Philip Scranton, Enterprise, Organization, and Technology in China. A Socialist Experiment, 1950-1971.

London, Palgrave Macmillan, 2019, xv + 395 p.

While it seemed that Maoism had been researched from all possible angles, new research publications are bringing to light new aspects of the economic and business history of the period, especially dealing with science and technology, industrialisation and the relationship between socialism, industrial capital and markets. This book is a business history of the Maoist enterprise in a broader sense, as it aims to explore the diverse and creative ways in which Communist China’s enterprises undertook business. Indeed, there is a rich body of literature dealing with private firms who were integrated into the socialist system and the emergence of state-owned enterprises in the context of China’s planned economy. Scranton provides a fascinating compilation of case studies that illustrate how China experimented with various business practices, especially after it broke free of its Soviet tutelage. Some of these experiments, Scranton argues, were resounding failures, but others provided successful “socialist alternatives to capitalist individualism and selfishness” (p. 360). The book concludes that “the Chinese Miracle materialized, not in the 1980s and 1990s, but in the first generation after Liberation” (p. 363).

This hypothesis is not new and there is a growing consensus among historians to trace the origins of China’s reform – officially starting when Deng Xiaoping imposed his reformist visions in December 1978 – in the previous experiments that took place under Mao which were often disrupted by violent political campaigns. Scranton is not a sinologist but he is a renowned expert in the relationship between technology and business administration in specific economic sectors. The book displays an amazing array of situations where different forms of economic associations (family businesses, cooperatives, state-owned companies, public-private mergers, etc.) engaged in all kinds of business deals (buying and selling, stocking and bookkeeping, overhauling and repairing, quality checking, inventing or copying new technologies, and so on). The book is divided into two parts which follow both the chronology of Maoism and a division based on economic sectors. The first part analyses the “Business Practice from Liberation through the Great Stumble, 1950-1961” and is divided into chapters dealing with agriculture, infrastructure, commerce and industry. The second part is titled “Recovery, Reversal, and Resilience: Business practices, 1962-1971” and also has the same sectorial chapters plus one final, less detailed, about the Cultural Revolution. The core contribution of the book, in my opinion, concerns the consequences of the Sino-Soviet split in the further diversification of business practices, especially during the period of economic adjustment in the first half of the 1960s.

This diversification was not a top-down decision but the result of real problems that Socialist enterprises faced. The centralisation of trade and the suppression of intermediaries increased the bureaucratic burden of cadres while daily necessities had to be covered with barters or other forms of informal business transactions. Big infrastructure projects like dams and power stations had to confront the departure of the Soviet experts and the scarcity of Chinese engineers with innovative solutions, like the so-called “dragon-chains” which created “simple mechanical devices to replace heavy labor and increase the speed of work process sequences” (p. 63). As market mechanisms were restrained (although not annihilated), producers of consumer goods had to find creative ways of testing the quality of their products and adapting themselves to the local specificities of demand. Furthermore, informal repair shops and cooperatives specialised in intermediate goods and thrived to solve the permanent problems of supply and the overhauling of machinery in the vertically-integrated and highly bureaucratic industrial production units. Scranton argues that these business initiatives were more prominent and decisive in China than in other socialist countries, especially compared to the Soviet Union and the satellite countries that emerged in post-war Eastern Europe.

The book is thus a reflection on the casuistic nature of the socialist enterprise in the twentieth century and the experimentation between socialist and capitalistic practices. A wonderful example is the 1963 “frog controversy” (p. 169). The Chinese like to eat frogs. As a wild but quite common animal, the state had no capacity to control or plan the production of frogs, or indeed to monitor peasant families catching or selling frogs informally in rural or urban markets. But frogs were also an important element in preventing insect pests, as each frog could eat 50 bugs a day. Agricultural production in China could be seriously harmed by insect pests but how could the state forbid the Chinese peasants to catch and eat frogs, especially after the great famine of the previous years? This problem was solved with a “socialist production solution with a market twist”: state farms and communes were encouraged to breed frogs for commercial purposes (enhancing the “magic of rural markets”) while natural frogs were protected to prevent insect pests. Of course, this example stands in contrast with other less successful campaigns to eliminate plagues, like the immediately previous four pest campaigns targeting rats, flies, mosquitoes and sparrows, which had actually increased the number of insect plagues and led to the subsequent Great Chinese Famine of 1959-61. But the aim of the former example is to highlight the possibilities of combining socialist and capitalist business practices.

These experimentation possibilities were not implemented without conflict or dilemma. For instance, industrial designers were impelled to combine office work with manual commitments following the revolutionary slogans. But to be both red and expert implied a work overload that had an impact on production, which was the ultimate goal of socialist industrialisation. At the same time, political cadres were told to establish rational methods of management and accounting, especially for registering production growth, but without considering profits or losses. Scranton argues, however, that these basic elements of management, despite attempts at neglecting them, inevitably resurfaced. This could happen when an enterprise had to face losses due to an overstock of goods that were unmarketable or not up to a minimum quality standard or, on the contrary, when another productive unit found a way to produce something at a profit and facing growing demand. A 1970 text from the Ministry of Commerce thus concluded that “the viewpoint that profit, cost accounting and economic accounting are not necessary is erroneous” (p. 354). This acknowledgment meant that, no matter how successful or unfortunate an enterprise was, it needed to be accountable.

Sources deserve a special mention. The richness of case studies and anecdotes mainly come from two archives stemming from the Cold War and US intelligence gathering about China. Firstly, the Joint Publications Research Service (JPRS), a Cold War translation agency (first affiliated to the Ministry of Commerce and later on to the CIA) that has translated thousands of documents from Chinese to English since 1957, and secondly, the CIA declassified archives (available online) for the same period. The volume of these archives is enormous and Scranton has done an outstanding job selecting technical journals, general publications and intelligence reports to highlight case studies from the extensive geography of China and from all economic sectors.

As a criticism, however, the sources are naturally biased by the Cold War and the United States’ intelligence needs, but this is barely discussed in the book. They provide a kind of U-2 photography album of China’s business practice during the Maoist era, impressive as it was, but taken from the filtered vision of the CIA and the translators working for them. Furthermore, I wonder whether the visits of foreign experts to China in the early 1970s and their positive reports (p. 376-377) were also influenced by Chinese intelligence and propaganda actions and, therefore, can be taken as proof of China’s economic superiority over the Soviet Union. Finally, Chinese names are given in the different transliterated forms as they are found in the translation reports. Due to the nature of the sources, it seems not only implausible to find the original names in Chinese but also difficult to establish a complete unified form of transliteration, especially with such a sample of proper nouns of enterprises, communes and small production units. However, a linguistic revision could have improved the accuracy in the spelling of some of the more common Chinese names.

These caveats aside, Enterprise, Organization, and Technology in China. A Socialist Experiment, 1950-1971 is an important contribution to the business history of China and to the study of socialist enterprises in general. The book not only demonstrates that socialist enterprises were far more complex institutions than we thought, thus deserving greater academic attention, but also that their problems were somehow quite similar to ours.

Carles BRASÓ BROGGI

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