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The character of the Chinese state
Socialism Today’s China debate continues with a
reply by LYNN WALSH to Vincent Kolo’s article,
China’s Capitalist Counter-Revolution (Socialism Today No.114). In
that article, Vincent argues that, to all intents and purposes, China is
now a fully-fledged capitalist economy. Is it that clear cut?
DEVELOPMENTS IN CHINA are of crucial importance to
socialists everywhere. The Chinese economy is now a major component of
the global economy. With its increased economic and strategic weight,
China is now a key player in relations between the major world powers.
And political developments in China – the fate of the regime and
struggles of the massive Chinese working class and poor peasantry – are
of enormous significance internationally. At the same time, there has,
not surprisingly, been a debate about the complex transition from a
Maoist-Stalinist planned economy and the current character of the
Chinese state.
In his article, Vincent argued, in essence, that
China is now a fully capitalist state. "The top echelons of the Chinese
state… are now fully integrated into the global capitalist system". In
our view – the view of the leadership of the CWI – Vincent’s
characterisation is too categorical. The direction of travel of the
Chinese state is clear enough, from the former Maoist-Stalinist planned
economy, based on nationalised property, towards a capitalist economy.
But, however powerful the locomotive, the train has not yet arrived at
its destination. It is premature to declare: "Capitalism, of a peculiar
Chinese type, has been restored".
Although there are powerful and rapidly growing
capitalist forces in China, the Chinese state is still a hybrid,
combining remaining state-owned industries with ‘state capitalist’
enterprises (state-owned companies run on a more or less market basis)
and with new elements of private capitalism (ranging from millions of
individual businesses to giant Chinese and foreign corporations). The
transition is not, in our view, complete and may not develop in a
straight line. There can be significant twists and turns in the
situation. It cannot be ruled out that, in the coming period of world
economic crisis, the state will once again take over privately-owned
corporations and some previously privatised companies threatened with
collapse.
We believe that this debate is important and we
welcome Vincent Kolo’s contribution. But, it may be asked, if both
Vincent and ourselves agree that there is no longer a state-planned
economy and that China is heading in a capitalist direction, is there a
real difference? We believe there are important issues involved in this
debate.
First, there is the issue of method. Marxists should
strive to analyse social phenomena (in this case, the changing Chinese
state) in a rounded-out, scientific manner, not attempting to fit new
developments into old stereotypes.
A second issue, related to method, is the autonomous
role that can be played under certain conditions by a powerful
Bonapartist state (particularly an ex-Maoist-Stalinist state) in
directing a social transformation from above.
Third, there are issues of perspectives. It would be
a mistake, in our view, to base ourselves on a single perspective that
China will develop on purely capitalist lines, uninterrupted by turns in
the direction of the regime. The advanced layers of the Chinese workers,
in our view, have to be politically prepared for several different
perspectives. In particular, they need to be prepared for the
possibility that, faced with a deep economic crisis and a mass upsurge
which threatens its survival, the regime will revert to much greater
intervention in the economy, including taking over failing companies, in
an attempt to defuse a potentially revolutionary situation.
Method
IN OUR VIEW, the possibility of swings by the
Chinese regime between promoting accelerated capitalist development and
increased state intervention to stabilise the economy is inherent in the
contradictory, hybrid character of the Chinese state. This is why our
method of analysis is important. In 1936, Leon Trotsky analysed the
character of the Soviet Union in The Revolution Betrayed (chapter 9:
Social Relations in the Soviet Union). The situation was obviously
different from China today. But from the point of view of Marxist
method, Trotsky’s analysis of the Soviet Union of that period as a
transitional or intermediate social formation is very relevant to our
approach to contemporary China.
Finished social categories, such as capitalism and
socialism, wrote Trotsky, had to be abandoned in favour of "a more
complete definition", necessarily more "complicated and ponderous".
Trotsky summarised his analysis of the Soviet Union in nine points,
summarising key features of the Soviet state and society, and posing
several alternative perspectives for the fate of the Soviet state.
