China's Break from Serfdom

A Review by the Grassroot Institute of Hawaii

This year marks the 60th anniversary of Friedrich A. Hayek's publication of the book, "The Road to Serfdom." More than 60 years ago, the intellectuals in China like most intellectuals, believed that socialism would be the best system to bring equality for all. Everyone under socialism would have full rights and democracy.

The events of the two world wars and the insult to the Chinese in the war settlement (the Allied powers gave German territory in China to Japan) enraged the intellectuals and set up the most important student's movement on May 4th, 1919. Also at this time, the Russian Revolution in 1917 became an attractive alternative to the allied countries. Thus classic liberalism in China lost its political base and the left leaning political ideal triumphed.

No one paid attention to Hayek's wise warning. The Chinese people after the Communist victory in 1949 gradually lost all their basic rights. No other country in this world has experienced the magnitude of the suffering and servitude that the Chinese people experienced under the planned socialist economy and one party dictatorship. Today the Chinese people appreciate Hayek's work because they had to live through the agony and hardships of socialism, deprived of their civil liberties (freedom of movement and freedom of occupational choices and freedom of associations) and the opportunities of pursuing happiness for 30 years. Since Hayek is recognized in China as one of the few who foresaw the failures of socialism, Hayek is highly respected by most Chinese scholars, even some leftists. Even some government officials will put some of Hayek's writings on their work desk for decoration.

China's Socialist Nightmare

In his book, "The Road to Serfdom," Hayek warned "the system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not." The Chinese Communist Party won the revolution by preaching equality, land redistribution, basic rights for all, and relief for the poor. This revolutionary spirit carried the day in the 1940s and Hayek's words were silenced at the peak of socialist revolutions in many developing countries. Many participated in the Chinese revolution and most intellectuals became proud socialists because they believed socialism was a better base for democracy and human rights. The Communist victory in China was not only military but also an ideological victory.

But very soon, the majority of Chinese people, especially the poor, would pay a heavy price for the socialist dream Mao and his leadership brought to China. In "The Road to Serfdom" Hayek warned people against the dangers of state control over the means of production. No sooner had the rural people gained the land rights in 1953 than the government came to nationalize the markets and used the tax system and procurement system to force farmers to join collectives. By 1956, most Chinese farmers lost their land rights and in 1957 almost all were forced to become members of collective farms.

In 1958, the government launched the Great Leap Forward movement toward Socialism, eliminating private property and even household cooking (using instead a collective mess hall). When everyone worked for the state and the state was the only source of food, dissent was dangerous because of the risk of job loss and food deprivation. The few brave souls who dared to challenge the system spent years in labor camps and their families were harassed constantly.

Thus the elimination of private property in the context of the commune systems created a new slave system in which millions of Chinese people worked day and night for almost nothing. The economic dependence of the people strengthened the party-state's power. The dominance of state power led to arbitrary rule, which caused fear among the people. China's three constitutions of 1954, 1972 and 1978 were all based upon the guideline of "Class Struggle" (yi jieji douzheng weigang) under which "class enemies" were to be eliminated. The poor rural people became the victims of a socialist dream, deprived of all rights and becoming communist slaves working day and night for almost nothing.

No Freedom of the Press and Speech

In his book, Road to Serfdom, Hayek discussed individualism and collectivism, economic control and totalitarianism, and the socialist roots of Nazism. Everything he outlined about roots of Nazism took place in China. Hayek argued that a planned economy simply could not exist without strict economic, civil, and political controls of the people, whether in theory or in practice.

He was right on China. In order to keep the socialist system, the party's political control in China was not limited to economic ways of life but included other aspects as well. When artists and writers could work only for the state, they were not allowed to become critical of the state. As an old Chinese saying states: "If one eats someone's food, one's voice becomes soft." In the U.S. there is a saying, "Do not bite the hand that feeds you." In exchange for a life-long salary and other welfare, writers and artists lost their freedom to express themselves and to tell the truth.

What is worse, the anti-rightist movement in 1957 destroyed 552,877 intellectuals, labeling more than 10 percent of all Chinese educated elites as rightists, depriving them of their basic rights until 1978. The silence of intellectuals and the nationalization of all presses led to total state control over media and made intellectuals and writers the tools of the party state. As a result, art and literary representation and political propaganda served the same purpose: to indoctrinate people.

Hayek warned us in 1944 how granting government control of the economy would lead to disaster. Disaster took place in China from 1959 to 1961. The government introduced the Great Leap Forward policies forcing people into communes, making steel, and working day and night for no pay. Famine occurred across China in 1959. When this state imposed famine occurred, the state distribution system provided relief to urban residents only, letting 30 million rural people die of starvation between 1959 to 1960.

The largest famine death toll in human history taught rural people a dear lesson "only private ownership is reliable in times of difficulties." This mistrust for the government sowed the seeds of a reform initiative from the grassroots. If only people in China had paid some attention to Hayek's warnings in 1944. Socialism brought tragedy to the world but it became a disaster when it took place in China, the most populous country in the world. The disaster that Hayek predicted befell a billion people.

