Thursday, April 25, 2013

The Restoration of Capitalism in China: A Marxist critique of the process of the CCP’s counter-revolution





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Ghost of Deng Xiaoping

Introduction


History is unforgiving.  In revolutionary politics denying the historical record puts you at disadvantages that in time become a metastasising methodological cancer.  Tendencies whose reason for being discrete groups were shaky to begin with make bigger and bigger political mistakes.  A whopper for the ages, and a damning one, is the failure of the Robertsonian groups to recognize capitalist restoration in China!

Capitalist restoration in China is in fact impacting the lives of every wage worker everywhere.  The Robertson and post-International Communist League (ICL) tendencies now defend the rule of the Chinese workers’ exploiters as maintainers of a variant of a Deformed Workers State (DWS).  Worse mistakes lie in wait for these tendencies when US imperialism decides to launch its inter-imperialist war with China.  Far from promoting the Trotskyist program for political revolution (nowadays itself a mistake,) these tendencies will defend the Stalinist Chinese Communist Party (CCP) regime when it is already high time to make the socialist revolution in China and the US and prevent WWIII instead! History is on the march, time is flying like warplanes; now is the time every militant worker must decide ‘which side are you on?’

For the workers movement the class character of the Peoples Republic of China, the counter-revolutionary capitalist restoration and political dominance by a class of “princelings,” stockholders, and entrepreneurs propagated by and hatched upon the top of society by the Communist Party’s cadres, technocrats and bureaucracy, has dire consequences for the international working class’ historic mission--the abolition of capitalism and the building of a classless society.

The ascendancy of counter-revolutionary capitalist restorationist forces inside the CCP and the dismantling of the social gains of the Chinese Revolution are a major setback for the Chinese and international working class and confirm a change in both the class character of the CCP and the state it administers.  Alongside the counter-revolution in the degenerated (USSR) and deformed (the eastern bloc, China, Vietnam, North Korea, Cuba) workers’ states (DWS) [1], the reintegration of China into the capitalist orbit and the submission of the Chinese workers social relations to the demands of the Law of Value (LOV) at the expense of the gains--the social guarantees-- previously protected by the central plan, represents a historic setback. 

As the size of the working class swells in China so does the wealth gap.  The GINI coefficient ratio has the “gloriously wealthy” hiding their opulence as Prime Minister Xi maneuvers to defend the rule of the CCP from the righteous indignation of the masses, who see the Party, the Bureaucracy and the new capitalists (often one and the same--think “Comrade CEO”) bathing in expensive perfume and driving Maybachs.  The promise of socialism and the social guarantees, “the three irons” were disassembled in a generation. Social guarantees have been replaced with Dickensian superexploitation, sprawling polluted industrial centers, oppressive company housing and massive dislocation of a surplus migrant army of labor.  These conditions fuel a class-wide frustration that erupts in thousands of strikes annually as the workers struggle against the implementation and consequences of the capitalist restoration imposed by the “Communist Party.”


Capitalist restoration has altered the conditions of production for the worse for the world working class; in just a few years hundreds of millions of workers were made to subject to the rule of the LOV, and at rock bottom wages, permitting the "Wal Mart" phenomenon to metastasise across the world's consumer markets and permitting the rise of the Peter Schiff investment strategy model ("buy Chinese stocks!") in the lead-up to the September, 2008 crash. Needless to say a terrific international siphoning off of manufacturing jobs followed this flight of capital to China. We can’t imagine seeing this change through the ICL’s rose colored glasses. Just because the social weight of the proletariat in China has increased and theoretically prepares to dig the grave of Stalinism, in reality this has produced a world-wide increase in the misery of the proletariat; joblessness in the west and increased super-exploitation in the east and only theoretically and at some later someday and only if a Chinese Leninist party should arise will the proletariat be digging any graves for Stalinism.


The 1949 Revolution

The gains of the revolution of 1949, which were achieved thorough the defeat and exile of the big bourgeoisie, established a DWS, which itself was driven forward by the power of the armed workers and peasants, were concretized by carrying out the economic changes that followed. These changes correspond to the tasks outlined in the historical program for the socialist revolution the Transitional Program. The socialist tasks include the expropriation of big capital, the nationalization of the land, the nationalization of finance, industry and manufacturing, the institution of centralized planning, the dominance of the plan over the market, the suppression of the law of value (LOV), the institution and maintenance of a monopoly of foreign trade (which acted as a buffer against world capital--abating the pressures of the international LOV.) The loss of these core economic features of the workers’ states (healthy, degenerated or deformed,) constitutes a historic defeat for workers, both in terms of the toiling masses’ daily survival as well as propelling humanity further along the road of capitalist-driven economic and environmental crisis; as well as the barbarism of wars of domination and inter-imperialist wars. It is a grave error to confuse these tasks of the socialist revolution with the very different tasks of the political revolution. We will show how the ICL and derivative tendencies make this tragic error further below.


The core elements of post-capitalist economic organization have the capacity to maximize the socially-produced surplus available for social consumption. Socialist production can eliminate poverty, shorten the work week, and reduce work-related fatalities and hazardous working conditions, and end fear of want and need, while providing jobs, health care, education, and cultural development for all.  To one extent or another, all the DWS’s which had time to consolidate their relative independence from imperialism benefited from implementing these changes in social and economic relations.  Both military spending and the consequences of bureaucratic parasitism limited the social gains made available by the unfettering of the forces of production from the enslaving constraints of the LOV. Material deprivation, imperialist intervention, encirclement and isolation from the world market elevated the bureaucracy’s and military’s appropriation of large portions of the social surplus in proportions that elevated these functionaries as a materially privileged caste. Due to the economic backwardness and isolation of the countries which abolished capitalism, the bureaucracies became Bonapartist parasitic castes mediating the pressure from imperialism, from the native bourgeois and petty bourgeois interests (the reinstitution of the LOV through the mechanism of market rationalizations,) on one side and the interests of the workers and poor peasants on the other side (the plan, the social guarantees, etc.)  This contradiction inside the DWS’s was not static; social relations and class forces pushed the bureaucracy in one direction or the other, advancing the economic foundations of proletarian power or toward capitalist counter-revolution. 


To claim as the ICL (a.k.a. the Spartacists) does that the state has not dismantled the basic gains of the 1949 revolution and is not leading China’s rise as a capitalist and imperialist superpower is to take the side of the “Princelings” against the worker masses and even as we shall show to take the “Princelings” side against the workers of the world.  The workers have resisted, in countless thousands of “industrial actions” and political actions.  From Tiananmen to Foxcom’s suicides, to the militant Tonghua steel workers anti-privatizations fight in 2009, and to the Wuhan Commune of 2012, wave after wave of independent workers actions fought the attacks on the gains of the 1949 revolution!  Hidden until recently, under the control of state censorship, are the multi-millions of new proletarians who, driven by the same market forces introduced and promoted by the CCP, have become underemployed itinerants (migrant armies of labor) with little chance of life-long employment, pensions, health insurance and other benefits enjoyed by industrial proletarians and with few rights respected by the police.

The pressures of the global capitalist crisis inevitably drives emergent Chinese imperialism on a collision course with US imperialism’s military might, the avoidance of inter-imperialist warfare depends on the American and Chinese workers defeating the rule of their own bourgeoisie in China and the USA in order to avert and end the threat of inter-imperialist wars.


