Photo: In Tiananmen Square protests Beijing in 1989 the hopes of a mass democratic movement and the possibility that it would generate a workers' and people's movement of the Solidarność type were massacred. CC BY-SA 3.0 - Photo: 2018

On ‘Socialism with Chinese Characteristics’ – or Mask of Capitalism

Viewpoint by Michele Nobile*

This is the second of a four-part series. Click here for Part 1

ROME (IDN) – “Socialism with Chinese characteristics” is described by the regime in the following terms:

“A historic transformation from a highly centralised planned economy to a dynamic socialist market economy has been achieved in China. A basic economic system in which public ownership takes the lead and different economic ownerships grow side by side has come into being. The market plays an increasingly important role in allocating resources, and the system of macroeconomic regulation is improving. A social security system covering both urban and rural residents is taking shape, and culture, education, science and technology, health care, sports and other social programs are flourishing.”

The problem is that the series of economic reforms that began in 1978 has far surpassed the boundaries of theoretical discussion and concrete experiments about the relationship between planning and market typical of pseudo-socialist statism: the objective indicated by the top echelons of the party-state bureaucracy – the modernisation of Chinese society – has been resolved in a transition to capitalism. Nor could it be otherwise in the absence of a social and anti-bureaucratic revolution.

The final result, although not the form of the process, has been the same as in the Soviet Union. On the secular arc it is the sign of the overall inferiority of pseudo-socialist systems compared with the more advanced forms of capitalism, the negative demonstration that social liberation does not pass through totalitarian statism, the blind alley of world history.

Of course, there has been no ‘big bang’ in China as there was in the Soviet Union and in Central and Eastern Europe; the process of transformation has been much more gradual. In the first half of the 1980s it was still plausible to discuss whether the reforms under way were a form of (pseudo) socialism of the market.

The system of agricultural communes was over, replaced by the principle of responsibility of peasant households in the management of assigned land, and there was a double system of prices – administered  and of the market – but farmers and state enterprises were allowed to market only the production exceeding the quota established by the central bodies.

Individual businesses (getihu) were born, municipal and village-based businesses (in part in fact private, usually referred to by the acronym TVE, standing for ‘township and village enterprises’) and transnational companies invested in the first special economic zones; nevertheless, state and collective enterprises sector had not yet been drastically reduced and restructured and the limit to the recruitment of wage earners in private companies was still formally in force – less so in reality.

The socioeconomic contradictions of that first phase of China’s social transformation – expressed in inflation – exploded politically at the end of the decade, culminating in protests in Beijing and other cities until the Tiananmen Square protests of 1989: these facts made it clear that capitalist social relations were in full development under the protection of the pseudo-socialist dictatorship.

In Tiananmen Square the hopes of a mass democratic movement and the possibility that it would generate a workers’ and people’s movement of the Solidarność type were massacred. However, that massacre cannot be traced back to an organically conservative operation: of the power of the single Party yes, but not a conservative one of what remained of the social relations of the Maoist era.

On the contrary, the economy was “cooled” for a couple of years – the collapse of domestic investment was partially offset by strong export growth – but from Deng Xiaoping’s southern tour in early 1992 the leadership of the Chinese Communist Party pursued the strategy of attracting large-scale direct investment from abroad with determination while what remained of planning ended, and in the middle of the decade the complete destructuring of the labour relations of the working class formed under Mao began.

The sector of pseudo-socialist state enterprises (danwei) was drastically reduced, with the elimination of about 32 million jobs (dismissals managed in such a way as not to be included in the calculation of unemployment), to be reorganised within a few years as a modern system of capitalist holdings that can be compared to the Japanese keiretsu and the chaebol of South Korea, despite the differences arising from the greater concentration of power in China. This new sector of capitalist state enterprises and of companies that are formally private but actually controlled by the former is now the economic backbone of the power of the CCP.

Therefore, it can be said that China’s transition took multiple paths which began to corrupt pseudo-socialist production relationships in the 1980s and develop “islands” of capitalism, but that the capitalist transformation was actually completed around the mid-1990s.

Party-State leaders have made and are leveraging on intensification of the exploitation of the new working class agglomerated in the centres of capital accumulation which emerged in the era of reforms – national, foreign and in shared ownership – and on the renewed exploitation of the rural population, which is revealed in the extraordinary extent of migratory flow and in the capitalist transformation also of agriculture, operating through the social differentiation of farmers and the diffusion of agricultural wage labour.

Market prices have ended up dominating state prices in domestic commerce; reproduction of the work force has been made completely dependent on the market; the income of farmers and crop specialisation depend on fluctuations in the international prices of their products and production inputs; the share of wages in national income has steadily decreased in favour of that of profit and this has led to maintaining high rates of investment for a lengthy period; the compression of labour costs has attracted foreign investment, the main driver of growth in exports of electronic products; the incorporation of China into the international division of labour, the importance of exports in the dynamics of capital accumulation and, finally, entry into the World Trade Organisation (WTO) have effectively linked the expanded reproduction of Chinese capitalism to the fate of the world economy.

It is significant – for what counted in practice, namely nothing – that the right to strike was wiped out by the 1982 Constitution at the beginning of the reforms that promoted commercial relations. At the moment, the legal status of strikes is nothing short of ambiguous: they are, in fact, illegal although they can be tolerated in some situations and if the claims remain limited.

More often than workers, the business leaders of the only legal union are also its managers or party cadres, and the union bureaucracy is part of local administrations. Article 27 of the 2001 law on trade unions explicitly prescribed that, “in the event of interruptions and slowdowns in work” (the word for strike is not used), “the union must cooperate with companies and public institutions to re-establish order in production as soon as possible”.

It is an anti-worker and productivist logic through which the trade union organisation is reduced to a role of representation of requests which are filtered at the outset as “reasonable” in a framework of collaboration with company management; obviously this is incompatible with an independent organisation of workers.

The growth of protests and tensions has led to the introduction of some rules more favourable to workers, but in the absence of an autonomous organisation there is no institutional mechanism for collective bargaining. Moreover, genuine and combative collective bargaining would undermine Chinese capitalism because it would deprive it of its main comparative advantage: exploitation of a huge mass of relatively inexpensive labour.

* Michele Nobile has published essays and books on the contradiction between capitalism and the environment (Goods-Nature and Ecosocialism, 1993), on the theory and history of imperialism (Imperialism. The Real Face of Globalisation, 2006), and on the transformations of the state and economic policy in the crisis (Capitalism and Post-Democracy. Economics and Politics in the Systemic Crisis, 2012). He is one of the founders of the international association Utopia Rossa (Red Utopia) which published the full version of this article in Italian under the title ‘Sul “Socialismo con Caractteristiche Cinesi”, Ovvero del Capitalismo Realmente Esistente in Cina’. Translated by Phil Harris. [IDN-InDepthNews – 05 October 2018]

Part 1 > On ‘Socialism with Chinese Characteristics’ – or Problem of Epochal Social Transformation

Photo: In Tiananmen Square protests Beijing in 1989 the hopes of a mass democratic movement and the possibility that it would generate a workers’ and people’s movement of the Solidarność type were massacred. CC BY-SA 3.0

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