Sparts - Why China is Not Capitalist. Good Article!

From "David Ewing" <>
Date Sun, 17 Jul 2005 16:05:45 -0700

Why China Is Not Capitalist

Defend, Extend the Gains of the 1949 Revolution!
For Workers Political Revolution to Oust Stalinist Bureaucracy!

We print below an edited translation of an article that first appeared in 
Spartacist Japan No. 30 (April 2005), newspaper of the Spartacist Group of 
Japan, section of the International Communist League.

For the last several years, on a daily basis, at least one bourgeois 
newspaper, magazine, or nightly news program has had a special feature on 
China. We have been told that China's economy is growing by leaps and 
bounds, with no end in sight; that it has overtaken Japan in several 
important economic indicators, and will soon become a "superpower"; that it 
is in the process of "siphoning off" natural resources that "belong to the 
Japanese people"; that, while the Japanese economy has rebounded due to 
trade with China, the reason for the high level of unemployment in Japan is 
the "hollowing out" of industry, most of which relocated to China in search 
of higher profits; that soon China will replace Japan diplomatically, 
politically and militarily as the "most important and influential country in 
Asia." Accompanying the bourgeois propaganda campaign, last December 
Japanese imperialism released new defense guidelines, and it is in the 
process of re-stationing its military, and also has signed security 
agreements with the American imperialists, including one to defend Taiwan to 
"counter the Chinese military threat." (See "Joint Statement of the 
Spartacist Group Japan and Spartacist League/U.S.: Down with U.S./Japan 
Counterrevolutionary Alliance! Defend the Chinese and North Korean Deformed 
Workers States!" WV No. 844, 18 March.)
It is in this context that the so-called Trotskyist group Kakehashi has 
published a pamphlet claiming that capitalism has been restored in China. In 
this pamphlet, Kakehashi disappears the role that the Japanese zaibatsu and 
international finance capital have played in the exploitation of the Chinese 
workers and in undermining the gains of the 1949 Chinese Revolution. 
Japanese imperialism's direct foreign investment totaled more than $5.45 
billion in 2004 (China Daily, 25 March). This investment is no longer 
confined to areas formerly colonized by Japan, such as Manchuria, but has 
expanded to the southern tip of China. They write nothing about Japan's 
military provocations against China, and they attempt to justify their 
betrayal of the class interests of the proletariat and their own 
reconciliation with capitalism by denying the working-class nature of the 
Chinese deformed workers state. In sum, what is missing is a proletarian 
internationalist perspective and the role of a conscious, i.e., Leninist, 
vanguard party to lead the proletariat.
China on the Brink
The 1949 Chinese Revolution was, despite profound bureaucratic deformations, 
a social revolution of world historic significance. Hundreds of millions of 
peasants rose up and seized the land on which their ancestors had been 
cruelly exploited from time immemorial. The rule of the murderous warlords 
and bloodsucking moneylenders, the rapacious landlords and wretched 
bourgeoisie was destroyed. The revolution enabled women to advance by 
magnitudes over their previous miserable status, historically symbolized by 
the barbaric practice of foot-binding. A nation that had been ravaged and 
divided by foreign powers for a century was unified and freed from 
imperialist subjugation.
Unlike the Russian October Revolution of 1917, which was carried out by a 
class-conscious proletariat guided by the proletarian internationalism of 
the Bolsheviks, led by Lenin and Trotsky, the Chinese Revolution was the 
result of peasant guerrilla war led by Mao Zedong's Stalinist nationalist 
forces. Patterned after the Stalinist bureaucracy in the USSR, Mao's regime 
preached the profoundly anti-Marxist notion that socialism—a classless, 
egalitarian society based on material abundance—could be built in a single 
country. In practice, "socialism in one country" meant opposition to the 
perspective of workers revolution internationally—for example in neighboring 
Japan—and accommodation to world imperialism.
In the 1950s, the People's Republic of China established a centrally 
planned, socialized economy and agriculture was collectivized. A state 
monopoly of foreign trade protected the socialized economy from being 
undermined by cheap imports from the far-more-developed 
capitalist-imperialist countries. In China under Deng Xiaoping, the 
bureaucracy moved toward "market socialism" following the examples of 
Yugoslavia and Hungary. Economic administrators and managers were rewarded 
or penalized on the basis of market profitability. The threat of plant 
closures and layoffs also served as a means of enforcing labor discipline 
among the workers. At the same time, agriculture was decollectivized and 
replaced by the "household responsibility system," i.e., peasant 
Many of the gains of the Chinese Revolution are being obliterated. The 
pressures of market competition have inevitably resulted in the growth of a 
small class of wealthy farmers alongside tens of millions of poor peasants. 
