SOCIALISM IN FOUR COUNTRIES

A Reply to Martin Hart-Landesberg and Paul Burkett’s CHINA AND SOCIALISM, Monthly Review, July/August 2004

by David W. Ewing, Co-Chair, U.S. China Peoples Friendship Association, San Francisco, CA

Introduction

China is a socialist country.  Vietnam, North Korea and Cuba are socialist too.  An analysis that proceeds from orthodox, albeit unfashionable, Marxist-Leninist principles must I think reach this conclusion.  But although I believe China remains socialist, I do not think socialism there is untroubled, or even very stable.  I remain sympathetic to China because I recognize the magnitude of the problems the Chinese Communist Party confronts, and most of all, the staggering setback for the cause of humanity if socialism should fail there, as it did in Russia.

Communist ideology is in crisis.  In the world outside of China, the crisis of Marxism is linked primarily to the historic defeat of Soviet Socialism—a decisive setback for the economic, social and military struggle against imperialism.  Every movement for human liberation has suffered from this loss.  We now live in a much darker world where international class struggles are often subsumed in the jumbled ideologies of reactionary bourgeois nationalist and religious movements contending with imperialism for the control of their “own” peoples.  

Inside China, and inside the CCP, there is another component to the ideological crisis.  It is centered on the failure of the pseudo-revolutionary ideology of Maoism.  The philosophical idealism of Maoism, which decoupled ideology from Marxist materialism, crippled the party’s ideological development.  Subjectivism ruled in all matters of ideology and politics.  The Maoists sought out hidden traitors in the Party who secretly wanted to restore capitalism.  Nearly every party leader (and every mass leader too) was eventually condemned as a carrier of the bourgeois virus.  It seemed that anyone could suddenly be discovered to have been a long-term “black” agent bent on restoring capitalism.  

And there is still one more component to the ideological crisis in China.  There remains the protracted military contradiction with American and Japanese imperialism over Taiwan today, and the mainland before 1949.  So there is a strong nationalist element to Chinese Communism expressed in a real-politik drive to modernize the country for self-defense.

The pragmatism of Deng Xiaoping came as a welcome relief after the tyranny of the “left” Maoists.  The new party leadership began their reforms with massive public support and a sense of relief that the tyrants had been toppled.  The path the party took after 1978 was Market Socialism.  It was a reaction to the idealism of Maoism, and a rejection of the egalitarian “barefoot socialism” of the past.  

Market Socialism has created a much wealthier China.  To achieve these gains, and to do it in a short time, the Communist Party of China employed risky capitalist incentives and permitted the private exploitation of an ever-growing segment of the working class.  The party has attempted to ameliorate the evils of market socialism by controlling investment through the licensing and control of private property and income redistribution to the poorest peasants and workers. Anyone who has done business in China can attest to the “nightmare” of bureaucratic red tape and layers of government approval needed to win a business license or lease land.   The party has taken measures to protect workers and peasants, frets about the inequality the development is producing, and has achieved steadily rising mass incomes all through the Reform period.  No capitalist country has achieved such results.

The growth of capitalist relations of production and the accompanying corruption is indeed a danger.  I think the Chinese Party risks losing its bearings.  And it risks losing its political base if the privatization extends into the essential collectivized property of the state.  The rising trend of peasant rage and workers strikes is rightly seen by the CCP as a warning and a growing threat to the social base that permits it to rule.

Despite market socialism, the party still controls the vast collectivized property of the state in the form of state factories, land, raw materials, natural resources, and the state portion of the banking and financial sector that dominates the economy.  The CCP exercises effective control over private property by its willingness to employ its administrative power against capitalists and their property.  The existence of the collectivized state property is the objective basis, the class basis, for the CCP’s political rule.  For this objective reason, the Communist Party of China is moved by pressure from the working and peasant masses. With the exception of the other three socialist countries, no other country (at any comparable level of development) is nearly so responsive to the mass demands and the needs of the poor. 

