title: Towards a New approach to Institutional Change in Rural China since 1949: a Reinterpretation of the State-Peasantry Relationship with Respect to the Primitive Accumulation of Capital for Industrialisation
Creators: name: Liu, Xi'an
Publisher: name: Griffith University
Year: 1998
Subjects: subject: People's Republic of China
subject: Rural development
subject: Institutional change
subject: Mao Zedong
subject: Deng Xiaoping
subject: Industrialisation

description: This is a study to reinterpret rural development in the People's Republic of China (PRC) within the framework of the new institutional economics. Applying North's theories of the state, property rights and ideology, this thesis explores the profound changes in economic, political and social institutions in rural China. Contrary to conventional views, this study aims to establish the internal connections between the seemingly contrasting models of Mao Zedong and Deng Xiaoping, to reveal the dynamics of transition from the former to the latter, and to clarify the logic of institutional change in the PRC. The development path of institutional change in rural China (ICRC) since 1949 was defined mainly by a set of rural institutions in traditional China and their changes after 1840. This development path determined the direction and content of ICRC in the PRC, defined the importance of the countryside in its industrialisation, and predicted the decisive influence of the state-peasantry relationship in the process of modernisation. The general thrust of ICRC since 1949 has been determined by the constitutional framework of the communist state. That framework, however, was primarily defined by the communist approach to the ICRC before 1953, and then by the paramount task of national industrialisation. Rural institutional innovations by the state in the PRC after 1953 have been intended to maximise its political interests (social stability) by securing the support of the peasantry through various reforms while accelerate industrialisation through extracting a huge amount of capital from the rural sector to maximise its economic interest (the highest possible accumulation rate). The institutions for farm produce trade in the PRC, as the major form of capital accumulation for industrialisation, have been the direct driving force behind the ICRC and the cornerstone for the establishment of the national economic system. The institutions were designed to ensure a stable supply of farm produce and a smooth flow of capital from agriculture to industry. They were changed neither voluntarily nor decisively for the reduction of transaction costs, but imposed by the state to overcome the dilemma that the state had in maximising savings while securing social stability. Rural property rights in the PRC have changed logically in responding to the progress of China's industrialisation. They were designed to sustain China's primary industrialisation in Maoist China and restructured to support China's advanced industrialisation since the late 1 970s. Rural property rights have been arranged by the state to allocate rural resources to produce a surplus for industrialisation and to equally distribute rural income to stabilise rural society, subject to constraints of the existing level of economic development and the current class structure. A series of social institutions, which segregated rural society from cities, were an indispensable prerequisite for rapid urban-based industrialisation through extracting capital from agriculture and restricting urbanisation, despite constitutional stipulation and ideological intentions to the opposite. These social institutions enabled the state to substitute scarce capital with abundant labour resources to accelerate industrialisation and eventually promote urbanisation. Changes in these institutions evidence that the performance of an institution relies largely on its institutional environment. Rural political institutions since 1949 have been specified by the state to enforce rural property rights and other rural institutions indispensable for industrialisation. They determine the perfonnance of grass-roots governments and cadres who, as agents of the state, have had an important role in determining the performance of rural institutions. By expanding North's state theory, this study explains the contradictory relationship between economic extraction of agriculture and sociopolitical stability of the countryside both in Mao's China and the post-Mao period. Contrary to popular views, changes of political institutions in rural China have been essentially determined by the structure of economic interests and designed to enforce the given property rights. This study provides evidence that rural development in China since 1949, as a process of institutional changes, has been a logical evolution of the state-peasantry relationship responding to the progress of industrialisation, and that the logic of institutional changes as relations of production derives from the increase of productive forces which concretely manifest themselves in the progress of industrialisation. In contrast to conventional explanations premised on the significance of either a planned collective economy or a private market economy, this study presents a new understanding of ICRC in the PRC and a reinterpretation of state-peasantry relationships; thus clari~ing the significance of the ICRC as a unique model of capital accumulation for industrialisation in a large developing country. It also sheds light on the feasibility of North's theory to explain socioeconomic development in various societies.