"Doctrinaires will doubtless not be satisfied with
this hypothetical definition. They would like categorical formulae:
yes-yes, and no-no. Sociological problems would certainly be simpler, if
social phenomena had always a finished character. There is nothing more
dangerous, however, than to throw out of reality, for the sake of
logical completeness, elements which today violate your scheme and
tomorrow may wholly overturn it. In our analysis, we have above all
avoided doing violence to dynamic social formations which have had no
precedent and have no analogies. The scientific task, as well as the
political, is not to give a finished definition to an unfinished
process, but to follow all its stages, separate its progressive from its
reactionary tendencies, expose their mutual relations, foresee possible
variants of development, and find in this foresight a basis for action".
In a notebook written in the 1930s, Trotsky made a
further general comment that is extremely relevant to any discussion of
the character of the Chinese state today: "Some objects [phenomena] are
confined easily within boundaries according to logical classification,
others present [us with] difficulties: they can be put here or there,
but within a stricter relationship – nowhere. While provoking the
indignation of systematisers, such transitional forms are exceptionally
interesting to dialecticians, for they smash the limited boundaries of
classification, revealing the real connections and consecutiveness of a
living process". (Trotsky’s Notebooks 1933-1935: Writings on Lenin,
Dialectics, and Evolutionism, edited by Philip Pomper, NY Columbia
University Press, 1986)
We believe that the transformation in China is also
a process without precedent and that we have to ‘follow all stages’. Our
analysis may appear more ‘complicated and ponderous’ than the simple
assertion that China is now a ‘fully’ capitalist state. However, it is
necessary, in our view, to take account of the contradictory features of
the transition and "foresee possible variants of developments, and find
in this foresight a basis for action".
The role of the Bonapartist state
LINKED TO THE question of method is the issue of the
role of the state, in particular the autonomous role that can be played
– under certain conditions, for a certain period of time – by a
Bonapartist state consisting of a powerful apparatus and army, together
with a powerful ruling party, in the case of China. Vincent, in our
view, does not take sufficient account of the role of the ex-Stalinist,
Bonapartist state in steering the transition in China.
"The class character of any social organism, regime,
or party", writes Vincent, "is determined by the class interests it
serves – its social base". As a general proposition, this is correct.
But it is not sufficient for analysing the situation in China. The
Chinese regime has abandoned defence of nationalised property and the
planned economy, historically progressive relations of production, and
is promoting the development of capitalist relations. But the situation
in China is conditioned by the past development of the Maoist-Stalinist
system after 1949. While defending the planned economy, the state was
relatively independent, not subject to democratic checks by the working
class. Now the regime has turned to a pro-capitalist,
counter-revolutionary course. This undoubtedly serves the interests of
an emerging Chinese capitalist class and international capital. But it
would be too simplistic, at this stage, to say that the regime is simply
the repressive agent or servant of the Chinese bourgeoisie. The Chinese
state, a product of Maoism-Stalinism, has a large degree of autonomy in
fostering and steering the development of capitalism while striving to
preserve its own power.
There are analogies for this development in the
writings of Karl Marx and Friedrich Engels, where they show that, under
certain circumstances, a state power balancing between social classes (a
‘Bonapartist’ state) can play an autonomous role in sponsoring the
development of capitalist industry and fostering the development of a
capitalist class. In Germany during the 1870s, for instance, Otto von
Bismarck – based on the Prussian monarchist state, the army elite and
the Junker landlords – promoted the development of capitalist forces as
the necessary basis for German imperialism’s increased military and
economic power.
Another example is the Russian tsarist state during
the second half of the 19th century. Based on archaic feudal
landlordism, some tsarist leaders recognised that to survive as a
military power they had to develop industry (especially railways and
armaments). After the Crimean war (1853-56), Engels wrote, the Russian
government "set about breeding a Russian capitalist class". (The Foreign
Policy of Russian Tsarism, 1890, Marx-Engels Collected Works vol 27) The
tsarist state remained a powerful force in Russian society until the
crisis of the first world war and its overthrow by the October
revolution in 1917. Like Bismarck, the tsarist state in breeding a
capitalist class also bred a small, but powerful, working class.
