Actually existing capitalism

Issue: 110

Sue Sparks

A review of Martin Hart-Landsberg and Paul Burkett, China and Socialism: Market Reforms and Class Struggle (Monthly Review Press, 2005), £13.99

This is a timely book. China is rarely out of the news, though generally in one of two contexts. The main one is the message that we must all fear for our jobs and be willing to accept lower wages and social benefits as this new economic giant rises in the East. The other is the issue of human rights, with the emphasis on the trial and imprisonment of individual dissidents (with the recent twist of the complicity in this of American internet companies such as Yahoo and Google). Less frequently do we hear of the negative
effects of Chinese economic growth on Chinese workers themselves, and hardly at all do we hear of their collective struggles. Occasionally violent acts, such as the recent case of a farmer who blew himself up at a court building, are reported. The
thousands of protests which are regularly happening get much less attention, and this book helps to redress this.

My heart did sink at the opening sentence of the introduction: ‘China and socialism …during the three decades following the 1949 establishment of the People’s Republic of China (PRC), it seemed as if these words would forever be joined in an
inspiring unity.’ Well, no. But the book improves. Its major strength is its clear result of the market ‘reforms’ of the post-Mao period. Its major weakness is the persistent view that the Chinese
Revolution was in some sense, however imperfectly, about building socialism, and that the events after Mao’s death represent
the restoration of capitalism. It’s far from clear how this was possible in a situation where the working class and the peasantry
(or the ‘broad popular masses’) supposedly held some form of political power. For the authors, as for so many other commentators on the state capitalist countries, it is enough for there to have been state control of the economy by a party which said it was building socialism. Of course, the Chinese Revolution was a huge achievement which led to substantial gains for the Chinese people against both internal oppression and imperialism. But mass literacy, free medical care and the ‘Iron Rice Bowl’ do not signify that a society is in transition to socialism, even leaving aside the appalling suffering which took place during Mao’s rule (dealt with in another review in this issue). And the authors do indeed leave it aside, with only oblique and somewhat positive references to the Cultural Revolution.

However, all this, rather surprisingly, does not interfere too much with the usefulness of the book. This may be because the authors are economists and have emphasised the actual course of the
reforms, and their impacts and contradictions. But it is also because, in spite of their confusion over Maoism (and also Castroism), they do seem to have a genuine commitment to change being achieved by the actions of the working class itself.

The authors target two groups for criticism in their analysis: on the one hand, the neo-liberal economists who applaud what is happening in China from the perspective of freeing up trade and
introducing market disciplines; and, on the other, ‘progressives’ who admire the results of the reforms in terms of economic growth and hold China up as a model for other countries to follow,
continuing to associate the rulers of China with a socialist project. It is this that the authors are most concerned to debunk.

In Chapter 1, ‘China’s Rise to Model Status’, the authors dissect the arguments of both groups. They first score some direct hits on the neo-liberals, who, following the economic disasters of the
post-1989 period in the former Soviet Union and Eastern Europe, were searching around for examples of success stories:

‘The opportunism underlying this strategy was evident from past attempts to use South Korea as a free-market poster country… When by the early 1990s it became clear that Thailand, Malaysia and Indonesia were experiencing rapid economic growth driven mainly by FDI and manufactured exports, South Korea was quickly dropped as model country in favour of these emerging platforms… Then came the East Asian crisis… They dismissed the crisis-affected countries—which literally weeks or even days before had been praised as free market success stories—as hopelessly corrupt “crony capitalist” regimes in desperate need of
wholesale free market restructuring.’

They then turn to the ‘progressives’— those who believe that it is the strength of the Chinese state, born from the revolution, which has allowed China in some sense to dictate the terms of foreign
direct investment (FDI) in the country and insert itself into the global economy on favourable terms:

‘Often overlooked by those who embrace this perspective is the fact that foreign investors’ respect for the Chinese government, and their willingness to put up with “restrictive” terms on FDI, are
largely due to the willingness of the Chinese government to deliver large supplies of cheap and productive labour power. Said differently, the facile linkage of China’s post-revolutionary achievements to its current capitalist successes diverts attention from the main precondition of the latter: an increasingly insecure labour force whose efforts at self-organisation are constantly suppressed by one of the world’s most authoritarian states.’