1978 and After

For statistical purposes, 1978 is the pivotal year for comparing the pre-reform and post-reform periods because it was at the December 18-22, 1978, Third Plenary Session of the 11th Central Committee that the CCP made its decisive turn toward rural decollectivization and started on the path of “reform” that led to market socialism.  I happened to be in China three months before the Third Plenary and I visited the major cities and the industrial Northeast that fall.   In September 1978 I visited the model commune, called Dazhai, which was specifically criticized at the Third Plenary and soon decollectivized.  Since the 1978 trip I have returned to China about twelve more times.  I have relatives living there and I can speak conversational Mandarin.  In addition to what I have learned through study and analysis, I think I have a reasonable first hand view of the changes that have taken place over the whole span of time since 1978.

The MR article focuses on the relative inequality of incomes, the growth of unemployment, and the exploitation of the working class since 1978.  (See for example, the various measures of state employment, unemployment, inflation, and the other problems highlighted in the Appendix at Tables 3, 4, 7, 8, and 9).  But there is no table to show the absolute increase in incomes that has lifted the mass of the working class to income levels undreamed of in the China of 1978.

Using the latest figures available (April 2004, see China Statistical Data at www.china.org.cn) for the 36 largest cities in China, the per capita monthly income for the richest city, Shanghai, is now 1,476.94 RMB (about $180.00/month US).  For the poorest city, Xining, the per capita monthly income is 620.40 RMB ($76.00/month).  In 1978, the per capita monthly income in Shanghai (adjusted for inflation) was less than 200 RMB.   I can’t estimate figures for Xining in 1978, but based on similarly situated cities I visited that year I would reasonably guess the adjusted per capita monthly income at around 100 RMB.  The average, for all 36 cities in 2004 is now 979.97 RMB ($120.00/month).  For China as a whole, I think mass working class urban incomes are nearly ten times higher, in real terms, than they were in 1978.  They are still growing at about seven percent a year.

The statistics I cite are averages, of course, so the objection may be raised that income disparities between classes actually skews incomes to the extremes of wealth and poverty.  Maybe only the capitalists have received all the gains?  I have not seen a breakdown of PRC incomes that would support this contention.  I think the averages are in fact a valuable gross measure of mass incomes -- as they are in the United States.  The reason for this, of course, is that the capitalist class is numerically small.  I have worked and lived among ordinary people in Chinese cities.  The incomes of ordinary workers really are several orders of magnitude higher than they were in 1978.  These gains are the basis for the mass support the Communist Party of China enjoys today. 

Something not apparent from the per capita numbers is the “wealth effect” these higher incomes produce.   Most urban families in China still live in low cost (rent subsidized) apartments with a family structure different from the USA.  The usual pattern is for an employed married couple and their one child to share the apartment with one set of parents—often the husband’s parents—who work or have retirement income.  If the average per-capita income (979.97 for the 36 largest cities) is spread over five family members, this boosts average family incomes to 4,900 RMB ($587.00 US per month).  At that income level families can save substantial amounts of money to use for the “productive consumption” of things like motor vehicles and, in some cases, a privately owned apartment.  Subsidized monthly rents in China, for the many families who still enjoy them, are low--often lower than 200 RMB ($25.00 US). 

Compared to China, rents in the USA consume much of the monthly income of poor workers, and greatly reduces their disposable incomes.   All other necessary costs in China--such as food, clothing, medical care and public transportation--are also lower than in the U.S.  And, in China, there is a much lower level of the street crime that often shatters the economic stability of workers in American cities.  So, despite much lower wage levels in China, the average net disposable incomes of working families in the 36 largest cities is now somewhat comparable to the net disposable incomes of poor working class families in the thirty-six largest cities in the imperialist United States.  Further evidence for my assertion about the Chinese wealth effect may be inferred from the often-cited fact that most Chinese families have substantial personal savings in bank accounts.  American workers have negative savings (debt).

But what about the unemployed in these 36 cities?  Table 7, cites a national unemployment figure of 4% for 2002, although, as the authors correctly note, the actual unemployment figure is substantially higher because many redundant SOE workers receive long-term small stipends, sometimes lasting for years, from their former employers and are therefore not counted on the unemployment rolls.  These stipends vary considerably, but generally, in real terms, they are not much less than what employed workers earned in 1978, and they are just enough to meet basic living expenses like food and rent.  The totally inadequate unemployment benefits that American workers receive rarely lasts more than a year.  Chinese workers demand more from their state.