Workers Democracy is the key

Chinese workers never experienced democratic control of their revolution. Unlike the workers who seized power in the 1917 Russian Revolution, the Chinese working class never experienced soviet democracy, shop floor democracy or workers control of the Communist party.  These experiences and organizational forms are the key components that distinguish a healthy from a deformed or degenerated workers state. Where Trotsky considered the revolutionary generation to be a force in the mid 1930’s which would recall the democratic workers councils and fight to rebuild their power, in China of the 1990’s soviet democracy was a concept far removed from most workers experience.  Once experienced, workers democracy is not easily forgotten.  Thus 1905 prepared the generation of 1917.  Lost from the living memory of the working class, these experiences become abstractions--revolutionary history and theory.  They can become a guide to program, but without a revolutionary vanguard party popularizing revolutionary theory and asserting those historic lessons during subsequent upsurges the moment is assured to be lost and the workers’ uprising, heroic as it may be, will be defeated.


The democracy of the workers’ commune in Shanghai was defeated in 1927 because of the treacherous CCP-led bloc with the Kuomintang. Thousands of communist workers were sacrificed.  Since then workers democracy was suppressed by the Communist Party itself, whenever it emerged, both inside the party with the attack on the revolutionary Marxists of the Left Opposition (Trotskyists,) and outside the party in the workplaces and unions.  Deformed from birth, the Chinese revolution’s ‘permanence,’ it’s growing over from an anti-imperialist ‘bloc of four classes’ to a social revolution was more a reflex and consequence of the escape of the Chinese bourgeoisie to Taiwan than the intention of the CCP. Because of the CCP’s adherence to the stagist theory of revolution the party hesitated when it ascended to power, for three to four years before taking up the economic tools of the workers’ state. The Chinese revolution threw the Trotskyist movement into a tailspin as it sought to equate reality with its varied understandings of the Marxist theory of the state.

Sam Marcy of the SWP explained that the “…bourgeois-landlord-merchant-comprador class alliance, the main and fundamental prop of imperialism in China, has been broken and shattered, and a new class power erected….  A new class power, basing itself fundamentally on the workers and peasants, has seized the reins of power, and is…attempting to shape the destiny of China in a new direction.” Marcy argued that although “…bourgeois relations still predominate in industry and agriculture…,” the crux of the matter was the “…political power of the former ruling class has been shattered, their ‘body of armed men’ disarmed or destroyed, and their nexus to and dependence upon imperialism, shattered….” (Memorandum on the Unfolding War and the Tasks of the Proletariat in the New Phase of the World Permanent Revolution—Marcy, SWP Internal Bulletin November 1950.) [not online]

Determining the Class Character of the State


“When the Third Estate seized power, society for a period of years remained feudal.  In the first months of Soviet rule, the proletariat reigned on the basis of bourgeois economy.  In the field of agriculture, the dictatorship of the proletariat operated for a number of years on the basis of petty bourgeois economy. (To a considerable degree it does so even now.)  Should the bourgeois counter-revolution succeed in Russia, the new government for a lengthy period would have to base itself on nationalized economy.(our emphasis)  But what does such a type of temporary conflict between economy and state mean? It means a revolution or a counter-revolution.  The victory of one class over another signifies that it will reconstruct the economy in the interest of the victors….(Emphasis in original.) (Leon Trotsky 1937, Not a Workers’ and Not a Bourgeois State Fourth International 1951)


The conundrum faced by the Trotskyists in the post-war era is adequately dealt with in the Leninist- Trotskyist Tendency’s June, 1995 document, “The Marxist Theory of the State and the Collapse of Stalinism”.  The LRCI/Worker’s Power’s untenable position dating the formation of the workers state in China, from the institution of the plan and the monopoly of foreign trade is dismissed if not by Trotsky’s quote above, then it is done in the LTT document. The post-war transformations in Eastern Europe were carried out, in all cases (except Yugoslavia), under the occupation of the Red Army and direction from Moscow, not by the masses themselves via their own revolutionary workers party, but because Moscow was losing control of its project to maintain bourgeois “Peoples Republics,” which were increasingly being attracted to the benefits offered by the Marshall plan.  The material contradiction between the world market guided by the LOV and the economy of the USSR guided by the plan had to be resolved in one direction or the other.  The USSR’s bureaucracy, adhering to the theory of “Socialism in One Country,” required a geographic buffer for defensive purposes and occupied Eastern Europe was made to serve as this buffer. To consolidate their sphere of influence, after attempts to incorporate the bourgeoisie into the governance of the “Peoples Republics,” Moscow changed course and ‘extended the revolution.’  ‘Socialism’ was born in Eastern Europe by imposing the economic mechanisms of the degenerated workers state (the USSR) onto the occupied nations, accomplishing revolution (transformation of the class character of the state) from above, denying the rightful agency of the proletarian revolution-the proletariat itself-actual power, yet establishing deformed workers states in the image of, yet subservient to, the Soviet planned economy.

The Soviet bloc and imperialism made a deal to partition the world after WWII based on the economic power of the USSR, given its successful defense of the gain of workers’ property. This was still, in a degenerated way the Dictatorship of the Proletariat in the USSR forcing imperialism to accept 'co-existence' for the time being. But the bureaucracy was Bonapartist and balanced between workers and capitalists and defended workers’ property only so long as it provided their privileges. Isolated and forced to compete with the capitalist world economy restored to profitability by depression and war, the 'planned' economies stagnated and with them so did the privileges of the bureaucracies. They re-introduced the LOV as “market reforms” to overcome stagnation.

In Russia the point at which the state became bourgeois was obvious when Yeltsin seized power from Gorbachev and eliminated the weak opposition within the bureaucracy to the fast road to the 'free market'. [2] Residual opposition to the state coming out openly to restore capitalism was eliminated. This was a world-historic defeat that the Spartacists and their offspring haven’t and won't recover from.

In China, when Deng dissolved the village communes and introduced the LOV in the Special Economic Zones (SEZs) this was a gradual preparation for restoration under the 'plan' of the CCP.  As Trotsky predicted, this 'plan' was actually a plan to restore the LOV, and capitalism was sold as 'socialism with Chinese characteristics,’ but inevitably the LOV would become dominant unless overthrown by political revolution.

When did quantity turn into quality?  Tiananmen was the smashing of workers resistance to restoration and the CCP Congress in 1992 was the now-dominant ‘reform’ faction’s dressing up of the LOV as 'state socialism.'  This is confirmed because there is no way that a healthy workers state, let alone a degenerate one, can develop the forces of production in one country (albeit with internal colonies,) accumulate capital over 20 years and become an emerging imperialist state in competition with existing imperialist states, unless the LOV is dominant.

History does not care which social layer carries out transitions from one mode of production to another. Dogmatists were among the non-dialectical thinkers who were flummoxed by the fact that the working class had not carried out the post-war transitions in their own name, through their own organizations. If a reluctant bureaucracy, proponents of the theory of “Socialism in One Country,” committed not to internationalism but to their own material interests derived from their position as a parasitic caste upon the workers state, and maneuvering between the pressure from the workers and oppressed toilers from below and from the imperialists’ stranglehold besieging from all sides, can abolish capitalism, advance the revolution in the mode of production and establish an albeit “Deformed Workers State,” the question is posed does the working class have an independent role in the tasks of the social overturn or can a “Socialism from above” be established and sustained?


Stalinophilia and Pabloism


This contradiction opened the Stalinophilic path for layers of Trotskyism leading to liquidationism. Some joined the Stalinist parties, some maintained their external groups. In one form or another most Trotskyists abandoned the understanding that the political revolution was not simply the optimal road forward, that the political revolution by bringing workers themselves to power through the (re-)establishment of democratic workers councils and their absolute rule of the socialist transition is itself the only means to defend the workers state. While the crisis of the death agony of capitalism and the long bloody transition period of revolutionary stillbirths, abortions and infanticide that accompanied the transition to a post-capitalist mode of production wore on, the theory came to be entertained that the DWS may be the most advanced  transitional form humanity can develop at this point, and as consequence of the extended duration (from decades to possibly centuries) of the proletariat’s struggle against imperialism, the Bonapartist layer that Stalinism represented might indeed rule for an extended duration.