The authors argue successfully that the pursuit of ‘poster countries’ is more pernicious in the case of the progressives than the neo-liberals (though the authors seem unaware that there may be a lesson for themselves here!). This is partly because the neo-liberals control the dominant means by which events are
interpreted, and so are always in a position—to put the best gloss on the contradictions in their position, but more fundamentally because they are not trying to build a movement to challenge
capitalism, which requires a consistent, clear stance in support of those struggling against it. The logic of the progressives’ position is that, if the leaders of China are building socialism through market reforms, then workers and peasants struggling against them must be reactionary. Those of us old enough will remember that this is exactly the kind of argument we heard from the defenders of various ‘socialist’ regimes around the world when strikes took place—usually that the workers were a ‘privileged’
group, and the state had the right to suppress the strikes on behalf of poorer and more oppressed sections of society. To their credit, the authors draw this logic out and reject it—at least in the case of China today.

In Chapter 2 the authors describe the course of the reforms, but the heart of the book is chapters 3 and 4, which examine in turn the domestic and international contradictions facing China’s rulers. They chart the social and human costs of the ‘reforms’, from a sharp rise in deaths from industrial accidents and occupational diseases to the disappearance of medical care for millions of Chinese, due to the mass layoffs at state-owned enterprises, the dissolution of the rural communes with their free clinics, and the increasingly desperate financial situation of local
government. The lack of education for many children is also shocking—the ending of state subsidy to primary education has led to a situation where in some villages only 20 percent of girls and 40 percent of boys attend school. The rural crisis has led the government to announce a programme to help the countryside catch up, including more subsidies to farmers and rebuilding public
services, with a focus on education—apparently a response to the estimated 87,000 ‘riots and mass incidents’ that have taken place during 2005 alone (Guardian, 22 February 2006).

Hart-Landsberg and Burkett also show that even the economic growth itself is far from assured. Many of the enterprises rely on loans which cannot be repaid, and on the other hand there is a speculative property boom, so the financial system is vulnerable. Underemployment in the rural areas is a huge problem, leading to
migration to the urban areas, adding to existing urban unemployment which is far higher in reality than official figures
disclose. The government is relying on the export sector to create the needed jobs, and has joined the World Trade Organisation to try to ensure greater access to international markets. But while
manufacturing output is growing, increased productivity means the number of jobs is not. The WTO deals open up China’s own markets, including to American grain exports, which adds to the rural crisis. The growing Chinese trade surpluses with the US and Europe are leading both to protectionist measures (such as those against Chinese clothes and shoes by the EU) and to pressure on the Chinese to revalue their currency.

The authors chronicle the struggles of the working class in terms of strikes and self organisation in the pre-revolutionary period, under Mao, and in more recent decades. They point out that even under conditions of extreme repression workers continue to organise strikes and demonstrations, sometimes on a very large
scale, such as the movement in the north eastern provinces between March and May 2002, which involved more than 80,000 workers engaging in repeated demonstrations. Some 50,000 oil workers in Daqing City marched for payment of unpaid wages and pensions, and against corruption and injustices committed by
enterprise managers and local officials. They also formed an independent union, and when news of their actions travelled, other oil workers staged protests in solidarity. The government has responded with physical repression by police and soldiers, as well as new legal measures restricting the right to public assembly.

The book also details the extent to which the rise of China as a regional economic power is leading to instability and crisis in other East Asian countries, as they all compete for FDI and access to export markets. They are, however, careful not to blame Chinese workers for ‘stealing’ jobs, either in South East Asia or in the West:

‘Far from bashing China, our aim here is to demonstrate that China’s capitalist growth strategy generates regional and global as well as national contradictions…. Export-led growth pushes down regional wage rates, undermines domestic consumption, and generates destructive regional competition for foreign
investment and export production. The danger of course is that workers in different countries will come to see each other as the enemy rather than the system of capitalism that shapes their relationships and pits them against each other in a destructive competition.’

Much of the semi-Stalinist terminology the authors use will grate on the ears of many readers of this journal. They also have a somewhat utopian vision of a regional development alternative where countries expand both domestic consumption and mutually beneficial trade. Under-consumption makes quite a few appearances, and the military dimension of international capitalist
competition is largely missing. But at least they are looking in the right direction for a solution:

‘If there is any hope for a more progressive form of development in the China/East Asia region, it lies in these militant tendencies created by the region’s industrialisation. Taken individually…
national working class movements are in a relatively weak position… But if they are able to coalesce, their ability to envision
and fight for human needs based forms of regional development will be greatly strengthened.’

I certainly learned from the book, which is well worth reading in spite of some of the authors’ theoretical positions.