Shareholding–Cooperative System in China
In their effort to create a proper ownership form for rural enterprises, the Chinese “peasant-workers” and their community governments have designed an ingenious one: a “shareholding–cooperative system (SCS).”11 It is similar to James Meade’s “labor–capital partnership” in that both systems have a labor share and a capital share;12 however, the Chinese SCS is distinct in that the capital share itself is mainly collective in the sense of belonging to the representative of the community – the township and village governments. Thus the SCS in China’s rural industry may serve to harmonize the interests of inside workers and outside members of the same community. To give a sense of its working mechanism, I now describe briefly one of the earlier experiments with the SCS in rural China.
In one locality where I conducted preliminary field research in the summer of 1993, Zhoucun District of Zibo (Shangdong Province), the SCS was invented in 1982 as a response to the difficulties of dismantling the collective properties of the People’s Commune. The peasants found some collective properties (other than land) to be simply physically indivisible. They decided to issue shares to each “peasant-worker” on equal terms, instead of destroying the collective property (such as trucks) to sell them in pieces (which had happened in many other regions).
Soon after, they realized (or conceded) that they should not divide up all collective properties into individual shares to distribute to the current workforce, because the older generation of “peasant-workers” had left the enterprises and the local government had made prior investments. Thus they decided to keep some proportion of “collective shares” which would not go into individual labor shares. These collective shares are designed to be held by outside corporate bodies, such as local governmental agencies, other firms in and out of the locality, banks, and even universities and scientific research institutions.
The following figures show the flow of profits of SCS in Zhoucun District:
- 10 per cent: Workers’ welfare fund
- After-tax profits of SCS firm – 30 per cent: Firm development fund
- 60 per cent: Share fund (collective and individual shares)
Clearly, the development of SCS is the joint product of two factors:
(1) accumulated change of Chinese rural institutions (such as the dissolution of the commune), and
(2) accidental solutions to the indivisibility of People’s Commune’s property.
Therefore, the SCS has created an attitude of ambiguity among the Chinese practitioners and scholars on China as to how to evaluate the potential of this new form of property. As Karl Polanyi once said: “the contemporaries did not comprehend the order for which they were preparing the way.”
As for James Meade’s “social dividend,” there is so far no Chinese experiment in a similar spirit. However, it is my belief that China can benefit from considering seriously Meade’s program of “social dividend” in establishing her own social welfare system."
- Essay/Chapter: Liberal socialism and the future of China. A petty bourgeoisie manifesto. Cui Zhiyuan. Chapter 9 of: The Chinese Model of Modern Development. Edited by Tian Yu Cao. 
- Essay/Chapter: Liberal socialism and the future of China. A petty bourgeoisie manifesto. Cui Zhiyuan. Chapter 9 of: The Chinese Model of Modern Development. Edited by Tian Yu Cao.