Freedom of Movement and Occupational Choices

Just as Hayek predicted that economic freedom would go hand in hand with liberty, the return of private economic activity in China in the 1980s led to relative freedom of movement, of press, of religion and of pursuit of happiness despite the Communist state! For example, the private economic activity in the countryside led to the growth of markets because people could sell their surplus to the market. When rural people gained some goods of their own, they wanted to trade them in for cash and for other goods, leading to the re-emergence of professional traders and a boom for markets. Private control of economic activities also enabled people to have some freedom in choice of occupation in their lives. The origin of freedom of movement involved a massive individual pursuit for economic opportunities.

Just as Hayek predicted, market development has great implications for civil rights pertaining to persons. First of all, independent economic decision-making effectively killed the old rationing system because in the new market economy migrants could buy food in the markets without any food coupons. The food coupon that was given only to urban residents had been used as a means not only to control people's movement but also to differentiate the rural/urban identities. For the majority of farmers, the death of the coupon was liberation.

Second, the freedom of movement (rural migrants) broke the closed job system in which the state determined people's life chances. Increasingly people change their jobs according to market demand rather than staying at government assigned jobs. This change has been most profound in the countryside where the majority of farmers' children no longer do farm work. By mid 1985, more than one fifth of rural people had changed their status in terms of occupation and residence.

The geographic and occupational mobility vary from region to region, but in some rural areas like Zhejiang, more than seventy percent of the population experienced both geographic and occupational mobility, while in other places the percentage is much lower (as low as 10-20 percent of rural people). An increasing number of Chinese people have been able to achieve "the right to live where they want" breaking the government's control over physical, residential and social activities.

Hayek should be very happy that he is highly respected by Chinese people because of his right vision between economic freedom and civil liberties. In the past 20 years, the development of the private sector has increased competition, and given Chinese people more choices in life opportunities.

The state in turn has become less important in the people's life. More and more Chinese people nowadays make choices themselves rather than having them made by the government. More Chinese people today work outside government organizations. This has tremendous political implications. The progress of freedom depends more upon the spread of commerce and diffusion of knowledge than upon the labor of government reform initiatives.

China's Hayek: Liu Junning

Hayek's stress on the notion of private property as the basis for liberty is debated in China. One leading Hayek scholar, Liu Junning, has played a leading role to spread the ideas of private property in China. Liu has developed Hayek's idea by stating that "private property rights are the most basic human rights in the world." Liu came from Anhui province, China where the famine hit hardest. It is also Anhui that started the decollectivization movement (Baochan daohu) in the late 1970s.

It is the poor people who taught Liu about liberty. Liu said to me in 2002 that "I like the English saying, 'the rain can come in and the sun can come in but the emperor should not be allowed to come in (to my poor cottage).' The poor need more protection against the arbitrary power of the state. The best way to help the poor is the provide them property rights." Liu has become a voice for liberty and constitutional reform in China. For this, he has paid a heavy price. In 2001, the government forced him to leave his post in the Social Sciences Academy. After a short stay in the United States, Liu returned to China.

Unlike Hayek whose book, "The Road to Serfdom," was not well received by academia in America and other Western countries, Liu is highly respected in China because liberalism in China means the classical liberal principles that Hayek outlined: the principles of property rights, limited government, free trade, and the rule of law. Those principles have become attractive after decades of lost liberty in China. Compared with Hayek, Liu is lucky because he lives in an environment in China when a liberal is popular among intellectuals. Liu's mistreatment also shows that the government is not really pushing for capitalism but crony capitalism.

Although the Chinese regime still tries to control Liu's life, the tide in China has turned. More and more Chinese demand private property rights protection. This year, the regime put protection of private property into its constitution, completely changing the nature of the Communist regime. Hayek may smile in Heaven.

China and World Trade

Hayek's book and the Chinese past failures have made the people become disillusioned about socialism. As more and more people are interested in trade and entrepreneurs, Chinese people have experienced real modernization and industrialization. Most young people want to become entrepreneurs.

This social basis produced a critical mass for both workers and businessmen. Thus world capital flooded into China despite the government's control. By 2002, more capital went to China than the United States. The United States also benefited from trade with China. Although the United States has a $103 billion trade deficit with China, exports to China rose by 22 percent in the first seven months of 2003 compared to a rise of only 3 percent to the rest of the world.

Hayek, the Great Model for Intellectual and Academic Integrity

Hayek wrote his book at a time when socialist theory dominated Western thought. I admire his courage and integrity. As someone who witnessed the suffering brought about by the Chinese communist state, I many times am afraid to express anti-socialist ideas in my classroom and in my writing because I am afraid to be excluded from my professional career and alienated from my socialist colleagues. I want to learn from Hayek and have the courage to speak against "the powers that be in academia" that control promotion and publication. I hope Hayek's profound intellectual courage, vigor, and honesty will give me enough courage to live in truth and to inform my students about the horrors of the Chinese communist state.

Hayek was also lucky because he lived to see the collapse of communism. While many people today in China and in Eastern Europe may have nice things to say about Hayek and his book, "The Road to Serfdom," few people in the US and Western European countries know his name. Hayek's warning is as relevant today as it was in 1944. China still has a long way to go before Chinese people reach the level of economic and personal freedom envisioned by Hayek. May freedom triumph in those lands that read and remember Hayek and "The Road to Serfdom."

Kate Zhou is Associate Professor of Political Science at the University of Hawaii, Manoa, and is a member of the Grassroot Institute of Hawaii's Board of Scholars.