The French revolution of 1789 – for Marx the most spectacular example of the bourgeois revolutions – was fought under the banner, “Liberty, Equality and Fraternity” (a device still borne on the coat of arms of the French Republic). The same themes echo through the nineteenth-century revolutions of national independence. But in the twentieth century there is a different slogan. Equality remains, but liberty and fraternity have been replaced by national independence and democracy. The terms have changed but some of the content persists – for example; “democracy” often means much the same today as “fraternity” meant to the French revolutionaries. If the “nation” is embodied in the State, then “national independence” secures the liberty of the State in relationship to other States.
However, none of these aims is achieved by a single act of national emancipation. National independence is not simply an abstraction, it requires a basis in economic power, and the capacity to defend national interests and frontiers. In short, “national independence” requires “economic development”. It is not a matter of a country choosing to develop; it is obliged to do so in so far as it wishes to sustain its national independence. The necessity flows from a world order dominated by competing capitalist States. This imposes the need for continuous armed preparedness, which in turn demands industrialization.
It was the growing sense of vulnerability in the Soviet Union, the fear of what was called “capitalist encirclement”, which drove the Russian leadership to undertake the first Five Year Plan, to lurch into the collectivization of agriculture, and to pursue blitzkrieg industrialization in the ensuing years, with all the toll of social deprivation involved. When, as early as 1931, there were calls for a slackening in the pace, Stalin replied: “No, comrades ... the pace must not be slackened. On the contrary, we must quicken it as much as is within our power and possibilities. We are fifty or one hundred years behind the advanced countries. We must make good this lag in ten years. Either we do it, or they will crush us.” 
The rivalries which dominate the world system exercise a compulsion over all the national participants. The compulsion is extreme for States that have started in the race late, are “economically backward’, and particularly so, the more dedicated they are to national independence. But if the quest for independence compels a nation to industrialize, industrialization, if successful, transforms the material basis of the national State, and so, all the components of social life. The aims of equality and democracy cannot but be affected. In the Soviet Union, the history of events since the first Five Year Plan illustrates some effects of this transformation.
What for Marx is the cause of the inequality of incomes? In early capitalism, it is rooted in inequality in the production process, an unequal access to the means of production and the social division of labour. In the process of “primitive accumulation”, great inequalities in the return from work are required to sustain accumulation – capitalists in expanding sectors of production get higher profits than those in declining sectors; industrial profits are higher than the returns to agriculture; skilled workers receive more than unskilled; and so on. The differentials are supposed to distribute capital and labour so that accumulation is maximized. It is accumulation in conditions of material scarcity – scarcity of investable resources, of the educated and skilled – which sustains the main lines of inequality.
Marx contrasts this situation with that in advanced capitalism where accumulation is well established and skills are more abundant: society already has within its grasp the conquest of scarcity. Here inequality persists, because of the domination of a ruling class, using its social and political power to sustain a privileged position; the capitalists, once the precondition for social progress, have become now a “fetter on production”, a parasitic formation no longer required to maintain production. Resources are now available, skills spread throughout the labour force (or capable of easy acquisition) or rendered unnecessary by the refinement of technology: the foundations of scarcity that made capitalism objectively necessary have disappeared.
On Marx’s analysis, then, one would expect that in a backward economy, starting the process of rapid capital accumulation would increase the differences of income as the social division of labour was established. The gaps -between the controllers or owners of capital and those with nothing to sell but their labour, between the contradictions Mao identifies as the “Three Great Differences” (between town and country, mental and manual labour, managers and workers) – would all widen. A government which tried to prevent an increase in inequality at the same time as it pushed forward accumulation would be caught in a contradiction: either accumulation would be sacrificed to preventing inequality, or vice versa. Of course, it would be difficult to check which had occurred, for those controlling the means of production would conceal what was morally reprehensible, the increase in their returns; skilled workers, in demand because of the pace of industrialization, would change jobs to defeat controlled wages, or receive an expanding range of non-cash “perks” to make up their income to a higher level, and so on. Furthermore, to control incomes would require a massive bureaucracy, intervening in detail to prevent evasion and ensure an efficient distribution of capital and labour; but then the bureaucracy becomes a separate social formation, consuming an increasing share of the surplus and so defeating the whole purpose.
In the twentieth century, matters are complicated by the fact that technology is now so refined that industrial output can be increased more rapidly than the number of jobs. This produces in backward countries a common picture of “dualism” – a highly productive but tiny industrial workforce alongside a vast mass of low productivity workers in town and country, an ever more stark “division of labour”. It becomes possible to secure industrial power without a general social transformation. In such circumstances, differences within the industrial workforce become less important than the differences between the mass and the minority.
