How Capitalism Got Started In China

NPR has a very interesting article about the modest and illegal beginnings of China’s booming economy. Way back before the agricultural reforms of the 1980s, farmers didn’t own anything: they worked on farms, but whatever they produced was given to the collective, which then redistributed the goods. It was a communist utopia: from each according to his ability, to each according to his need. And it would’ve worked fantastically, if it wasn’t for human nature; as one of the farmers in a village in central-eastern China put it:

“Work hard, don’t work hard — everyone gets the same,” he says. “So people don’t want to work.”

Yen Jingchang, one of the original capitalist Chinese farmers


As a result, that village didn’t have enough food. So one day in 1978, the farmers got together and came up with a plan to illegally divide the farms up into plots; they all had to give food to the collective, but the farmers that met a certain quota could keep some food for themselves. They then signed a secret contract formalizing the agreement, and included a clause saying that in the event a farmer got arrested for the practice, the other villagers would raise their children. The result of this risky enterprise would make Ayn Rand proud: that season’s harvest was more than the previous five years combined.

When the government eventually got wind of what they were doing, the farmers were hauled in front of officials; but since you can’t argue with results, the government decided that instead of punishment, they deserved praise. So the economy was reformed, the farmers were held up as heroes, and the secret contract is now in a museum. Since then, 500 million Chinese have risen out of poverty.


But it was just a start: the government still takes businesses away from their owners once they become too profitable, and a lot of wealthy Chinese are looking to move their money abroad, out of governmental reach.


From NPR


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