A pragmatic view on revolution

I have finished translating this report, something I said I would do a while ago but never got around doing.
http://cpc.people.com.cn/GB/69112/82103 ... 75335.html Original in Chinese if you are keen

The point of this exercise is to provide a view on revolution from a pragmatic perspective, the concrete measures need to be taken to ensure its success. Though these policies themselves will probably not be applicable in any future revolutions, it's still interesting to see how revolutionaries back then assessed the practical problems they encountered and formulated solutions.

I could not find reference to some of the terms in the text in English language literature, so I took some liberties, and have explained them in the footnote.

Basic Economic Development, Fiscal, Financial, and Trade Policies in the Liberated Zones
Ren Bishi, May 1946

1) Recently, discussions were held with comrades who came to Yan’an from various parts of the country on the issues of economics and finance in the liberated zones. We believe after the victory against Japan, liberated zones have expanded and joined together, they contain not only the vast countryside, but also small and medium cities, some vital industries, such as coal and iron, are now in the hands of the democratic regime. Therefore, the issues of how to let the people recover financially, how to increase production, how to combat bureaucratic capital and international monopoly capital, how to overcome the current financial difficulties, i.e. the issues of the economic development and fiscal and financial policies, should draw the attention of the whole Party. Although we don’t yet have much experience on these, and specific policies need to be continuously investigated, some basic policies must be formulated right now.

2) The Party as a whole must understand that if we cannot organise the economic undertakings of the 120 million people in the liberated zones, develop and prosper the economy of the liberated zones, and improve people’s lives, we will be divorced from the masses, and not only will we not have the power to propel the democratisation of China, we will also not be able to retain the existing gains, and will eventually fail. At the same time, we also need to be aware that the struggle on the economic front is the most complex and difficult task we face. Our enemies are the Chinese bureaucratic capital and international monopoly capital, we are at a great disadvantage economically, but it does not mean that we should think the future is bleak and become pessimistic. We have many favourable conditions, that is, the liberated zones contains many strategic resources, such as coal, iron, cotton, food, salt, gold, petroleum, etc. Most importantly, we have established democratic regime, people have gained real freedom and democracy. The peasants have obtained land in the rent and interest reduction and liquidation movements, their enthusiasm will inevitably be raised, and their purchasing power will increase greatly. As long as we have the correct and firm policies, the people of all liberated zones unite together, economise on everything, accumulate capital, acquire new technologies, we will be able to overcome all difficulties with the power of the people.

3) At the moment, the basic policies on economic development for the liberated zones should focus on the recovery and development of agriculture and agricultural sidelines, development of handicraft industry, establishment of the necessary light industries, and rebuild the existing heavy industries, eventually achieving self-reliance.

4) The fundamental economic basis in the liberated zones are the numerous and distributed individual peasant’s private economy. Only when the peasant economy becomes fully developed, allowing everything peasant household to greatly increase its wealth from the increased yield on its land, can we have a solid base for industrial development. We must understand, the democratic regime cannot borrow from the outside, or has a strong industrial and commercial basis to accumulate capital, we must use the power of private capital to prosper the economy of the liberated zones. The most dependable force, is when the peasants have prospered, we use the surplus wealth they have accumulated, in a planned and organised manner, to develop the industry and commerce in the liberated zones. Therefore, the development of the agricultural economy is the most important link in the development of the economy of the liberated zones.

5) After eight years of war, agriculture in the liberated zones suffered extensive damage, draft animal was reduced by 70-80%, very large quantities of farm tools were lost and damaged, there is also significant shortages in labour power, and seeds are also in short supply, average yield of the land is less than half of the pre-war level. On the development of agricultural economy, we have to set a goal of recovering the productivity to pre-war level within 1-2 years, and double or triple pre-war level within five years. This requires us to address two issues: 1. improve peasants’ mutual support and cooperative movements, organise mutual-labour and exchange-labour teams (1) etc. based on past experience and local conditions, to address labour shortage. 2. Improve agricultural technologies, firstly, manufacture large amounts of improved farming tools in a planned fashion, loan or sale them at discounted prices to the peasants; breed the necessary livestock, trade authorities should be responsible for importing the livestock from outside and distributing them within liberated zones; organise and assist the peasant in irrigation projects (wells and ditches can increase production greatly); improve seeds and fertilisers; improve farming techniques etc. Once the peasants have the land, organise, improve techniques, are the basis for agricultural development. Local governments should continue to issue agricultural loads, organise experimental farms and exhibits, and promote improvements in agricultural technologies. At the same time, burdens on the peasants and mobilisation of the workforce should be reduced, so that the peasants will have the power to work the land.