In Russia, we can see the effect on income differentials of the State undertaking rapid capital accumulation, beginning in the first Five Year Plan (1928-33). In 1917, the new régime laid down clear guidelines; the State should move towards equality of incomes so that “all citizens are transformed into salaried employees of the State, which consists of armed workers ... All that is required is that they should work equally – do their proper share of work-and get paid equally.”  So far as the State itself was concerned: “the salaries of all officials, who are to be elected and subject to recall at any time, (should) not exceed the average wage of a competent worker”.  A few months after the October revolution, the aim was reaffirmed as the “gradual equalization of all wages and salaries in all professions and categories”. 
The Bolsheviks recognized the problem. In conditions of material scarcity, war and civil war, “socialism” was out of the question. Scarce skills would have to be paid more, even if less than under the old régime. A Tsarist expert, it was said, received twenty times the average worker’s wage, but in the early years of the Soviet Union, an expert received no more than five times the average.
The retreat of the New Economic Policy – a partial revival of private capitalism and trade – produced more marked inequality, particularly between the now uncontrolled private sector and the public. But still, the absence of any sustained drive towards capital accumulation rendered the pressures controllable. The new unified seventeen grade scale of wages introduced in 1921-2 to cover the entire workforce envisaged a basic span between top and bottom of 1:3.5 (but some specialists could earn up to eight times the lowest paid worker). Party members were forbidden to receive salaries at the level awarded non-party specialists; the general rule up to the time of the first Plan was that party members could earn no more than the average wage of skilled workers (so that the two-thirds of directors of enterprises who were party members could legally earn no more than their leading workers). By March 1926, one study reports, the average wage for all workers was between fifty-eight and sixty-four chervonet roubles, and for factory directors who were also party members, 187.8 (a span of roughly 1:3.5), and non-party directors, 309.5 (a span of roughly 1:5).  Officially, the average annual income of manual workers was 465 pre-war roubles; the maximum salary permitted to specialists was 1,811 (a span of 1:4); some 114,000 people received this maximum salary, or 0.3 per cent of all earners. 
The impact of the first Plan and the continuing efforts to increase output transformed both the aims of the régime and actual differentials. Now equality of income became, not a key target, but a serious obstacle to what was called “building socialism”. Stalin attacked uravnilovka (“crude levelling”, an abusive term for egalitarianism) as “the peasant outlook, the psychology of equal division of all goods, the psychology of primitive peasant ‘communism’. Uravnilovka has nothing in common with Marxian socialism.”  Molotov went further and demanded that egalitarians be rooted out as class enemies: “Bolshevik policy demands a resolute struggle against egalitarians as accomplices of the class enemy, as hostile to socialism.” 
The restraints on income differences and on the earnings of party members were dropped, and the practice of publishing income figures – other than averages for all workers and employees – ended. However, fragmentary information still appeared, indicating that income differentials (as opposed to the distribution of owned wealth) now became even more extreme than in the private capitalist countries. In 1937, for example, plant engineers were said to be receiving 1,500 roubles per month, directors 2,000, skilled workers 200-300; the minimum wage for piece workers at that time was 110 roubles, and for time workers, 115.  Managers also had access to special bonuses for fulfilling or exceeding plan targets.
This distribution of income was only within the factory. For the social distribution, we must add, at one end, those employed outside the factory sectors (in services and in agriculture), at the other, the ranked hierarchies of the State. Again the information is fragmentary. For example, in 1938, it was announced that the President and vice- President of the Council of Union and the Council of Nationalities were to be paid salaries of 25,000 roubles per month each, and deputies of the Supreme Soviet, 1,000 roubles per month, with an additional 150 roubles per day when the Soviet was in session.  To take another example, during the Second World War, it was reported that privates in the Soviet army received ten roubles per month; lieutenants 1,000; and colonels, 2,400, a range of 1:240. By comparison, in the United States army, rates for the same ranks were $50, $150 and $333, or a span of about 1:6.7. 
These extreme differences were the result both of deliberate government policy and the process of rapid capital accumulation in conditions of national isolation to which that policy was a response. Once the process was basically achieved, the supply of educated and skilled manpower became relatively abundant; differentials began to narrow, just as they had done in the industrialized countries of the West. But the narrowing was obstructed by the politically privileged order. Nonetheless the wage reforms of 1956-60 acknowledged the narrowing process but endeavoured to restrict it to wages alone. In industry the variations now are not wide. One study of engineering, for example, shows the differential between average wage earnings and the salaries of technical and office staff between the early l930s and the 1960s as follows:
(average manual wage earnings: 1) 
Another study gives the rate for skill grades as a ratio of the basic rate for different industries as follows: 1:3.75 (underground coal mining); 1:3.2 (ferrous ore mining); 1:3.2 (ferrous metallurgy); 1:2.85 (non-ferrous metals mining); 1:2.4 (cement); 1:2.3 (chemicals); 1:2.0 (construction); 1:2.0 (oil refining): 1:1.8 (food preparation). 