Migrant workers, now a substantial part of the urban workforce, receive no unemployment benefits. However, the government announced in July 2004, that they would bring migrants into the unemployment system by requiring their employers to register with the authorities and pay a new tax.  At this writing, migrant wages are rising precipitously due to a “labor shortage” widely reported in the press.  The rising incomes in China are real, and they are not limited to “entrepreneurs”, as China now prefers to identify its new capitalists.  

In addition to substantially higher salaries, China’s working class has benefited from the addition of new socialized resources such as cheap and, in many cases free, public transport on local buses.  There are also new subways, trains, and airports, improved roads and schools, new national parks, a remarkable beautification of dour industrial cities, access to new libraries, much better quality television programming than in the United States, sports facilities of all kinds, new cultural organizations, and the Internet.  In every city of China, Internet cafes offer DSL access for around 1 RMB (12.5 cents US) per hour of use.  There are new public spaces and free access to beaches at inland lakes and to the seaside on every point along the Chinese coast.  The diet of the masses has improved, and the undeniable proof of this is in the remarkable increase in the average height of the young people of China, who invariably tower over their parents’ generation.

Socialist Markets, Capitalist Markets

Under fully developed capitalism, like in the USA, it is the class of capitalists that exploits the class of workers.  The political power of the capitalist ruling state assures the legal and repressive features of capitalist relations of production.  Workers under monopoly capitalism are not simply exploited individually by particular capitalists in a neutral democratic state, but through a system of capitalist production in which the factory owner, the banker, the insurer, the landlord, the tax collector and the policeman all play their coordinated roles in a system of social repression.  Class oppression makes possible the individual private expropriations of labor power and distributes the extracted surplus value through a market system (and taxation) to the exploiters and their agents of repression.  

China does not have these necessary features of a capitalist state.  Chinese market socialism has just one of the important hallmarks of capitalism—the private exploitation of a significant section of the working class (but not all of the class) by individual foreign and domestic capitalists.  

The peasants are not exploited by capitalists.  Peasants labor in a hybrid system of agricultural production as small largely self-sufficient private producers, but they sell their grain at prices guaranteed by the socialist state planners at a level above the cost of production.  The recently noted migrant labor shortage (August 2004) in coastal cities is caused by the higher grain prices the state has just begun paying farmers.  Enough peasants are now choosing to stay on the land that it is appreciably limiting migration and competition for urban jobs.  These higher wage levels are a product of state intervention reshaping the labor market.

The Chinese government has announced its determination to soon allow the market to set grain prices.  We shall see if they are able to do this without subsidies.  If they move to a free market in grain, I think prices will fall, risking a collapse of grain supplies as farmers switch into truck farming and other more profitable lines of production, or just revert to subsistence agriculture.  I think the subsidies will remain in one form or another.   

In China today, political power—the economic ministries, government administration, the courts, the army and the police—is in the hands of a workers’ state governed by a workers’ party.  So, while there is private exploitation, overall control of the economy is not in the hands of a capitalist class.  China does not have a capitalist economic system, and it is not ruled by a party that represents the capitalist class.  

The party and state bureaucracy in China is itself an important brake on capitalist development because the bureaucracy has a material interest in protecting the collectivized state property from being privatized.  The state bureaucrats’ livelihoods, and their petty privileges, are utterly dependent on this collective property.  The CCP would be swept from power in a capitalist restoration—as the CPSU was swept away in Russia.  

The Slow-Motion Capitalist Restoration Theory

The Monthly Review analysis presents a “slow motion” theory of capitalist restoration. The authors say that the final victory of capitalism was driven by the logic of the reforms.  It was largely the unintentional outcome of a misguided and perhaps well-meaning development policy pursued by the CCP.  As the authors say:

As we shall see, while it may have been a party decision to begin marketization, market imperatives quickly proved uncontrollable.  Each stage in the reform process generated new tensions and contradictions that were resolved only through a further expansion of market power, leading to the growing consolidation of a capitalist political economy.”  p. 31

The authors point to a quantitative erosion of the conditions of working class life since 1978.  The authors then conclude, based on examining this evidence, that the dreaded qualitative change--a capitalist restoration--has taken place.  That’s their theory.  And this quantitative analysis—the slow-motion unintentional introduction of capitalism--is their entire theory of capitalist restoration.

