Socialism with Chinese Characteristics Lü Yanchun (吕延春),
Northeast Chinese Households (关东人家), 2005
China is now at the center of the world. The biggest economy in
terms of industrial output, the largest manufacturer, and its population
as measured by purchasing power parity, or PPP, (how much of the real wage does
a McDonald’s burger cost) is already at a higher living standard than the USA.
By every economic metric it is the only major power that has grown economically
by more than 5% a year in the 21st century. How do we explain this? For most Marxists
there are two basic positions – China is either capitalist or socialist. Some
however, argue that it is undergoing some intermediary ‘transitional’ position
between them. The transition option is used by those who want to reject the
reality that China is an imperialist world power, and keep alive the dream that
it has some progressive, pro-socialist characteristics. In this case China’s
growth must be explained not by its restoration of capitalism which is globally
in decline but by its ‘transition’ to socialism.
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Foremost among those who argue China is undergoing a ‘transition’
is Michael
Roberts the British based Marxist well known for his defence of Marxist
economics and the law of value, most notably against Michael Heinrich, (see In Defence
of the Labour Theory of Value). He has also defended
Marx’s key law of the tendency of the rate of profit to fall, the LTRPF,
against David
Harvey, who rejects it as the necessary cause of crises of overproduction,
and ultimately setting the historical limits of the capitalist mode of
production. Roberts’ defence places him directly in the tradition of Marx for
whom value is the product of social labour, and the LTRPF the expression of the
ultimate contradiction - the class struggle between the proletariat to retain
the labour value it produces, and of the capitalist ruling class to extract
surplus labour value.
However, the class struggle is not only over the rate of
exploitation during the production of value. It is mediated by the state which
rules on behalf of the ruling class to reproduce these exploitative class
relations. To understand China today we have to determine for which class does
the state rule. Transition in the historical context of China’s revolution can
only be from the rule of capital to the rule of labour. The transition ends
when the law of value as the basis for setting prices of production in the
world market is replaced by the workers’ plan which sets prices based on social
labour time. Roberts however, argues that the ‘transition’ to socialist
planning was ‘trapped’ after the state opened up to the market from the late
1970s, because the Law of Value (LOV) is as yet not ‘dominant’ in the
state.
So for Roberts there was no transition back to capitalism because
the state could ‘manage’ the LOV so that it did not ‘dominate’ the
economy. We argue that Roberts arrives at his conclusion by
confusing levels of analysis. Marx’s abstract model of capitalism where
the state is left out of the picture is superimposed on the real world of 21st
C state monopoly capitalism. Roberts claims the state intervenes in the
market to suppress the domination of the LOV when its actual role is to manage
the LOV on behalf of the capitalist ruling class. How is this different from
the rest of the monopoly capitalist states in the epoch of imperialism?
We will show that since 1992 when the CPC decided to reintroduce the LOV to set
the prices of production within the global economy, it has become a monopoly
capitalist state, and that particular historical circumstances (many historical
determinations) drove it to become imperialist. To make the transition from
monopoly state imperialism today we need a socialist revolution that will
expropriate all capital (‘public’ and ‘private’) and develop the conditions
necessary to build socialism, the first stage of communism, which in ending
class society, and therefore the state, will usher in communism
itself.
No workers’
revolution means no socialism
We say
that there is no evidence that China was or is socialist. China did not
have a workers’ revolution which is the necessary condition for socialism. The
revolution in 1949 was a peasant revolution led by a Stalinist party comprised
of bureaucrats modeled on the degenerated revolution in the USSR after 1924
when the bureaucracy aligned with the peasantry and advocated a ‘bloc of four
classes’, workers, peasants, petty bourgeoisie and bourgeoisie. The CPC took
power after it defeated the bourgeois nationalist forces of the KMT which fled
to Formosa (Taiwan). In that event the revolution was based on an alliance of
only two classes, the peasants and the petty bourgeoisie. Trotsky had
anticipated the possibility that such a petty bourgeois revolution, led by
Stalinists based on the peasantry, would find it had to go further than it
intended and expropriate the bourgeoisie, leading the bourgeois democratic
revolution itself.
