China and Socialism
Posted to www.marxmail.org on August 1, 2004
If any confirmation of the correctness of Marty Hart-Landsberg and Paul Burkett's "China and
Socialism" (a book-length article in the July-August 2004 Monthly Review)
was needed, you can look at the heartrending Aug. 1, 2004 NY Times article on
the suicide of Zheng Qingming.
This 18 year old peasant youth threw himself into the path of an onrushing
locomotive because he lacked the $80 in fees to continue with college. It is
the first in a series of NY Times articles dealing with class divisions in China,
a country in which 85 million people earn less than $75 per year.
I strongly urge everybody to get a copy of the current MR
since it is high time that the left come to terms with what is happening in China.
In this post, I am recapitulating some of their main arguments for the benefit
of Marxmail subscribers outside the USA
who may have difficulty purchasing a copy.
Not only do Marty and Paul put the nail into the coffin of
Chinese "socialism"; they pose broader questions about how to
understand problems of development. I can think of nothing since Robert
Brenner's NLR article on the world financial crisis that makes as big a
statement as their article and hope that it opens up some dialog on the left
about the issues it poses. This post is a first step in that direction.
In part one, Marty and Paul discuss "China's
Rise to Model Status." Obviously, one would expect people like Stephen
Roach of Morgan-Stanley to hail China's
"unwavering commitment to reform." However, China
has also ingratiated itself as a model to so-called progressives like Joseph
Stiglitz who was profiled in the Nation Magazine of May 23, 2002 titled "Rebel With a Cause". Referring to Stiglitz, Eyal Press tells us that:
"He also believes the spread of global capitalism has
enormous potential to benefit the poor. As an example of a country that has
successfully integrated into the global marketplace--but in a manner that
defies the conventional wisdom of the Washington Consensus--Stiglitz points to China.
adopted privatization and lowered trade barriers, he argues, but in a gradual
manner that has prevented the social fabric from being torn apart in the
I guess throwing oneself into the path of an onrushing train
does not constitute a rift in the social fabric.
When Stiglitz was in Beijing
in July, 1998, he "called China
by far the most successful of the low-income countries' in moving to a market
economy." With 85 million people making less than $75 per year, one would
dread less "successful" examples.
Moving along, one encounters a fondness for the Chinese
development model among the "market socialist" academic left. In the
1993 Rethinking Marxism, Victor Lippit considers China
as an exception to the capitalist triumphalism that
was sweeping the world. He hoped that a mixture of state and privately owned
enterprises could be a formula for success.
Although somewhat noncommittal on the exact character of
Chinese society, Walden Bello has been one of the
most outspoken defenders of the development model which he describes as "a
successful revolutionary nationalist struggle that got institutionalized institutionalized into a no-nonsense state," whatever
that's supposed to mean. In defending China's
policies against people like Lester Brown, who invoke neo-Malthusian arguments
against them, Bello
is one of the world's most dynamic economies, growing between 7-10% a year over
the past decade. Its ability to push a majority of the population living in
abject poverty during the civil-war period in the late forties into decent
living conditions in five decades is no mean achievement. That economic
dynamism can't be separated from an event that most of us in the South missed
out on: a social revolution in the late forties and early fifties that
eliminated the worst inequalities in the distribution of land and income, and
prepared the country for economic take-off when market reforms were introduced
to the agricultural sector in the late 1970s."
In other words, socialism in China
was a kind of training wheels that helped the country prepare for the
turbo-capitalism of the recent period. One wonders if Zheng
Qingming felt a part of this dynamism, especially in
light of a verse he composed:
Do not toady to those above.
Do not flatter the rich.
Do not cheat the poor.
Make way for a new generation.
While I appreciate Marty and Paul's decision to challenge
precepts about "market socialism," especially in relation to China,
I wonder if this trend all that powerful in the academy. As one who tries to
keep track of academic fads, I don't recall that many articles in praise of the
Chinese CP over the past 15 years or so in obscure journals on the left. By and
large, "market socialism" was a kind of utopian socialism that turned
Mondragon and other such worker-owned or operated
firms as a kind of model for the transformation of capitalist society. I think
most left academics viewed China
as mutating rapidly toward capitalism, but held out the hope that aspects of
the "iron bowl" could remain. I would have put myself in this camp
around 5 years ago, but made up my mind that this was a lost cause after the
Chinese CP began considering capitalists for membership.
