FLTI Split between Majority and Minority over China

Dear Comrades,

We acknowledge receipt of the Majority reply to the Minority on China. We note that the FLTI Majority document 'In defence of Marxism' talks about the Minority not as comrades but "these people", "academic chatterboxes", "petty bourgeois servants of Obama" etc. We think that all this crude abusive language is defensive on your part because you cannot convince readers by your arguments that China is a semi-colony owned by Wall St. so you must label us revisionist enemies of the working class.

But that means you must slander us since you cannot prove we are Obamaists from our politics let alone our program. On the contrary the SCI in supporting the PFP to oppose the picket of Nancy Pelosi has chosen to side with Usec, PFP and Obama rather than the Minority. You cannot claim ignorance since the reactionary, dogmatic and arrogant position you took on this picket was explained to you several times.

The FLTI majority is no longer democratic centralist international but bureaucratic centralist. The bureaucratic nature of the SCI was demonstrated a number of times. For example, The SCI never convened a meetings of the IEC, which should happen at least once between Congresses. In addition to that, the SCI kept on changing its own composition, which is a violation of basic democracy in a democratic centralist international. The IEC is the highest body in between Congresses and in a healthy democratic international only the IEC has the authority to change the secretariat. Yet the SCI kept changing the membership of the SCI to fit the factional needs of the majority. By doing it the SCI ceased to represent the FLTI but it represented in a bureaucratic way only the majority. Further proof of this is that the SCI failed to produce an IWO that carries both Majority and Minority positions on China. 

Marxists must look at China and ask "what is it"?  We can agree it is no longer a deformed workers state. Beyond that, "what China is", has to be decided by the Marxist analysis of reality, not by preconceived theories or perspectives. Otherwise how can we pretend to be an embryonic Marxist revolutionary international?

We agree with you that Lenin's theory says that in the imperialist epoch the world is already divided. It can only be redivided by means of war. You then draw the conclusion that China cannot be a new imperialist power since it has not redivided the world by means of war. Lenin never meant to be dogmatic on the re-division of world. The latest crisis is bringing down all the small imperialist forces in Europe. We are clearly seeing a further decline of small imperialist countries such as Portugal, Spain, Italy and Greece. China is clearly occupying their places and taking territories that were occupied by other old European countries. We have seen in the past that deep crisis can easily force a change in the order of the imperialist pack. This is what happened in depression of the 1930s that ended with the US taking charge of the imperialist pack.

But for you the question of China was already decided during WW1 -either workers state or semi-colony. Any reality today must conform with the world as it was in WW1. WW2 is just a continuation with some redivision that does not change anything fundamental. Indeed, you say that the restoration of the workers states is really the delayed conclusion of WW2.

It is true that a new imperialism can only arise at the expense of existing imperialisms (and by means of war) but you overlook the fact that the October revolution 'divided' the SU (and subsequently the Deformed Workers States including China) from imperialism by means of war (civil wars and WW1 and WW2). Not as new imperialisms, but as workers states. Of course Lenin did not foresee the restoration of capitalism in the SU and the consequences that might have for imperialism. For him the revolution in the East would intervene, and as part of the international revolution boost the SU.

Trotsky predicted that without a political revolution restoration would result from the stagnation of the bureaucratic rule of the workers states. But there is nothing in Trotsky to say that the re-integration of restored workers states into the capitalist world economy would inevitably make them semi-colonies divided and oppressed by imperialism.

What Lenin could not have foreseen, and what Trotsky would not have excluded was that restoration need not reduce the former workers states to semi-colonies; that the bureaucracy could make the transition to a national bourgeoisie without losing its independence. (Trotsky argued that restoration of capitalism in the SU would make Stalin's regime a "fascist" regime. He did not speculate beyond that.)

China was not defeated in a world war, invaded, occupied and turned into a lackey (like France, Germany and Japan - Germany still has 70 US bases in it). Restoration was forced on the bureaucracy by stagnation and imperialist pressure, but the bureaucracy had to defeat the resistance of the working class. The bureaucracy took responsibility for this counter-revolutionary defeat and as the result was able to convert itself into a new national bourgeoisie without military defeat or occupation.

We can see then, that China emerged from a DWS and was re-incorporated into the global capitalist economy not by means of imperialist war, invasion, occupation and partition but by internal counter-revolution. This has nothing to do with China's 'exceptional' circumstances, and everything to do with its transition from a DWS to restored capitalism. Certain features of the DWS carry over to Chinese capitalism, not as 'Chinese characteristics' but as the characteristics of 'state property' which Trotsky recognised would take the form of state capitalist property.