6) According to reports from different regions, the peasants are content with obtaining things through the liquidation movement, their enthusiasm in production generally has yet to be elevated, and they also fear that producing too much and acquiring too much wealth, will cause them to be targeted in the future. We must explain to them the Wu Manyou direction(2), encourage the peasant the produce more wealth, elevate their enthusiasm in production, not only to bring about the gradual increase of the production of crops, but also encourage them to participate in sidelines, such as poultry, cattle, sheep, bees, silk worms etc., to further increase their wealth.

7) The basic task in industrial development, is the necessary consumer goods to satisfy the needs of the people in the liberated zones, to ensure the gradual establishment of self-reliance in basic necessities such as clothing, farm tools, matches, tobacco, soap, etc. However at the moment, we do not have the modern industries that are required to produce those goods, nor can we establish them in a short time, we only have handicraft industries, cottage industries, workshops, and small scale factories. Overlooking them would be a mistake, we should assist their development, organise various forms of cooperative production, work to improve technologies, and improve both quantity and quality of their products, letting handicraft industry to play a role in supplying the liberated zones with basic necessities. On solving the problem of clothing shortages, we should promote people’s household textile production in all cotton producing regions, advocate “self-grow-self-spin-self-weave-self-use”, and “every family spin every village weave” movements(3), and produce for the needs of cotton-less regions. All areas suitable for cotton growing should develop cotton growing and textile industries.

8) However, we cannot be content with just handicraft industries. If we cannot organise the necessary modern light industry, we will not be able to satisfy the needs of the people, not can we maintain the struggle against outside forces. Therefore, all regions must expend maximum effort, depending on resources, transportation and other conditions, on the rebuilding and development of the necessary modern light industries, such as textiles, matches, tobacco, flour, food, soap, oil pressing, eggs etc. These enterprises can be public owned, joint public and private, and private, however, they must be profitable, strive for low cost, high quality, and high output. Government, trade unions, finance and trade institutes should provide favourable conditions in regards to raw materials, labour, and sales, and tax protection should be applied.

9) On the development of industry, we do not yet have the power to develop a heavy industry (situation in Manchuria is still unclear). However, we do have control some heavy industry, such as coal mines, iron mines, smelters etc., we should follow the policies of gradual recovery, and it’s vital to change some armament factories, and heavy machineries that cannot be easily repaired, to the production of farm tools and the light machineries necessary for industrial development, such as cotton teasing, spinning and weaving, oil presses etc.

10) On the economic development of the liberated zones, an important task would be the cooperation with the national bourgeoisie, in order to combat foreign capitals, their Chinese compradors. We have to adapt the appropriate policies to ensure that profit level for private enterprises in the liberated zones is not less than that in the Nationalist controlled zones, so that the national bourgeoisie, who have been oppressed by the Nationalists to the brink of bankruptcy, will be willing to use the raw materials, market, labour, and governmental assistance, and move their capitals and machineries to the liberated zones, prospering our economy.

11) Foreign capital should be allowed to invest in liberated zones if it will benefit the development of the liberated zone’s economy, but they must respect Chinese sovereignty and laws. Foreign capital can be allowed to establish some enterprises on their own, and contracted to be handed over to the government after a certain period (10 – 20 years); or participate in joint ventures, and divide the profit based on shares. However, for enterprises with significant military implications, such as the armament industry, foreign capital should not be allowed.

12) In order to develop the industry in the liberated zones, attract national or even foreign capital to prosper our economy, we avoid extreme-left labour policies. The Party have committed mistakes of being extreme-left on issues of industry and labour movements during the Northern Expedition and the Civil War periods. During the war against Japan and recently, the remanent of extreme-left thoughts cause by the inability to see long term and collective interests still exists. Some places dealt with factory and business owners the same way they dealt with landlords, leading to the serious problem of capital flight. This kind of extreme behaviour must be corrected in time, or the economy of the liberated zones will suffer. We must explain to the masses and the labour movement leaders that regardless of whether an enterprise is private or public, the wages, working hours, and other workers’ rights set must allow the enterprise to develop and expand in the region. That is to say, we have to both improve the workers’ lives, and allow profit for the business owners.

13) To ensure industrial and agricultural development and the prosperity of the economy in the liberated zones, all liberated zones should now closely collaborate in matters of economic development, transfer products and raw materials. For the liberated zones that are already connected physically, they should abolish duties on each other, set exchange rates, develop transportation, lower transportation costs, in order to benefit the flow of raw materials and products, stimulating each other’s growth. More productive regions also should provide assistances that are within their power to poorer regions. All in all, in the matter of economic development, all liberated zones should work together, unifying our efforts in the struggle on the economic front.