In the next part, Marty and Paul take a close look at the
economic transformation of China
in terms of the underlying logic of "market socialism" rather than as
a function of the greed or bad faith of people at the top. In other words, once
itself to market solutions to long-standing economic problems, all "the
same old crap" was destined to reappear.
At the close of the Mao era, China
faced serious problems that stemmed from an overly centralized planning
apparatus. There was underproduction in one sector and overproduction in the
other. There were also investment imbalances. Deng proposed that the country
solve these problems by using market mechanisms. This restructuring of the
economy took several stages to implement.
In the first stage, which lasted from 1978 to 1983, they
adopted a labor market in urban areas. This demonstrated their willingness to
tackle one of the major challenges of market socialism, namely the need to
discipline the working class. As Wlodzimierz Brus once pointed out, without a market in labor, it is
next to impossible to streamline an economy. Of course, once you introduce such
a system, the employers gain enormous leverage over workers. If you can
threaten an unruly worker with dismissal, they tend to keep quiet. Since
independent trade unions are illegal in China,
the powerful have enormous leverage over the working class. In this period,
workers began to be hired on a contract basis. By April 1987, the state-owned
enterprises were using 7.5 million contract workers, about 8 percent of the
In the countryside, radical measures were instituted to decollectivize agricultural production. By 1983,
approximately 98 percent of all peasant production was being done by
family-based households. Even though production was done on collectively owned
land, you essentially had private enterprise since the individual farming
family soon began hiring wage workers and subletting land to tenant farmers.
Also, around this time, township and village enterprises (TVE's) began cropping up. Apparently, these were considered
a positive development by those inclined to market socialism. By 1993, these
enterprises numbered 25 million and employed over 123 million workers. There
was no such thing as job security on them and workers had little bargaining
power on wages or working conditions. In the more recent past, the TVE's have been superceded by pure capitalist enterprises.
In addition, the doors were thrown open to foreign
investment. Four special economic zones were set up that soon became a model
for all future enterprises. Although workers were exploited to the hilt by
foreign firms, there was little returned in terms of technology transfer or
foreign exchange. This did not daunt the Chinese government from throwing the
doors open even wider. Zhao Ziyang,
then the secretary general of the CP, declared that China
should become an "export-oriented" economy, hence gratifying the
Thomas Friedmans of the world.
In this stage, the government also took the next logical
step and introduced market pricing. This, of course, soon led to inflation as
prices rose by 18 percent in 1988 and 1989. Despite these structural problems,
the Chinese economy began to gather the momentum of a runaway train and soon
tied South Korea
as the nation with the fastest GDP growth in the world. One must assume that
this rapid growth combined with the socialist demagogy of the party leadership
convinced some on the left to make allowances for China.
In the period from 1991 to the present, Deng Xiaoping launched the next phase of economic
restructuring--using the catch phrase "as long as it makes money it is
good for China."
This is when privatization of state-owned enterprises (SOEs)
begins to accelerate. These facts stick out. By the end of the 1990s, SOEs employed only 83 million people, which is just 12
percent of the total employment in China
and only 1/3 of urban employment. As of 2001, state enterprises accounted for
only 15 percent of total manufacturing and less than 10 percent of employment
in domestic trade. These figures are borne out by tables appended to the
article, which are in themselves worth the price of the MR.
In part 3, Marty and Paul look at the domestic consequences
of the transformation of the Chinese economy. This involved an increase in
worker insecurity as the number of SOEs fell from
100,000 to 60,000 between 1995 through 1999. This translates into massive
unemployment. From 1996 to 2001, some 36 million state-enterprise workers were
laid off; over the same period collective farms let go of 17 million workers.
