A vital component of the Maoist planning system, therefore, was the central-state efforts to coordinate the main subnational units, that is, the provinces. In reality, however, this resulted in a checkered history of decentralization and recentralization implemented in an attempt to get a grip on the macroeconomic losses of control (Lyons 1990, 40). From this, a regime emerged that essentially constituted a combination of local/regional and national planning. During this period, the command economy was therefore simultaneously controlled in both a “cellular” and “centralized” manner (Herrmann-Pillath 1995, 112).32
Two parallel systems existed. Roughly described, the key components of these systems are: a national ministerial planning organization, which supervised the centrally controlled economic units within the provinces, and a regional provincial planning organization, which, with the exception of the above-mentioned centrally controlled economic units, incorporated all other areas of responsibility in its plan. This planning logic was also flanked by other economic units with overlapping jurisdictions:
Abstracting from the sub-branches and tiers within each ministerial and provincial branch, there are four types of planned agents: provincial, provincial/central, central/provincial and central…. The two mixed cases are those subject to dual leadership, with either the province or the centre (i.e. a ministry) predominant. In the case of a provincial/central enterprise, the province is responsible for the production and financial plans, and the enterprise is accommodated in provincial balances. In operating its provincial/central enterprises, a province must comply with national plans and, in particular, must ensure any required “exports” from the province. The relevant ministries provide “guidance and support” and may supply some key inputs. In the case of a central/provincial … enterprise, a branch ministry is responsible for the production and financial plans, for providing most inputs and for distributing outputs. The province in which the enterprise is located handles political and ideological work, arranges “co-operative assistance” and supplies of locally controlled inputs, and receives in return a fixed share of the output or the right to have materials worked up after completion of ministry orders. (Lyons 1990, 41–43)
In the second half of the 1970s, only ten thousand enterprises were central or “central/provincial.” Both the overwhelming majority of state-owned enterprises (over seventy thousand) and the even larger number of collective enterprises were controlled by regional or local institutions.33 Many provinces therefore had considerable room for maneuver and a level of financial leeway that should not be underestimated. While the development of a heavy industry core and the distribution of important industrial goods were still centrally controlled in the 1950s, over time, the central power apparatus delegated the authority for numerous industrial enterprises to regional governments. Consequently, the Maoist era was characterized by a disparate economy, which also applied to the situation in the provinces themselves:
It was possible for a company to be located in a specific city and for it to be assigned to the municipal authorities and yet for that company to actually manufacture goods for a second enterprise which, although situated in the very same city, was in fact under the jurisdiction of the provincial authorities. Neither company had the power to directly decide their own supply relationships but both were required to first seek approval for their respective plans from the relevant—but different—administrative bodies. This of course had an impact on production. Where necessary, the manufactured goods still had to be delivered to the state supply office, which also maintained a branch in the city. It was possible for the input requirements of the second company to first need to be processed by the entire hierarchy of the State Bureau of Material Reserve until the enterprise possibly—but certainly not as a matter of course—was allocated the product by the local office of the State Bureau of Material Reserve, which, in turn, was produced by the other company located in the very same city. (Herrmann-Pillath 1995, 113–14, my translation)
This system of local and regional state ownership rights and the principle of different jurisdictions—according to which a company could be assigned to a subnational authority and yet functionally still be under the control of the central government—differed from the ideal type of command economy. Complex processes of negotiation between the different units resulted in economic plans with roughly formulated targets that generally gave the companies a certain degree of leeway in terms of their production decisions. The conflicting interests at different levels within the government apparatus could be understood as an expression of a “quasi market” in which those responsible were trapped in permanent barter activities and procurement efforts, although prices were still officially fixed and in fact only performed a limited allocative function (Herrmann-Pillath 1995, 116).
Accordingly, national planning also manifested itself as a competitive process—as a plan anarchy that was reflected in discrepancies between the central and regional plans as well as higher-level plan targets and the political considerations of local authorities and managers. The administrative command center’s attempt to unite a multitude of partially competing economic subunits using an overarching accumulation strategy failed (Lyons 1990, 53).
In order to establish a more detailed explanation of the radical change at the end of the 1970s, we now need to outline the main reasons for the turnaround under Deng.
The Crisis After the Crisis: The Erosion of Maoism in the 1970s
In the mid-1970s, it appeared that the nation was gradually recovering from the trauma of the Cultural Revolution. However, the escalating political conflicts within the party leadership from 1975–76 onward expressed social tensions that had only temporarily faded into the background. They reflected a weakening of Maoist self-definition, development policies, and the systems of the danwei and the rural people’s communes that had underpinned the daily and working life of the population (Dittmer 1987, 207–9).
The reorientation of certain sections of the power elite from the late 1970s was an expression of this predicament. However, Deng Xiaoping’s policies did not represent a complete break with the country’s economic history. Deng belonged to a camp within the CCP that advocated a pragmatic economic policy, unlike Mao’s model. In the 1950s, a fierce debate erupted between this right-leaning wing of the party supporting Liu Shaoqi and the left-leaning, or more precisely, voluntarist wing allied with Mao about the pace at which agriculture was to be collectivized.34 While Maoist voluntarism primarily (if not at all times) relied on the rural population and the party, the pragmatism of Liu and others developed a popularity among industrial workers and intellectuals that should not be underestimated. The Great Leap Forward campaign from 1958 and the establishment of people’s communes could therefore be implemented only in the face of significant internal party resistance (Kosta 1985). After 1961, on the instruction of Liu Shaoqi, aspects of collectivization were temporarily reversed, which meant, for instance, that plots of land were made available for private use. The agricultural policy implemented in the province of Anhui in 1962–63 created foundations for the subsequent strategy of land leasing.
China has never had a monolithic unified development model. This is another reason why it is inaccurate to describe the post-1978 reform period as a genuine break with the past. Deng himself, like Mao, attached great importance to national development. Communist policies and the CCP were vehicles for creating a prosperous and powerful China in a competitive global environment. Similarly, the wing of the party with an allegiance to Deng also saw the CCP as having an undeniably essential role as an instrument of modernization. The internal factions within the CCP were therefore ultimately proponents of different responses to one and the same national development issue. In this respect, the gradual change in party ideology after 1978 comprising a transformation of the CCP from a “class-based” to a “people’s” party was belated recognition of the nationalistic development policies targeting