Capitalism Saved Communist China

Speaking of food, it wasn’t long after Mao took power that widespread food shortages began happening. My own parents had to get up at 3 o'clock in the morning to stand in long lines outside of a grocery store to get a pound of sugar or several ounces of cooking oil. Often, they got nothing.

Every year was worse than the last. Between 1958 and 1962, China experienced the worst famine in human history. An estimated 45 million Chinese starved to death, victims of their own government’s murderous stupidity. Among the lives lost were my uncle, my grandaunt and her family of five, and my dad's maternal grandmother.

At the time of Mao's death in 1976, more than 90% of the Chinese population lived below the poverty line, earning less than $2 a day. The only equality socialism had achieved was an equal distribution of misery.

Mao's successor, Deng Xiaoping, recognized that this couldn’t go on much longer. The only way to save the CCP's one-party rule was to get the economy going. But how? Deng had no idea.

Fortunately for him, a small group of farmers did. In 1978 these farmers, 18 of them in the village of Xiaogang, made a secret deal with their village leader.  After fulfilling the government quotas, they would be allowed to keep any surplus for themselves and sell what they didn’t need.

Such a move was risky because it was a rejection of the CCP's socialist policies. But the result was magical. The first year after this deal went into effect, the 18 farmers produced more grain than the entire village had produced in the previous 10 years combined!