The figures tell us nothing about the variation between industries, between industry and agriculture, between workers and all other occupations. For example, unskilled Leningrad engineering workers in the late 1960s were said to receive an average monthly wage of 97.5 roubles; skilled workers up to 120; foremen 173. But a government minister received about 1,050 roubles per month, or nine times the average wage. Furthermore, the top income figures contain no allowance for extra provisions like cars, holidays, houses, special shops and schools, all of which widens the gap between workers and top government officials to possibly 1:25-30.
Unlike the Soviet Union, China had no introductory phase in which official policy was dedicated to the achievement of equality. Officially, the régime always adhered to Stalin’s proposition that egalitarianism is, in Chou En-lai’s words, “a type of petty bourgeois outlook which encourages backwardness and hinders progress. It has nothing in common with Marxism and a socialist system.”  On the other hand, in contrast to Stalin, the régime always expressed anxiety lest income differentials, particularly among workers, grew too wide; for example, in 1958, Mao argued that wage differentials were too wide and should be narrowed, although not eliminated.  Yet Mao also tolerated with equanimity – as we have seen – the high rewards given to capitalists, and when their properties were purchased or absorbed by the State, the continued payment to them of a rate of interest of five per cent on the capital.
In sum, this position has remained reasonably constant, although different elements have been stressed at different times. For example, we find Mao in 1964 arguing: “The system of high salaries for a small number of people should never be applied. The gap between the incomes of working personnel of the Party, the Government, the enterprises and the people’s communes, on the one hand, and the incomes of the mass of the people on the other, should be rationally and gradually narrowed and not widened.”  During the Cultural Revolution and afterwards, similar statements were regularly made by party leaders, although no one raised the question of changing the existing income structure. That structure, laid down in 1956, appeared to have been retained intact throughout all the different emphases of policy.
The approach to pay straddled a contradiction. On the one hand, capital accumulation in conditions of backwardness necessitated income differences – hence the opposition to egalitarianism. On the other, industrial jobs did not expand fast enough to make available to an increasing proportion of people some access to higher incomes. As a jesuit, the potential for resentment at the income results of accumulation could become extreme (unlike the situation in the Soviet Union in the 1930s). The government stressed three different aims (which were often confused with each other) – narrowing income differences, not permitting income differences to become more extreme, and not allowing income differences to be expressed in marked differences in living standards and life style. The third received most attention, the second slightly less, and the first, in practice (that is, the wage structure) the least.
The official justification for the policies was curiously un-Marxist. It was argued that a relatively high living standard was the basis for the foundation of a bourgeoisie, a constant threat despite the achievement of “socialism”. Thus, different levels of consumption are not the result of the existence of classes, they are the cause of the existence of classes. This turns Marx on his head.
However, in China, Marx and Lenin are cited in support of the case that permitting “bourgeois right” (the temporary expedient of paying people according to their work, made necessary in an immediate post- revolutionary situation) can of itself re-create capitalism. The moral and the economic seem to coincide: “If a Communist party member has no sober understanding of bourgeois right, and if he lets the concept of bourgeois right clog up his mind, thinks about narrow personal gains and losses, refuses to work half an hour more than the others or to receive less remuneration than the others, seeks fame, gain, enjoyment and privileges, and operates his own comfortable quarters.., he would mark time on the road of continued revolution.”  The basis for increasing consumption is not, then, related to the ordering of the production process, but to the psychology of the individual concerned. Curbing the tendency of the cadre to indulge his appetite does not take the form of control of his income (nor the rationing of all consumer goods) but strengthening his self-discipline. Higher incomes are associated with lower work efforts: “The kind of style of work that should be maintained and fostered is a major aspect of the struggle between the proletariat and the bourgeoisie.”  But if the proletarian is defined as no more than abstemious and hard-working, and the bourgeoisie as greedy /or lazy, nothing ties such terms to any objective social structure. I may be proletarian today, bourgeois tomorrow and proletarian the day afterwards; the “class struggle” comes to mean no more than the effort to prevent someone having phases of bourgeois tiredness between the times of proletarian hard work!
