This is the story of a little commune that no longer is.

In 1958, New People's was swept up in Mao Tse-tung's crusade to turn China's countryside into the "bridge" to communist utopia. The peasants of this rural warren formed a commune by the same name, run by a party committee that controlled every aspect of their lives. It collectivized their land, water buffalo and tools, forced them to eat in communal mess halls, sent their children to nurseries and mothers to the fields, dictated the crop mix and divvied up total output in almost equal shares.

Today, New People's has been converted back to a township. Instead of ushering in Marxist paradise, it is testing capitalistic management techniques that could transform rural China more profoundly than any other policy in a quarter of a century.

"You can call it another revolution," said the commune's ex-party boss, Jia Hekun.

What has happened in this rolling farmland of China's southwest is the abrupt ending to one of history's boldest social experiments. Mao's vision at once provided a model for Third World development and inspired alternative life styles for American hippies of the 1960s.

Mao, the prairie populist, had believed he could unleash tremendous creative and productive forces by communizing 600 million backward peasants under the banner, "Everyone eats out of the same big pot."

In 25 years, however, the pot did not get much bigger while China's rural population hit 800 million. Rather than molding a new socialist man, Mao's blueprint became an echo of George Orwell's "Animal Farm," yielding what Chinese officials now acknowledge to be a bumper crop of bureaucracy, corruption and sloth.

Mao's modernizing heirs now are determined to dismantle his dream, replacing the communes' almighty party committees with township governments and business combines like the ones being tried out at New People's.

"Our motto today is, 'Peasants should get rich as fast as possible,' " Jia said. "We no longer talk about big pots."

New People's is practicing one of several organizational models being considered for nationwide application. Although still experimental and vulnerable to Maoist backlash, it provides a glimpse into the future of the huge countryside where eight of every 10 Chinese live.

Once the would-be harbinger for Marx's withering away of the state, New People's now symbolizes the death of the commune.

Since reforms began here in 1981, the scorecard has been impressive: average income per peasant has nearly doubled to $180 yearly, total agricultural output has increased by 50 percent, and the bulging commune bureaucracy has been pared by three-quarters.

The reforms fall into two categories--production and political organization--with the common aim of shifting many of the commune's powers to the peasants themselves.

Organizationally, New People's now has a township government assuming most of the administrative functions and a corporation that offers business services. The name "commune" has been stricken from usage. The old party chief is called corporate director today and the commune chief is called mayor.

The most far-reaching change at New People's, however, comes in the autonomy peasants now have to determine what they grow, how they farm and how much they earn.

In the past, peasants simply followed the commune's grand design, planting, fertilizing and harvesting large communal fields. Each village of between 200 and 500 families was responsible for fulfilling certain quotas for their "public plot." Any surplus was divided roughly equally regardless of individual contribution.

With hundreds of families sharing the meager surpluses, peasants had little incentive to work hard. As a result, output barely kept pace with population increases.

To remedy this "big pot" problem, New People's adopted the system of family farming. Now, each household signs a three-year contract with the village, taking responsibility for certain output levels on the piece of land assigned to the family. Everything grown in excess of this quota can be kept or sold by the family.

The contract requires that 70 percent of the land be planted in wheat and rapeseed, but the household can decide what to do with the remaining space. Each family thus rises or falls on its own initiative.

"When the job was done collectively," said farmer Zhang Fuchun, 53, "we spent all day leaning on our hoes and joking around because we got paid just for showing up, not for our results.

"Now you manage your own work in the most economical way. Whatever you put into it, you get out."

For Zhang, the change is easy to measure in profits and efficiency. In the last two years, his family has doubled its grain intake and boosted its income sevenfold to $200 yearly from the sale of excess crops.

As his own boss, he now does in 70 days what took over 200 days as a commune hand. In his extra time, he earned $1,000 last year raising pigs and vegetables and working part time in a factory.

His new wealth has come faster than he can spend it in his village of mud huts without windows or plumbing. He has, however, begun to improve his life style with the modest status symbols of China: bicycles, wristwatches and radios.

"We would've been better off had we started this a long time ago," Zhang said during a recent visit to his village. "We wouldn't be living in thatched-roof houses if we had."

The rags-to-riches stories here are just the most dramatic spinoff of a profound structural change centering on the retreat of New People's once omnipotent party committee.

The 13-member body began controlling events as soon as New People's Commune was founded in December 1958. No decision was too small for the Communist chiefs, who planned new schools and clinics, set rations for cooking oil, mediated family disputes, determined commune factory wages, selected students for junior middle school and pushed Maoist ideology in addition to their agricultural policies.

For all its power, however, the committee had a narrow base. Of New People's original 12,000 commune members--later grown to 20,000--only 100 party card holders selected the board.

With its all-encompassing responsibility, the party bureaucracy grew like crabgrass. By 1980, 1,000 cadres were pushing papers for twice the salaries of the peasants who were pushing plows to pay the bureaucrats. Basically the same jobs were performed by teams at the commune, village and production levels.

Cadres spent their time and commune resources bettering their own life styles, according to former party chief Jia. When communal kitchens had little food to feed farm laborers, the cooks slipped supplies to their friends and relatives.

"The system wasted human resources," Jia said. "The cadres exhorted everyone else to work but were idle themselves. The party was too powerful and interfered too much in the peasants' lives."

The party retains influence in the new system, but its duties are limited to ideological matters. In place of the committee, less than 250 officials now serve New People's in a two-pronged structure separate from the party's ruling body.

Administrative power resides in a seven-member township government, which is more democratically elected by village representatives.