The Productivity and Political Radicalism of Chinese Cooperative Movement

The productivity and political incentive of Chinese cooperative movement are still in controversy. We argue that the cooperative brings both scale effect and monitoring cost, and the free exit rights reduce the monitoring cost and raise the net revenue, but the radicalism lowers the effort input and the net benefit for insufficient labor incentives. Meanwhile, the provincial leaders with lower Party ranking behave more radically in cooperative movement. Using the provincial participation rates of three kinds of cooperative from 1950 to 1956, we find that the productivity is indifferent between the household farming and the mutual-aid group, but the elementary and advanced cooperatives see lower efficiency than the household farming. The negative effect of cooperative is more significant in the more radical regions. The Party secretaries of alternate member and non-member behave more radically and thus are more likely to be promoted than the Party secretaries of full member. It empirically confirms that the cooperatives have already triggered a decline in productivity before collectivization that was controversial between Lin(1990) and Kung(1993), and it also clarifies the disputes on the political radicalism in authoritarian China between Kung and Chen(2011) and Yang et al(2014)