In China, the former Maoist-Stalinist state has used
its massive power to ‘breed’ a Chinese capitalist class. The regime has
adapted the state (the party, the army and the apparatus) to the
transition to capitalism. But the state retains considerable power,
while the new capitalist forces are, at this stage, an emergent social
class in the process of formation.
The burgeoning capitalist elements are very diverse,
ranging from small family businesses to the owners of giant
corporations. At this stage, they lack social cohesion and, as yet, have
not developed any independent political representation. Many of the
capitalists are ex-bureaucrats or state-sector bosses, and retain close
links with the Chinese Communist Party (CCP) and the apparatus. They are
mostly quite content to allow the state to create the conditions for the
growth of capitalist business, and provide ‘social stability’, that is,
to protect them from resistance and mass protest by workers and
peasants. At this stage, there is no threat to the regime’s absolute
political power from the emergent capitalist class.
Perspectives
"THE STATE SECTOR today", writes Vincent, "is a
lever for developing the capitalist economy", providing a framework of
basic industries and infrastructure. This is evidently true. The regime
is carrying out, under contemporary international conditions, the
barbarous tasks of ‘primitive accumulation’, historically required as
the basis for capitalist growth. There is a brutal process of forced
urbanisation, as the poor peasantry are being driven from the land and
are forced to seek low-paid work under atrocious conditions in the
sweatshops and construction sites of the big cities. In the long run, if
this development continues in an uninterrupted way, it would produce a
‘fully’ capitalist society. But this depends on perspectives.
If there were to be a long period of rapid growth in
the world capitalist economy (continuing, for instance, the record 5%
per annum growth of 2002-07), accompanied by 10% a year growth in the
Chinese economy, then China could, theoretically, move steadily towards
a ‘fully’ capitalist economy. At a certain point, on that basis, a
strengthened Chinese bourgeoisie would come into conflict with the
ex-Stalinist Bonapartist state and attempt to take direct control of a
Chinese capitalist society (though the bourgeoisie would be increasingly
challenged by a strengthened working class). Given the current implosion
of the global capitalist finance system and the beginnings of a world
recession, that does not seem the most likely perspective.
If there is a prolonged world economic crisis, on
the other hand, which would inevitably result in a serious downturn in
the Chinese economy, the regime could be forced to intervene in the
economy to prevent economic and social collapse, and head-off a
revolutionary challenge from the Chinese workers and peasants. The
Chinese leaders have already taken note of the abrupt swing of the US
government from free-market fundamentalism to state intervention and the
nationalisation of failed financial institutions. Faced with the
prospect of failed industries collapsing, it is likely that the Chinese
state will intervene and take them over. Given the history of the
Chinese state and the existing extent of state ownership, this is likely
to be on a bigger scale than in the major capitalist states.
The Chinese regime (as with Bismarck, the tsarist
autocracy, and other Bonapartist regimes in the past) faces the problem
that, in ‘breeding’ a new capitalist class in China, it is also breeding
a new working class. Already there is a high level of social protest and
strikes, often brutally repressed by the regime. In coming years the
Chinese workers will increasingly form independent trade unions and
their own political parties. The advanced layer of workers will in the
course of struggles prepare to overthrow the regime and sweep away the
capitalists, Chinese and foreign.
We cannot predict the timescale of such events. But
we should not take it for granted that China will automatically become a
‘fully’ capitalist society. In the coming years, events and the
influence of Marxist ideas will give rise to a revolutionary movement
aiming to overthrow the regime, sweep away capitalism, and re-establish
nationalised property relations and planned production – this time under
the democratic control of the working class and linked to an
international perspective for a world socialist economy.