As many as 130 million rural Chinese have migrated to the eastern and 
southern coastal areas in search of work. Education and medical care are no 
longer free. The workers no longer have their "iron rice bowl" which 
guaranteed a job and benefits for workers in state-owned enterprises. 
Unemployment has reached massive proportions as industries are closed or 
privatized. The number of women working as prostitutes has skyrocketed, and 
female infanticide is resurgent in the countryside.
The Beijing bureaucracy essentially acts as a transmission belt for the 
pressures of the imperialist-dominated world market on the workers state. 
The brittle, contradictory character of this bureaucratic caste can be seen 
in the fact that, in the face of working-class unrest, the current regime 
has often reversed some of its economic "reforms" and occasionally put some 
of its own on trial for corruption, sometimes with a penalty of execution. 
In the face of massive peasant protests and riots over the last year, the 
recent National People's Congress announced that within two years all 
children of peasants in rural areas will receive a free primary education. 
Earlier this year, the bureaucrats promised that by year's end the basic 
agricultural tax in most of China's provinces will be eliminated.
In maintaining that China continues to be a deformed workers state, we do 
not deny or minimize the growing social weight in China of both the newly 
fledged capitalist entrepreneurs on the mainland and the old, established 
offshore Chinese bourgeoisie in Taiwan and Hong Kong. The fostering of 
capitalist-restorationist forces within the framework of a deformed workers 
state has already gone much further in China than in Tito's Yugoslavia or 
Gorbachev's Soviet Union. The Chinese bureaucracy itself is a major 
participant in joint ventures with foreign capitalists. It continues to 
invite overseas Chinese and foreign capital into the country, opening up 
entire areas to capitalist exploitation. The economic policies of the 
Beijing Stalinist regime that encourage capitalist enterprise (and the 
corresponding rightward shifts in the bureaucracy's formal ideological 
posture) have increasingly strengthened those social forces that will give 
rise to imperialist-backed, openly counterrevolutionary factions and parties 
when the CCP [Chinese Communist Party] can no longer maintain its present 
monopoly of political power. This can be clearly seen today in the 
capitalist enclave of Hong Kong, the one part of the PRC [People's Republic 
of China] where bourgeois oppositional parties exist. (See "Hong Kong: 
Expropriate the Bourgeoisie!" WV No. 814, 21 November 2003.)
Nonetheless, the political power of the main body of the Beijing Stalinist 
bureaucracy continues to be based on the core collectivized elements of 
China's economy. Furthermore, the economic policies of the CCP regime are 
still constrained by fear of social—especially working-class—unrest that 
could topple it. This came close to happening in 1989, when student-centered 
protests for political liberalization and against corruption triggered a 
spontaneous workers revolt that was suppressed with great bloodshed by 
regime-loyal army units.
The social revolution persists in property relations and in the 
consciousness of the toiling masses. Trotskyists give unconditional military 
defense to a deformed or degenerated workers state in order to prevent its 
military defeat by a capitalist power because these states are based on 
collectivized property. Simultaneously, we call for a proletarian political 
revolution that would oust the reactionary bureaucracy whose policies 
undermine the defense of the workers state and which has brought China close 
to the brink of internal capitalist counterrevolution. In place of 
bureaucratic autocracy, soviets (workers councils) must be created as the 
direct organizations of the workers, soldiers and peasants, the vehicles for 
them to organize and administer their own state in all aspects.
This is the most fundamental historic task of the Chinese proletariat. What 
is needed to realize this is to build a Leninist-Trotskyist party. This 
party would link the struggle of the workers in the state-owned enterprises 
with those in the private enterprises, with the struggles of the migrant 
workers, the poor peasants and women, and it would fight against Han 
chauvinism. The International Communist League is committed to bringing this 
Marxist program to Chinese workers and rural toilers.
