finances are given by the suzerain state. If not given, they collapse, and the condition for giving is obedience. Therefore, the reason most developing countries cannot rise is that when they formed sovereignty they did not undergo a brutal revolution. After China underwent revolution, its sovereignty was once de-externalized.
A century of rural reconstruction is precisely the practice of saving the nation outside the history of radical struggle. In the late Qing Dynasty and early Republic of China, the traditional state power disintegrated, and while the Republic of China attempted to copy Western state power but could not yet establish it, rites and music collapsed, and rural society declined everywhere. In the same period there were top-down national salvation trends such as saving the nation through industry, through education, and through science and technology. Yet the rural reconstruction that advocated common people orientation was precisely bottom-up. In the National Museum's “Road to Rejuvenation” exhibition, it was classified as “other national salvation practices.”
From the late Qing Dynasty and early Republic of China to now, there have been approximately three rural reconstructions in history:
The first was cooperation between officials and the people. In 1904, in the late Qing Dynasty, it began in Zhaicheng Village, Ding County, Hebei. The village suffered chaos and gentry maintained self-governance. It flourished in the 1920s, when under warlord infighting and local separatism, the weak central government acquiesced to local separatist forces inviting social forces to resolve the lack of rural governance. It declined when the government forcefully promoted the baojia system, which turned into bad gentryization, and with the Japanese invasion in 1937. After World War II, the Republic of China government also built the West China experimental zone, the last rural reconstruction experiment established by intellectuals. Among the early rural reconstruction faction, Yan Yangchu went into exile overseas, Lu Zuofu committed suicide, Tao Xingzhi died of illness, Liang Shuming was equivalent to a rightist, and only Huang Yanpei escaped.
The second was official-led rural reconstruction. In 1950, a small-peasant economy like today's household responsibility system was realized, and a dispersed society is powerless to resist any capital deprivation. At the founding of the People's Republic in 1949, economically what was to be pursued was national capitalism, and by 1953, what was to be pursued was state capitalism. This was the transition from primitive accumulation of private capital to primitive accumulation of state capital. In this process, the highly dispersed small peasants all had transaction cost problems, so forming state-led organizational construction and institutional construction of rural society was inevitable.
In the 1930s, what the rural reconstruction faction was doing, for example what Yan Yangchu was doing in Chongqing with US dollars, Yan'an was actually also doing. It was nothing more than using cooperatives as the carrier to achieve good rural governance. So continuing into the 1950s, the masses had already been widely mobilized, and good governance could naturally be achieved. In this world one can hardly find any developing country that can achieve nationwide mobilization of all people. Note this: China has the highest female employment rate in the world, and the institutional legacy means our female employment rate today is still as high as 84%, first in the world. In fact it is simply because your grandmothers at the time participated in literacy classes for women's liberation. When a revolution that can obtain property without compensation is accepted by most petty bourgeoisie, everyone is mobilized.
The organizational construction formed in the 1950s continued until the 1970s, when the state's primitive accumulation of industrial capital was basically completed. After entering mass production, it was no longer necessary to extract accumulation from agriculture, and the countryside restored the household responsibility system. Purely from the perspective of property relations, what Mao and Deng did had no essential difference.
The third is a new round of rural reconstruction movement with civil society as the main body, starting from China's entry into the WTO in 2001. This will be discussed later. Below I analyze the historical background and experience of China's first two rural reconstruction movements.
Cost Transfer and Rural Self-Governance: The Political Economy Foundation of Rural Reconstruction
The late Qing Self-Strengthening Movement failed, the Republic of China's private economy failed, and only then did it turn to the four big families. Excessive industrialization costs and urbanization costs were transferred to rural society, destroying rural society. The gentry of traditional rural society could no longer serve the role of protective brokerage, leading to bad gentryization, and therefore many rural reconstruction movements starting from the idea of rural self-governance emerged. During the Republic of China period, rural reconstruction had more than 600 organizations and more than 1,000 experimental zones, a rather large-scale figure.
In the early Republic of China, a group of government officials recognized that the people must be saved from fire and water, so they resigned and returned home to do rural reconstruction. Among the more famous, the first was Sun Faxu, secretary to provisional president Li Yuanhong, who went to Ding County and discovered the model of Zhaicheng Village, promoting it throughout Ding County. In the third year of the Republic of China, Ding County became a model county for village governance. In 1904, Zhaicheng Village was already a village of 2,000 people, and now it is a large village of 5,000 people. Two thousand people in the West already amounted to the scale of a city, so what he realized was localized self-governance within a certain scope.
Sun Yat-sen's secretary, surnamed Huang Zhanyun, was the Kuomintang's Fujian provincial party secretary. He resigned from office and went to Yingqian Village in Changle, Fujian, merged the two surrounding villages, and used all revenue locally to practice rural self-governance. Feng Yuxiang's adjutant also realized village-level self-governance in Xinyang, Henan. In this no-man's-land area it could be considered a success, but because he offended the local military government family's forces, he was eventually assassinated.
Zhang Jian's early Nantong experimental zone can be called “the success of county governance”; similarly, Lu Zuofu's Beibei experimental zone can be called “the success of town governance.” It was a completely localized process, using all so-called industrial revenue formed in the region for local social welfare construction, education construction, basic construction, and so on; while Liang Shuming's experiment in Zouping was the success of village governance, a three-level governance experiment of county-town-village.
The commercial street Huang Zhanyun built in Changle is also very similar to ours today, except that his revenue stayed local and was not occupied by capital. Today many of our local governments build office halls, integrating multiple functions into one place. Liang Shuming already did this in the 1930s. At that time he ran joint office arrangements for township governments, concentrating all departments in one office so that ordinary people would not have to run to so many government offices.
Mr. Mizoguchi Yuzo has a very famous analysis explaining rural reconstruction during the Republic of China and institutional construction after the founding of New China. He said that although Mao and Liang were opposed on the fundamental revolutionary question of whether classes exist in China, under the situation of building New China, these two paths appeared coordinated like two straws twisted into one rope. Liang Shuming later clashed with Mao over how much surplus cooperative organization should contribute to the cities, but earlier, on the land reform issue in Yan'an, they were in agreement. On how to maintain a social existence different from Western class society after the founding of the state, Liang Shuming once had an all-night long talk with Mao Zedong in Yan'an.
There was a very important background to rural reconstruction at the time: the Nationalist government's golden decade left two problems. One was that during the primitive accumulation of capital it could not plunder externally, and could only plunder the countryside. Industrial and commercial capital and financial capital destroyed rural society. The other was that after the great crisis erupted, silver outflow occurred in China, leading to a silver crisis. The Republic of China government had to abandon the silver standard and switch to the fiat currency system, taking the economy from deflation to inflation. Combined with the Sino-Japanese War in 1937, China exchanged all its limited precious metals with the United States for military aid. China's inflation continued until the gold yuan reform failed again, the entire Chinese financial system collapsed, and modernization in the governmental sense completely failed in 1948. The army had no pay, and collapsed like dry twigs, with the Communist Party seizing power through guerrilla methods.
Most developing countries, after obtaining political power, face economic crisis, causing regimes born from revolution to often be short-lived. How did China solve this? What did the peasants in peasant wars want? Land distribution. So 88% of the peasant population went home to farm, with food and drink; the new regime only had to manage 10%—12% of urban people. With small carts and carrying poles, agricultural surplus could be brought to feed the urban population. If 9 people support 1 person, how could they not support him? It was precisely not modernization that saved China. It was the return of traditional rural society to a small-peasant economy that saved China, which was deeply trapped in crisis in 1949.