Actually, the quantitative record is somewhat mixed.  As I noted in an earlier section, many of the quantitative losses the MR book catalogs are offset by quantitative gains--like much higher and still rising working class incomes after 1978.  The peasants have gained too.  And although peasant incomes have lagged urban incomes lately, the mass of the peasants have enjoyed similar across the board material gains.  Nominal rural per capita income was $42 in 1986 and had grown seven-fold by 2003.  Peasant incomes are increasing at about 5% per year now. 

The economic gains that workers and peasants have made under the reforms have occurred because the CCP protected the workers’ and peasants’ class interests even as they introduced markets and privatization.  The party has limited the economic power of capitalists and has repeatedly demonstrated its power over them by arresting and sometimes shooting them for economic crimes—like the theft of state property.  The property, the freedom, and even the lives of Chinese capitalists are subject to the political control of the workers’ government.  Does it seem likely that any bourgeois state would exercise such repression against its own ruling class?   

When American capitalists are caught stealing huge amounts of state (or private) property, they are punished with light criminal sentences and sometimes not punished at all.  (The same is true for ALL bourgeois states.)  When American workers are caught stealing any property—public or private—they are invariably sentenced to long prison terms.  

The weakest part of the slow-motion capitalist restoration thesis is the problem of explaining how a new capitalist class came to rule China and how that rule is carried out -- either through the Communist Party of China itself, or perhaps in a power sharing arrangement between the CCP and capitalist class representatives.  The authors do not explain how the new capitalist dictatorship operates, but simply deduce the gradual consolidation of a new ruling class from within socialism.  A convincing theory of capitalist restoration must, at the very least, explain how—and when—working class power was overthrown and how the bourgeoisie came to rule China through apparently socialist institutions.  

Magdoff and Foster v. Hart-Landesberg and Burkett

I think the editors of Monthly Review, Harry Magdoff and John Bellamy Foster saw the flaw in the “slow motion” restoration thesis and attempted to correct it.  The Forward they wrote for the book presents an altogether different version of capitalist restoration in China—one that is at odds with the “slow motion” restoration thesis of Hart-Landesberg and Burkett.  In the Forward, Mr. Magdoff and Mr. Foster propose a Maoist theory of revolution and counter-revolution.  As they put it, 

A bureaucratic elite and other privileged groups sustain a competing ideology—one that justifies their privileges, which are at odds with the needs of the mass of people.  Members of the elite are commonly concerned with passing their advantages to their children, typical of class society.  The clash of class interests continues from generation to generation.  In this way the class struggle persists, though in different forms from the past.  At heart, as Mao pointed out, even some in high Communist Party positions wanted to take the “capitalist road.” Forward at pp. 3-4

Maoism is all about people’s hearts.  That’s because, for Maoists, ideology can be independent of material class interests.  In this revealing passage, Magdoff and Foster equate the petty privileges enjoyed by the worker’s party with a hostile class ideology. This is where they depart from Marx.  Marxists believe that only classes have class ideologies and that class ideologies are rooted in relations of production--not in petty privileges or corrupted hearts.  

HB come closest to adopting the position of the MR Editors when they approvingly cite a quote from Eva Cheng: “The more market reforms were pursued, the more the party ‘antagonized working people, and thus the more acutely it felt the need to restore private property so that its privileges could be passed on to the bureaucrats’ children.’”  p. 45  But they stop short of developing the capitalist-restoration-via-privileges theory of the MR Forward . 

A thoroughgoing criticism of Maoism is beyond the scope of my comments here—especially since Hart-Landesberg and Burkett (hereafter HB) do not openly propose the Maoist model of capitalist restoration.  Perhaps it will suffice as a criticism if I remind the reader of the suffering the CCP imposed on the Chinese masses during the Cultural Revolution as they attempted to read the hearts of wrong thinkers and subjected millions of innocent people to humiliations and punishments to remold them from a bourgeois ideology they didn’t subscribe to.  

