The resolution on the people's communes only mentions "distribution according to work" in one sentence. How exactly to implement distribution according to work has not been fully resolved. What is a production responsibility system? Marx spoke of a "production responsibility system," but what kind of responsibility system was not elaborated. The issue to discuss now is the problem of commune ownership. The question of ownership is whether a transitional process is needed to establish commune ownership, or whether the commune is collectively owned from the moment of its establishment. I visited a commune in Shandong—the Jinan Eastern Suburb People's Commune, with 21,000 households and 120,000 people, functioning as a single production team. It is far from achieving commune ownership and is essentially owned by the commune Party committee—how can this be allowed! This is the crux of the issue. Many people are now unreceptive; they want to centralize too much and rigidly control everything. Wasn't this what local authorities used to criticize us for? Now hasn't there been a delegation of authority? The commune has three levels, with production teams at one level having seven or eight hundred households, or even over a thousand. So-called excessive centralization means accumulating too much. Ownership refers to: first, means of production such as land; second, labor power; third, products of labor. The question is, to whom do these ultimately belong? At present, the commune Party committees, county Party committees, prefectural Party committees, provincial Party committees, and even the Central Committee are probably rushing to enter communism, hence the tendency to centralize too much and rigidly control everything. The situation of workers and peasants differs. Take the Anshan Iron and Steel Plant as an example: the total output value per worker is 18,000 yuan. After deducting 7,200 yuan, 10,800 yuan remains, but the worker's income is only 800 yuan. Personal consumption accounts for less than one-twelfth of their output value, contributing very little to the state's accumulation. We want to accumulate. In Henan communes, state taxes, management expenses, accumulation, and public welfare funds together account for 50% of the total, production costs account for 20%, and the peasants' actual share is 30%. But the peasants need to survive, so they conceal 15% of their output—there are dozens of methods for this. This is a legitimate right, yet we criticize them for departmentalism, which in fact violates the principle of distribution according to work. At present, ownership is in reality ownership by the production team. The means of production and the producers belong to the team, and the ownership of the products also belongs to the team. The peasants now stand guard and patrol to defend the ownership of their products. They fight for the fruits of their labor. When you allocate them 30%, they add an extra 15%, making it effectively 45%. The intense struggle between the commune and the production teams now revolves around two issues: first, labor power; second, products. The peasants are not afraid of the land being taken away, but they fear their products being hauled off. Peasants are fleeing to the cities. Now the financial departments have recalled all loans, making the people's communes unable to sustain themselves. This is a tendency that destroys production and opposes the people's communes. Loans that have been fully recalled must be returned. The money from selling pigs and cabbages is not given to the communes, leading to large-scale spoilage of cabbages; people are eating desperately, and cities cannot get vegetables. The reason lies here, not entirely in transportation issues. Now it's a head-on confrontation: on one hand, the production teams criticize the higher levels for egalitarianism; on the other hand, the higher levels criticize the lower levels for departmentalism. Both "isms" may exist, but within the Party, the main thrust must still be against leftism. Production costs and accumulation account for 70%, while consumption is only 30%. Too much accumulation. Pigs are sold, various goods are sold, and all proceeds go to the commune. This kind of commune ownership is destructive to production and is a dangerous policy. We should not criticize them for concealing output as departmentalism—the things originally belong to them. If you don't allocate them a share, they have no choice but to conceal output and distribute it privately. The change in ownership takes at least four years, or as many as five, six, or seven years. Rich teams help poor teams improve, and poor teams gradually catch up to rich teams. Do not chop off the heads of rich teams to supplement poor teams; this amounts to the uncompensated appropriation of others' labor. We still use a redemption policy towards the national bourgeoisie. The Soviet Union produces 55 million tons of steel; we produce 11 million tons. It would be unreasonable to cut 20 million tons of Soviet steel to supplement us. When a portion of the peasants uncompensatedly appropriates the products of another portion of peasants, instead of calling it robbery, we call it communist style. This differs from aiding the poor. Why has so much industry been set up? Why accumulate so much? Why have the finance and trade departments recalled all loans? It's because too much industry has been set up. The central, provincial, prefectural, county, and commune levels all want to go big on industry. It seems the enthusiasm at all levels has been somewhat excessive. This is somewhat excusable—excusable because it aligns with the reality that land, labor, and products all belong to him. The six levels—central, provincial, prefectural, county, commune, and management zone—confront the production teams and squads. The six levels have power, but the peasants are numerous. What is meant by "a coordinated chess game"? At present, it's not a whole chess game but only half a game; the distribution is far too little. Not recognizing the ownership of the production teams, allocating only 30% to them, and wanting to level out distribution—this is called half a chess game. Massive mobilization of personnel, massive accumulation—such power is adventurist power. Insisting on communism alone while rejecting departmentalism is very dangerous. Accumulation must be raised legitimately; industry must be set up legitimately—not frantically raising accumulation to set up industry. Do we still want communism, or do we want departmentalism? Insisting only on communism won't work. The peasants' concealment of output is excusable; their products of labor should belong to them. Accumulation, unpaid labor to build railways, roads, and reservoirs unrelated to them—this portion of unpaid labor is enormous. Raising accumulation, recalling loans, purchasing goods without paying, organizing transport without paying—this is why the peasants try every means to defend the fruits of their labor.