Kakehashi vs. Trotsky
For some ten years, the Kakehashi group publicly debated the question of 
China in its newspaper: Is it still some kind of workers state, or has 
capitalism been restored? While members of Kakehashi may not have agreed on 
the class nature of China, in action their party sided with 
capitalist-restorationist forces—from the pro-capitalist China Democratic 
Party to the CIA-backed Dalai Lama. In 1999 they organized a march on the 
streets of Tokyo protesting the visit of former Chinese premier Jiang Zemin 
to Japan, a protest that could only have appealed to Japanese anti-Chinese 
chauvinists. Their debate was preceded and guided by a formal rejection of 
their own program—which they considered Trotskyist—and a negation of the 
Marxist conception of a class society:
"With the destruction of the Soviet Union and East European bloc, there has 
been a fundamental change of circumstances in the structure of the 
international revolutionary movement, and our program also needs to be 
changed.... Thinking in terms of fixed 'classes'... must be decisively 
considered as a past methodology."
—Sekai Kakumei, 30 October 1995 (Sekai Kakumei was Kakehashi's previous 
In the summer of 2004, Shin Jidai Sha, the publishing house for Kakehashi, 
published a pamphlet titled, "Boiling 'Capitalist China'; Will It Have a 
Successful Soft Landing on Its Way to Becoming a Normal 'Imperialist 
Power'?" The basic premise of this pamphlet is the following: The Trotskyist 
analysis of the Stalinist bureaucracy is outdated and the period of the 
"anti-bureaucratic political revolution is over." Following discussions with 
their Hong Kong comrades, the Pioneers, Kakehashi became convinced that 
under the rule of the Communist Party, the Chinese bureaucracy had restored 
capitalism during the 1990s, a process that, according to them, took a 
while. Workers in China noticed the danger of capitalist restoration in the 
mid '90s. But by that time, the workers had lost control of production and 
therefore were unable to put up any resistance, i.e., it was too late. In 
addition, Kakehashi cites three main reasons for capitalist 
counterrevolution: During the 1990s, the bureaucracy began the process of 
"primitive accumulation of capital"; capitalists were allowed to become 
members of the Communist Party; and the constitution was amended to 
guarantee protection of private property. Today, according to Kakehashi, the 
Chinese Communist Party is a capitalistic peoples political party, and what 
is now required in China is a socialist revolution.
Later on we will explain why Kakehashi's position has nothing in common with 
Marxism and is in fact deeply social-democratic. For now, we will note that 
two of the reasons they mention for China becoming capitalist in the last 
century actually occurred during this century. It was in 2002 that the 
Communist Party officially recognized that some of their members had been 
capitalists for many years. And last year, at the March 2004 party 
conference, the constitution was amended to recognize private property.
It is not this or that resolution that the bureaucracy passes, although 
these are dangerous developments, that determines where China is going, but 
social conflict. To premise one's conclusion about the class character of 
the Chinese deformed workers state exclusively on the actions of the 
bureaucracy relegates the working class to merely a passive object of either 
the bureaucracy or imperialism. What Kakehashi has done is written off the 
Chinese proletariat as a contender in the battle against capitalist 
But Kakehashi and the Pioneers actually thought it was the Chinese Stalinist 
bureaucracy that would bring socialism to China. Under the subhead, 
"Abandonment of the Fight Toward Socialism," a representative of the 
Pioneers wrote, "In 1979, after Deng came to power, the stage of the 
'planned economy' went to 'market socialist economy' (read: changed to 
'capitalism'). The socialist outlook was completely abandoned" (Kakehashi, 
21 March). But the bureaucracy, from Mao to Hu Jintao, never did and does 
not now have a "socialist outlook." Up until 1946, Mao was still seeking a 
coalition government with the bourgeois-nationalist KMT [Guomindang] regime 
of Chiang Kai-shek. After the revolution, Mao sought to transform 
impoverished China into a "socialist" world power through economic autarky 
within the framework of a bureaucratically centralized economy, based on the 
anti-Marxist dogma of "socialism in one country." Contained in this 
nationalist perspective were the seeds of the bureaucracy's implementation 
of "market reforms" under Deng, called "socialism with Chinese 
characteristics." It was under Mao that China consummated an alliance with 
U.S. imperialism during the Vietnam War and betrayed revolutionary struggles 
from Indonesia to Africa. It contributed to the victory of capitalist 
counterrevolution in the Soviet Union by supporting, for example, the 
CIA-backed Afghan mujahedin against the Soviet Red Army. The bureaucracy 
continues to preserve state property, not out of a subjective identification 
with socialism but, as Trotsky wrote, "only to the extent that it fears the 
How is a gradual, decade-long, bourgeois counterrevolution possible? Real 
Trotskyists would not have let this historic defeat occur without fighting 
against it—or even noticing it until years later. Trotsky did not live to 
see capitalism restored in the Soviet Union, and his prognosis of how that 
would occur—through civil war—did not happen. But Kakehashi members have 
lived through the counterrevolutionary destruction of the Soviet Union and 
East Europe and know there was nothing gradual about those.