How does this conception of “bourgeois right” compare with Marx’s? For Marx, “abolition of the wages system” is “the revolutionary watchword”.  It is the most important mark of the post-revolutionary order, let alone of socialism. Workers now control production and the State, and have thus abolished the need to sell their labour as the sole means of material survival. However, all cannot immediately be paid equally since skills are still in short supply. Only over a longer period of time can the resistance of the old ruling class and the problems of immediate scarcity be overcome. Only then can the distinction between skilled and unskilled, between mental and manual labour, between town and country, finally be dissolved. It is material abundance – and what flows from this, high incomes for all – which dissolves the yoke of the social division of labour and “bourgeois right”, not an effort of will or a moral striving for abstemiousness, or government edict. Marx puts it in this form: “In a higher phase of Communist society, after the enslaving subordination of individuals under the division of labour, and therefore also the antithesis between mental and physical labour, has vanished; after labour has become not merely a means to live but has become itself the primary necessity of life; after the productive forces have also increased with the all-round development of the individual, and all the springs of co-operative wealth flow more abundantly – only then can the narrow horizon of bourgeois right be fully left behind and society inscribe on its banners: From each according to his ability, to each according to his needs.” 
Is China on the threshold of such a situation? At the 1975 Fourth National People’s Congress, Chou En-lai set as the national aim the “comprehensive modernization of agriculture, industry, national defence and science and technology before the end of the century”. In Marx’s terms, this means, not the abolition of the existing division of labour, but its establishment: not the ending of “bourgeois right”, but on the contrary, its most rigorous enforcement. The level of consumption is very low, reflecting great material scarcity. If a moral campaign by the State can achieve what Marx called communism, then Marx and his materialism are nonsense; in which case, the concept of communism as he presented it is equally false.
Does the reality of income differentials in China demonstrate the absurdity of Marx’s materialism?
The basic income structure that governs China today was established in the late 1950s. The overwhelming majority of people – possibly 300-350 million earners – are governed by the wage point system in agriculture. The minority outside agriculture – some fifty to seventy million earners – can be divided into four groups:
1. Workers and staff in State administration, welfare and educational organizations, covered by a thirty grade pay system. In 1955-6, the rates (as opposed to earnings) were said to cover a range of 1:31 (and 1:19 in local government). This is said to have been reduced to a span of 1:20 (another estimate says 1:25.2) in 1958, but thereafter may have widened again to reach roughly the same span in 1972.  The PLA, whose pay structure is not known, ought also to be included in this category.
2. Technicians and technical staff governed by an eighteen to twenty-four grade pay system with a rate span said to be of 1:10 in the late 1950s.
3. Workers and staff in public sector economic undertakings (employing 100 workers or more), governed by an eight grade wage system, at various times said to span a range of rates, 1:2-3.
4. Workers and staff in enterprises with less than 100 workers, contract and temporary workers, rural non-agricultural workers etc. The size of this group is not clear, but its pay seems to be the same as in agriculture, on a work-point basis rather than a grading system.
Having several overlapping scales makes it difficult to assess the overall span of incomes. The individual Chinese tends to assess income differentials solely in his workplace, rather than on a national scale. Furthermore, the government publishes no estimates of the numbers in each group or grade, so it becomes impossible to compare income inequality in China with that in other countries. Nonetheless, let us examine the fragmentary information on each of the five groups:
1. The State administration. The thirty grade pay structure had, in 1975, a top rate of RMB 400 which, according to Teng Hsiao-p’ing, was being received by some 100 people in the whole of China. The figure is misleading, for it includes no estimate of other privileges attached to high office. For example, Red Guard newspapers in January 1968 alleged that senior ministers received special allowances of up to fifty per cent of their pay for working away from home; there is no evidence that this practice has been discontinued. It is also misleading because it does not include all the top earners of China. Thus, in 1975, Tan Fu-ying, head of the Peking Opera troupe in Shanghai, and Chou Hsin-kao, one of the principal singers, were reported to have volunteered to cut their monthly salary from RMB 1,000 to RMB 300.  How many people, receiving incomes above RMB 400 in China, did not volunteer for a cut is not known. Nor is it clear whether interest payments to capitalists are still made; this produced enormous incomes in the early 1960s (the end of such payments is assumed, but has not been officially announced). Presumably, the cumulative wealth of the capitalists was disposed of in some way, whether by buying State bonds or financing petty activities, and now produces an income outside the grading system. Writers presumably also continue to draw royalties on their works; Red Guard publications documented some of these payments, one of which brought an income of RMB 200,000 to the novelist, Pa Chin.  Foreign specialists employed by the government of China were said, in 1972, to receive incomes between RMB 300 and 800. 
Below the RMB 400 mark, there are a scatter of incomes, accruing to high State officials: for example, the Chief Astronomer of the Nanking Observatory is said to receive RMB 330 per month. Older professors in the universities are said to get between RMB 300 and 360, as opposed to the starting rate for university teachers which is close to the average industrial wage, RMB 50-60, a range of 1:6 which is wider than the official salary scales in, for example, British universities (roughly 1 :4).  Particular ministers may get higher figures; a 1966 study reports a minister receiving nearly RMB 400; his bureau chiefs 200 to 250; divisional chiefs, 150 to 200; section chiefs 45; a span in this one ministry at the national level of roughly 1:10.  The editor of the People’s Daily is said to receive RMB 200, and ordinary journalists, RMB 80 (a span of 1:2.5).