In fact Trotsky in The Revolution Betrayed said that in regard to capitalist restoration that:

“In the sphere of industry, denationalization would begin with the light industries and those producing food. The planning principle would be converted for the transitional period into a series of compromises between state power and individual “corporations” – potential proprietors, that is, among the Soviet captains of industry, the émigré former proprietors and foreign capitalists.” http://www.marxists.org/archive/trotsky/1936/revbet/ch09.htm

This is roughly what the situation is today in China. The heavy industry remained in the state hands and it is slowly being dismantled and given to private corporations primarily Chinese capitalists.

These are the 'exceptional' circumstances that allowed the new bourgeoisie to 'inherit' as state property the means of production of the former DWS as the basis of its political 'independence' from imperialism.

For the Majority this 'independence' is temporary and must lead to semi-colonial domination unless there is a socialist revolution. The theory is decided and the program follows; defend China from imperialism, overthrow the Red bourgeoisie!

How temporary is temporary? The FLTI agrees that capitalism in China was restored between 1989 and 1992. It says in 2008 that China was still poised between a semi-colony and socialist revolution. Now when the Minority affirms that China retained its 'independence' in 1992, the Majority says it lost it in 1979 when the Special Economic Zones were created, and when the Chinese banks went bankrupt in 1991 and were rescued by Wall St. That in fact, China is owned by Wall St and that Chinese workers are in a pre-revolutionary situation today confronting the Red Mandarins, and "Obama's" Red Army, who are the junior partners of Wall St.

Except the Majority's description of Chinese reality in the last 30 years is a fantasy. For the Majority the facts of China's rapid rise as an capitalist industrial economy, soon to be second only to the US, is an illusion, as China is really no more than a branch of the US domestic economy. The material basis of China's 'independence' evaporated sometime between 1979 and today and China's army, its banks, its factories etc are now part of the US global regime.

The Minority never said that China did not invite FDI to create capitalist export manufacturing. It was a strategy of the Chinese bureaucracy on the road to restoration to create a material base of its transition and its new class 'independence'. Thus the Special Economic Zones did not give US imperialism ownership of China's economy. China processes manufactures and supplies raw material and labor, but the majority of the profits do not go to foreign investors.

In exchange, China has won markets, foreign exchange, and technology transfer. Nor did China's banks go bust and get taken over in 1991. China's big banks are state owned. The state always has more than 50% ownership of each bank, in addition 25% ownership can be in private Chinese hands. Foreign banks cannot have more than 25% ownership of a Chinese bank, and in no case does a single foreign bank have anywhere near 25% ownership. Thus, foreign banks are mainly advisors and administrators of funds and have no significant role independent of China's banks. Therefore, more and more of China's rapid growth is the result of Chinese capital accumulation to the point that over-accumulation has required the export of finance capital.

Why, if the US exports finance capital to China, is it not the case that China exports finance capital to other countries? What are the 'exceptional' circumstances that makes capital accumulation in China a proxy for US capital? The Majority tries to limit 'finance' capital to the US, calling China's FDI 'commercial' capital. It defines finance capital as 'parasitic' without realising that this is already part of the definition of finance capital. That is, finance capital is not just capital that is invested in 'usury' or loans to productive capital, but is a built-in component of productive capital since industrial capital is fused with banking capital. Chinese FDI is no less parasitic than US FDI. 

Imperialist 'parasitism' is the extraction of super-profits due to monopoly prices which include unequal exchange of value i.e. appropriating unpaid values of commodities including labor-power. This appropriated unpaid value is called super profits or 'rent'. Imperialism replaces competitive capitalism, and shifts the competition from the market to competition between imperialist corporations and imperialist states. This does not mean that new technology is unimportant. Instead of allocating capital on the basis of prices of production (i.e high tech labor productivity) monopolies buy up or suppress new technology as part of their rent-seeking. That is, new technology reduces the price of production and therefore increases the potential rent.

Therefore, FDI by both US in China and by China in many other countries, is the export of finance capital (banking capital fused with industrial capital) to gain rent. The US gains rent through unpaid value of Chinese labor-power and unpaid value of Chinese or other Asian raw materials, machine goods etc which they buy to produce the finished commodities. But US (plus Japan etc) FDI does not own more than a small minority share of the productive capacity of the Chinese economy which is typical for cross ownership between imperialist powers.