In fact
Trotsky had already been proven right. It had happened in Eastern Europe after
1945 when Stalin’s plans to form popular fronts (the ‘bloc of four classes’)
with the national bourgeoisies fell through as they all reneged on such a bloc
as soon as the Cold War iron curtain came down. For those who understood
Trotsky on Ukraine, these states became extensions of the Stalinist USSR where
the bourgeoisies were expropriated by the bureaucracy rather than the workers.
They were therefore characterized as deformed-at-birth workers’ states in
defence of workers’ property.
Was the
situation in Eastern Europe analogous to the Chinese Revolution? We say yes. In
both cases the bourgeoisie decamped to join the Cold War and the Stalinist
bureaucracies had no option but to nationalise private property as state
property. The Chinese revolution was also deformed at birth as workers’ played
no role in the revolution having been suppressed since the counterrevolution
when the KMT liquidated the CPC leadership in 1927. So what resulted in
1949 was a petty bourgeois bureaucratic revolution that by 1951 was forced to
expropriate the bourgeoisie, at the same time making sure the working class
played no active role in the advance of the revolution towards socialism.
The petty
bourgeois bureaucracy held state power balancing between the only two classes
that could act as the ruling class - either the bourgeoisie or the working
class. The petty bourgeoisie was a class intermediate between the two
capitalist classes - the proletariat and bourgeoisie, which were locked in a
class struggle over the production of value. The bureaucratic state was neither
capitalist, nor socialist, but rather a ‘transitional’ state in which the petty
bourgeoisie had to return to capitalist rule or go forward to proletarian
rule. Resolving this class transition was pressing given the new state had
to solve the dilemma of restoring capitalism without succumbing to
recolonisation by imperialism.
Therefore,
as a petty bourgeois formation the state bureaucracy had an interest in
administering the state to advance and consolidate its power by becoming
the new national bourgeoisie. This would involve restoring capitalist social
relations ruled by a ‘socialist state’. The CPC at the head of the
bureaucracy decided to do this gradually in the name of “Socialism with
Chinese Characteristics”. The decision became more urgent as the bureaucratic
plan which suppressed workers’ democratic participation failed to raise
productivity and the economy began to stagnate.
CPC restores
capitalism
Within the
CPC the Maoist faction campaigned to enforce greater worker productivity in the
name of the revolution. This campaign was a disaster that led to mass famine.
By 1978 further stagnation in the economy prompted a rival faction around Deng
to call for a return to capitalist market forces - that is, the LOV - to set
the prices of production as the basis of market exchange. However this would
only work if China re-joined the world market in which world prices would guide
the application of the LOV. Labour-power would become a commodity in the market
and socially-necessary labour-time would be the economic measure of value and
surplus-value (or profits). This in turn would set the prices of production
which included the share of profits.
In 1992
the 14th Congress took the decision to allow the LOV to set prices in the whole
economy including the state owned sector to increase labour productivity. The
rule of the LOV was carefully managed. Private investment in production on the
land and in industry was now allowed subject to capital controls which
restricted private trade and investment abroad. More importantly, tariff free
economic zones for Foreign Direct Investment (FDI) were now established within
strict limits including the requirement of joint ownership to prevent foreign
takeovers, and the transfer of intellectual property to allow China to develop
the forces of production.
For
Marxists who recognize the LOV as determinant under capitalism, the CPC
decision in 1992 is the qualitative point at which capitalism was restored in
China. The bureaucracy led by the CPC was now converted from its role in the
state as an intermediary bureaucracy serving the petty bourgeoisie, into a new
ruling capitalist class serving collective
capitalism. This ended the period of ‘transition’ from a Stalinist-led
peasant revolution forced to expropriate the Chinese bourgeoisie, to a
bourgeois counter-revolution that restores the national bourgeoisie.
Everything the bureaucracy had done over this transitional period in the name
of ‘socialism’ was to create the conditions for the restoration of capitalism.