The Sixth Plenary Session has not yet completely resolved the issues of accumulation and distribution. Without resolving this issue, there will be no enthusiasm for the Great Leap Forward. We must now issue a notice to reassure the people. Currently, the people's communes are fundamentally under the collective ownership of the production teams, with the commune only having partial ownership. The commune and the management zone actually serve as a link between ownership by the whole people and collective ownership. It would be dangerous not to issue a notice. This year's stockpiles have decreased, and there has been no increase in production. The more we oppose departmentalism, the less we can procure. This situation is widespread. Why was last year's autumn harvest so rough, with things not being gathered? It's because the issue of the distribution system wasn't resolved. The Xinxiang Prefectural Party Committee in Henan said that when they announced that whoever harvested the persimmons could keep them, the job was done overnight. We must recognize that peasants concealing output is legitimate. The Central Committee and the provinces should persuade the three levels of Party committees—prefectural, county, and commune—and the commune should persuade the management zone Party branches. We should stand firmly on one side, first and foremost supporting the peasants' legitimate rights. This also explains that we simply want to industrialize. Regarding wage grades: fixed grades with flexible evaluations, evaluated once a month, more pay for more work, changing monthly, with the total wage bill remaining unchanged—this is called "fixed above, flexible below." Ultimately, what should the commune centralize? It should centralize three major items: state taxes, public accumulation funds, and public welfare funds. There are also unified procurement, planning, pricing, and education. Setting up too many educational institutions is also bad.

Additionally, too much industry has been set up. Commune-run, county-run, prefecture-run, and province-run industries not incorporated into the national plan are also excessive and need regulation. Industry must not be neglected, nor must it be excessive. The five levels of industry—central, provincial, prefectural, county, and commune—all need adjustment, and none should have too much. We must continue to pour cold water on this. The ownership issue must be explained clearly. We should compare Stalin's policies with ours. Stalin's enthusiasm was excessive; he drained the pond to catch the fish. We now suffer from this ailment. The justification is to oppose conservatism and departmentalism, but I support these "isms." It's not that opposing departmentalism is excusable; rather, it has been changed to a legitimate right. I quite support concealing output and distributing it privately—excluding embezzlement and sabotage, it is a proper right. The consumption portion in distribution must be increased. We must develop production, gradually raising poor teams to the level of rich teams without leveling down. Industry should not be set up excessively—adopt this method of accumulation. Large-scale industry, large-scale water conservancy projects, and highways must be restricted. The amount distributed to individuals must increase, with bonuses for exceeding quotas. For fulfilling a quota of ten pigs with an eleventh, that extra one entitles them to a share. Tian Jiaying's orderly, a native of Hebei, went home for a visit and found his family had slaughtered a pig weighing 60 jin. Why did they slaughter it? They couldn't wait—waiting meant it would be taken away. I think we must draft a resolution. Centered on ownership, with issues of accumulation and distribution. The amount of grain produced by each production team varies, so the grain consumption standards of each production team should also differ. Some may receive less than 380 jin—that cannot be helped. More grain produced means more to eat; wages should also mean more produced, more distributed, with fixed grades and flexible evaluations. The basic principle is distribution according to work. This concerns consumption. Accumulation refers to construction funds. Communes must not establish full-time art troupes divorced from production. There are too many cadres at all levels; they must be drastically streamlined. Frugality in running the communes must be written into the resolution. Regarding the enthusiasm for setting up industries: first, it should be commended; second, it should be restrained. The central, provincial, prefectural, and county levels must all exercise restraint. One must refrain from some things in order to accomplish others. Which industries belong to the county and which to the commune must be adjusted.