Points of agreement
BEFORE TAKING UP his arguments in more detail, and
in order to avoid any misunderstanding, we will try to sketch out where
we agree and where we disagree with Vincent Kolo. The Maoist-Stalinist
planned economy (dominated by state-owned industry but undemocratically
managed by a ruling bureaucracy), which began to crumble in the 1970s,
no longer exists. Whatever state intervention there is, there will be no
return to the Stalinist planned economy, which developed on the basis of
the international class relations of a past era. The destruction in
recent years of the social gains of the masses based on the planned
economy – the ‘iron rice bowl’ (security of employment) and education,
health and welfare provisions provided by state-owned enterprises and
village communes – is a counter-revolutionary development that has had a
devastating effect on workers and peasants. The leadership of the
Chinese state – the CCP and the state apparatus – from Deng Xiaoping to
Hu Jintao has fostered the development of capitalist forces and sought
to integrate China into the global economy. The leadership, recognising
the failure of bureaucratic planning, has sought to develop a new
social-economic base for its rule.
The growth of the capitalist market has been
accompanied by the intensified, super-exploitation of the majority of
workers and peasants (in both private and state-owned companies) and a
grotesque widening of inequality. The growth of market relations has led
to the emergence of a tiny stratum of capitalist billionaires and a
wider layer of wealthy capitalists. The Chinese regime is one of the
most repressive in the world and uses its massive apparatus to suppress
all forms of opposition organisation, activity and discussion. The
counter-revolutionary destruction of the social gains of the planned
economy is virtually complete and China is heading in the direction of a
‘full’ capitalist economy.
We reject any claim by the regime (or its
apologists) that they are developing the market – capitalist relations –
in order to ‘strengthen socialism’, even in the limited sense of
defending a state-planned economy. The regime no doubt fears a growing
backlash against corruption, poverty wages, the growth of inequality and
environmental destruction. But these social phenomena are the result of
the policies they are pursuing. We judge the Chinese leaders by their
deeds, not by the deceitful ‘socialist’ language they use in an attempt
to legitimise their counter-revolutionary measures. We share the anger
of Chinese workers and peasants at the squandering of the gains of the
1949 revolution and the promotion of the most predatory elements of
capitalism.
There is also broad agreement with Vincent Kolo on
the programme that should be adopted by Marxists in relation to China.
We call for state-owned enterprises (SOEs) to be run under workers’
control and management, and for SOEs to be integrated in a plan of
production under the direction of a workers’ government and managed by
elected, democratic planning bodies. Large privately-owned firms should
be nationalised – or re-nationalised – and also run democratically by
workers as part of a planned economy. As internationalists, we also
raise the issue of international collaboration between Chinese workers
and workers in other countries with the aim of developing economic
planning on an international level.
We agree that (as Vincent says), "A political –
‘anti-bureaucratic’ – revolution is no longer enough to raise the
working class to power". But we do not accept his assertion that, "Nor
is it correct to say a new revolution will combine tasks of the
political and social revolution…" There are indisputably important
sections of industry and banking remaining under state ownership and
control, and a revolutionary overturn would entail placing them under
workers’ control and management. A proletarian revolution would, of
course, involve the overthrow of the present state and the expropriation
of the Chinese and foreign capitalists. But the tasks facing the coming
Chinese revolution, because of the remnants of Maoism-Stalinism, are in
some ways more complex than in the advanced capitalist countries, and
our revolutionary programme must reflect this reality.
Our differences
SO, WHAT ARE our differences with Vincent’s
approach? Essentially, our criticism is that Vincent (to use Trotsky’s
phrase) is giving "a finished definition to an unfinished process". We
agree that there is a counter-revolutionary transition towards
capitalism, but we do not accept that, as Vincent argues, the process is
complete and that China is now a ‘fully’ capitalist state. He refers,
for instance, to Trotsky’s comment that a restoration of capitalism may
occur either along "the path of an abrupt counter-revolutionary
overturn" or "the path of successive shiftings", culminating in "a
Thermidorian shift". (Thermidor refers to the defeat in 1794 of the
Jacobins, the most advanced party in the French revolution, a term used
by Trotsky to denote a victory of the counter-revolution.) Vincent says:
"This ‘path of successive shiftings’ is an excellent description of what
has happened in China. Capitalism, of a peculiar Chinese type, has been
restored". It "has happened", capitalism "has been restored". In other
words, the "Thermidorian shift" has taken place. In our view, however,
there will be further "shiftings" and the process is not yet complete.