Edgar Snow reported in the late 1960s that in the PLA “the present scale of pay ranges from US $2.50 per month for a private to US $ 192-236 for a full general”, a span of 1:77-94.  In the excitable climate of the Cultural Revolution, such enormous pay differentials must have provoked much resentment. However, Mao’s complaint was not against the differential itself, but against the resentful. “There are people instigating the soldiers to oppose their superiors”, he said in 1967, “and saying that while you are making only six yuan a month, the officers are making much more and enjoying the luxury of riding in cars.”  Perhaps the differentials were narrowed as a result of the Cultural Revolution, but they remain extreme if Snow’s figures are correct. Possibly such resentments lay behind the 1965 abolition of marks of rank in the PLA; rank itself was not abolished, but expressed in new forms (the number of pens in the top pocket or the number of pockets has been mentioned) and through social privileges (for example, gaberdine rather than cotton uniforms; first-class travel on the railways, air or car travel, as opposed to the hard class’ on trains, or truck and bicycle transport). Mao showed no concern with income differentials in the PLA, only with the need to have a common style regardless of income. A national newspaper expressed it in 1975: “The officers and soldiers are all equal politically. They only differ in the division of work and official duties, and there is no distinction between high and low.”  This is as disingenuous as the phrase “all equal before the law”, or its ancestor, “all equal in the eyes of God”.
The additional privileges of upper income groups are not included in the income figures, nor can they be easily quantified. They include the use of cars with chauffeurs, rail and air travel, servants, places in sanatoria, housing, access to special services and goods, banquets and so on. In the 1950s and 1960s, there were – as in Russia – special shops for high ranking cadres, denounced as “little treasure pagodas” by the Red Guards (whether or not they have been ended is unclear). Housing is an important index of status for these holding high rank. The 1966 report on a Peking ministry mentions that about sixty per cent of the staff lived in State-run housing; the minister and his vice-ministers received individual houses; the assistants to the minister and bureau chiefs lived in apartments in a special modern block; and the rest of the staff in three dormitory blocks. Party members appeared to be consistently favoured in the allocation. In the PLA, senior officers have similar access to special services – for example, special military hospitals.
With such differentials, the children of the high ranking are inevitably favoured. After the Cultural Revolution, the press continued to complain that senior cadres used their influence to ensure their children gained access to university, avoided manual labour, and received the best jobs after graduation.  As we have seen, in 1971 Lin Piao’s son had the remarkable distinction of being a senior officer in the Air Force at \the age of twenty-four. In 1973, the press reported a scandal when a son refused to allow his father, a Long March veteran and senior PLA officer, to get him transferred from a rural area to enter university. The press cannot tell us of the cases where sons or daughters did not refuse such parental assistance.
Lower down the hierarchy, the administrative grade system becomes more complicated, with some eleven regional variations (with a forty per cent range between them) and graded living expense subsidies. Before the Cultural Revolution, the maximum addition to the basic pay was ninety-three to ninety-seven per cent. A grade I driver in Mangya, Tsaidam Basin, received RMB 196 per month, and in Shansi, RMB 70. 
Although the overall picture is not clear, the differences in official incomes appear so marked (even if their effect is curbed by the rationing system, shortages and the stigma attached to conspicuous consumption) that a few voluntary pay cuts do not affect the situation. In the absence of a new wage and salary structure on one scale, published so that all the people of China can see it, one must assume that the basic structure of 1956 has remained intact.
2. Technicians and engineers are on a national scale that covers a wide variety of plants and enterprises. Visitors to Chinese factories since the Cultural Revolution report a range between a maximum comparable to the administrative top grade, and a minimum below the average industrial wage (RMB 50-60). Meisner reported from one plant a range between RMB 230 and RMB 34, or a span of 1 :6-7.  Other reports confirm top rates of between RMB 200 and RMB 250. Little seems to have happened to the structure since before the Cultural Revolution. However, in 1977 it was reported that senior technicians were to receive pay increases from 1 October (whether achieved by an increase in the pay received in a particular grade or promotion between grades was not clear).
3. Industrial workers have a narrower span of wage grades than the two preceding groups, include more people, and are markedly in advance of the rest of the working class and much of the rural population. The span depends upon the skills involved and the priority attached to the plant and industry concerned. The average wage is RMB 50 to 60, and the span covers a range of 1:3, or RMB 36 to 108. Dockers’ wages in Shanghai average RMB 70.  Apprentices do not figure on this wage scale. In some factories they receive RMB 18-20; in another in Peking, RMB 30.