The Freedom Socialist Party (FSP) took this logic almost as far as the Marcyites of the Workers World Party and the Party of Socialism and Liberation (WWP&PSL) would. The FSP only in 2003 took up the call for political revolution in China and later on produced a new waffle for Cuba.  The FSP now calls for a new revolutionary party to contest for power with the Castroists, but says it is “premature” to call for a political revolution!  Will they adopt the Robersonian method and wait until all the gains of the Cuban Revolution are gone before “then” incorrectly calling for the political revolution?  The PSL still sees no reason to fight for political revolution in China. And most, in the trajectories spun off from the United Secretariat of the Fourth International (U.Sec) and the U.Sec. itself, while identifying the capitalist restoration in China, have a blind spot in recognizing the restorationist process led by the Castroists in Cuba and still do not call for political revolution there. When the U.Sec. and the American SWP taught generations of militants internationally that Cuba was a healthy worker’s state, they themselves were already theoretically disoriented by the rise of the DWS’s. When they were revived numerically by the 1960’s upsurge, they disarmed a generation by abandoning Leninism and Trotskyism, and then collapsed into a Menshevik stages methodology.  They abandoned the Transitional Program, the anti-imperialist principle of opposing the imperialists both at home and militarily in all their interventions, and the permanent revolution.  This led to capitulation to semi-colonial ‘anti-imperialist’ national bourgeois leaderships and popular fronts (from Bolivia through Sri-Lanka and later Nicaragua, Ethiopia, Grenada and South Africa,) while their pretense to building the Fourth International as founded by Trotsky vanished from the world of material reality.

For Trotskyism the DWS could only be defended by the establishment of a healthy workers state. The parasitic caste has to be negated--abolished or incorporated-by one mode of production or the other resolving the contradiction between imperialism and the proletariat. The abandonment of the conviction that the working class itself is the only reliable agency of the permanent revolution is to make a wreck of Marxism and to trivialize the sacrifices of the revolutionary generations.


Murray Weiss, a spokesman for the Trotskyist majority led by James P. Cannon, wrote in answer to the “Third Camp” minority:

“[I]t was this slight misconception as to who was the main enemy that helped to bury the German revolution.  “For the Marxists, the main enemy of the Russian working class, as well as the international working class, is the class enemy…. The Bolshevik-Leninists in the U.S.S.R. will be the best fighters and because of that they will tell the Russian workers the truth: In order to win this war against imperialism we must overthrow the traitor Stalin and appeal to the revolutionary working class of the world to come to our aid.”(our emphasis) 
–“Marxist Criteria and the Character of the War,” [SWP] Internal Bulletin, February, 1940” “Marxist Criteria and the Character of the War,” [SWP] Internal Bulletin, February, 1940”

Thus for Trotskyism the defense of the USSR has never been anything less than the full on struggle by the proletariat for their healthy workers state, if not by reform (until 1933,) then by political revolution, not some half-way formulation or schema to defend the DWS. By the workers and not by any jumped-up Reiss faction.  Even when Trotsky advanced tactical military blocs with the Stalinists against imperialism the message to the workers was clear.  The defeat of imperialism would require the defeat of the Bonapartist bureaucracy--Stalinism.  And vice versa, the defeat the Bonapartist bureaucracy would require the defeat of imperialism.  This seems an important link between the open Pabloists (i.e., the Stalinophilic membership described above), and the covert Pabloists we describe below who try to hide their Stalinophilia in a formal recognition of political revolution by workers from below, even while the workers are being turned into wage slaves by a regime and a state they defend!  Their Stalinophilia is the obverse of their phobia of the proletariat! The Spartacist ilk want the Stalinists to rescue the workers states without having to defeat imperialism at home, which would destroy their cozy labor-aristocratic positions, which finds expression in their social chauvinism, such as their initial confusion over the 1967 “Six-Day War” their refusal to defend Argentina during the Malvinas War and their initial applause for the so-called “humanitarian mission” of the US Forces in Haiti. Being sure does seem to determine consciousness and over and over critics have had to correct them.


There is nothing accidental about these mistakes and they are not only to be put down to the social origins of the membership of the Spartacist LeagueLike Cannon before him, Robertson, the spiritual-political guide of Spartacism never did make a comprehensive political nor methodological break with Pabloism.  They have not understood the way posts of the capitalist restoration in the degenerated and deformed workers states any better than the SWP US understood the Eastern European transformations  in the 1940’s.

Spartacism on China…Yet another Pabloism!


The most exercised proponents today for the idea that China remains a bureaucratically deformed workers state are the various groups of the Spartacist current: the International Communist League (ICL), the Internationalist Group (IG), and the International Bolshevik Tendency (IBT). The method of these groups is the same in regard to the class nature of the Chinese state, although the ICL has written the most material through the years in a zigzagging and contradictory manner trying to fit the Chinese reality into successively redefined criteria for a deformed workers state. For the Spartacists, what is left of the nationalized property, the political rule of the CCP and the absence of openly capitalist counterrevolutionary political forces provoking working class defense of the workers state and splitting the bureaucracy into opposing camps in a civil war, are the empiricist criteria of their static position on China. They do not see beneath these criteria that the interests of the bureaucracy and the program of the CCP are now capitalist-imperialist. They ascribe a pro-capitalist motive to forces in and around the bureaucracy and in and around the party but not to their central directorates.  They see China as “On the Brink” of capitalist restoration and have seen China on this brink since 1997, as fantastic as that may seem! Much of the continuity of their present position falls back on Trotsky’s formulation in 1933:

“He who asserts that the Soviet government has been gradually changed from proletarian to bourgeois is only, so to speak, running backwards the film of reformism.” (The Class Nature of the Soviet State, October 1, 1933)


The ICL runs from the fact that the Stalinist bureaucracy, in order to preserve its privileges, has been the force that capitulated to imperialism in the USSR, the Eastern bloc and now, in China, that initiated and led the gradual restoration of capitalist property relations. The ICL did in fact finally admit that the Stalinist Bureaucracy led the counter revolution in the USSR. Yet the ICL still believes that a bourgeois party would have to come to power in China by some means to be able to carry through the restoration. In this they ignore Trotsky who advanced this possibility:


"…Thus, as long as the European revolution has not conquered, the possibilities of bourgeois restoration in our country cannot be denied. Which of the two possible paths is the more likely under our circumstances: the path of an abrupt counter-revolutionary overturn or the path of successive shiftings, with a bit of a shake-up at every stage and a Thermidorian shift as the most imminent stage? This question can be answered, I think, only in an extremely conditional way…." (The Challenge of the Left Opposition, 1926-27 “Thermidor” 260-261)

“…Two opposite tendencies are growing up out of the depth of the Soviet regime. To the extent that, in contrast to a decaying capitalism, it develops the productive forces, it is preparing the economic basis of socialism. To the extent that, for the benefit of an upper stratum, it carries to more and more extreme expression bourgeois norms of distribution, it is preparing a capitalist restoration. This contrast between forms of property and norms of distribution cannot grow indefinitely. Either the bourgeois norm must in one form or another spread to the means of production, or the norms of distribution must be brought into correspondence with the socialist property system….” Trotsky Chapter 9 Revolution Betrayed


The ICL claims that in the wake of capitalist counterrevolution in the Soviet Union in 1991 led by Yeltsin, that “Trotsky had overdrawn the analogy between a social revolution in a capitalist society and social counterrevolution in a deformed workers state…,” and that the “…preservation of proletarian power depends principally on the consciousness and organization of the working class.” (ICL, How the Soviet Workers State was Strangled, 1993).  They have not understood the process yet.

“…In contradistinction to capitalism, socialism is built not automatically but consciously. Progress towards socialism is inseparable from that state power that is desirous of socialism or that is constrained to desire it.(those constrained to desire it would be the parasitic bureaucrats, ed. note) (Trotsky, The Workers' State, Thermidor and Bonapartism, 1935).

