Towards a Worldwide Index of Human Freedom

Liberty in Comparative Perspective: China, India, and the West • 207
democratic socialism in India on the poor by reference to a state that is
“never absent from your life, except when you actually need it” (2006: 64).
Creeping capitalism in Asia
After Deng Xiaoping’s final rise to power as well as under his successors,
the Chinese government switched from radical communism to creeping
capitalism. Reforms began in the countryside. Incentives to work were
reestablished. Peasant judgment replaced cadre decision-making again.
As implied by the label of the new policy, “Household Responsibility
System,” those who made the decisions had to suffer the consequences
again. Although the state retained ownership of the land, the communists
returned rights to work the land to small groups, to families, and even to
individuals.20 Peasants had to pay rent and to sell part of the harvest to
the government at fixed prices. Since surplus products could be sold in
free markets, even scarcity prices got a toehold in the Chinese countryside.
Chinese peasants responded forcefully to the reforms. From 1978 to
1984 agricultural output grew about 42 percent (Lin, Cai, and Li, 2003:
145). Within less than a decade, per capita incomes in the countryside
doubled. Since the mid-1980s, however, the rural-urban income disparity
has widened again. In 2006, urban per capita income was about 3.3
times the rural income (Zhu and Prosterman, 2007: 2). By and large, the
urban-rural gap is wider in the western interior than in the coastal provinces.
The wider it is, the more investment is discouraged and the more
provincial growth rates suffer (Wan, Lu, and Chen, 2008). According to
Bardhan, these early rural reforms have been even more important than
urban reforms, exports, or globalization for China’s economic development:
“Much of the high growth in the first half of the 1980s and the associated
dramatic decline in poverty happened largely because of internal
factors, not globalization. These internal factors include an institutional
change in the organization of agriculture, the sector where poverty was
largely concentrated, and an egalitarian distribution of land-cultivation
rights, which provided a floor on rural income-earning opportunities, and
hence helped to alleviate poverty” (2010: 6).21
20 Most rural households do not even now have certificates stating which land they farm and
which residential property they occupy. A completed land registry might become the first
step towards private property in farmland, which some day might permit the consolidation
of tiny plots into more efficient farms. Although rural residents are discriminated
against when they work in cities, as tens of millions of them do, rural registration also has
some advantages, including access to cheaper medical insurance, a residence, and some
farmland (Economist, 2010, May 8).
21 Huang makes the same point about the timing of significant poverty reduction (before)
and foreign direct investment (later) in China (2008: 26).
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