The Great Proletarian Cultural Revolution did more to discredit Marxism among the Party and masses of China than the capitalist incentives pursued by the CCP since 1978.  I think that the fatigue and ideological cynicism that crept into the party under Mao made the “anti-ideological” pragmatism of the reformers seem like a rational alternative to Maoist idealism.  

HB must recognize the incompleteness of their theory of capitalist restoration.  I don’t know whether or not they really agree with Magdoff and Foster, but their silence on this issue, and the friendly Forward to the book suggests, I think, that they might agree with this discredited theory.  

Values Socialism 

The authors’ conclusion that China has restored capitalism rests, in the final analysis, on their conclusion that the social system there violates the essential values of socialism.  What these values are, however, are rarely explicitly stated, but the authors “vision of socialism”, as they put it, appears throughout their analysis.   

I was struck by their descriptions of socialism as I read the analysis.  Here are four representative quotations from their ideas about what a socialist society must be like:

“For those interested in radical change toward a worker-community-centered economy, however, analytical disagreements are likely to involve different perceptions of collective values, vision and strategy, i.e., matters that are not simply reversible without great political costs. After all, for progressives, movement building anchored by clear and consistent values, visions, and strategy is a necessity, whereas quite the opposite is true for defenders of the status quo.” p. 24

“What is important is that production be driven by use values that are socially agreed upon, not by the requirements of class-exploitative money accounting.”  p. 114

“…each step in China’s transition … moved the system further away from any meaningful progress toward socialism in the sense of a system centered on grass roots worker-community needs and capabilities.” pp. 10-11 

The Chinese development model is creating a race to the bottom in other countries  “…that has nothing to do with any progressive development of productive forces holistically considered.  This cannot be the basis for building socialism or forwarding socialist values of sustainability, equality, solidarity, and democracy.”  p. 112 

These comments about the author’s vision of socialism would be acceptable to almost any gathering of Green activists, anti-globalist anarchists, or liberal progressive students.  But they profoundly conflict with Marxism. Indeed, Karl Marx spent much of his life combating voluntarist notions about a “worker-community-centered economy” (Proudhon), “grass roots” production schemes like cooperatives (Bakunin), and the “holistic” (Lassallean) development of productive forces.  

How Will Socialism Defeat Capitalism?

The victory of socialism, if it happens before capitalism ruins our world, is now, to be sure, some distance away.  But if socialism is ever to win, it will not win primarily because of its superior social values. 

Socialism will not replace capitalism if socialism is “anchored by clear and consistent values, visions, and strategies.”  Socialism will not replace capitalism if “it is driven by use values that are socially agreed upon.”  Socialism will not defeat capitalism by establishing “a system centered on grass roots worker-community needs and capabilities.”   Marx angrily dismissed such anarchist conceptions as utopian and reactionary.

Socialism will only defeat capitalism--in a long hostile struggle--if it can establish a radical new economic system that is at least an order of magnitude more productive than capitalism.  The really essential feature that such a system must have is that socialism must raise labor productivity to a level unachievable by capitalism.  Socialist relations of production must eventually out produce and “out compete” capitalism.  And socialism will wreck and supplant the economies of all the countries of the world that do not embrace it.  If socialism cannot achieve a level of productivity greater than capitalism, then it is doomed, and Marx would be the first to denounce it as utopian.  

In establishing socialism in any particular country, such as China, “class-exploitative money accounting” will be the method that the socialist state uses to test its accomplishments in a world economy still dominated by capitalist production.  The difference between world (capitalist) prices and domestic (socialist) prices is the objective and unmistakable reflection of labor productivity between the contending economic systems.  That’s where the accounting comes in.  Socialism will undersell capitalist producers and wipe them out.  This will not be the “holistic” cooperative “transformative” process that HB envision.  Workers in the capitalist countries will lose their jobs, they will demand socialism at home, and they will fight for it. 

A socialist system that can out-produce capitalism will be more centralized than capitalism.  It will employ labor in immense modern production networks that employ every advantage of science, concentrated productive assets, and worker initiative.  Scientists and other highly trained specialists from among the workers will direct production according to a centralized plan that mobilizes material and human resource to produce a level of material abundance unlike anything under capitalism.  Distribution of the social product will be according to need.