Vincent, in our view, puts forward a simplistic
analysis of the complex process of transition, basing his categorical
conclusion on a one-sided approach. For instance, on the role of the
state, he rightly refers to the power of the "repressive one-party state
of the CCP". He also says, "This edifice of super-exploitation is built
around the repressive one-party state of the CCP…" But he underestimates
the role played by the powerful, ex-Stalinist state (the CCP and the
state apparatus) in directing the transition. The regime has promoted
the development of capitalist forces and the intervention of foreign,
trans-national corporations, but it has also been determined to
safeguard its monopoly of political power and overall control of the
economy.
"[T]he state’s economic power", writes Vincent, "has
been seriously degraded". True, the state no longer has the economic
power that it had on the basis of the planned economy. Moreover, the
development of capitalist forces has produced powerful centrifugal
forces, which will tend to become stronger if the present course
continues. But it is a mistake to imply (as Vincent does) that the
Chinese state is now completely subservient to capitalist forces, within
China and internationally.
The present Chinese state is not simply the
equivalent of the state in Japan, Korea or Taiwan during their
accelerated growth in the 1960s and 1970s, when (on the basis of the
‘Asian development model’) the state intervened in the economy to a much
greater extent than in the advanced capitalist economies of Western
Europe and North America. The surviving state-owned and state-controlled
industries in China today are the product of the Maoist-Stalinist
planned economy. They are not merely the equivalent of Japan’s keiretsu
or South Korea’s chaebol, industrial-financial conglomerates that
developed from big family-capitalist trusts.
There is still a legacy of Maoism-Stalinism in
China. Though fostering capitalist development, the state still controls
powerful levers of economic influence. As we show in a separate section
(China’s hybrid economy, pp27-30), the regime, through a cluster of huge
state-owned enterprises (SOEs), effectively controls several key
industrial sectors: telecoms, transport, energy, and defence production,
etc. Though state-sector employment has been drastically reduced, the
state sector still accounts for 38% (2004) of industrial output. It is
true, as Vincent says, that most of the remaining SOEs have been
‘corporatized’: they no longer operate under a plan of production but,
according to government policy, on the basis of market criteria. But it
is an exaggeration to say: "The state industrial and commercial sector
consist of completely autonomous and in most cases semi-privatised
units". In reality, many SOEs are run by ex-CCP bureaucrats or bosses
currently nominated by the CCP, who (often on the basis of ‘soft loans’
– where there is no expectation of repayment – from state banks) aim at
maximising investment and growth, rather than maximising enterprise
profits.
As Vincent says, "The banking sector is majority
state-owned…" and the big four state banks are responsible for over 70%
of all loans. Loans are provided, moreover, not according to strictly
market criteria but, in many cases, in order to further the regime’s
policy objectives. Indeed, soft loans are regarded (both in China and by
foreign, free-market critics) as a supplementary form of public
spending.
The state, moreover, through central and provincial
governments, is responsible for most infrastructure spending – and this
investment is a major factor in driving China’s high growth rate. At the
same time, sales of formerly state-owned land (combined with soft loans
from state-controlled banks) have been a big element in China’s massive,
speculative property boom.
The enforcement of macroeconomic policy also gives
the central government considerable power to determine the direction and
priorities of economic growth. There are undoubtedly provincial
governments and both SOE and private bosses who defy central government
policies. Nevertheless, both the CCP and the state apparatus are used to
enforce policy.
China & global capitalism
VINCENT KOLO ARGUES that China’s links with the
global capitalist economy confirm that China is now a fully capitalist
country. However, involvement in the world capitalist market, through
trade and investment with other capitalist economies, does not in itself
determine the class character of a state. In the case of the newborn
Soviet state, Lenin and Trotsky advocated exploiting rivalry between the
capitalist powers to develop trade links necessary for the growth of the
Soviet economy. Their proviso was that there must be a state monopoly of
foreign trade to ensure trade served the needs of the Soviet planned
economy. Clearly, there is no longer a monopoly of foreign trade in
China. But neither is there a completely ‘open door’, despite some of
the Chinese leaders’ claims. Just as there is a ‘hybrid’ domestic
economy, China’s relations with global capitalism have a mixed
character.