In 1977, the government announced pay increases affecting some forty-six per cent of workers employed in the organized sector of industry. This was achieved, not by changing the grading structure, but by the promotion of workers in the two bottom grades to higher grades, the average increase being between RMB 7 and 18. Other workers also received increases, although no workers paid over RMB 100 were affected. The change excluded apprentices, workers in agriculture and workers paid on a work point system. At the time of writing, economists – stimulated by Hua’s statement at the 11th Party Congress that wages should be linked to productivity – are debating the best form for productivity bonuses.
In the past, industrial workers have also received incentive bonuses and overtime pay, as well as welfare benefits, housing, recreation facilities, and pensions (financed out of the wage fund).
4. Other non-agricultural employment. There is a vast range of labour outside the grading system, from petty services and handicrafts to small-scale factories. There seems to be a trend towards expanding this sector at the expense of modern “organized” industry, but there is little evidence of the numbers involved. From the reports of visitors to a small selection of plants – presumably among the very best, since otherwise foreigners would be unlikely to receive permission to inspect them – it appears pay levels are strictly related to output, and are roughly half the average in the modern sector (or RMB 20-30 per month). Small-scale industry seems to draw heavily on the labour of housewives organized by neighbourhood committees. One visitor to the Yun Chun Lane Residents’ Committee in Shanghai found that unemployed women were organized in factory piece work, in work at home for outside buyers (a “putting-out” system) or in small neighbourhood workshops. They were paid RMB 26 per month, or slightly less than an apprentice in the organized sector, a level of pay which would be tolerable only in a household where there were other earners. 
5. The majority of the Chinese labour force is not paid on a grading system at all, but in relationship to the collective profits made annually by an agricultural team or brigade after meeting certain set obligations (taxes, accumulation and welfare fund costs). This income may be supplemented by “sideline” activities (handicrafts, peddling, petty trade, cobbling, cutting grass for heating and fodder, as well as small industrial enterprises); by the sale of private agricultural output (including the raising of livestock); and remittances from household members working elsewhere (in the city or abroad, important for Kwantung villagers). The picture is therefore extremely varied – between brigades or teams working in intensive farming, horticulture or export crops, in well-watered fertile areas on the outskirts of a big city (with a large market), with outside work easily available for some family members or for cultivators in the off season; and villages in the barren hill areas, remote from the cities, with little trade and no important local markets. The range is between incomes well above those received by the mass of the city population and pay on the verge of, or below, subsistence level.
The majority of Chinese cultivators receive incomes well below the average for the cities, and this makes for the sizeable gap between town and country. There are no recent figures available on the size of the gap, but in the 1950s estimates were made of the difference in real consumption per head in comparison with the 1930s:
Workers and employees
Peasants as percentage of
The figures show a surprising stability. However, the “workers and employees” figure is raised by the high income of top urban wage earners; otherwise the gap between the mass of the urban and rural population would be less extreme. In the 1950s, the ratio was about 1:2. In terms of official income (as opposed to consumption; it costs less to live in rural areas), the gap between the average permanent employed worker in the city and the agricultural worker is wider – in 1960, RMB 560 as opposed to RMB 140 (or 1:4).  For rough comparison, the ratio between all city incomes and the rural average in two Latin American countries in the 1960s was: 1:2.5 in Venezuela, and 1:2.3 in Mexico. 
The figures are misleading because the variation in rural incomes is great. For example, the Westlake Commune, growing tea near Hangchow, claimed that its top teams received average monthly earnings of RMB 86, which does not include the proceeds from private cultivation; while a Hopei Commune, reported by NCNA in 1972, claimed that its annual product per head was 99.45 yuan which, if the income of its members took all the product, would have produced monthly earnings of only RMB 8.3.  Without employing the entire rural labour force on a standard wage grading system which in the main ignored the enormous regional differences in productivity, there is little possibility of doing much about such differences. Such a task is beyond the resources of the Chinese State, whether this means the resources to meet the wage bill or the administrative structure to supervise it.
Numerous visitors over the past ten years have been able to visit communes, but inevitably it is a small selection. What are the differences noted? Burki in a 1964 study of thirteen communes estimated the variation in annual family incomes as covering a range from RMB 405 to RMB 1,392 (or RMB 34 to RMB 116 per month), and for individual workers, from RMB 166 to RMB 568 (or RMB 14 to RMB 48 per month). The variation in agricultural wages per month was between RMB 17 in a Chekiang commune and RMB 47.22 in an Inner Mongolian commune, with an average in monthly wages from collective agricultural work of RMB 30.1.  Buchanan in a study of eighteen communes two years later calculated the average agricultural pay per month as RMB 23.9. The incomes of the communes he visited varied over a range of 1:4; of the teams in the communes, by 1:2; and of the members of the team, by 1:3. 
