Paul R. Gregory and Kate Zhou





[Paul Gregory is the Cullen Distinguished Professor of Economics at the University of Houston and a research fellow at the Hoover Institution, Stanford University. Kate Zhou is Professor of Chinese Political Economy and Comparative Politics at the University of Hawaii. She is the author of How the Farmers Changed China (Westview, 1996) and China’s Long March to Freedom, Grassroots Modernization (Transaction, 2009).]

On a dark November night in 1978, 18 Chinese peasants from Xiaogang village in Anhui province secretly divided communal land to be farmed by individual families, who would keep what was left over after meeting state quotas. Such a division was illegal and highly dangerous, but the peasants felt the risks were worth it. The timing is significant for our story. The peasants took action one month before the “reform” congress of the party was announced. Thus, without fanfare, began economic reform, as spontaneous land division spread to other villages. One farmer said, “When one family’s chicken catches the pest, the whole village catches it. When one village has it, the whole county will be infected.”

Ten years later, in August of 1988, Mikhail Gorbachev lifted his nation’s 50-year-old prohibition against private farming, offering 50-year leases to farm families who would subsequently work off of contracts with the state. Few accepted the offer; Russian farmers were too accustomed to the dreary but steady life on the state or collective farm. Thus began reform of agriculture in Soviet Russia.

The results in each country could not have been more different. Chronically depressed Chinese agriculture began to blossom, not only for grain but for all crops. As farmers brought their crops to the city by bicycle or bus, long food lines began to dwindle and then disappear. The state grocery monopoly ended in less than one year. Soviet Russian agriculture continued to stagnate despite massive state subsidies. Citizens of a superpower again had to bear the indignity of sugar rations.

These two examples point to the proper narrative of reform in Gorbachev’s Russia and Deng Xiaoping’s China. Our narrative contradicts much received doctrine. The standard account is that China succeeded because a wise party leadership deliberately chose gradualism, retained the monopoly of the Communist Party after rebuffing democracy at Tiananmen Square, and carefully guided the process over the years. The narrative says that Russia failed because the tempestuous Gorbachev ignored the Chinese reform model, moved too quickly, and allowed the party monopoly to fall apart. This standard account is incorrect. Deng Xiaoping and his supporters, contrary to popular legend, did not agree on a reform program at the Third Plenum of the Eighth Party Congress in 1978, which installed him in power. A Chinese reform official by the name of Bao Tong later admitted as much: “In fact, reform wasn’t discussed. Reform wasn’t listed on the agenda, nor was it mentioned in the work reports.”1

Throughout the reform process, the Chinese Communist Party simply reacted to (and wisely did not oppose) bottom-up reform initiatives that emanated largely from the rural population. Deng Xiaoping’s famous description of Chinese reform as “fording the river by feeling for the stones” is not incorrect, but it was the Chinese people who placed the stones under his feet.

Mikhail Gorbachev became general secretary of his party in March of 1985. By that time, he knew that the Chinese reforms were successful. His reforms, contrary to the popular narrative, closely mimicked China’s. He proposed to lease land to peasants, establish free trade zones, promote small cooperative businesses, and set up joint ventures. The difference was that Gorbachev imposed these changes from above, on an urban economy in which virtually all citizens worked for the state. Gorbachev’s reforms either were ignored or they were enacted with perverse consequences. Bottom-up reforms worked in China; top-down reforms failed in Russia.

Both countries began serious reform after the passing of a leader (or leadership) that abhorred reform. Deng Xiaoping and his allies succeeded Mao in 1978 after a brief power struggle with hardliners. Gorbachev succeeded the initial beneficiaries of Stalin’s purges of the 1930s, who rose quickly as young men to replace those who were executed. The forgettable Konstantin Chernenko was the last in line; there was no choice but to turn to a relative newcomer when he died. For Gorbachev, the horrors of the Stalin era were in the distant past. For Deng Xiaoping and his supporters, the excesses of Mao — the starvation of the Great Leap and the “reeducations” of the Cultural Revolution — were recent and personal experiences. Whereas Stalin had physically annihilated independent-minded party officials, Mao permitted them to survive, subsequently to take over after he was gone. Gorbachev worked his way up the party ladder as a typical apparatchik; although touted as a reformer, he had few reform ideas. His Politburo and Central Committee comrades had no real stomach for reform. Deng Xiaoping also had not worked out a reform program, but he knew enough not to oppose reforms that work (“I don’t care if it is a black or yellow cat as long as it catches mice”)...


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