In the absence of the Chinese working class, organized by its revolutionary party, sweeping away the bureaucracy, capitalism was restored in China and the state became a defender of capitalist property relations, a process that began in the 1970’s but accelerated decisively during the 1989-1993 period.  And this certainly did not happen “peacefully” as the resistance and the repression of the workers and students after the Tiananmen Square massacre demonstrate.  The political expressions of the workers movement were crushed alongside and after the suppression of the pro-democracy student elements in Tiananmen Square.  Thousands were shot and tens of thousands of workers were arrested, clearing the road for the final consolidation of political power by the “capitalist roaders” in the CCP.


The ICL also sometimes contradict their position that a civil war is necessary and on occasion call on Karl Marx to the effect that counterrevolutions do not always require a military component or a military repression of the revolutionary forces.

The fear of the possibility of a Reiss faction inspired the CCP leadership to send the army against the Party apartment houses in Muxidi in 1989.  In Michael Fathers and Andrew Higgins book The Rape of Peking, they show the decision to send the army was "…not merely to disperse the mobs from the barricades, but to create a spectacle of forceful repression so shocking that it could not fail to cow anyone within the party who had dared to sympathize with such defiance". One incident underlines this fact, when troops opened fire on ‘one of the best addresses in China’, numbers 22 and 24 in Muxidi, which were home to some of the most senior officials in the CCP. "Soldiers shot indiscriminately into Buildings 22 and 24, terrorizing their inhabitants as effectively as they did those on the streets". (Tiananmen – The Rape of Peking) “At least two servants were killed and several relatives of top officials were injured in this episode.” (Socialism Today, Issue #129 June 2009, “Tiananmen and the working class”)

The resistance of the Chinese workers in 1989 was heroic but short-lived.  The repression was very sharp, casualties were enormous, but the ICL and associated currents are not satisfied that this constituted or met their expectations of a civil war which forcefully crushes the Dictatorship of the Proletariat (DOP).  But by admitting the military ends of the bureaucracy were to cement the “reforms” the entire edifice of the enduring DWS falls alongside the slaughtered at Tiananmen.  The only other course is to revise Marxism and claim the slaughter of Tiananmen was to defend the DOP; it had to be for one end or the other.  Along with the fact that the CCP and bureaucracy smashed the resistance of the working class in order to change the project of the state, against the planned economy, they opened China to imperialist exploitation of the proletarians being driven off the land in the wake of the destruction of the rural communes. They elevated the LOV to be the determining factor in most social relations and midwifed into existence from their own excrescence a new class of capitalists, entrepreneurs and managerial elite to work the process of exploitation and primitive accumulation.


The Search for the Reiss faction


For the variety of Spartacist currents the existence or non-existence of or even the dialectical necessity for the existence of a “Reiss” faction is a big deal, perhaps of the first order of importance.  For us the shop floor of vanguard workers is of the first order of importance.  Whether any Reiss faction exists should be determined by observation--the first requirement of the scientific method.  For the political revolution the Reiss faction is not essential. What is essential is the revolutionary vanguard of the working class, its program and its Leninist party.  How much of a civil war there is during a capitalist restoration has more to do more with the level of resistance the working class can muster than the emergence of any left wing of the bureaucracy.  With or without a “Reiss faction” the political revolution requires the army to break ranks from the Bonapartists of the bureaucracy and form up democratic soldiers councils who arm the workers and defend the workers councils.

As a matter of method the Robertson-inspired currents are looking for a substitute vanguard instead of a vanguard that rises from the shop floor. They are looking for a vanguard among the bureaucracy although Trotsky said this layer would be more or less passive.  This is most clearly displayed in the IBT with their military support for Zanayev, whose faction did not oppose capitalist restoration but only the shock therapy tempo of the Yeltsin wing.  The ICL did not support the coup, but only because they considered the coup leaders an inept ‘gang of 8 that couldn’t shoot straight’. The IBT knew Zanayev was for restoration and considered the coup to be Stalinism’s last desperate stand and called on the working class to make a military bloc with one restorationist wing against another.

To be fair the IBT in September 1991 came to see that the end had come to the workers state in August with the triumph of Yeltsin.  But they nevertheless put their faith in the Zanayev coup to stand at the head of the revolutionary workers in the initial stage of the political revolution.


The Robersonians oversubscribe the Stalinist party to be defenders of post capitalist property relations and when they see the bureaucracy ridden with class enemy capitalist roader consciousness the Internationalist Group and the ICL suddenly have an argument over whether to be clinging to or appealing to a Reiss faction as a necessary leadership element for a political revolution to defend the gains of the DWS’s.  Substituting a Reiss faction for the working class to defend the revolution is a utopian schema.

Following the blood bath at Tiananmen the restorationist wing was freed to carry its program forward.  The property relations the state defends or strives to develop defines the class character of the state to paraphrase Trotsky (see above).  The project of the state had changed.  When the masses and their uprising to advance workers rights and workers democracy was militarily defeated, just as embryonic workers self-defense guards and councils were prying open the road to political revolution, this road was snapped shut by the repression and another opened presenting an obstacle-free path for the restorationists.  The state became nothing other than a vehicle for the building of capitalism, primitive capital accumulation and the building of a capitalist class from within the cadres, the technocratic layers, from expatriate capitalists, from capitalists who survived the red purges inside the party, and through nepotism, corruption, malfeasance, speculation and labor brokering.


Reviewing the ICL material on China shows they deny very little that others on the left cite as proof of the restoration.  The transformations that have been carried out in the mode of production and the wealth accumulation by and under the direction of the parasitic bureaucracy are all accepted as within the defined economic activities of the “DWS.”  It appears that for the ICL the Rubicon is not crossed until a distinctly bourgeois party challenges the CCP politically and smashes the remnants of the DWS, throwing up forms of bourgeois governance, whether multi-party democracy, or one of their more authoritarian or fascist variants as a result of civil war.  We have evidence that ICL leader Joseph Seymour held that a civil war is not requisite for capitalist restoration.

Alongside the CCP, the Bolivarians, Green-Left and the Castroists, the ICL contends that the Chinese CCP has not restored capitalism.  They see all the intrusions of the market into the economy and the integration of the economy into the world of international finance capital, directed by the Bureaucracy-Leadership-Party as the result of material restrictions imposed on the emerging post-capitalist world fighting within the old world economy for its liberation from Western and Japanese imperialism.  Their analogy positing the ‘market reforms’ that began in 1978 as an extended version of the 1920’s New Economic Policy (NEP) comes to mind.  We reject all this self-delusional thinking.

They are creating a fictitious chasm between the party and the bureaucracy.  Not taking account that the bureaucracy is shot through with capitalist roaders and the class enemy consciousness has triumphed in the bureaucracy and the party and that the bureaucracy doesn’t have a separate existence from the state or the party and the rise of bourgeois consciousness has been an evolutionary process, initiated by the party and not imperceptible at all.  Capitalist restoration has been a conscious goal of the CCP and bureaucracy since the triumph of the capitalist roaders at Tiananmen.  That they still take in ostensible Trotskyists with their claims to be building “market” and “21st c. Socialism” more than twenty years later is only a gauge of the credulity of methodological Pabloites.


Trotsky gave some guidance on the question of restoration pointing to the nationalization of big capital in the hands of the workers state, the monopoly of foreign trade and the increasing dominance of socialist planning over the anarchy of production.  Marxists are not static thinkers, they understand that revolution and counter-revolution are processes dependent on the relationship of class forces, the level of cultural, political and organizational development of the counter-posed classes.  They understand that during transitions from one mode of production to another the economic forms that fortify the emergent class are yet in flux and that the state power is wielded to crush the remaining obstacles to the emergent class’ sustained power.  The dominance of the rule of the LOV on the world stage and the military power of the imperialist states are the two main obstacles to the transition to a socialist mode of production.  Even now the dominance of the LOV is being further extended into central China as the CCP and the bureaucracy organize the industrialization of the Chinese interior. 

