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In 1966, Mao Zedong launched a movement towards Socialism, to, solidify his power after a disastrous Great Leap Forward, called the Cultural Revolution. Though the movement moved towards a total Communism, it was never really achieved. For example, peasants both, owned their own land, and worked on group owned lands. What I am wondering is how did the economics work in Cultural Revolution China, specifically in the cities. I am interested in,

  • If it was legal, how could someone set up a business; What general rules or paperwork was involved?
  • How did hiring work?
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heiring?... hiring? – kubanczyk Sep 25 '12 at 13:55
@kubanczyk, ah you're right, I thought "heiring" looked slightly strange :) Thanks. – Russell Sep 25 '12 at 16:01
First dig a grave... – T.E.D. Sep 26 '12 at 17:38
up vote 10 down vote accepted

It was illegal to set up business by person or group during that time. The first license to individual business after cultural revolution was issued in 1980. Even in late 70s and early 80s (after the cultural revolution), trading goods by individual was still a crime called 投机倒把罪,meaning "crime of Speculation and profiteering". People relied on a nation-wide ration system to get everything -- rice, egg, cloth etc. No hiring was needed, government assigned job to everybody. I'm not sure how similar it's to Soviet society, but my guess is, not much different.

After reform in 1978, the ration system co-existed with free market until about 1990. But even before reform, some farms already started to trade produce secretly.

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A very nice answer, welcome to Stack-Exchange History. +1 accept. – Russell Sep 25 '12 at 23:30
Welcome to history.stackexchange! The Soviet system was radically different; as was the Chinese system prior to the cultural revolution. – Samuel Russell Sep 26 '12 at 4:00
BTW, most likely (though I have no proof), 投机倒把罪 was a direct translation of an equivalent Soviet term, both linguistically and politically. And yes, for large part, the whole system was fully patterned on USSR, you're quite correct. – DVK Oct 2 '12 at 13:35

If you wanted to own a business, the way to do so under Communist China was to go into the Army and advance to a generalship. Vast swaths of military-industrial complex in PLA functioned as basically economic fiefdoms subordinate to specific generals. "Hiring" is then of course done by military and civilian personnel assignment by staffing officers in PLA at Party's directions.

Not quite the same as owning a business in a liberal capitalist democracy, but for the guy doing the owning, much better on balance (no worry about competition).

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