David Ewing's review of MR article
Jonathan Lassen <firstname.lastname@example.org>
Sun, 22 Aug 2004 02:15:22 -0400 (EDT)
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
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
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
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 Northwest 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
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
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 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
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
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.
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
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
How Will Socialism Defeat Capitalism?
The victory of socialism, if 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
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
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.