The ICL conflates the Political Revolution and the Socialist Revolution


The ICL states “…A proletarian political revolution would implement a centrally planned and managed economy to eliminate unemployment and provide basic economic security for all workers…” (Australasian Spartacist No. 198, Defend, Extend the Gains of the 1949 Chinese Revolution!)


And furthermore that, “…It would expropriate the new class of domestic capitalist entrepreneurs and renegotiate the terms of foreign investment in the interests of the working people. It would create a centrally planned and managed economy under conditions of workers democracy—not the autarkic, bureaucratic commandism of the Mao years.” ( Spartacist Canada No. 166, Fall 2010)


This remarkable statement comes from the political tendency that wants to believe and wants the world to believe they are the champions of Trotsky’s Transitional program.  But each of these concepts listed above correspond directly to the slogans and demands of the socialist revolution and its tasks, not the political revolution. For Trotskyists who read the Transitional Program the political revolution presupposes that the expropriation of the capitalist class and foreign imperialist enterprises has taken place, it further presupposes the planned economy and the monopoly of foreign trade which would be incompatible with the existence of large property holdings by native capitalists, never mind the existence of SEZs.  At this point all that is really planned in China is the state foreign investment policy and the fostering of private enterprises across the country and not only in SEZ’s.  This was made explicit in changes to the constitution.

“But the pupa is not the butterfly”


Even while Andreyev the Secretary of the Central Committee of the USSR was announcing that the relative weight of the socialist production reached to 98.6% in 1936, Trotsky warned:


The enormous and wholly indubitable statistical superiority of the state and collective forms of economy, important though it is for the future, does not remove another and no less important question: that of the strength of bourgeois tendencies within the ‘socialist’ sector itself, and this not only in agriculture but in industry….A bare antithesis between individual proprietors and collective farmers, between private craftsmen and state industries, does not give the slightest idea of the explosive power of these appetites, which imbue the whole economy of the country, and express themselves, generally speaking , in the desire of each and every one to give as little as possible to society and receive as much as possible from it.” (The Revolution Betrayed)

Who would deny that these appetites have not only been explosively proliferated across China but have been promoted by the leading bodies of the party, the state, the army and the bureaucracy?  The sum result of this dynamic is to kill Trotsky’s metaphorical pupa.

“…In order to become social, private property must as inevitably pass through the state stage as the caterpillar in order to become a butterfly must pass through the pupal stage.  But the pupa is not a butterfly. Myriads of pupae perish without ever becoming butterflies.  State property becomes the property of ‘the whole people’ only to the degree that social privilege and differentiation disappear, and therewith the necessity of the state.  In other words: state property is converted into socialist property in proportion as it ceases to be state property.  And the contrary is true: the higher the Soviet state rises above the people, and the more fiercely it opposes itself as the guardian of property to the people as its squanderer, the more obviously does it testify against the socialist character of this state property….” (The Revolution Betrayed)


What influences the life and death of our pupa? 


“…To the extent that, in contrast to a decaying capitalism, it (the soviet state) develops the productive forces, it is preparing the economic basis of socialism.  To the extent that, for the benefit of an upper stratum, it carries to more and more extreme expression bourgeois norms of distribution, it is preparing a capitalist restoration.  This contrast between forms of property and norms of distribution cannot grow indefinitely.(our emphasis)  Either the bourgeois norm must in one form or another spread to the means of production, or the norms of distribution must be brought into correspondence with the socialist property system….” (The Revolution Betrayed)

Not even the ICL denies that the state is developing bourgeois property norms, is participating in the growth of bourgeois consciousness by writing capitalist laws and that the state is administering the capitalist transformation by the selling off of and abandonment of the state sectors of the economy, to the benefit of private, foreign, domestic and corporate ownership and control of the means of production.  The ICL has chronicled the death by a thousand cuts of the DWS, yet still clings to fallacy that the state administered by the CCP is not a capitalist state because the privileged bureaucracy still derives its parasitic privilege from the core of the Chinese economy, which they claim is still the state sector.  The bureaucracy, they say is not the new bourgeoisie and the new bourgeois as a class are denied political power. Yet what is political power except the ability of a class to utilize the state in its own self-interest at the expense of other classes whose ascendancy would negate theirs?

In the 1937 Trotsky argued that the proletarian state is defined and established by these relations:


“The nationalization of the land, the means of industrial production, transport and exchange, together with the monopoly of foreign trade…”

The bureaucracy was not a ruling class because even though they had, “expropriated the proletariat politically in order by methods of its own to defend the social conquests. …the very fact of its appropriation of political power in a country were the principle means of  production are in the hands of the state , creates a new and hitherto unknown relation between the bureaucracy and the riches of the nation.  The means of production belong to the state. But the state so to speak, ‘belongs” to the bureaucracy.  If these as yet wholly new relations should solidify, become the norm and be legalized, whether with or without resistance from the workers, they would, in the long run lead to a complete liquidation of the social conquests of the proletarian revolution.”(our emphasis)  At that point in history the bureaucracy had, “not yet created social supports for its domination in the form of special types of property.”  It was compelled, “to defend state property as the source of its power and its income.  In this aspect of its activity it still remains a weapon of proletarian dictatorship”.  One crucial aspect of the lack of special property forms that for a whole period and across the DWS’s was that: the “individual bureaucrat cannot transmit to his heirs his rights in the exploitation of the state apparatus.  The bureaucracy enjoys its privileges under the form of an abuse of power.  It conceals its income; it pretends that as a special social group it does not even exist.” (The Revolution Betrayed)

In China today an entirely different picture emerges when we seek to determine class nature of the state based on which property relations the state defends or strives to develop.  In 1992, while in the Revolutionary Trotskyist League (RTL), we identified the Chinese road to restoration as the slow road compared to the 500 day shock treatment employed by the Yeltsinites in the former USSR.  The slow road, while just as counter-revolutionary as the fast road, afforded the working class many opportunities to resist even after the Communist Party’s slaughter of workers and students in 1989.  Since ‘89 the workers have resisted the implementation of the privatizations and the super-exploitation imposed with the integration into the world economy.  But without a revolutionary party the class’ resistance failed to coalesce into a political revolution during the survival of the DWS.  The contradiction between world imperialism and the proletarian revolution as mediated by the Bonapartist bureaucracy was resolved in favor of imperialism. Today the tasks of the workers revolution are no longer limited to the political overthrow of a privileged bureaucratic caste via the formation of democratic workers councils and armed workers detachments. Today those workers deputies must take up again the socialist tasks of establishing a centralized plan and a monopoly of foreign trade through the expropriation of the native bourgeoisie and foreign imperialist holdings as opposed to the ICL claim that the task would be to renegotiate (!) terms of exploitation with these foreign bosses. The Spartacist insistence that the task is to renegotiate with foreign capital abandons in concrete terms the internationalist nature of the proletarian revolution.


Today worker revolutionists must revisit the social conquests completed between 1949-1953, the expropriation of the bourgeoisie and of the foreign capitalists, the formation of worker-run communal enterprises, the suppression of the influence of the LOV in social relations, and the institution of a revolutionary foreign policy (as short lived as that was).  At some point quantity does turn into quality and vise versa.  When the quality—the class character of the state—changed, the quantity--the pace of the implementation of capitalist mechanisms accelerated!


Trajectory of Capitalist Restoration in China

Let’s look at this trajectory down the road of capitalist restoration in China and at the consequences, that concrete material and legal programmatic changes have had on the nature of the state, the introduction of capitalism, the integration into the world capitalist economy and then determine if the parameters of the DWS that Trotsky applied to the USSR apply to China today:

1972 Mao and Nixon meet.  The great opening of China to western imperialism begins.  China further distances itself from USSR, and it invades Vietnam in 1978.