To the income received from agricultural labour on public land must be added the income from “sideline” activities. Here the variation between households is extreme, depending upon the availability of a market. Burki estimates such work adds another twenty per cent to rural incomes; Deleyne argues that private agricultural activity adds on average fifteen per cent with a maximum of thirty per cent.  In sum, a reasonable guess would be that the span of rural incomes covers a range of about 1:12.
There is little guide as to the condition of the poor. Some things are cheaper in the countryside, and foodstuffs from private plots safeguard rural families to a greater degree than urban; the income figures perhaps thus exaggerate the gap. The Hopei commune claimed that its richest families consumed 305 kilograms of grain per head per year, and the poor, 207 kilograms, a figure well above the urban ration of 175 kilograms. Nonetheless, families in the commune presumably had to borrow to make up their food and clothing. There is no information on the extent of rural borrowing apart from the fact of occasional campaigns to recover outstanding debts. 
Other inequalities persist. Women apparently can earn no more than seven to eight points per day, no matter how hard they work, whereas men can reach nine to ten. This entrenches a “division of labour” that is not counted among Mao’s Three Great Differences. There seems to be more equality between men and women in urban areas but, as in so many countries, women tend to be concentrated in the low-paying jobs – down to the notorious example once raised in the Chinese press (and then forgotten), the old women night soil cleaners of Peking. The differential work point system is justified on the grounds that women are physically less strong than men, a stock rationalization in most societies, and one contradicted in China by the use of women in heavy manual occupations.
While the vast rural sector remains outside a standard national pay structure, any aspiration to greater income equality is clearly utopian. The government does not raise the question. Its concern at most is with the urban minority, and even then it is with preventing people expressing their different incomes in different consumption standards rather than changing the differentials themselves. Nevertheless, the differences are expressed – between the cadre with leather shoes and tailored clothes, living in an apartment with a private kitchen, bathroom and running water, and those with cloth shoes, crammed in dormitories; between the city technician with a steel bicycle, a radio, a fountain pen, smoking Red Lantern cigarettes, and the worker who owns none of these things and smokes “10,000 Li” cigarettes.  Prices are low, but incomes are very low. A visitor reports, for example, that in one factory, monthly wages ranged between RMB 36 and RMB 53; a twenty-five-year-old could expect to earn about RMB 40, of which RMB 6 would go on rent and electricity, the remainder being divided between food (two meals a day in the factory canteen cost RMB 10 a month), clothing and cigarettes; almost everyone smoked, and an average-priced packet of cigarettes would take more than a quarter of the monthly wage. 
In the countryside, some families can afford new and better housing, can spend open-handedly on festivals, weddings and durables (bicycles, watches, radios, sewing machines); they eat white rice at all meals and, quite often, meat; their sons are able to continue in education, and easily find brides. Yet other families do not earn enough work points to buy their grain ration, persistently fall into debt (which, over a year, can accumulate to several hundred yuan); they eat congee, not white rice and, in some villages, depend on public relief grain.  The policy of local “self-reliance”, meeting local needs from local resources, exaggerates such problems; the rich areas no doubt would be happy to be left alone to be “self-reliant” while devil take the poor.
Given the surprising degree of inequality evident in the official income figures, how is it that the general impression is of such relative equality? The secret lies partly in the stigma attached to conspicuous consumption, partly in the lack of typical Western signs of inequality and in the insensitivity of foreign visitors to the language of social status in China, but above all in the rationing system and the limited supply of goods available for purchase. Rationing imposes a certain equality of basic consumption – as it did in Russia in the 1930s and in Britain during the Second World War – and the limited supply of consumer durables resulting from the State’s concentration on heavy industry makes it difficult for the better-off to express higher incomes fully.
There are many other components in consumption which cannot be quantified. Services and housing – where available – are relatively cheap, and so raise the real value of urban incomes. But on the other hand, there is no income tax, and the State’s tax revenue comes entirqly from indirect taxation, particularly on consumer durables. The availability of services must be a continuing problem, despite the great improvements made since 1949. For example, the number of hospital beds has increased dramatically since that year and may now have reached one million – or roughly one bed to every 800-900 people, compared to average figures in Europe of one bed to every 46-180 people.
There are reports in recent years of a narrowing of differentials, of pay cuts at the top, and of a bunching of workers in the middle grades of the eight grade system. But, as should now be clear, such changes – even if there were firm and comprehensive information – would barely change the national picture of differentials, and might indeed only increase the gap between top pay and the middle wage grades, or between the elite and the mass of urban and rural poor. China has to go a long way to reach the degree of equality in the Russia of the New Economic Policy, let alone anything the 1917 Bolshevik leadership would have regarded as “socialism”. The overall picture is of great stability and considerable differences.