I have written a few sentences:
1. On the issue of ownership: Within a few years, say four or five years, gradually complete the transition from basic production team ownership to basic commune ownership. At present, for the commune, there is only partial ownership—accumulation, public welfare funds, etc.—and the same applies to product ownership. That is, “recognize the conservatism or departmentalism of the production teams.” In this way, our six levels of cadres can integrate with the 600 million people. On one hand, criticize our egalitarianism; on the other hand, criticize their departmentalism. Before last autumn, it seemed the peasants were surpassing the workers; but after autumn, they concealed output and distributed it privately. This is the dual character of the peasants—peasants remain peasants. Is this a concession to the peasants? This is not a concession to the peasants; it is equivalent to the gradual progression from distribution according to work to distribution according to need. In a certain sense, it is a concession regarding overly zealous industrial expansion. Commune ownership can only be achieved by guiding the peasants step by step over several years and cannot be accomplished all at once at present; it must be viewed as a process. The transition from mutual aid teams to advanced cooperatives took four years (from 1953 to 1956), going through several steps. The completion of the transition from the collective ownership of advanced cooperatives to the collective ownership of communes may also require four years or more—perhaps five, six, or seven years. Overly impatient thinking must be rectified. The issue is raising poor teams to the production level of rich teams, which requires such a process. Because communes are large and have many teams, a longer process is necessary. This process is also the process of agricultural mechanization and electrification, commune industrialization, national industrialization, the enhancement of the people's socialist and communist consciousness and moral qualities, and the elevation of the people's cultural education and technical skills. (We calculate that in four years, steel output can reach 50 million tons; allocating one million tons next year, two million tons the year after, and three million tons the year after that—i.e., six million tons of steel materials—will roughly suffice to equip agriculture with mechanization. Communes becoming industrialized will take about four, five, six, or seven years.) Of course, this is only the first stage; there will be second and third stages of elevation to complete socialist construction (i.e., fifteen, twenty years, or slightly more). Throughout this entire process, its nature is a process of socialist distribution according to work. However, in the first stage of this process—that is, within three, four, five, six, or seven years starting from 1958—the collective ownership of the people's communes will be completed, and it is possible that some or even most people's communes may transition to ownership by the whole people.

In 1958, there were bumper harvests of grain, cotton, oilseeds, hemp, and so on. Yet in the past four months (from last November to this February), there has been a great uproar over shortages of grain and oil. Isn't it strange? It was completely unexpected. In this world, storms may arise without warning. On one hand, the six levels of Party committees—central, provincial, prefectural, county, commune, and management zone—harshly criticized the departmentalism of the production teams and production squads, the so-called concealment of output and private distribution, pinning the label of “departmentalism” on them. On the other hand, the production teams and production squads, almost universally, concealed output and distributed it privately, storing it deep in hidden cellars, posting guards and patrols to protect their own products. In turn, they criticized the communes and higher levels for egalitarianism, for forcibly seizing products, writing IOUs, and universally measuring and hauling everything away. I believe that the actions of the production teams and production squads are fundamentally not so-called illegitimate departmentalism; they are essentially legitimate and proper rights.

(He produced it, didn’t he? Marx spoke over a hundred years ago about more pay for more work. They understand a bit of Marxism. They act precisely according to this principle.) Two issues arise here: First, the leveling of poor and rich teams through egalitarian distribution methods constitutes the uncompensated appropriation of a portion of others’ labor fruits and violates the principle of distribution according to work. Second, state rural taxes account for only about 7% of total rural output value (as in Henan)—not too much, and the peasants agree. But the accumulation drawn by the communes and counties from the total income of the production teams is too high. For example, in Henan, it reaches 26%, plus 7% in taxes, totaling 33%. After deducting 20% for 1959 production costs, plus public welfare funds and commune management fees, the total exceeds 53%, leaving the commune members with less than 47%. I believe the personal share is far too small; it does not conform to the principle of material incentives. Politics is indispensable, but 70% politics and 30% material incentives is far too little. Management fees include enormous waste; too many people are employed. One commune actually had over 3,000 people who do not work or only partially work yet still consume, including a full-time art troupe of 180 people—an example from southern Shanxi. Additionally, there is waste on things like ceremonial arches and props.

The commune was established in the autumn of 1958, setting off a wave of "communist wind." Its contents included several points. First, leveling the rich and poor (which has been corrected, though some residual effects remain). Second, excessive accumulation. Third, pigs, chickens, and ducks (partially in some places, entirely in others) were turned over to the commune without compensation, along with some tables, chairs, benches, knives, pots, bowls, and chopsticks handed over without pay to public canteens, and most private plots were taken by the commune (some of which were legitimately taken by the commune). Some of these were borrowed out of necessity, while others should not have been taken by the commune but were, and in some cases no valuation was made. As a result, the communist wind swept across the entire country, leading to the uncompensated appropriation of others' labor fruits—this is unacceptable. Looking at our history, we only uncompensatedly expropriated the means of production from the imperialists, feudalists, and bureaucratic capitalists. Beyond that, we once infringed upon a portion of the surplus means of subsistence of the landlords. All of this involved the labor fruits of the working people, not the seizure of labor fruits of the imperialists, bureaucratic capitalists, and feudalists; rather, we reclaimed our own labor fruits. Regarding the national bourgeoisie, we adopted a policy of redemption through purchase, because they were former allies, supported reform, and could still be utilized in work, among other reasons. That being the case, why could we uncompensatedly seize the labor fruits of the peasants? In the past, we did not explain this clearly to grassroots cadres, so they would casually advocate for communization. Of course, joint accumulation is not treated as means of consumption nor as uncompensated appropriation, but as construction funds for expanded reproduction, which is similarly correct for the state. Without reasoning from the perspective of ownership, the issue cannot be clarified. In practice, they treat the commune as ownership by the whole people, only conceiving of large collective ownership while not considering production team ownership.