1974 Relief of threat from USA, freeing surplus slated for military for “The four modernizations.”

1976 Hua Gou Feng defeats the Gang of Four.  As Premier he is the ‘stalking horse’ for Deng Xiao Ping and the Capitalist Roaders.  He rehabilitates Deng for the second time.


The ICL is mystified by changes at the top; tells the working class that they are “murky and personality politics.”

In 1978 Deng becomes Premier and worked to free the bureaucracy from Maoist policy of  “putting politics in command.”  Deng attacked Maoism after the defeat of the “Gang of Four” with his “Emancipation of the Mind,” “Opening to the Western World” and “Getting rich is Glorious” concepts.  He said that the state sector would remain the core of the “socialist economy” and that although individual capitalists existed, the bourgeois class as a whole no longer existed so the socialist project would be secure despite the foray into the market.  This period embraced the “Four Modernizations” resulting not only in the opening of four Special Economic Zones (SEZ’s) but the closing of the “Democracy Wall.” (English People Daily)


It appears the ICL believed him until at least 1997 when they introduced that contradictory position that China is on the Brink of restoration, however they maintain that the state sector remains the core of the Chinese economy and the bureaucracy’s privileges to this day.

1979 Following the signing of friendship treaty between Vietnam and the USSR Vietnam invades Cambodia which was endangering the Vietnamese revolution. The autarky that was in Cambodia was the furthest thing from internationalism with massacres of Vietnamese.  China in turn told Jimmy Carter they would be invading Vietnam.  The Vietnamese deported many Han Chinese who were running big black market operations.  They took a tremendous amount of material goods with them.  China saw the USSR as trying to encircle them on their southern border.  Not only was China not defending the Soviet Union it was making common cause with imperialism against the Vietnamese revolution and even served as its proxy.


Concrete changes in the economy and the condition of the masses followed:

  • The State share of the economy which in 1978 was 78% dropped to 42% by 1996.
  • The Value added to the economy through Industry by the State Owned Enterprise (SOE’S) was 100% in 1978 and was reduced to 54.8% in 1998 and to 41.9?% by 2003
  • The state share of producer goods transactions 1978 was 100% and this was reduced to 10% by 2003 (everything from ores and diamonds to specialized machine tools--everything that industry consumes to do business.)
  • The share of prices set by the state for all commodities in 1978 was 97% and this was reduced to 2.6% by 2003.

While these market reforms were touted by the largest Communist Party in the world as proof of their method and by the biggest capitalists in the world as proof of theirs, the workers and peasant masses of China were suffering its consequences as the GINI coefficient ratio, which in 1978 was 0.2% would jump to 0.46% by 1998 peaking at 0.491% in 2008 and stood at 0.474 in 2012. A GINI coefficient ration over 0.4% is widely considered the threshold that incites social unrest. (Reuters)

“The GINI coefficient ratio has stayed at a relatively high level of between 0.47 and 0.49 during the past decade, indicating that China must accelerate its income distribution reform to narrow the rich-poor gap, Ma said.” (English News)

The ICL and the Committee for a Workers International (CWI,) as well as the Freedom Socialist Party (until 1999) buried their heads in the sand claiming these changes were enacted somewhere along the trajectory of an intact DWS and that either reform of the party (the FSP) or political revolution (CWI/ICL) were the objective task of the working class, as the class nature of the state had not changed.  So if we look at the class nature of the state asking what class interests it serves and which class’ social conditions it advances in society, we have to look at the social and economic policies enacted by the state.  We steal liberally without citation from their publications, as these policies we are reviewing are well known and easily referenced.

Every worker knows that without the right to strike workers’ have no power.  In 1982 the right to strike and the “Four Bigs” (to speak out freely, air views fully, hold great debates, and write big character posters) were abolished.

Workers know that if our organizations are controlled from the top down and that if those organizations are not independently run by active rank and file, by shop floor action committees, they have a tendency to negate workers’ power and enforce the control over the work and/or our lives rather than liberate them.  What kind of union can you have without the right to assembly, to speak out and to write large posters? They are the mainstay of workers self expression!

Chinese labor law gives workers the right to form unions. Trade unions are an arm of the state, and are controlled by and provide funding for the Communist Party. The party tells unions which leaders to elect. According to Chinese law a union can be created at any place with 25 or more employees. The approval of the employer is not required. The unions do not negotiate and make agreements with state-controlled management.” (Facts and Details)

Alongside the abolition of the right to strike in 1982 was the promotion of the growth of private capital in the form of “self employed labor.” (English People)

“5 Second paragraph of Article 11:"The State protects the lawful rights and interests of the individual and private sectors of the economy, and exercises guidance, supervision and control over individual and the private sectors of the economy."

(In 1982 this was Revised to): "The State protects the lawful rights and interests of the non-public sectors of the economy such as the individual and private sectors of the economy. The State encourages, supports and guides the development of the non-public sectors of the economy and, in accordance with law, exercises supervision and control over the non-public sectors of the economy."

1985 Reduction of public provisions.

1986 The Law of Gestation of Land opens land leases for 30 years. 

1986 Deng message “Do not follow socialism”

1987 The legal introduction of a system to allow SOE’s to make contracts and directly negotiate with overseas companies is the tip of the wedge breaking the state monopoly of foreign trade.


1988 The law of gestation of land extended land leases to a possible 60 years, making millions of surplus agricultural laborers who then leave the land for the cities.  Waves of internal migration fill the labor camps of every major city, suppression and exploitation of this migrant reserve army of labor fed the market’s quest for surplus value accumulation.  Inflation, previously unknown in the DWSs and before 1978 in China, jumps to 19%!


1989 General “liberalization of prices.”  Social resistance breaks out at Tiananmen, University of Beijing, the Beijing Autonomous Workers Assn. is formed; millions of workers join student strike.  Demonstrations spread across the country. Li Peng declares martial law. The Communist Party-led PLA crushes workers resistance, murders students and workers, signifying the use of the state to militarily enforce the program of restoration upon the masses.

1991 The law allowing the transfer of land leases marketizes the state “owned” property, promoting private agriculture over communal.  This completes the privatization process begun in 1978 with the dissolution of the village communes.  Even though nominally the state owns all land in China today.

1992 14th Party Congress eliminates sectors where public investment is limited. The privatization of the SOE’s begins as they must survive the rationalization of the market; 40 million workers are sacked and strikes and protests break out to stop the Communist Party from eliminating the “3 Irons”. 

From a peak of 145.1 million in 1992, the number of jobs in China's state sector fell to 82.8 million in 2002. (Wall Street Journal)


1993 revision of constitution promoted “household responsibility system” to replace the people’s communes.


1994 Labor law changes implement salaried labor, the “iron rice bowl” rusts through. The Communist Party carries out a Thatcherite wet dream as education and health care are privatized and the right to life-long employment replaced with “performance based contracts;” the “iron rice bowl” is eliminated.  Deng takes his victory lap to celebrate the integration into the world of capitalism in his touted “Tour to the South.”

1995-2002 45 workers million were sacked of which 36 million were state sector.

1995-2002 State sector employment peaked at 113 million (1995), down to 71 million by 2002

By all accounts unemployment doubled during this period though government data paints a much rosier picture than academic research has. (China Economic Review)

State share of employment declined from 60.5% (‘98) to 19.4% (2010) (RCIT pg.7)


While the informal labor employment for migrant workers dropped from 87.3% in 2001 to 60.7% in 2010 the rise in informal employment for local workers jumped from 13.4% to 25.8% while the total informal employment for all workers hovered between 29-37% over the decade. (RCIT pg11)

The distribution of workers protests in SOE’s vs. private enterprises between 2000-2010 made a complete turnaround; with 80% of the protests being at SOE’s in 2000, in 2010 80% of the job actions were at private enterprises. (RCIT pg 16)

Who does the banking system serve?


