The Chinese Revolution of 1949 was one of the most significant events in human history. Millions of people rose up, seized their destinies into their own hands, overthrew capitalism and landlordism, and lifted themselves out of poverty. Despite China’s eventual transition back to capitalism, the revolution was an awe-inspiring event full of lessons for communists today.
The planned economy transformed China and raised the standard of living of ordinary Chinese workers and peasants. Despite its bureaucratic deformations, the Chinese experience offers a glimpse of what a planned economy can achieve once the American working class wins political and economic power through a successful revolution.
Planned economy in China
For several years after the revolution, the Chinese Communist Party (CCP) attempted to solve the many problems facing Chinese society—hunger, homelessness, unemployment, inflation—by capitalist means, but the system proved insufficient to the task. Eventually, the CCP was pushed into taking socialist measures: nationalizing all private industry, banning foreign investment, and implementing five-year economic plans.
Under the anarchy of the capitalist market, what is produced is determined by what is profitable for individual capitalists, and production is uncoordinated across the economy as a whole. This leads to enormous waste and, despite an abundance of resources and technology, a lack of investment in socially and economically necessary, but unprofitable, production.
Under a planned economy—the economic basis for a socialist society transitioning from capitalism to communism—production and distribution are based on a plan allocating available resources according to the needs of the people in that society. This allows for the efficient use of materials, machinery, and labor. The plan also coordinates investment into scientific research and technological development to support long-term needs.
Chinese poster reading, “National scientists and engineers from across the country strive to learn new skills and transform nature to fight for the driving force of industry.” / Image: public domain
A genuinely socialist society would make an economic plan with the democratic input of the working class, the people who actually produce everything. Only they can provide direct checks and balances to ensure maximum efficiency and the highest quality.
However, due to the backward nature of China’s economy at the time of the revolution and the example set by the bureaucratized Soviet Union, China never had a genuine workers’ democracy or control over production. Instead, the economy was planned from above by bureaucrats who had no connection to production processes, leading to corruption and wasted resources. Additionally, due to trade restrictions from the US and other imperialist countries, China also did not have access to the resources of the entire world. There were certain materials to which they had very limited access or no access at all.
Even in these circumstances, the planned economy was able to achieve incredible economic growth and raise the standard of living for hundreds of millions in China.
China vs. India
Another revolution occurred around the same time. After a long struggle, India gained formal independence from Britain in 1947. However, due to the betrayal of the revolution by its bourgeois-nationalist leaders, capitalism remained in place, and the British and other imperialist powers maintained their economic grip on the country.
China and India faced similar economic conditions in the late 1940s. Both governments put forward industrialization as a priority in the decades following their respective revolutions. A comparison of their development in the decades following the Chinese Revolution and Indian independence shows very different results.
From 1952 to 1978, China’s annual industrial growth rate averaged 11%, compared to an average of 6% in India. In the same period, electricity production grew by 35 times in China and 18 times in India, steel production by 23 times in China and six times in India, and cement production by 22 times in China and four times in India. The number of industrial workers rose from 5.3 million to 53.3 million in China. In India, it increased from 3.2 million to just 5.4 million.
In China, the same period saw the share of manufactured goods in exports rise from 15% to 55%. In 1952, agriculture made up 48% of net domestic product and industrial manufacturing made up 18%. By 1959, agriculture had dropped to 29% and manufacturing had risen to 30%.
From 1952 to 1978, China’s annual industrial growth rate averaged 11% and the share of manufactured goods in exports rose from 15% to 55%. / Image: ILO Asia-Pacific, Flickr
Conditions of life for Chinese workers and peasants changed rapidly as well. Because production was based on a plan rather than the profit motive and the market, resources were allocated to areas that supported long-term economic growth and stability, such as education, healthcare, housing, and higher wages.
Workers were guaranteed lifelong employment, and between 1953 and 1958, wages rose by a third. China also made great strides in equality of wages. The wage differential—the ratio of the highest to the lowest-paid worker in a particular workplace—averaged 50 to 1 before the revolution. By the 1960s, it had dropped to an average of 2.5 to 1. This was the lowest wage differential in the world. At the same time, India had the highest in the world.
Between 1949 and 1958, the percentage of children enrolled in primary school quadrupled, from 20% to 80%. In the same period, illiteracy was cut almost in half, falling from 80% of the population before the revolution to 43% in 1959. In India, illiteracy only fell from 82% in 1951 to 71% in 1961.
In addition to greatly expanding and cheapening access to healthcare, investments in public health and infrastructure led to better sanitation, cleaner water, and the near eradication of many common diseases in China. The number of medical and pharmacological school graduates between 1951 and 1961 was over four times that of the period between 1928 and 1947.
From 1949 to 1963, life expectancy in China rose by 26 years, from 35 to 61. Between 1950 and 1965, life expectancy in India rose by only nine years, from 34 to 43.
The Human Development Index (HDI), a statistic measuring lifespan, education, and per-capita income, of China and India were about the same in 1950. By 1973, China’s was double that of India. Over the course of those 23 years, China’s HDI had more than tripled.
In summary, an American economist wrote in 1974:
On this question, the following quotation would appear to be amply justified by the available evidence:
“The basic, overriding economic fact about China is that for twenty years she has fed, clothed, and housed everyone, has kept them healthy, and has educated most. Millions have not starved; sidewalks and streets have not been covered with multitudes of sleeping, begging, hungry, and illiterate human beings; millions are not disease ridden. To find such deplorable conditions, one does not look to China these days but rather to India, Pakistan, and almost anywhere else in the underdeveloped world … The Chinese—all of them—now have what is in effect an insurance policy against pestilence, famine, and other disasters.”
One need only scan the periodic reports from India in The New York Times in 1974 to recognize that no such insurance policy is available to the Indian population.
A comparison of economic development in the decades following the Chinese Revolution and Indian independence shows very different results. / Image: denisbin, Flickr
Lessons for today
The planned economy fundamentally changed the character of Chinese society and deeply impacted the lives of the workers and peasants who lived in this period. These dramatic changes occurred despite starting with an economy that was mostly agricultural with a very low level of industrial development; despite the economy being planned by bureaucrats and not by the workers themselves; and despite China being isolated economically through trade restrictions imposed by the US and other imperialists.
If China was able to achieve all of this under such circumstances, just imagine the productive forces a socialist revolution in America will unleash. Starting with advanced production techniques and a genuinely democratically planned economy, production could be rapidly expanded and investment redirected towards areas that actually affect the lives of the working class. Practically overnight, workers could have a shortened work week, a raise in pay, and affordable or free access to high quality housing, healthcare, education, and food.
And as the revolution spreads across the globe, access to the entire world’s raw materials and technology would increase productive capabilities even further, as former competitors merge voluntarily into a single worldwide planned economy.
A planned economy could redirect investment to areas that ensure the long-term flourishing of human society. For example, fighting climate change is absolutely necessary for the survival of billions of people around the world. Under capitalism, resources are not being invested into solving it, because it is not a profitable problem to solve. A plan of production allowed China to consciously invest resources into transforming their economy, and a similar plan of production is the only way to combat climate change. Production could be retooled to completely eliminate fossil fuel consumption, invest in infrastructure that could withstand climate catastrophes, and invest massively in researching ways to slow or stop the effects of climate change. All of that is possible but not on the basis of capitalism.
The incredible gains of the Chinese Revolution and planned economy show us just a glimpse of what a socialist revolution could unleash. Production based not on profit but on human need, using all of the resources available to us, will create a world in which humanity not only survives but thrives.