could benefit from a substantial shift toward market-linked methods of allocation. But in the dominant producer sector, the continuing prominence of ambitious targets, technical uncertainty and unpredictable demand suggests that as in the past 25 years, fundamental institutional change holds little prospect for improving the performance of China's industrial system.

WORKERS' INCENTIVES IN CHINESE INDUSTRY*

By CARL RISKIN

As the "leading force" in China's economy, industry plays a role that decisively affects her entire development performance. The success that attends this role in turn depends upon the resourcefulness, skill, diligence, and creativity of the men and women who staff the enterprises of the industrial sector. While such a statement might be readily applicable to any other society as well, it is of particular interest in one whose leadership puts as much stress on the importance of the human factor as does the Maoist leadership in China. In such a society, one might expect to find special attention paid to the nurturing of human motivation, not only as an end in itself, but as a potent force for achieving economic modernization.

This essay surveys the main forces and mechanisms affecting the motivation of the industrial workforce in China today. It begins with a discussion of the general theoretical approach to wages and incentives contained in current Chinese Marxist discussion, and proceeds to take up in turn the factors that influence the motivation to become an industrial worker, considerations affecting the choice of occupation within the industrial sector, and the incentives to diligent and creative labor in one's industrial job. Throughout the essay, and particularly in its conclusion, attention is called to the innate social and psychological complexity of the subject of human motivation, and the importance in particular of the socio-political setting in which work takes place to the attitudes that determine work morale and productivity.

GENERAL DOCTRINE

China's wage system, according to the Chinese themselves, is still in part a "bourgeois" system of distribution. All sides in recent debates and discussions about wage reform agree on this point and regard it as inevitable for a certain period of time. The fundamental text cited in such discussions is Marx's "Critique of the Gotha Program," which is therefore worth quoting at some length:

What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally and intellectually, still stamped with the birth marks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society-after the deductions have been made-exactly what he gives to it. *** The same amount of labor which he has given to society in one

*I am indebted to Professors Audrey Donnithorne, Alexander Eckstein, Sam Noumoff, Hugh Patrick, Bruce L. Reynolds, Lloyd G. Reynolds, and Robert Scalapino for making available to me notes of their observations in China. Professor Donnithorne also brought other relevant materials to my attention, for which I am most grateful to her. The above persons are not responsible for the use I have made of these materials.

form he receives back in another. *

* * Hence, equal right here is still— in principle-bourgeois right. * * * The right of the producers is proportional to the labor they supply; the equality consists in the fact that measurement is made with an equal standard, labor. But one man is superior to another physically or mentally and so supplies more labor in the same time, or can work for a longer time; and labor, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labor. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment and thus productive capacity of the worker as natural privileges [emphasis added]. It is, therefore, a right of inequality, in its content, like every right. *** Further, one worker is married, another not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal share in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right instead of being equal would have to be unequal.

But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic, structure of society and its cultural development conditioned thereby."

It can easily be seen that, in both its content and what it omits, this passage leaves behind a myriad of problems that must be confronted in its practical application to a functioning socialist society. For example, how are different types of labor, operating in different industries with different technologies, and embodying various degrees of skill and education, in fact to be reduced to a common denominator for the purpose of calculating the wages due each? How are differences in quality of labor traceable to the individual laborers themselves, to be distinguished from such differences due instead to the efficiency of organization and operation of the units to which the laborers belong? Should the results of (unequally provided) education and training be treated as "human capital," i.e., property as distinct from labor power, and thus exempted from entitling the endowed individual to income just as if it were physical, tangible property which had been nationalized or collectivized? Perhaps most importantly, how rapidly and in what concrete manner should the inequalities due to "bourgeois right" be restricted and eliminated in the process of transition to communism? On none of these questions, unavoidable as they are to a society bent upon developing in a socialist direction, do the basic Marxist texts throw much light. All have been at one time or another the focal points of dispute in the ongoing struggle between those who would preserve (or even increase) existing distributional inequalities in keeping with the state of development of the economy and of the social consciousness of the workforce, and those who would reduce or eliminate them as a reflection of and further contribution to the advance of Chinese socialism. Thus, far from being perceived as merely technical questions involved in the allocation of labor, these issues are treated as among the fundamental determinants of whether China progresses or retrogresses in the development of socialism. It is argued, for example, that "the existence of bourgeois right provides the vital economic basis for (the) emergence" of "new bourgeois elements:"

if the consolidation, extension and strengthening of bourgeois right and that part of inequality it entails are called for, the inevitable result will be polarization, i.e., a small number of people will in the course of distribution acquire increasing amounts of commodities and money through certain legal channels and 1 Taken from citation in Peking Review, Feb. 28, 1975, pp. 8-9.

numerous illegal ones; capitalist ideas of amassing fortunes and craving for personal fame and gain, stimulated by such "material incentives," will spread unchecked; public property will be turned into private property * * * the capitalist principle of the exchange of commodities will make its way into political life and even into party life, undermine the socialist planned economy. * * * 2

Early in 1975, Mao Tse-tung himself, in a brief "instruction" to the people, called attention to the fact that China's current wage system is "scarcely different from (that) in the old society," and he suggested that this system "can only be restricted under the dictatorship of the proletariat." Mao's intervention on this issue testifies to its continuing importance in debates over the path of socialist development in China. The general principles followed by the Chinese are easily summarized: "the money wage received by a laborer, represents a part of the total output of society used for individual consumption; this part corresponds to the amount and quality of each worker's labor, to his social contribution." This wage "reflects the relations between the individual laborer and the state representing the interests of the entire working people." Insofar as the worker spends part of his day working not for his own individual consumption but for "the state representing the interest of the entire working people," he is working for his own direct or indirect interest, and thus no exploitation is involved. However, the successful claiming of special privileges and high incomes by upper echelons can reintroduce the threat of exploitation if not the thing itself.