14) In terms of foreign relations, will be accomplished peacefully in the future, though in form, the past duty policies cannot be continued, but in order to protect the development and prosperity of the economy of the liberated zones, new forms of duties must be applied on import and export goods that have significant impacts on the economic development, such as equalisation tax, sales tax, stamp duties etc. On the matter of trade, internally, we should implement the policies of free trade, but externally, our trade firms must have control over important goods such as food, salt, cotton, clothes, coal, tobacco etc. To unify and strengthen our trade power, all capitals, big and small, public and private, can participate in joint ventures. In the liberated zones, apart from political mobilisation to advocate domestically produced goods, protecting economic development, we also need to organise and regulate cooperatives, so that goods produced in the liberated zones and goods imported by trading firms can be systematically distributed to the consumers through the cooperatives and public and private businesses, at the same time, simplifying the collection of local products, and their sales to the outside, allowing cooperatives to become powerful economic entities, contributing to the struggle on the economic front.

15) The basic policy for external trade, we should achieve exchanging goods of equal value, use our excess raw material and products to trade materials necessary for people’s livelihoods, pay special attention to the means of production that are needed for economic development in the liberated zones, such as machines necessary for establishing a light industry, farm tools that are in short supply, and draft animals. We should organise the peasants to produces export oriented raw materials and goods. Some raw materials should be turned into finished or semi-finished products before exporting; it will vastly improve people’s lives and our internal economic activities. Such as, wool into yarn and cloth, peanuts into oil, which will not only benefit the people with wages, more foreign currency and material can also be traded for. There should be planned production and collection of export oriented resources and goods, such as bristles, down, oils, fur, grass braids etc., aim to trade directly with foreign countries, in exchange of needed machineries and materiel. Foreign commercial capitalists can be allowed to set up business in liberated zones on the condition that they obey the laws.

16) On the issue of financial development, we should establish banks at a local level, issue localised currencies. Because financial institutions are important weapons in economic development, banks can control the life of the economy. We can use banking houses to issue cheques, trading firms issue local currency, organise banks for some sectors, such as salt and coal, and issue shares. However, bank issues must never be used on government overspendings, but instead, on investments for economic growth, and assist the development of industry, agriculture, and commerce. Use tax and savings etc. to control issue, to prevent excessive fluctuations in prices of goods. And adjust prices accordingly, minimising price scissors, in order to stimulate agricultural development. Banks should develop all forms of services, such as savings, exchanges and transfers, loans, operating business etc.

17) Fiscally, all local government must implement the streamlining policies directed by the central government, aim to reduce expenditure, regulate tax collection. Government institutions and the armed force must participate in production, exercise frugality, in order to reduce the fiscal burden on the government. We should curtail the growing trend of wastefulness in government, advocate frugality. Only then, can we achieve real prosperity. From now on, we should keep the expenditures within income (except in case of war), eliminate the problem of deficit currently exist in the liberated zones. During the war against Japan, burden on the people was generally over 15% of national income, as high as over 30% in some cases, this severely impedes economic recovery and development, and should not be continued. In times of peace, in order to allow economic growth, burden on the people should not exceed 10% of the national income. Next year, grain tax(4) should be abolished, and changed to a uniform progressive agricultural tax, and a uniform progressive industrial and commercial tax, balancing the burden on the different sectors. Reform public enterprises, enforce their commercialisation, in order to increase income. Fiscal administration should be regulated, thoroughly implement budgets and accounts, auditing, treasury and transfer, and other practices. Designate county incomes, strictly regulate village finances, eliminate all forms of waste. At the same time, we should introduce salary system in a gradual and planned manner, to reduce expenditure, and improve efficiency.

18) Developing the economy of the liberated zones is an extremely important task of the party, even if the civil war is going to drag on, we must still organise the economy of the liberated zones in accordance with the policies described above. If we cannot demonstrate the capability of the Part, if we display incompetence in the matters of economic development, not only we will not be able to further improve the lives of the people, we will be destined to lose our political position. Incompetence and failure on the economic front will lead to political and military failures. The entire party must conduct educations on economic development, transfer capable cadres in the party on to the economic front. Party organs at all levels should establish economic and finance committees, accumulate experiences, strengthen the leadership in economic development. We should also utilise and win over non-party economic and technical cadres, not only providing them with political education, but also material incentives for them to actively participate in economic development, helps us train more economic, fiscal, financial, and trade cadres. The main liberated zones should immediately plan for the establishment of industry, agriculture, and commercial technical schools, and attract experience workers, peasants, and intellectuals, to train large numbers of personnel on matters of industry, agriculture and commerce, this already is a very urgent task.

1. Mutual labour: 换工, peasants performing certain tasks for each other.
Exchange labour: 变工, peasants swap labour or livestock and work on each household’s land in turn.

2. Wu Man’you direction: 吴满有方向, Wu was a farmer in Yan’an, prospered through successful agricultural practices, promoted as a model to encourage increase in agricultural production.

3. Self-grow-self-spin-self-weave-self-use, 自种自纺自织自, peasants in cotton growing regions were encouraged to meet their clothing needs using their own means.
Every family spin every village weave, 家家纺村村织, decentralised textile industry based on households and villages.

4. Grain tax, 公粮, peasants were required to handover a proportion of their harvest to the government as tax.