The history of the Cooperative Movement in China began a quarter of the way into the 20th century, when Chinese modernizers and sympathetic foreigners promoted cooperatives as a tool for reforming the Chinese economy.
This accelerated during the Guomindang's peak control of the country in the 1930s, when cooperatives were a significant plank of the Guomindang's development policy. After the Communist Revolution, cooperatives became the first form by which the Chinese economy was brought under socialist principles in the 1950s. Even after reform and opening up, cooperatives remain a significant part of the modern Chinese economy.
Historical context Cooperative movement
The modern cooperative movement arose in the early 19th century as a response to the negative social consequences of the Industrial Revolution and thus was a response to the same conditions that begot the wider labor movement. Two men are typically credited with developing the modern concept of the cooperative enterprise: Robert Owen in Britain and Charles Fourier on the European continent. They advocated that, instead of having businesses be owned by private individuals who pay workers wages and then keep all remaining profits, businesses be set up that gave ownership to the workers themselves as a class. These proposals soon developed into a social movement that was present in many countries; in 1895, the First International Co-operative Congress was held, which lead to the foundation of the International Co-operative Alliance.
Marxism and cooperatives Owen and Fourier both called themselves socialists at some point, and are typically regarded as belonging to the utopian socialist movement. Thus, they were criticized by Karl Marx for, above all, failing to recognize the fundamental role of class conflict in history, while cooperatives as a social form had a mixed reputation in early Marxist circles. On one hand, Marx both praised the development of cooperatives as a victory for the working class in his public speeches and in theoretical works such as Capital analyzed cooperatives as prefiguring, within capitalism, what labor relations will become in communism. On the other hand, Marx insisted that the duty of cooperatives was to gain leverage for the working class to overthrow the capitalist system, thus he also worried that cooperatives might look out only for themselves instead of playing a role in the wider class struggle. As a result, Marx and the wider communist movement would increasingly turn away from bottom-up organization of workers' cooperatives to aim for communist capture of state power as the 19th century progressed; however, this was for what they thought was political expediency, not theoretical necessity. The wider cooperative movement, for its part, continued to be led by people with a variety of opinions on political economy, but were for the most part non- or even anti-Marxist.
Early 20th century China
China's economic and political condition in the early 20th century is generally regarded as poor. Politically, China entered the 20th century still under the rule of an absolute monarch and while never outright conquered by a Western power, it was still made to sign the unequal treaties which forced China to accept exploitative trading terms and grant what was effectively legal independence to the territorial holdings of foreign powers. The Chinese Emperor was overthrown in 1911 and the Republic of China was proclaimed, but the young republic soon was broken apart by small warlords fighting each other. This dire political situation was accompanied by economic deprivation; outside of Shanghai, China had undergone essentially no industrialization, with most of the population being rural peasants with extremely small land holdings.
Traditional Chinese forms of mutual aid
While cooperatives as a modern institution responding to the Industrial Revolution are typically credited to Owens and Fourier, the basic principle of mutual aid between those in need is as old as history itself. Pre-modern China's traditions of mutual aid are vast, differing from place to place and time to time. Some examples include: "buying the leg of an ox", whereby a poorer peasant could contribute some money toward a richer peasant's purchase of an ox, and be rewarded with the occasional use of that ox.
Early cooperatives in China, 1919–1935 Xue Xianzhou, the "Father of Chinese Cooperatives" One of the earliest people to promote cooperatives in China was the Chinese professor and banker Xue Xianzhou. In 1919, he, together with students from Fudan University, founded the Shanghai Cooperative Savings Bank. In 1927 he published a proposal entitled, A Plan for the Cooperativization of China. The plan had three main points: first, it called for a National Cooperative Union "to direct training, planning, and 'practical application;'" second, for a Cooperative Training Institute "to conduct six years of training, divided equally between academic studies and practical work;" and third, for a National Cooperative Bank for "financially assisting cooperative enterprises, worker and agricultural enterprises, [and] lightly capitalized businesses." Xue died suddenly in September 1927, not able to see his plans realized.
The China International Famine Relief Commission and cooperatives Another major strand of the cooperative movement in China came about as a result of Western charitable responses to the 1920–1921 famine. In February 1921, the China International Famine Relief Commission was chartered to manage the distribution of Western funds raised for Chinese famine relief. Among its various actions, beginning in Hubei in 1923 it started sponsoring the formation of rural credit cooperatives, which peasants would buy into and then be able to take out loans for capital improvement of their farms. These proved quite popular and spread quickly, such that the CIFRC also experimented with sponsoring other forms of cooperatives, such as the mutual aid society, though it is unclear what exactly these did. As the number of credit and other cooperatives expanded, it drew the attention of commercial banks, and eventually the Nationalist government. In 1935 the Cooperative Law was passed, and responsibility for overseeing cooperatives in the Republic of China was transferred to the Cooperative Department of the Ministry of Industries.