"The top echelons of the Chinese state, including
the central government in Beijing", writes Vincent, "are now fully
integrated in the global capitalist system – through the open door
policy that Hu Jintao describes as the ‘cornerstone’ of China’s economic
development". This, in our view, is an exaggeration. China has
encouraged massive investment by foreign trans-national corporations,
but largely controls the terms on which they operate. The regime,
moreover, still tightly regulates relations between the Chinese economy
and the global economy.
Recently, in response to the global financial
crisis, the regime has again signalled to the US and the EU that it is
in no hurry to relax government controls on capital flows in and out of
China. It continues to maintain the low exchange rate of the renminbi
(which gives China’s exports a strong competitive advantage) and defends
its current rate through massive interventions in currency markets – in
defiance of IMF rules and contrary to promises to the US to allow a
substantial appreciation of the renminbi. At an earlier stage, the
Chinese leaders used the issue of WTO compliance to help push through
marketisation at home but, more recently, they have turned increasingly
to bilateral trade deals. The Chinese government shed no tears at the
recent breakdown of the Doha round of WTO negotiations, in which
(together with India and Brazil) it refused to accept the packages
proposed by either the US or the EU.
In the event of a prolonged crisis in the world
economy, it cannot be ruled out, in our view, that China will resort to
much stronger protectionist measures, both in relation to trade and
investment, in an attempt to cushion the impact on the Chinese economy.
Role of the state
VINCENT GIVES NO real analysis of the process of
transition since Deng Xiaoping launched his pro-market reforms in 1978.
In particular, the comments on the role of the state are inadequate.
This means, in turn, that Vincent draws a simplistic picture of the
unfolding counter-revolutionary processes.
The role of the state is a key factor in determining
the character of the transitional regime. Vincent presents it simply as
a ‘repressive apparatus’ that has shifted from the planned economy to
capitalism. With the abandonment of central planning, the working class
is no longer the "ruling economic class". The Chinese state "has thrown
in its lot with capitalism". A section of the Maoist bureaucracy has
converted itself through the "reform" process into "a property owning
class". "The victory of bourgeois counter-revolution, albeit in a
peculiar ‘Confucian’ form, is today brutally clear".
There is truth in all of this, but Vincent’s
analysis does not take sufficient account of the decisive role of the
powerful Bonapartist state created by the Maoist-Stalinist regime. Far
more than a repressive apparatus, the bureaucratic state has fostered
the development of capitalist forces, with the aim of creating a new
social base for its continued rule. It has used all the resources of the
CCP and the state apparatus to direct the process of change from above
and to retain, together with its monopoly of political power, a key role
in the running of the economy. Its economic power is undoubtedly
diminished compared with the situation under the centrally planned
economy. But the state retains a far greater role in the economy than in
capitalist countries like Japan and South Korea.
It is not a question of the Chinese state, the CCP
and the state apparatus itself, being "the repository of the socially
progressive features created by the 1949 revolution". The state has
clearly abandoned the relatively progressive planned economy.
Nevertheless, to understand the processes taking place in China, we have
to take account of the role played by the ex-Maoist-Stalinist state in
the transition. The autonomous power of the state, neither controlled by
the working class nor by the emergent capitalist class, together with
significant elements of state industry and banking, determines the mixed
or hybrid character of the transitional society that exists in China
today.
Leaving aside for a moment the question of what
stage has been reached, the counter-revolutionary process in China is
not simply a transfer from one ruling class (the working class) to
another (the bourgeoisie). In the aftermath of the second world war, the
magnificent revolutionary mass movement of the Chinese peasants and
workers swept away landlordism, capitalism and their imperialist
patrons. The transformation of 1949, however, was directed from above by
the Maoist leadership of the peasant Red Army and the bureaucratised
(Stalinised) Communist Party. Under the planned economy, which was run
on Stalinist lines, there were (as Vincent points out) important social
gains for the workers and peasants that have now been largely wiped out.