This was managed within the framework of a state controlled by the Stalinist
CPC presenting the return of capitalism as a ‘bloc of four classes’ as a
necessary condition for socialism.
Of course, there
have been many attempts to insert extraneous conceptions of China to explain
its capitalist growth as some ‘exceptional’ aspect of its ‘transition’ to
socialism. As we have seen, Michael Roberts claims that while China has
established a capitalist market, its growth is not explained by market forces
as such, but by the state which does not represent the private
capitalists. He argues that the state sector of the economy plans
production for use and not profit. The private sector exhibits the usual
laws of motion of rising and falling profits typical of the capitalist world
market while the ‘public sector’ can escape those laws. What is
‘exceptional’ is its ability to avoid the ‘domination’ of the LOV and create a
surplus that is not distributed as profits to private owners, but accumulated
as a sovereign fund. This enables China to subsidise the production of
commodities more cheaply than its capitalist rivals and at the same time make
millions of workers ‘middle class’.
This
claim is therefore a sort of ‘Marxist’ variant of US propaganda that calls
China a ‘cheat’ in under pricing its exports (and therefore its currency) and
massively underwriting the infrastructure and development of its many, and
growing, economic partners. Only the authoritarian CPC can manipulate prices of
production by intervening in the private market. For Roberts, so long as
the state is not formally ‘dominated’ by the market, this is a good thing. It
shows that something progressive has emerged from the legacy of the peasant
revolution that may contribute to the transition to socialism. What needs to
happen is that workers have to progressively impose workers’ democracy on the
CPC to socialise planning and ‘dominate’ the LOV! If we were to extend such
reformist dreams from China to the BRICS+ then ‘win win’ economics can spread
across the globe creating a wave of new middle classes, and the transition to
international socialism can be completed on the installment plan.
From the ‘abstract’
Capital to the ‘concrete’ real world
But how
can a state which is so influential in re-establishing and regulating the LOV
in the market not be ‘dominated’ by the LOV which operates as the determinant
of prices in the global market? How is it possible for a nation state not to be
fully integrated in capitalist production of value and surplus value when it
contributes to the prices of production of everything that China produces
globally up and down the value chains? As we noted, Roberts’ claims the
state does not produce profits because profits can only accrue to the private
owners of capital.
For Marx,
‘capital’ could only exist in the form of different capitals; otherwise, there
was no more compulsion to accumulate. Consequently, capital could only exist in
the form of ‘different capitalists’, that is, a social class constituted so
that each part of it was, by compelling economic interest, tied to the survival
of ‘its’ own unit of production or circulation. Consequently the ‘thirst for
profit’ of each part of that class and the ‘drive to capital accumulation’ are
identical, the second one being only realizable through the first (the attempt
at profit maximization of each unit or firm). If there is no competition, and
the allocation of resources are not left to the decisions of individual
capitals and the ‘invisible hand’ of the market’, then there is no capitalism.
Capital cannot exist as one capital, the state. (Carchedi and Roberts, 2023,
219)
Roberts
fails to translate the level of abstraction of Marx’s three volumes of Capital
(and the ‘Fourth’ on Theories of Surplus Value) to the real world. The
real world comprises concrete social relations that are the result of ‘many
determinations’ originating from the operation of the laws of motion. Prices of
production which assumed the ‘free competition’ and averaging out of the profit
rate that Marx used to demonstrate the operation of the LOV in the circuit of
capital was never intended to correspond to the concrete reality of capitalist
development. The working out of prices of production in the real world are NOT
determined by an abstract market, but by the class struggle in which theory is
subjected to practice.
John Smith in his Imperialism
in the 21st Century has a useful discussion of
how Marx’s method anticipated the way the LOV works in the epoch of
imperialism. (224-251) Production of value requires the exploitation of labour,
as Capital demonstrates, but due to the monopoly ownership of capital
its distribution is now characterised by super-exploitation where wages are
paid below their value. That is, the value of labour power as a commodity with
a use-value to produce surplus value is determined by a class struggle in which
monopoly capital can exercise power over labour power to set its price and
extract super-profits.