The freedom, material wealth, democracy, equality, and human happiness that socialism will produce are a product of the relations of production that such an advanced economic system must rely on.  These values cannot be wished into being, and they will not be realized until socialism can be established on the advanced economic base described above.

China, of course, is a poor country, with a barely developed industrial system that lags behind the capitalist states in all but a few areas of production.  It has to survive against imperialism as it struggles to modernize.  And rightly or wrongly, the CCP has chosen the path of market socialism to get there. 

Capitalist Restoration and Class Struggle

Since 1978, mass incomes in China and the quality of life for workers and peasants have steadily risen.   Does it seem logical that the restoration of capitalism in China could lead to all these improvements for the masses of that Third World country?  The greatest defect in the case presented by HB is the “un-Marxist” core of their theory—the idea that the restoration of capitalism in China (a counterrevolution in Marxist terminology) could take place without a qualitative decline in the living standard of the laboring masses after their class lost power.

Another, no less puzzling feature of the slow-motion theory of capitalist restoration is the suggestion that a counterrevolution could have taken place in China without the rest of the world noticing it.  Was there no class struggle signaling this momentous event?  

In Russia and Eastern Europe, the counterrevolutions of the early 1990s were violent affairs and involved the great powers.  There were military clashes and coups and crowds in the streets.  Tanks roared through Moscow as the “white house” burned.  Workers mounted political strikes to save the socialist system.  

After the counterrevolution in Russia, the incomes of the workers and peasants did NOT rise.  Incomes fell.  They fell to a level beneath minimum subsistence.  Even now, over a decade later, Russian GDP has still not recovered.  The national product of the once mighty Soviet Russia is today roughly equivalent to that of the tiny Netherlands.

How did the much poorer China manage to restore capitalism without suffering these effects, and without anyone noticing until recently?  To imagine that capitalism could have been restored in backward China without causing at least as much harm as it did in advanced Russia suggests, I think, a sort of negative defense of capitalism.  Perhaps capitalism can do some good things—like economically improving former socialist countries and increasing mass living standards?  To the extent that this observation about the negative defense of capitalism is correct, it refutes the central premise of the HB book, which was written to prove the opposite principle—that neoliberal capitalism has no redeeming qualities as a development model.

China’s Risky Future

The Communist Party of China is still a subjectively revolutionary party.  It is trying to develop China into a modern socialist country.  The strategy it has embraced, market socialism, is fraught with dangers and the risk of failure.  

China does not have unlimited time to develop.  It suffers ideological, political, and military pressure from the United States--just as Cuba, the DPRK and Vietnam do.  The U.S., Japan, and the other imperialist countries support and fund the anti-China nationalist movements.  The goal is to split China into smaller, more manageable, weaker states.  Taiwan is a strategic platform for military aggression and espionage against China.  Hong Kong is utilized as a base for ideological subversion in the ideological battle between socialism and capitalism.  Resources and propaganda are devoted to split Tibet and the Islamic western provinces into new capitalist states.  The U.S. funds and provides political support to every anti-communist trend willing to fight the PRC--everything from the attempts in Beijing and Shanghai to organize a bourgeois opposition party, to charismatic Christian sects in Szechuan, to the bizarre Falun Gong cult and every other manifestation of discontent that could harm the workers state.  

There are many challenges China will have to overcome before it can hope to establish the socialist future that Karl Marx envisioned.  Socialism can fail in China, and capitalism may be restored.  That day is not yet.  Socialists have a duty to exert what little influence we have to protect China and encourage the success of socialism in the world’s most populous country.   To reject China, and fail to support her, crosses a class line that inevitably conciliates coercive imperialist measures to “democratize” China, protect American jobs from “unfair” socialist (state subsidized) competition, or militarily protect “democratic Taiwan” from Communist aggression by building new weapons systems to confront the PRC.  Following the defeat of the USSR the cause of socialism has been passing though some of its darkest hours.  A socialist victory in China, if it can be consolidated, is the best current hope of socialism in the 21st Century.