...in five years, or a little more, it can certainly be accomplished. The Party's general line for the transition period is the beacon that lights up all our work. We must not depart from this general line; to depart from it is to commit either "Left" or Right errors.

Some people think the transition period is too long and become impatient. This leads to "Left" errors. At present there is impatience in capital construction, in agriculture, in handicrafts, and in capitalist industry and commerce—for example, being over-eager to set up more cooperatives, and not halting the offensive against the capitalists after the "Five Antis," which puts the working class itself in a dilemma, unable to advance or retreat.

Some people, after the victory of the democratic revolution, still remain where they were. They have not understood the change in the character of the revolution and go on pursuing their "New Democracy," failing to carry out socialist transformation. This leads to Right errors. As for agriculture, the socialist road is the only road for our country's agriculture. To develop the movement for mutual aid and cooperation and to raise the productive forces of agriculture steadily—this is the central task of Party work in the countryside.

Right deviation is expressed in three phrases:

"Establish a New-Democratic social order." This formulation is harmful. The transition period is changing every day, and socialist factors arise every day. How is a so-called "New-Democratic social order" to be "established"? To "establish" it would be very hard indeed! Take private industry and commerce: they are in the very course of transformation. If you "establish" an order in the second half of this year, it will no longer be "fixed" next year. Agricultural mutual aid and cooperation also change from year to year. The transition period is full of contradictions and struggle; it is a period of very violent and very profound change. The revolutionary struggle we wage now is in some ways even more profound than the armed revolutionary struggle of the past, for it aims to wipe out capitalism within ten to fifteen years. The idea of "establishing a New-Democratic social order" does not accord with the actual conditions of the struggle, and it hampers the development of the socialist cause.

"Move from New Democracy toward socialism." This formulation is not clear. Merely "moving toward"—moving toward year after year, and still calling it "moving toward" even after fifteen years? "Moving toward" means not yet having arrived. This formulation looks all right, but on close analysis it is inappropriate.

"Guarantee private property." Because the middle peasants fear "standing out" and fear "having their property communized," some people put forward this slogan to reassure them. In fact this is wrong.

We put forward gradual transition to socialism, and this is better. By "gradual" is meant that it is divided over fifteen years in all, and each year again has twelve months. Go too fast and it is "Left"; do not move at all and it is too Right. We must oppose both "Left" and Right, transition gradually, and in the end complete the transition entirely.

The transition period means a gradual transition to socialism, basically completing socialist transformation, by the method of gradual transition. For the collectivization and cooperativization of agriculture and handicrafts this is fairly easy to understand. How to transform and transition capitalist industry and commerce step by step to socialism, however, many people do not understand. In my view, the socialist factors grow year by year; it is not that capitalist industry and commerce will suddenly be confiscated in the sixteenth year. Judging from the experience of the past four years, the socialist factors within capitalist enterprises have grown year by year. Private commerce can be squeezed out year by year. If retail is squeezed by five percent a year, in nine years forty-five percent will be squeezed out; adding the thirty percent already squeezed out, by the end of the Second Five-Year Plan seventy-five percent will be squeezed out; retail takes a long time to transition, but in ten years it too can basically be squeezed out. The main part of wholesale can be squeezed out quickly—only six or seven years are needed. Squeeze them out toward both sides: (1) commercial capitalists toward industry, so that the money they have left can be used to run industry; (2) shop clerks we take over, relieving them first and then employing them. In private industry too the socialist factors can grow year by year. Both forms of state capitalism contain socialist factors. The higher form is joint state-private operation, which is half-socialist in nature, or has somewhat more socialist factors. The lower form is processing and ordering, in which both ends and the middle are clamped down: the two ends—raw materials and purchasing-and-marketing—are already clamped off; in the middle there are processing fees, inspection of varieties and specifications, the trade union, the Party branch, labor-capital consultation, and so on—these too clamp down very hard. This year we are too busy to manage it all; next year we must take hold of a batch of large private factories and send cadres in. We must not suppose that the capitalist economy will remain intact for fifteen years; the socialist factors within capitalist enterprises grow year by year. We must not always regard the capitalist economy as a single iron plate, as something unchanging.

In every city we must do good work on a few big capitalists. I myself am doing this too. The experience of these few years has proved that the basic section, or rather the majority, of the bourgeoisie can be educated. They are democratic personages and can be educated. Rong Yiren says that capitalists fall into three kinds: those who enter socialism willingly, those who are pulled into socialism, and those who are swept away by socialism. He hopes there will be more of the first two kinds.