In fact, we argue that in the real world competition has never
been free from the intervention of state power in service of
corporations. From its inception to its decline and decay the capitalist
state has always played the role of manager and broker in establishing and
maintaining the production and circulation of capital. Originating in genocidal
wars against pre-capitalist peoples to extract rent from privatised property,
its epoch of decay ends in more genocidal wars over land and rent, so that
production becomes parasitism where monopoly rents accrue to corporate warlords
who monopolise production, distribution and exchange.
Roberts, by projecting Marx’s abstract level of analysis in Capital
onto the actually existing world in which the state is the overseer and
regulator of the LOV, is blind to the rise of state monopoly capitalism in the
transition from so-called ‘competitive’ capitalism in the 19thC to monopoly
state capitalism in the 20thC.
“Moreover the view that the
likes of China and Vietnam are a new form of capitalism, ‘state capitalism’,
suggests that world capitalism is now today stronger than it ever was before in
history. Alongside the decline of the imperialist powers, state capitalism has
apparently a new and sensational phase of the development of the productive
forces, in a backward country like China, and thus much more impressive even
than anything Marx described for 19th century capitalism. (Carchedi
and Roberts 2023, 218)
What is State Capitalism?
Roberts’ method applies abstract assumptions to arrive at his
ahistorical conclusions. A ‘new form’ of state capitalism in China arising out
of the deformed workers’ state cannot be dismissed until it has been put to the
test of ‘many historical determinations’ that make up that
history. First, China after 1949 was not (on Roberts’ own figures) a
backward country relative to the GDP growth of capitalist semi-colonies,
keeping pace with the South Korean ‘tiger’ and well ahead of India. Marxists
agree that state planning in the degenerated or deformed workers states,
despite the limits imposed by bureaucratic planning, generally allowed the
forces of production to develop beyond the semi-colonial world. Second, let’s
identify the historically specific conditions that allowed China to restore
capitalism as a new ‘state capitalism’ in the late 20th century and
launch a ‘sensational phase of development’ despite the decline of world
imperialism. We argue that the CPC took the decision to restore
capitalism in 1992 and on the basis of its historic legacy of deformed state
planning combined with the prevailing late capitalist development of state
monopoly capitalism in the world economy.
To explain this development we need to understand the role of
state monopoly capitalism over the last century or so. Before we do that we
need to say what ‘state capitalism’ is. The first case is ‘state
capitalism’ was used by Lenin to explain the necessity of using market
forces (the LOV) to determine prices in Russia under the New Economic Policy
in the attempt to solve the ‘scissors crisis’. Lenin explained that this
was ‘state capitalism’ to counter the charges that Soviet Russia was restoring
capitalism. Far from it, prices of production set by the market were
‘dominated’ by a healthy workers’ state which had not yet degenerated under the
Stalinist bureaucracy. The struggle of the Left Opposition against this
bureaucratic degeneration called for the defence of workers’ democracy to ensure
workers’ control of the state. These historic conditions never existed in China
and bear no resemblance to state monopoly capitalism today!
Second,
we agree with Trotsky (see Carchedi and Roberts footnote 21 p256) in giving no
credence to the renegades of Trotskyism who abused his name while he was still
alive by claiming that ‘state capitalism’ had been restored in the Soviet Union
between 1929 and 1939. Workers’ property in Russia was the legacy of a workers’
revolution and the bureaucracy was forced to defend that property rather than
the LOV. Trotsky
denounced those who refused the unconditional defence of the SU claiming
that capitalism was restored when workers’ property was still being defended
against the LOV. We argue with Lenin that no scientific concept of ‘state
capitalism’ exists outside the reality of State Monopoly Capitalism.