The working class and peasantry, however, were
excluded from any democratic participation in the running of the state
or the economy. They were denied any independent, democratic trade
unions or political organisations. The centrally planned economy was
historically progressive compared to capitalism and was therefore in the
interests of the working class. In this sense, the working class could
be described as the ‘ruling economic class’. But, politically, the
working class never became the ruling class. That would have required
the working class to overthrow the bureaucracy and establish workers’
democracy – a political revolution. China (like the Soviet Union under
Stalin) was ruled by a bureaucratic caste through a monstrous apparatus
consisting of the CCP and the state machine itself. Unchecked by
workers’ democracy, the state became a monstrous behemoth wielding
enormous power over every area of society.
For nearly three decades the bureaucratic Maoist
elite defended the planned economy as the basis of its power and
privileges. In the 1970s, however, the planned economy (as in the Soviet
Union and Eastern Europe) began to flounder under the weight of
bureaucratic mismanagement. Deng Xiaoping introduced ‘reforms’, elements
of the market economy (inevitably stimulating the emergence of
capitalist relations), initially with the aim of stimulating growth and
shoring up the planned economy. However, after the rapid collapse of the
Soviet Union and the other Stalinist states following the fall of the
Berlin wall, Deng and other leaders concluded that the planned economy
was no longer viable and they could preserve their power only through a
transition to a market economy. In reality, this inevitably meant moving
towards a capitalist economy. Of course, the regime tried to disguise
this by presenting the new course as ‘market socialism’.
Paramount for the CCP leaders was the need to retain
the power of their regime. The regime was profoundly shaken by the mass
protest movement that culminated in the bloody Tiananmen Square events.
From that and the events in the Soviet Union and Eastern Europe, the
Chinese leaders concluded that they could not tolerate any political
liberalisation: there would be no democratic reforms accompanying the
moves towards the market.
At the same time, the Chinese regime concluded that
it should at all costs avoid the kind of ‘big bang’ economic transition
that had taken place in the Soviet Union. Sweeping privatisation of the
state industries had not only provoked an economic disaster but had (as
was intended by US advocates of the ‘big bang’) shattered the
bureaucratic, Stalinist state apparatus and the Communist Party. There
would be no Chinese Yeltsin.
In contrast to the Soviet Union, the Chinese regime
proceeded incrementally towards the capitalist market. It promoted
market forces in the countryside and opened the door to foreign
trans-national corporations in the economic development zones. Private
enterprises were allowed to develop in urban areas alongside the
state-owned enterprises. The regime, fearing a surge of social and
political unrest, has moved cautiously and incrementally towards the
privatisation or ‘corporatisation’ of SOEs. It has undoubtedly opened
the door to the ruthless, super-exploitation of workers. At the same
time, it has been cautious about the freeing of prices and the cutting
or abolition of subsidies for fuel and food.
So far, as a result of this incremental approach –
and given the absence of an organised mass opposition to the regime –
the Chinese leadership has preserved the regime and the state
bureaucracy largely intact. Clearly, it is no longer in complete command
of a centrally planned economy. But it retains powerful levers for
steering the direction of economic change. Vincent says that "the
state’s economic power has been seriously degraded". But it retains far
more power than in economies where capitalism has been consolidated as
the dominant socio-economic system. Moreover, the regime has attempted
to adapt the ex-Maoist-Stalinist state machine and the CCP (with over 70
million members) to the tasks of directing a market-dominated economy.
In his recent book, China’s Communist Party: Atrophy
and Adaptation (2008), David Shambaugh writes: "… the CCP has atrophied
over time and its Leninist [Maoist-Stalinist] instruments of control are
not as sharp as in the past, but its tools of rule are far from blunt –
and they are being re-strengthened. The party remains a nationwide
organisation of considerable authority and power. It is the only
political game in town. Through its monopoly on personnel management
(through the nomenklatura and bianzhi [selective appointment] systems),
the party effectively controls not only the government at all levels but
also a wide variety of professional institutions, corporations and
enterprises, universities and research institutions, and service
organisations. It also controls the military and all coercive
institutions (People’s Armed Police, People’s Militia, Ministry of State
Security, and Ministry of Public Security). It also controls much of the
media and flow of information to and within society. The party certainly
does not intend to relinquish these instruments of control – quite to
the contrary, it has been doing much to strengthen them. It also brooks
no opposition, and it quickly suppresses any sign of organised political
activity".