These are the official figures. However, the government disguises unemployment
by considering only workers under 50 (for men) or under 45 (for women) as
officially unemployed. In addition, if your employer is a SOE that has stopped
operating, you are not counted. This also leaves out the immense number of
rural workers who are simply too marginalized to count.
Not only has unemployment increased, so has inequality. The Gini coefficient for China
rose to 0.46 in 2000. This surpasses the inequality level in Thailand,
India and Indonesia.
Most observers suspect that the coefficient may be as high as 0.50, which puts China
in near Brazilian and South African levels. (According to Wikipedia,
The Gini coefficient is a measure of income inequality
developed by the Italian statistician Corrado Gini. The Gini index equals Gini coefficient times 100. The Gini
coefficient is a number between 0 and 1, where 0 means perfect
equality--everyone has the same income--and 1 means perfect inequality--one person
has all the income, everyone else has nothing).
With growing poverty and a withering safety net, social
indicators have declined as well. Public health-care covered 90 percent of the
population in 1978, but only covered 4 percent in 1997. Today the World Health
Organization rates China
last in terms of access to medical care among developing countries.
In the next section, Marty and Paul deal with the
international ramifications of China's
transformation. In a nutshell, they regard the hypergrowth
of the Chinese economy as something that cannot be viewed in isolation from the
development requirements of neighboring states. As should be obvious to anybody
who lives under capitalism, there can only be winners and losers. If China
is "winning" today--even on a highly distorted basis--, other nations
have to lose. With a race to the bottom, foreign investment will always be
persuaded to leave some place like Mexico
and flow to China.
So, looking at capitalism as a world system, China's
gain can only be understood in terms of some other country's loss.
The rapid take off in China,
especially in the high tech arena, has a lot to do with the rapid influx of
foreign capital. Foreign-based companies accounted for 81 percent of all high
tech exports in 2000. This means that Singapore,
Malaysia and South
Korea are all feeling the pinch. While some
economists, including some progressives, view China
as a locomotive for growth in the region, Marty and Paul remain unconvinced.
for example, 16,000 jobs have disappeared from the country's high tech
production hub as new investment flows to China.
A J.P Morgan report states that China's
growth in high technology has "eroded" Singapore's
status as an electronics exporter. South Korea
has found it profitable to relocate in China
as well where militant unionized workers are not a problem. Samsung, Daewoo and
LG Electronics now make half their goods outside of Korea,
many in China.
is often seen as a strategic partner for China,
the benefits of such an alliance will be lost no doubt on Japanese workers who
will increasingly see their jobs disappear to China.
Under newly instituted WTO rules, it will be much easier for Toyota
and company to relocate where they can save 10 to 20 percent on manufacturing
costs. The World Bank predicts a major contraction of automobile production in Japan,
just around the time when a 10 year old slump appears to be ending.
Quoting from their conclusion, Marty and Paul make a point
that is crucial for understanding the drawbacks of seeing China
as some kind of model--either socialist or as a nationalist development schema:
"First, as we have seen treating China
as a success story tends to draw attention away from the uneven and combined
development of capitalism. The search for national models based on national
economic and competitive criteria implicitly suggests that different countries
can simultaneously achieve China-like economic successes based on their
simultaneous adoption of China-like economic policies. But this is a fallacy of
composition insofar as China's growth has been based on historically specific
conditions that have allowed it to attract abundant foreign investment and
maintain very low wagesóconditions that include the contradictory development
of capitalism in other countries.
"China's growth has been both cause and effect of the
growing problems of FDI- and export-led growth in East Asia and Mexico, as well
as of the contradictions of capitalist 'maturation' in the developed countries,
especially Japan and the United States. Its national competitiveness should not
blind us to the fact that its rapid industrialization has been part and parcel
of the uneven development and overproduction of capital on a world scale.
Unfortunately, when progressives engage in a shared competitive search with neoliberals for national economic successes (and failures),
they end up evaluating individual countries in isolation from the wider logic
and dynamics of capitalism, or uncritically taking the latter as natural givens.
The case of China
shows how this approach can lead to progressive support for policies and
regimes that are destructive of the interests of working people."
To this I would only add amen.