Fat Years - Chan Koonchung [106]
Number Three: During this period many peasants returned to the cities and, taking advantage of the labor shortage, moved into well-paid jobs. But what did the peasants who stayed behind do? They, too, were busy taking care of their own property.
The third set of policies enhanced peasants’ property rights to their farmland. This move had been discussed for years. One of the chief motives behind this policy was to divert the peasants’ attention from any grievances and maintain social stability in a time of economic crisis. And, as expected, the peasants all got busy taking care of their private property.
“What about privatization?” Little Xi asked with accusation in her voice.
He Dongsheng himself was not exactly certain whether the farmland should have been privatized. The privatization experiences of other countries had not been completely positive, but he could not change anybody else’s opinion on the matter. One thing was certain and it left him without an argument: the peasants fully supported the privatization policy. “After this China can never go back again,” he said rather wistfully.
Number Four: This was a period of great enthusiasm throughout the country. It looked like it was pretty chaotic, but it was a necessary and constructive chaos.
What this chaos meant, though, was that having liberated the nation’s forces of production and activated people’s economic enthusiasm, the leadership’s next most important task was to guard rigorously against fraud and the sabotage of government policies by corrupt officials. The “severe and rapid” crackdown of three weeks earlier had first neutralized the power of many criminal elements, including gangsters, hooligans, human traffickers, and gangs of pickpockets and beggars. While the memory of the early crackdown was still fresh, three new targets were announced: crackdowns on graft and corruption, on manufacturing fake products, and on spreading misinformation. This announcement put the fear of death into everybody.
The Communist Party is most proficient at swatting flies. Rounding up a few usual suspects and summarily executing them does a lot to intimidate the local officials; it makes them toe the line and thus achieves the desired goal. As long as the local administrations improve somewhat, officials will not dare conspire to defraud the government. With that, the first three sets of new economic policies had comparatively better odds for success.
Number Five: He Dongsheng was in favor of a market economy, but he didn’t believe the market was infallible, and he certainly didn’t believe in laissez-faire economics. He knew that at certain points the government had to step in. The above four sets of policies created real aggregate demand and stimulated a corresponding level of production to meet it. There was a great increase in the circulation of money and in the amount of credit available in the market, and there were temporary shortfalls in some commodities and services. Even if there was no wild speculation, simply letting the market regulate itself was bound to give rise to inflation. Commodity prices would experience irregular upward swings, and if this developed into hyperinflation, it would put enormous pressure on this stage of economic reform, perhaps even bringing it to a halt. So the government had to implement price controls.
“I believe that this was the most controversial aspect of the ‘Prosperity amid Crisis’ plan,” said He Dongsheng. It was also the policy that required the greatest amount of technical expertise to implement. Those scholars who had been brainwashed by Western economic ideas would probably have a negative conditioned reflex when they heard the dreaded words “price control.” He Dongsheng was self-taught in economics, and he had originally had the same reaction to the idea of price control. It was not until recent years, after he’d immersed himself in the study of Western economic