Chinese capital (state owned and private) which owns the big majority of finance capital in China reaps the same rents when investing finance capital in loans for oil and other raw materials, loans to build infrastructure, investments in ownership of foreign corporations, etc in semi-colonies and other imperialist powers. China does this precisely to gain ownership and control of the production of these commodities to increase superprofits (i.e. the unpaid value component, or rent).

We conclude that to describe China as merely a semi-colony today ignores the reality that China is a major capitalist industrial power expanding rapidly into the global economy. It is not a US sock puppet subordinated to a US imposed division of labor.

Some of the fake Trotskyists are stuck inside historical schemas and explain China's expansion as some mysterious aspect of a surviving Deformed Workers State. We, on the other hand recognise it as capitalism, and the expanded reproduction of Chinese capitalism can only take one form - imperialism.

Does this put us outside the pale of Marxism? Well only if it means we think Chinese imperialism is progressive. You slander us to suggest that we side with US imperialism alongside the Bolivarians, Maoists, Stalinists, Castroists. This is cheap demagogy to bolster your historic schema.

We clearly say over and over again that China is as reactionary as US imperialism. US imperialism is still hegemonic and its defence of its global interests must bring it into collision with an ascendant China. This is why we changed our position of China's dual character in which we could defend it from a direct US attack, to that of an rapidly emerging imperialist rival that could not be defended in any situation. That is why we are for the defeat of both China and US.

How is this different from the Majority? The majority must argue that the defence of China in a war with the US must be won by the Chinese working class fighting US imperialism in a military alliance with Red Mandarins who will use the war to instil Chinese chauvinism in the name of the Fifth international and with the support of the Bolivarian regimes. This could lead to the defeat of the Chinese working class by the Red Mandarins in the name of “socialism” and the Fifth International.

We say wakeup and call for the Chinese workers in a confrontation with the US to turn their guns on their own ruling class, and in every proxy war between the US and China, we say call for the independent struggle of workers and poor peasants led by a revolutionary party for the socialist revolution.

We call on the Majority to reconsider its method of dogmatically reproducing an historical schema based on the world in WW1. Yet have seen no willingness to even consider the theoretical arguments put forward by the Minority. Instead the argument that China has made the transition from DWS to imperialist state is denounced as 'Cliffite', 'Mandelist', cheerleading for Stalinism, Bolivarianism etc etc. The only development of the Majority position since July 2009, is the hysterical escalation in the political characterisation of the Minority from unconscious Stalinists to open enemies of the working class. The logic of such a characterisation is that the Majority must expel the Minority to defend its indefensible 'defense' of Marxism.

The Minority will not be publishing the official Majority document on China in its national papers. We have not published our own Minority document in our national papers.They are fully displayed in good English on our websites. It is the responsibility of the SCI to publish an IWO containing the debate as a duty to the international working class. We will undertake to print and distribute this IWO internationally.

Because the debate over China has revealed fundamental differences in method, in our understanding of imperialism, and in programmatic differences that put us on opposing sides in a war involving the US and China, the CWG and HWRS are breaking from the FLTI and its international center and forming a Liaison Committee to defend the fundamental principles and program contained in the 23 points document of the FLT.

A formal document which puts the position of the Liaison Committee will be written in due course. In it we will defend the 23 points except the existing characterisation of China.We will clarify our understanding of the 23 points and explain them in the context of the world situation in which China plays a significant role. We don’t think that our break with the majority is confined to China. China is rather a symptom that reflects the break of the majority from Marxism and its dialectic method. We explain the majority method in the document The SCI’s Rejection of Dialectics Is Taking the FLTI into the Centrist Swamp which is available at the HWRS website http://www.humanistsforrevolutionarysocialism.org/IFLT_Documents/Critique_of_FLTI.pdf.

In the document we showed the centrist zigzag of the FLTI majority leadership the SCI from ulra-leftism (China is in a revolutionary situation, drop the demand for the Labor party in the US and instead call for a general strike in the entire US, etc.) to opportunism (uncritical alliance with pacifist JRCL-RMF to create a “bridge” to China). We think that the majority is reverting to the old Morenoite method from which the majority leadership originated. This is ultimately what we are breaking from.

Communist Workers Group and Humanist Workers for Revolutionary Socialism