#148 1978 · Xiaogang Village, Anhui · Agriculture / rural economic policyincentive-flip
Eighteen starving farmers couldn't legally divide up the collective farmland that was killing them slowly — so they signed a secret pact promising to raise each other's children if the plan got them jailed, and did it anyway.
the problem
a system pools individual output collectively in a way that removes any link between one person's effort and their own reward, and the people living under it cannot change the rule through any official channel
background
Under China's people's commune system in the late 1970s, farmland was collectively owned and worked, with output pooled and distributed across the commune regardless of any individual household's effort — a structure that severed the link between how hard a family worked and what that family actually received. Xiaogang Village in Anhui Province, hit by severe drought on top of this structural disincentive, was reduced to famine-level conditions, with villagers unable to feed their own families despite working the land.
Dividing the commune's land into individually managed household plots was explicitly illegal under the collective system, and openly proposing it risked imprisonment or worse. With no official channel available to change the policy and starvation already underway, eighteen heads of household in Xiaogang decided to act outside the system rather than continue starving inside it.
the move
On November 24, 1978, the eighteen farmers secretly signed a compact dividing the village's collectively held farmland into individual household plots, agreeing that each family would deliver a fixed quota of output to the state as before but keep everything grown above that quota for themselves — and, anticipating the very real risk of arrest or execution for the illegal act, pledged in writing to raise each other's children if any signer was imprisoned or killed for it.
the payoff
In the very next harvest, Xiaogang produced more grain than the village had grown in the previous ten years combined, transforming what had been a starvation village into a net food exporter within a single growing season — a result so dramatic and undeniable that it drew official attention rather than punishment.
what came after
Xiaogang's illegal household contract became the direct template for China's household responsibility system, formally adopted as national agricultural policy in the early 1980s and eventually written into the Chinese constitution — it is now taught worldwide in development economics as the clearest documented case of restoring individual incentive to a collectivized system producing a dramatic, immediate productivity jump, and the village itself is preserved as a memorial site to the reform it started.
references
- [1]How Eighteen Hungry Farmers Beat Collectivism and Helped China Succeed: Lessons from the Village of XiaogangFoundation for Economic Education, 2019fee.org
- [2]Xiaogang Village, where China's nationwide rural reforms startedCGTN, 2021news.cgtn.com