An emergent capitalist class
IN CHINA, THE former Maoist-Stalinist state has used
its massive power to ‘breed’ a Chinese capitalist class. The regime has
adapted the state to the transition to capitalism. While the state
retains considerable power, the new capitalist forces are, at this
stage, an emergent social class in the process of formation. The Chinese
capitalist class is made up of diverse elements, from small family
businesses to the owners of giant corporations. It lacks social cohesion
and as yet has not developed any independent political representation.
Before Deng’s market measures in 1978, private
enterprise was officially illegal and there were hardly any capitalists,
apart from black-marketeers. Successive pro-market measures under Deng
Xiaoping, Jiang Zemin and Hu Jintao opened the doors wider and wider to
the growth of capitalist forces, inevitably encouraging the emergence of
new strata of capitalists.
The first large contingent of capitalists came from
the layer of peasants who enriched themselves on the basis of Deng’s
pro-market reforms in the countryside. As market opportunities widened,
many small family traders and professionals developed businesses. A
substantial section of the capitalists are former CCP officials and
ex-bosses of SOEs, who have used their power and influence (and
resources plundered from the state) to set themselves up in business.
Many retain close links with party and state bureaucrats.
Moreover, the composition of the emergent capitalist
class is still quite fluid. There are signs that many of the small
businesses of the first phase are now being squeezed out by much bigger
businesses that are increasingly dominating the economy.
Many big businesses have links with state-owned
firms, overseas Chinese big business and transnational corporations.
Prominent among the big-business elite are the ‘princelings’, the
children of top party officials. Some of the wealthiest and most
rapacious capitalists are the property developers, who have already
accumulated unimaginable wealth on the basis of appropriating state land
and feverish property speculation. Last year, the Hurun Report recorded
over 100 US dollar billionaires in China (compared to 24 in Japan).
According to another report, 90% of the billionaires are the children of
senior CCP-state officials.
Surveys report many complaints against the regime
from the capitalists, especially small business-people: their property
rights are not secure; they find it too hard to get loans from the banks
(which favour SOEs and big business); they are over-taxed; and their
profits are undermined by corruption; etc. A few would like to throw off
the constraints imposed by the present regime and see the introduction
of a big-business government. The great majority, however, are grateful
to the regime for introducing a social framework in which capitalism can
develop. Above all, they rely on the regime to maintain ‘political
stability’, to protect them from the growing, super-exploited working
class. Many capitalists pay lip service to the idea of democracy, but
consider that it is ‘too early for China to become democratic’.
Many capitalists have joined the CCP or the CCP-sponsored
‘democratic parties’ as a way of lobbying for their interests. According
to official surveys, over 30% of private entrepreneurs are now members
of the CCP. "The CCP already counts 2.86 million employers and employees
from private enterprise in its ranks and 800,000 independent
entrepreneurs, as well as 40% of all heads of private and individual
enterprises". (Jean-Louis Rocca, A Middle Class Party, Le Monde
Diplomatique, English edition, August 2008) Now the CCP is trying to
recruit among the employees of the 600,000 foreign companies operating
in China. This is not a takeover of the CCP by capitalists, but rather
an effort by the CCP leadership to co-opt capitalists in order to exert
political control over this emergent class. At the same time, the CCP
also strives to maintain political control of the various business
associations that have developed over recent years.
In our view, the analysis presented here shows that
China is a ‘hybrid’ state, still in the process of transition towards
capitalism, not a ‘fully’ capitalist state. As Barry Naughton, a
pro-capitalist economist, puts it: "Despite the enormous distance
already traversed, China still has several steps to go in the creation
of a high-functioning market economy". (The Chinese Economy: Transitions
and Growth, 2007, p326)
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