“The banking sector is totally dominated by the state banks while foreign banks hardly play any role.  This may come as a great surprise to the Munzerite FLTI who see Chinese capitalism as an offshore operation of US imperialism.  Far from being a Yankee tool Chinese state banks own large percentages of Morgan Stanley and Barclay’s Bank.


The banking sector is also responsible for half of the whole financial system. If one combines this figure with the government bonds, the state sector provides nearly 2/3 of the financial system.

Since Lenin developed the category of “state monopoly capitalism”, there has never been a more pure form of state monopoly capitalism than in Chinese banking in the last two decades.

Chinese banks have emerged as a major financier over the past few years. It is already lending more money to so-called developing countries than the World Bank. The China Export Import Bank and China Development Bank signed loans of at least $110 billion to other developing country governments and companies in 2009 and 2010 (the World Bank made commitments of $100.3 billion from mid-2008 to mid-2010). The purpose of these loans is – as it is usually the case with state loans to foreign governments – to support Chinese exports and businesses overseas.

It is therefore not surprising that China is today close to being the biggest Net Capital Exporter, only slightly behind Germany.

However China’s capital is not only active on the international loan and bond market but also as a foreign investor in the industrial and raw materials sector.


One can see that Chinese imperialism has already surpassed rivals like Canada or Italy in Foreign Direct Investment and has already reached the level of countries like Germany.” (Entire above section is reprinted from RCIT)

While it is outside the scope of this investigation to fully record the role of the Chinese state banking sector and state foreign direct investments, it is notable that the ICL, et.al, loathe all discussion of the role of the Chinese banking sectors’ OFDI and the relationship that creates between the Chinese state and the world proletariat.  We offer only three examples but many more are available to the interested investigator with time and access to the internet.   As we noted (elsewhere in this article) China began moving out of the “safe haven” of US Treasury bills.  It redirected these funds, it sought and received permission to purchase a $3billion stake worth roughly 8 percent in “…Blackstone, which owns companies that have 375,000 employees…” (New York Times)

In July of 2007 The Guardian reported that “another bank, controlled by the Chinese government has become a major shareholder in Barclay’s, and could soon own 8% of the UK bank.

Barclay’s announced this morning that China Development Bank is spending €2.2bn (£1.5bn) on a 3.1% stake…” (Guardian)

And in August 2010 the FED approved a request to allow the China Sovereign wealth fund to purchase 10% of Morgan Stanley. (Reuters)

These banks and financial institutions that the Chinese State has purchased shares of are major exploiters of proletarians worldwide and super-exploiters of workers in China itself and the semi-colonies across the planet.  This makes the Chinese state participants in capitalist exploitation in the advanced industrial countries and super-exploiting imperialists in the semi-colonies, not only through direct SOE investments abroad but as large percentage shareholders in some of Western Imperialism’s biggest capitals.

It is our view that the exposition of the emergence of Chinese imperialism has been well documented both in our struggle with the FLTI in 2009-2010 (FLTI minority report The Truth is Concrete), The HWRS,  The Rise of Chinese Imperialism,  and in the RCIT’s book The Great Robbery of the South (2013) Chapter 10, “China’s Transformation into an Imperialist Power.”

Is the state sector the core of the economy?


Despite Trotsky’s admonition that the restorationist state would for a time base itself on the state sector, for the reductionist and economist schools, continued existence of the DWS hinges on the core of the economy remaining in the state’s hands.  Since we first heard this argument 20 years ago we have seen that core of the economy diminished significantly, proving concretely the trajectory we identified in 1992.  This is the very heart of the matter; the Stalinophiles hide behind the state as an abstraction when Trotsky has explained that the state is the concrete armed force of the class whose social relations it is imposing or defending. After 1989 the state smashed resistance to full-scale restoration, and by 1992 imposed major restructuring of the state enterprises to consolidate wage-slave capitalist relations. The LOV then determined value as opposed to planned prices. By 1992 the state is everywhere enforcing and reproducing capitalist social relations and the results (see data below) show how they transform themselves from state capitalist administrators to privately rich bourgeois. The reductionist and economist schools (or empiricists) make a false distinction between market and state when the qualitative criterion is that the state is imposing LOV to revalue production in place of the plan.


Comrade Richard C. of the IBT does not realize that he has supported the true picture of the economic state of affairs operating in China when he said  In imperialist countries at the present time, the tendency is deflationary and increasing the money supply will not (right now) generate hyperinflation. It has instead created asset bubbles in less developed countries such as the BRICS.   The “C” in BRICS being China we have to wonder what kind of workers state comrade C thinks China is to be vulnerable to manipulation by the printing of money in the imperialist countries. [4]


Ergo our timeline continues…,


1998-2010 State share of total number of industrial enterprises (with annual sales over 5mnRMB) fell from 39.2% to 4.5% (!!!)

State share of total industrial assets fell from 68.8% (‘98) to 42.4% (2010)


1997-2010 State share of nation’s exports fell from 57% to 15% (2010) (RCIT pg 7)


1999 Private enterprise is lifted from playing a “supplementary role” to being an “important constituent component” of the new “market socialism.”

2000-2009 China’s share of global manufacturing exports grew from 4% to15% (RCIT pg. 5)

2008 Surpasses the USA as the world’s largest manufacturer.

2010 Becomes the world’s second largest net exporter behind Germany.


While China’s foreign-exchange reserves have grown from $250bn in 2002 to over $3 trillion in 2011, the percentage held in US securities has dropped from 75% to 54%. (RCIT pg. 17)


Chinas Outward Foreign Direct Investment (OFDI) jumped from between $10-12bn in 2005 to between $70-73bn in 2011 (RCIT pg.19)


Strong national research and development infrastructure was in place before the ‘market reforms.’  Without these prior accomplishments of state planning the ‘market reforms’ are unlikely to have produced the gains they did.


With the ‘reforms,’ R&D by the state was defunded, forcing alternative funding and profit-seeking.   As a result, LENOVO, started by the Chinese academy of Sciences, was privatized. Then it purchased the IBM PC division in 2005 and is now a major world player in consumer electronics.

The Chinese bourgeoisie: spawn of the bureaucracy born with their hands on the levers of power

In the Workers Vanguard  #814 of 2003 we read the following fantasy: Of the 1,240 companies listed on China’s two main stock exchanges, in some cases the government holds a majority of shares, in others a substantial minority. But even the latter remain effectively government-controlled because the CCP has retained a monopoly of political power. There is no workers democracy in China—but neither is there shareholders’ democracy. A disgruntled shareholder brash enough to organize a revolt to oust the incumbent management, typically politically well-connected CCP cadre, would likely find himself in a very bad place very rapidly.


Shareholders in China’s corporations do not have ownership rights in the Western capitalist sense. They have the right to income from their financial assets and they can sell their shares, if they are smart or lucky enough, for a net gain over the purchase price. But they cannot determine or even influence the management and corporate policies. These are determined by various and often conflicting political as well as economic pressures.”

What do the Spartacists suppose they are describing if not State Capitalist property and hybrid forms of it, shares of which by 2003 had already long since been for sale.  Why do they suppose  the lack of shareholders democracy is a qualitative distinction and somehow indicates the survival of the DWS.  Do they ever acknowledge what Trotsky said about state capitalism? Or state monopoly capitalism in the epoch of imperialism? So it’s OK for all the Western imperialism to take the form of state monopoly capitalism, but not for capitalist restoration in a DWS. In the DWS the ICL insists that capitalism be competitive market capitalism based on individual shareholders. This is theoretical bankruptcy. Obviously the bureaucracy preferred to use state power to ensure that state monopolies that were stagnating could switch from planned prices to market prices and to position themselves as the new Red Bourgeoisie. 