1. Speech to managers, February 1931, cited by Isaac Deutscher, Stalin, London (Penguin edition), 1966, p.328
2. Lenin, State and Revolution, SW7, p.92.
3. Lenin, Tasks of the Proletariat in the Present Revolution (“April Theses”), SW6, p.23.
4. Lenin, CW27 (Russian), p.132, cited Tony Cliff, Stalinist Russia, London, 1955, p.53.
5. S. Zagorsky, Wages and regulation of conditions of labour in the USSR, Geneva, 1930, pp. 176-8, cited ibid., p.55.
6. Statistical Handbook of the USSR, Moscow, 1926, cited ibid., p.56.
7. Cited by Z. M. Chernilovsky, History of State and Law, Moscow, 1949, cited ibid., p.56.
8. Cited by D. I. Chernomordik, The economic policies of the USSR, Moscow, 1936, p.240, cited ibid., p.56.
9. Cited Cliff, Stalinist Russia, op. cit., p.57.
10. Annual figures given in Stenographic Report, First Session, Supreme Soviet of the USSR, Moscow, 1948, pp.124, 205, cited ibid., p.60.
11. New York Times, 23 August 1943.
12. Extracted from Janet Chapman, Wage variations in Soviet industry: the impact of the 1956-60 wage reform, Santa Monica, 1970, p.26.
13. From figures supplied by Alastair McAuley, Essex University, cited by Malcolm Crawford, Pay: has Russia a better answer?, Sunday Times, London, 3 October 1976.
14. Report on the work of the government, First session, First National People’s Congress, 23 September 1954, Peking 1954, p.11.
15. Talks with directors of various co-operative areas, November-December 1958, in Miscellany I, p.134.
16. JMJP, 14 July 1964.
17. Kuang-ming JP, 22 April 1975, SCMP 75-22, 27-30 May 1975.
18. JMJP, 28 March 1975, SCMP 5846, 6 May 1975.
19. Value, Price and Profit, in SWI, p.337.
20. Critique of the Gotha Programme, in SWII, p.566.
21. Estimates by Howe, Wage patterns, op. cit., pp.40-41, for whom see official Chinese sources. Another estimate states a span of 1:28, cited from Chung-yang Ts’ai-cheng fakui hui-pen, in Collection of the 1956 Central Financial Regulations, Peking, 1957, pp.228-9, by M.K. Whyte, Inequality and Stratification in China, CQ 64, December 1975, p.684.
22. SWB 4949/BII/8 May 1975.
23. Cited by Whyte, op. cit., p.732.
24. Report, New York Times, 17 Mar. 1972, p.10.
25. Report of a visit, Jules Nadeau, Far Eastern Economic Review, 21 November 1975, p.47; see also Ross Terrill, 800,000: the Real China, Boston, 1972, pp.127, 130.
26. Reported by A. Doak Barnett, CQ 28, October-December 1966, p.8.
27. The other side of the river, op. cit., p.289.
28. July-September 1967, in Miscellany II, p.465.
29. Kuang-ming JP, 5 January 1975, SCMP 5771, 21 January 1975.
30. JMJP, 14 September 1973, and Hung-ch’i 4, 1974, pp.35-42.
31. Cited Hoffman, The Chinese Worker, op. cit., p.101 (for which, see Chinese sources).
32. Maurice Meisner, The Shenyang Transformer Factory, CQ 52, 1972, p.731.
33. Nadeau, op. cit.
34. William Shawcross, Far Eastern Economic Review, 12 December 1975, pp.30-31.
35. At 1952 prices: State Statistical Bureau, 1957; T’ien Lin, in Hsin-hua pan-yüeh-kán, 1957, p.158, cited Whyte, op. cit., p.686.
36. JMJP, 3 May 1962, cited Hoffman, Work incentives, op. cit., p.13.
37. Table 8, Income distribution in Latin America, United Nations (ECLA), New York, 1971, p.105.
38. Report Far Eastern Economic Review, 19 February 1973.
39. Table 11, Shahid Javed Burki, A Study of Chinese Communes, in Kuan-I Chen and Joginder S. Uppal, India and China, Studies in Comparative Development, New York, 1971, p.181. (Extract from A study of China’s Communes, 1965, Cambridge [Mass.], 1969, pp. 8-32.)
40. The Transformation of the Chinese Earth, London, 1970, p.136.
41. Deleyne, op. cit., p.73.
42. Document of the Central Committee, Chung-fa 1971, 82, translated in Studies on Chinese Communism, 6/6, September 1972.
43. The example comes from Nadeau, op. cit.
44. See letter from Shanghai, Far Eastern Economic Review, 18 March 1977, p.110.
45. The example comes from Whyte, op. cit.
Last updated on 22.1.2002