State Monopoly Capitalism
Trotsky
argued in Revolution
Betrayed, that the political revolution that overthrew the bureaucracy would
restore a healthy workers’ state. But he could not exclude the possibility that
the capitalist counter-revolution would bring about the restoration of
capitalism in Russia. State property could be easily adapted to the operation
of the LOV in the epoch of state monopoly capitalism. The personnel of the bureaucratic
state would overnight convert to the role of capitalists in the new state to
serve the interests of collective capital. The main object would be to restore
the private ownership of property. New state policies to manage the
productive, distributional and monetary tasks would serve to regulate the
market as a whole to produce capital goods, infrastructure, and the
accumulation of capital. Concretely, the state would enter into the productive
circuit to facilitate the formation of constant capital (plant and machinery
etc) and variable capital (wages and the social wage).
Marx had
anticipated growing state intervention on behalf of capital in its
administration of the public debt which emerged in the 19th C to further
the concentration and centralization of capital by taxing wages and
accumulating savings. For Lenin the role of the state was central, in fact
defining, to the age of state monopoly capital. State intervention in the
market competition for existing value was proof that the laws of motion of
capitalism could not be avoided. First value had to be produced by labour to be
exchanged and accumulated by finance capital. The LTRPF would cause recurring
crises of overproduction and the imperialist powers which resort to the
counter-tendency of paying labour less than its value.
The
extraction of super-profits and absolute
rent would inevitably create deeper crises and wars between rival
national blocs of capital. As a result the LTRPF downloaded deepening crises
onto the backs of workers so that the class struggle would erupt into
revolutions and counter-revolutions. In summary, the short 20th century from
1917 to 1992 was ultimately all about imperialism destroying the Bolshevik
revolution and restoring its hegemony over the capitalist world to re-divide
the spoils among the victors.
While the
LOV always dominated the history of capitalism, in both corporations and
states, it does not do so under the same conditions. The revolution at the
beginning of the short 20thC was an historic defeat of global
capitalism. Yet the counter-revolutionary end to the Cold War in 1992 which restored
capitalism to Russia and China did not completely destroy the legacy of the
revolution. Those who celebrated that counter-revolution as the end of
‘socialism’ and a victory for capitalism did not anticipate the contradictory
blowback of the legacy of the former bureaucratic workers’ states. Notably the
relatively high level of development of the forces of production, and the
centralized command economy, that helped restore capitalism and create new
imperialist rivals in the ‘great game’ for Eurasia and the World.
The
counter-revolution in the revolution enabled the new capitalist states to
benefit from the decay and decline of global capitalism. China was able
to restore capitalism’ without submitting to ‘recolonisation’ and
imperialist domination. This explains its ability to convert a transitional
petty bourgeois national revolution into a state monopoly capitalist
counter-revolution with the capacity to regulate and manage the LOV within the
limits of rising organic composition and the LTRPF. But these benefits will be
illusory for the great mass of workers and peasants. China’s rapid rise
is creating a reactionary response in the West which is already on the brink of
world war over the repartition of Eurasia with escalating wars already on three
fronts between the two imperialist blocs around the US and China.
So the legacy proved
progressive only in the sense that it allowed China to escape re-colonisation
and quickly adapt a dynamic state monopoly capitalism to develop the forces of
production over a two decades leap in growth. As part of that legacy
it carried with it the inescapable terminal crisis of overproduction in a dying
and decaying global capitalist world. The question is this, how long can
China’s state capitalist management of the LOV create growth in the productive
forces within the BRICS bloc and further the pre-conditions for socialism,
before the inevitable determination of the laws of motion of capitalism explode
the contradictions of class war, crises and inter-imperialist wars on the lives
of workers and poor farmers? The answer is surely that only the world’s working
classes can resolve this question by rising to the struggle to take power and
plan a new society without exploitation, ecological destruction and nuclear
war.
Roberts on China transitioning to socialism https://www.redreview.ca/p/prc-75-today-the-transition-to-socialism
Roberts on China as a transitional economy to socialism https://www.jstor.org/stable/pdf/48713461.pdf
Carchedi and Roberts (2023)
Capitalism in the Twenty-First
Century – Through the Prism of Value. Pluto
` John
Smith ttps://www.researchgate.net/publication/281225444_Imperialism_in_the_Twenty-First_Century
ILTT Draft theses on imperialism https://www.cwgusa.org/?p=3021
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