“The Chinese Stalinist bureaucracy created a new indigenous bourgeoisie out of its own ranks the old Chinese capitalist class was expelled after 1949-52…. Of course it also tried to attract the old Diaspora bourgeoisie but it has no appetite to withdraw from the scene and to hand the economy over to the latter.  For this reason a process of rapid primitive accumulation was initiated with the result of a growing private capitalist sector as the figures above indicate.  However given the huge size of the country’s economy and the –in relation to this-small size of the new Chinese capitalist class, the ruling class made sure that a strong state capitalist sector ensures that China avoids the fate of the economic collapse like the former Soviet Union after 1991.” (RCIT pg 7)

Not every millionaire is a member of the ruling elite, but class has its privileges a lesson many of the fourteen million millionaires in the United States have learned.  In China, figures show that by 2011 over one million Chinese are now dollar millionaires, and for every one identifiable millionaire there are estimated to be two flying beneath the radar. 

The opening of the CCP in 2002 to entrepreneurs and capitalists with the “Three Represents Theory,” an ideological throwback to bourgeois political economy which paints the upper-middle classes as the most advanced productive forces in the economy, was more a recognition of the fact that the party is a capitalist party than an invitation.  The properly-positioned party members and bureaucrats, not a billionaire among them or in all of China in 2002, were able to propel at least 100 capitalists to billionaire status (Forbes claims there may be another 100 harder to identify,) while according to the Hurun report there are 317 billionaires in China and that for every one identifiable billionaire there are two additional unidentifiable due to hidden assets.


Take for example Zong Qinghou (宗慶後), the CEO of the Hangzhou Wahaha Group.  The Company began as a local government owned sales company (an SOE) which through “rationalizing” into private and Joint Ventures (JV’s), and then through mergers, acquisitions, offshoring, spinning out and sharing out to family members, etc.,  has amassed a US$20.1 billion fortune.  This makes Zong the third richest man in China. Nowadays 80% of Wahaha group business is controlled by Zong Qinghou’s wife Shi Youzhen and daughter Kelly Zong.  Unlike in Trotsky’s time, this fortune, this ownership, these property forms, and these managerial relations are not secret and are public knowledge, openly acknowledged.  This is not illegal, it is not corruption, it is not invisible nor does the party pretend that it does not exist. 

Or take the capitalist success story of the Fosun group. The ‘reforms’ enabled four University graduates to enter business  through market research, extend their business into health care and real estate, list on the Hong Kong stock  exchange, and today their CEO Guo Guangchang (郭廣昌) is considered China’s Warren Buffet, although he had only amassed US$4.1 billion as of 2007.  In 2008 Guo controlled a portfolio valued at $200bn in assets in the US, (Business Week, 8/08) and these US assets were once again valued at $200bn when he was interviewed on “60 Minutes.”   Guo Guangchang was a representative of the 10th National Peoples’ Congress (NPC).  The NPC, although touted in the constitution as the highest state body of people’s democracy,  is widely recognized to be a rubberstamp body following the lead of the  CCP having no real power to legislate  or intervene on behalf of their constituents. 

Huang Nubo (黄怒波) was a party member and Department Chief in The Central Propaganda Department.  He formed the Zhongkun Investment Group to subsidize his paltry pay as a party hack and today is listed as a billionaire Forbes ranks129th among China’s richest people.

The recent storm over ex-Premier Wen Jiabao’s “hidden wealth” reported as up to $2.7bn is far more than the skimmings of “corrupt” bureaucrat.
Bloomberg reports that now Prime Minister Xi’s family members own an 18% stake of a $1.7bn rare earths company. See also the Bloomberg report on the “Heirs of Mao’s Comrades…”

In the two main legislative bodies the 70 wealthiest NPC delegates in 2011 had a combined wealth of US$90bn and among the Chinese Peoples’ Political Consultative Conference (CPPCC) the top 70 had a combined wealth of US$100 billion. This level of wealth accumulation by the members of the CPPCC dwarfs that of the total assets of the members of congress of the USA.


The current developments reveal a crack in the ICL’s crystal ball.  “The aims of China’s would-be exploiters—centrally to secure the right to buy and sell property and hand it down to their offspring—can only be achieved through smashing the existing state apparatus by one means or another and replacing it with a new one based on the principle of private ownership of the means of production….” (Spartacist No. 53, Summer 1997)


Today the bureaucracy has found a way to buy and sell off state property; with the selling of shares and the listing of privatized companies and joint ventures on the stock markets they have found a means to hand property down to their offspring. Indeed the remnants of the deformed workers state were smashed by the Communist Party, the army changed sides, turning against the workers in 1989, and despite reporting on the event, the ICL/IBT/IG/FSP/PSL and the like all missed its significance.

Out of the darkness and up to Lenin

We have concentrated on delineating the process of capitalist restoration in China, somewhat at the one- sided expense of detailing the rise of Chinese imperialism. So we need to warn worker militants everywhere about Neo-Kautskyism and Stalinophile Pabloism at this same historical crossroads. US imperialism is in decline and is taking its lumps badly.  With the “Pacific pivot” and US diplomacy and the treaty provisions of the TPPA (The Trans Pacific Partnership Alliance) and war-mongering against the DPRK, Washington aims to encircle and cordon off the expansionism of emergent Chinese imperialism.


This policy shift has already led to international incidents on the high seas, as each of Washington’s allies takes a turn as proxy and each presses its own territorial claims. Additionally, China threatens the economic survival of Vietnam and Vietnam is buying arms as fast as it can, including submarines and anti-shipping missiles.  The world crisis of capitalism is driving this collision to determine who will win the lion’s share of redistributed world markets sometime in this century, and perhaps very soon.  This would be a world war, make no mistake. The capitalists must destroy capitals which they cannot profitably employ (just as they did in WWI and WWII) as a result of the Tendency of the Rate of Profit to Decline.


To prevent this outcome workers in the imperialist countries and in the first place China and in the USA need to recognize that their main enemy is their own bourgeoisie.  To embrace the truth that the only anti-war program is ultimately but urgently the socialist revolution, a Leninist party is required to pursue this program with single-minded devotion and discipline.  Workers of the world unite!   Forward to the world party of socialist revolution; forward to its transitional program, based on the demands and method of Trotsky’s 1938 Death Agony of Capitalism and the Tasks of the Fourth International!  We have a world to win and nothing to lose but our chains!



Notes: 

[1] We consider the North Korea and Cuba to still be bureaucratically Deformed Workers States (DWS), although with the process towards capitalist restoration, led by the Castro brothers and the PCC is far along in Cuba, North Korea is under attack from all sides its former supporters the USSR and China both support restoration in DPRK.

[2] For Socialist Action, as late as 1993 the continued existence of the economic plan equaled the survival of the DWS. The ICL took two years to decide that restorations it took place in 1991-2.  This bizarre analysis meant that the workers’ state, the state and not just some surviving economic organizational form, was maintained by the Yeltsin forces for many months after they banned the Communist Party! This is more than a bit disingenuous and over-the-shoulder on their part.  In fact in the January, 1992 Workers Vanguard (pg.8) they said, “The dismembering of the USSR does not leave a consolidated capitalist counterrevolution but a bloody mess.” So a “series of ‘governments’ that are counterrevolutionary through and through, intent on dismantling the Soviet degenerated workers state”, nevertheless maintained it.  As for the Spartacists the hour for the political revolution was getting late, until at last they conceded that it was not coming.  Which for the ICL was the Rubicon.

[3] Online discussion of the Occupy Oakland Labor Solidarity Debate: 1570, Yahoo Groups


April 2013

Statement of Liaison Committee of Communists  (CWG/USA, CWGA/NZ, RWG/Zim)
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