Industrial wages are overtly and unabashedly kept low. In a meeting in late 1974 with visiting overseas Chinese, Vice-Premier Teng Hsiaoping is said to have put this policy with unusual bluntness:

Wages are low and the living standard is not high. We only get enough clothing and a full stomach. To develop the economy, this situation must be maintained for some time to come. We have made this clear to the people. The people understand. * * *6

Another reason for the low-wage policy is to help "consolidate the worker-peasant alliance" by permitting a gradual reduction in the gap between urban and rural living standards-i.e., allowing the peasants to catch up to the workers and simultaneously thereby to relieve pressures for excessive rural-urban migration.

Nonetheless, state and party policy is to gradually raise the level of wages, a policy applied unevenly over time but which is said to have led to a 1971 national average wage level some 50 percent higher than in 1952. The significance of this rise for the welfare of workers is linked to three related phenomena: (1) The guarantee of job security and full employment; (2) the maintenance of price stability (consumer goods prices are said to have dropped by 2.3 percent in Shanghai from 1965 to 1970); and (3) the provision by the state of health, education and welfare goods and services. Between them, these three sup

2 Yao Wen-yuan, "On the Social Basis of the Lin Piao Anti-Party Clique," Hung Ch'i, March 1975, translated in News from Hsinhua News Agency, Mar. 2, 1975, pp. 16-17. 3 Peking Review, Feb. 28, 1975, p. 5.

Liang-chung she-hui, liang-chung kung-tzu (two kinds of society, two kinds of wages), Shanghai, 1973, p. 8. This small book, which provides a thorough summary of the principles of China's wage system, was written by "comrades from the Shanghai Hutung Shipyards and the Sixth Economic Group of Shanghai Municipal May Seventh Cadre Schools.' 5 Ibid., p. 9.

Teng Hsiao-ping interview of Oct. 2, 1974, quoted from notes of Prof. Fan Lan and reported in the Hong Kong left student publication, Chiu Shih Nien Tai, December 1974, pp. 15-17.

7 Liang-shung she-hui, p. 15.

Ibid., pp. 15-19.

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plementary considerations ensure that wages, however "rationally low" they might be, are received regularly and predictably by industrial workers, that their purchasing power is not continuously eroded by inflation, and that they are supplemented in a substantial way by nonwage income. All three points, and particularly the last, are important to keep in mind when making international comparisons of real living standards.

The degree to which a low-wage policy is consistent with high work morale depends fundamentally upon the legitimacy of the policy in the eyes of industrial workers. Since most net income not received by the workforce as wages and salaries takes the form of enterprise profits and generally reverts directly to the government as state revenue, the problem of the legitimacy of low wages can be regarded conversely as that of the legitimacy of the uses to which state enterprise profits are put. Therefore, as a part of the prerequisite conditions for high motivation among industrial workers, it is necessary to provide a convincing explanation of the uses of the "surplus" they create. The general explanation offered in Chinese wage policy discussions of the need for a high level of accumulation out of net income, is that the accumulated portion is necessary for national defense, strengthening of the revolutionary state internally ("consolidation of the dictatorship of the proletariat"), fulfilling China's internationalist obligations to aid the struggles of the revolutionary peoples of the world, and finally, for creating the conditions for a gradual increase in living standards. Clearly, the motivational efficacy of this explanation depends not only upon the degree to which it is embraced by the Chinese people, a matter which cannot be investigated here,1o but also upon popular perception of whether it is being lived up to. In the light of such an explanation and the ideology and education that lie behind it, for example, we might expect a priori that a low-wage policy would encounter morale problems in an environment of corruption or of extravagantly high salaries among the political and administrative elite. The relation of distributive inequality to work incentives will be pursued further below.

10

Having discussed general policy toward the level of the overall wages bill, we turn now to policy toward the differentiation of wages within that total. As is widely known, Chinese wages are not equal, and we have already seen that the inequalities are traced by the Chinese themselves largely to the remnant element of "bourgeois right" that continues to attach to the wage system.

In fact, this subject has been a source of both theoretical and practical difficulties. Marx's treatment of it, quoted extensively at the beginning of this article, is somewhat formal: because socialist society "as it emerges from capitalist society" is still "stamped with the birthmarks of the old society," therefore wages can only be paid on the basis of an equal right, namely, the right to get back from society an amount proportional to what one has contributed to it in labor; and, since "labor, to serve as a measure, must be defined by its duration or intensity," workers who are better endowed physically or mentally or who have fewer dependents will necessarily emerge better off.

Liang-chung she-hui, pp. 26-28.

10 One note of caution, however: The alarm expressed at-and attention given to the sense of decline of "national purpose" in America in recent years should make us cautious about denigrating the importance of China's "national purpose" to work morale.