"Differ in some respects, treat alike in all." This is a comparison drawn for company enterprises. They differ in some respects: one is socialist, the other capitalist; one is the leader, the other the led; and therefore the policy toward them also differs in some respects. "Treat alike" means that in raising labor productivity, economic accounting, wages and benefits, working conditions, and so on, public and private enterprises are broadly the same, the general aim being to increase production and practice economy and to reduce costs. Because of the relation of ownership, state-run and privately run enterprises cannot be said to be entirely the same; complete sameness is impossible. Look at the workers: in private enterprises they are uneasy, but once in a state enterprise they feel at ease. We cannot obliterate the difference between them, but they can be broadly the same and basically about alike. If one says broad sameness cannot be achieved, that is failing to see that above there is state power in the hands of the working class and below there are the organizations of the Party and the trade union, and seeing only the capitalists! That would split the working class into two parts! If private enterprises cannot increase production, cannot raise wages, and cannot improve the workers' livelihood compared with state enterprises, would that not mean that one section of the workers is out of luck while another section is well off?

The quantity of capitalist enterprises must not be ignored; their role is no small one. They have three million eight hundred thousand workers and shop clerks, while state enterprises have only four million two hundred thousand workers and shop clerks, exceeding them by not very much. Capitalist enterprises are very numerous; for the present we cannot do without them, and at the same time we have the means to transform them year by year into socialist enterprises. To kick capitalist enterprises aside at one stroke at present will not do, nor are we qualified to do so. At present we cannot manufacture aircraft, tanks, automobiles, tractors, and the like, yet would want to kick capitalist enterprises aside at one stroke—this is wrong, and we must not be impatient and rash. We should, first, do work on the workers in capitalist enterprises and, second, do work on the basic section of the bourgeoisie. Overall planning that takes all factors into account is entirely necessary, so that we can concentrate our main energies on the work of state enterprises and concentrate our strength on national defense and on heavy industry. We do not leave capitalist enterprises unattended, but carry out educational work on them, so that the bourgeoisie will rack their brains to come seeking us out, and can be transformed step by step.

The transformation of capitalist industry and the reorganization of commerce are not the same. For the transformation of private industry, two methods are used—processing-and-ordering and joint state-private operation—strengthening the work of the Party branch and the trade union, and strengthening the education of the basic section of the bourgeoisie. For the transformation of private commerce, it is permissible to do educational work on the commercial capitalists, but the aim is to squeeze them out year by year, turning the commercial capitalists into industrialists, while we take over the shop clerks.

We must regard the bourgeoisie as a hostile class; not to see it this way is to commit errors. On the other hand, we must see that elements of the bourgeoisie can be transformed. We must not forget one political condition, namely that state power is in our hands, and therefore we have the skill and the ability to transform them. Even the five kinds of counter-revolutionary elements have been transformed by compulsory methods; the one million eighty thousand heads of reactionary secret societies are being transformed! As for elements of the bourgeoisie, civilized methods can be used to transform them. If we fail to reckon on this aspect, we will be very much afraid of the bourgeoisie. Moreover, we must not forget one economic condition, namely the superiority of the socialist economy. The labor productivity of the socialist and semi-socialist economy has risen greatly, and this has already been shown clearly to the people. This is something the capitalists themselves say! Why is the socialist economy better? Precisely because its labor productivity is higher, technology improves fast, and production develops fast—both fast and good. This shows that socialism is superior to capitalism. We must also have a transformation in production, mainly raising technology. Stalin said: on the basis of a high level of technology, to expand production continuously so as to satisfy the constantly growing material and cultural needs of the people.

Stalin spoke of a "high level of technology"; our technology is still at a low level. But on the basis of raising productive technology, our country has continuously expanded production and satisfied the people's needs, and it cannot be said that the work of these few years has been without achievement. The labor productivity of our country's state-run factories has risen greatly; the quantity and quality of products have both improved; workers have been added and machines have been added. In sum, labor productivity must be raised, people and machines must be added, and the quantity and quality of products must be improved—chief among which is that technology must be raised, and this requires much work.

We already have the experience of the semi-socialist joint state-private enterprises, and this has given the capitalists an example. In the past we used the method of Emperor Wen of Han, declining three times to the west and twice to the south, and only reluctantly becoming emperor. From now on joint state-private operation will expand every year. State enterprises and joint state-private enterprises are greatly superior economically, and so it will be possible to attract large numbers of capitalists to ask for joint operation. Now that we have these two things—the political condition and the economic superiority—the capitalists cannot but submit to us, cannot but accept our leadership, are willing to cooperate with us, and willing to accept joint operation. At present there are many problems that need to be solved and that require unified leadership, lest orders issue from many quarters.