Second, the issue of labor distribution. The current contradictions between the peasants and us involve, on one hand, the struggle over products, and on the other, the struggle over labor power. At present, land, manpower, and products are nominally owned by the commune, but in reality, they still essentially belong to the production teams. At this stage, only a portion of things belong to the commune, namely the commune’s accumulation, commune-run industries, and the permanent and semi-permanent workers in commune-run industries, plus some public welfare funds. That is all there is to so-called commune ownership. Nonetheless, our hopes lie precisely here. By increasing accumulation year after year and continuously expanding commune-run industries, large and medium-sized agricultural machinery owned by the commune, commune-run power stations, commune-run schools, and so on, within three, five, or seven years we can overturn the current ownership situation—that is, from basic team ownership with partial commune ownership to basic commune ownership with partial team ownership. Of course, there will remain a tail of some individual ownership, such as trees beside houses, poultry, livestock, small farm tools, and small implements. Houses, being for consumption, are naturally private prior to large-scale construction of public housing. At present, the peasants are not afraid of having their land taken away; what they fear is the removal of their manpower and products. There is great enthusiasm for requisitioning both people and money, but if this is suppressed, the 500 million peasants will have no way out and will put up resistance. Last year, the peasants resisted desperately, letting their products rot or even destroying them. This resistance was good; it made us ponder this problem.

Labor distribution is now extremely unreasonable. Agriculture (including farming, forestry, animal husbandry, sideline production, and fishery) receives far too little of the distribution, while industry, administrative personnel, and service sector workers are too numerous (in some cases, as high as 30% to 40%). They must be resolutely reduced. Over the past eight years, only 8 million workers were added, but the nationwide increase in workers last year—10 million—was not included in that figure.

(In reality, it was 26 million people.) From the time Zhang Zhidong established industry in China, there were only 4 million industrial workers. Since liberation, the average annual increase has been 1 million, totaling 8 million, for an overall figure of 12 million. Yet last year alone saw an increase of 26 million, and with the addition of 4 million who shifted back and forth across various industries, the total came to 30 million. This sudden increase of 30 million is both a joy and a worry. Among the three groups mentioned above, there is massive waste that must be resolutely reduced by redirecting them into farming, forestry, animal husbandry, sideline production, and fishery; otherwise, there is danger. It is said that industrial wastage amounts to 20 percent, and these individuals must return to the countryside. The service sector must be drastically cut, and administrative personnel may account for only a few thousandths. Communes are not permitted to have full-time cultural troupes. The contention over manpower between production teams and communes, counties, and the state is a serious problem.

Distribution issues: Distribution refers to the allocation of the consumption portion itself. Among production teams, there are three tiers—poor, middling, and rich—and there should be differences in grain rations and wage standards. Grain rations should also have distinctions, just like wages, varying from team to team. Apart from state requisition and purchase, those who produce more shall eat more, and those who produce less shall eat less. Wages should follow a system of fixed grades with flexible evaluation—fixed at the top and flexible at the bottom. Strict systems must be established for grain collection, grain management (with warehouses belonging to the state, commune, and teams), and grain use (with set quotas). Grain consumption must be carefully calculated and budgeted. Last year’s bumper harvest made us complacent. Even a decade from now, we cannot claim the grain problem is solved; even with 3,000 jin of grain per person per year, we cannot say it is solved. We must vigorously combat waste. Production can never satisfy the demands of waste; as soon as old needs are resolved, new ones arise. The somewhat excessive accumulation in 1958 was also well-intentioned. In light of this, we should openly announce to the masses that commune accumulation in 1959 will not exceed 18 percent, and together with the 7 percent national tax, the total will not surpass 25 percent, in order to reassure the people, boost production enthusiasm, and benefit spring plowing.

Finally, a word on the matter of sending people down to serve as commune members. Cadres at all levels should be sent down by rank and in batches to work as commune members for at least thirty days a year, or as many as forty-five days. Some should be sent down to factories or mines to work as laborers. In this way, we can integrate with the masses, and there will not be the current tense situation. In the past, the order has always been: first, the state; second, the commune; third, the individual. Now we reverse this: first, arrange for the people’s livelihood; second, commune accumulation; third, state taxation.