Diverse cooperatives in Nationalist China, 1935–1949 Cooperatives and the Guomindang
Chinese Industrial Cooperative movement
The Guomindang's growing state influence over the cooperative movement was, like all other aspects of Chinese society, upended by the Japanese invasion of 1937. Most cooperative activity, whether CIFRC-inspired, state-directed, or relatively independent, was concentrated in Hebei, Jiangsu, Zhejiang, and Shandong, and thus the diverse strands of the prior movement were almost entirely snuffed out by the invasion. Out of this cooperative vacuum emerged what is likely the most infamous cooperative movement in history: the Chinese Industrial Cooperative movement; aka Indusco; aka Gung-ho.
Indusco was founded by three foreigners – Helen Snow, Edgar Snow, and Rewi Alley – all of whom were long-term Communist sympathizers and were thus for most of their time in China contemptuous of cooperatives, for the same reasons as the later Marx or the early Lenin was. However, in the aftermath of the invasion, Helen Snow, first by herself then in conversation with her husband and Alley, an old friend, developed the idea of a network of rural light-industry cooperatives which would supply the Nationalist army fighting against the Japanese, thus achieving a dual purpose of war support for the country and economic development among the peasantry. After the three of them worked every lead they had with Guomindang leaders, including Song Qingling, on August 5, 1938, the Chinese Industrial Cooperative Association was founded by an act of the President of the Executive Yuan, Kong Xiangxi. A Chinese associate of Alley, Liu Guangpei, was appointed General Secretary of the Association, and Alley was appointed Technical Advisor. Under Kong's patronage, they set out to organize industrial cooperatives in the countryside as in Snow's plan.
The movement failed. 21st century scholar Jenny Clegg says that Indusco fell "so far short of its ambitions ... as to cast doubt on its credibility." A Japanese intelligence officer reported at the time that the movement was "ludicrous" (馬鹿馬鹿しい). Out of a stated goal of forming 30,000 cooperatives, at its high-water mark in 1941 the movement had organized only 1,867.
Despite the failures, the Chinese Industrial Cooperative movement is noteworthy for several reasons. First, it was the first cooperative movement in China that put industry at the forefront. Second, it was an example of a movement, born of the urgency of the war, that had no qualms about being aggressive with its agenda, yet also trying to balance this with maintaining a traditional cooperative emphasis on grassroots decision-making. Finally, it was the first explicitly left-wing cooperative movement in China: all three founders were Communist sympathizers who sought the approval of Mao.
Cooperatives with the Communists in Yan’an When the remnants of the Communist party arrived in Shaanxi after the Long March, the government they established had extremely limited resources, so cooperatives were appealing not only for ideological reasons, but also for practical ones: self-organizing enterprises would require less of scarce state resources than state-directed ones. This was part of the spirit of the Yan’an Rectification Drive, whereby popular management (民辦) was the order of the day. The difficulty in establishing cooperatives, however, lay in the fact that in many areas the populace was so uneducated that the administrative tasks necessary to run an organization like a cooperative were utterly lacking. For this reason the concept of the mutual aid team emerged, as a simple structure that would not require separate administrative skills and yet would both ideologically encourage communal values among the populace and also, hopefully, lead to increased yields. These mutual aid teams were very similar to traditional forms of collaboration and they often simply replicated legacy social relations of aid between kin, although the Communists did their best to encourage the formation of new networks of aid. As mutual aid teams became more experienced throughout the 40s, the Communists encouraged them to remain in formation year-long, and, when not engaged in the fundamentals of sowing and reaping, put their combined efforts on reclamation of farmland and capital improvements. These efforts produced clear benefit to the populace, and were part of the reason that the Communists were able to maintain their power.
Mutual aid teams were not the full extent of the Communists’ dreams, however. In the areas where the Communists had stronger control and more concentrated personnel they pursued cooperatives with aplomb. Ideally, all productive activity would be organized into cooperative form, and the Communists held up as a model the "comprehensive" cooperative of Liulin village near Yan’an. This single cooperative "combined more than 20 activities which, along with enterprises such as handicraft workshops, retail shops, porterage and team farming, included the collection of grain and salt taxes, the mediation of disputes, marriage brokerage and the management of welfare granaries." This was, of course, exceptional; most cooperatives were far more limited in scope, but the extent of the Liulin cooperative does demonstrate how appropriate the Communists found the cooperative form for almost any problem of economic organization during the uncertainty and limitedness of the Yan’an years.
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