The unprecedented economic and social implosion taking place in the former 
Soviet Union and East Europe is the real measure of just how historically 
progressive the planned, collectivized economy really was, despite 
bureaucratic deformities. Trotsky's prediction of what capitalist 
restoration would look like was correct. The laws of capitalism have 
resulted in total economic collapse and all-sided nationalist fratricide. 
Life expectancy has fallen dramatically, with the lifespan of an average 
Russian male dropping to 57½ years. In fact, the number of deaths exceeded 
the number of births during the first six years following counterrevolution 
in the Soviet Union. Malnutrition has become the norm among schoolchildren. 
The infrastructures of production, technology, science, transportation, 
heating and sewage have disintegrated. The gross domestic product fell more 
than 80 percent from 1991 to 1997.
That is what capitalist counterrevolution looks like. The former Soviet 
Union was a global industrial and military power. And because China is so 
much behind where the Soviet Union was economically, capitalist restoration 
in China would be much worse. It would lead to widespread impoverishment of 
the population, and bring not only economic collapse, but the danger of the 
breakup of the country and bloody political chaos. In addition, because the 
Chinese economy is somewhat integrated into the world economy, workers 
around the world would be adversely affected. The current Japan-U.S. 
alliance against China could fracture, as each hungry imperialist beast 
competes for the spoils.
Capitalism Is a Brake on Further Development, Not an Accelerator
The Marxist revolutionary program is not based on moral repugnance against 
war, social oppression, class exploitation and inequality. It is based on 
the objective fact that capitalism arrests the development of the productive 
forces and must be superseded by a superior economic system, which will 
eliminate the basis for all the evils which are inherent in capitalist 
Kakehashi locates counterrevolution in China during the same period when 
China has been experiencing its highest growth rate and has been convulsed 
by labor struggles and peasant unrest. In the past five years, from the 
northeast down the coast and into the heart of the country, workers have 
been protesting in defense of collectivized property, which they consider to 
be theirs. Only those who are completely blinded by their own defeatism 
could have missed this.
For the past two decades, China's economy has been growing at about 7 to 9 
percent a year, unmatched by even the main imperialist powers. Between 1998 
and 2001, government spending in China increased from 12 to 20 percent of 
the country's gross domestic product. The largest and fastest-growing 
component of government expenditure has been investment in infrastructure, 
which increased by 81 percent over these three years. Moreover, this has 
been happening at a time when the entire capitalist world has been pursuing 
fiscal austerity. China navigated successfully through the 1997-98 East 
Asian financial/economic crisis and then through a generalized world 
capitalist recession. If China is capitalist and its economy has been 
growing without cyclical contractions (which are inherent in capitalism), 
this would negate the fundamental Leninist understanding that we are living 
in the epoch of capitalist reaction and decay. If there exists today a 
capitalist system which ensures the rapid and steady growth of productive 
forces, this calls into question the necessity and progressive character of 
proletarian revolution in the capitalist countries and of working-class 
The CCP leadership officially describes China as a "socialist market 
economy." It is the "socialist" (i.e., collectivist) aspects that are 
responsible for the positive economic developments in China in recent years. 
And it is the market aspects of China's economy that are responsible for the 
negative developments—the ever-widening gap between rich and poor, the 
immiseration of a large and growing fraction of the populace, tens of 
millions of workers laid off from state-owned enterprises, the army of 
impoverished migrants in the cities who can no longer make a living in the 
In China today, it is the core collectivized elements of the economy which 
continue to be dominant, though not in a stable, coherent manner. In 2003, 
state-owned and partly state-owned enterprises (shareholding corporations) 
employed half of China's 750 million workers and accounted for 57 percent of 
the gross value of China's industrial output (McKinsey Quarterly, 2004). But 
this simple statistical figure obscures the strategic centrality of 
state-owned industry.
The private (including foreign-owned) sector consists for the most part of 
factories producing light manufactures by labor-intensive methods. Heavy 
industry, the high-tech sectors, and modern armaments production are 
overwhelmingly concentrated in state-owned enterprises. It is these 
enterprises that have enabled China to put a man in space. Far more 
importantly, it is state-owned industry that has enabled China to build an 
arsenal of nuclear weapons and long-range missiles to ward off the 
imperialists' threat of a nuclear first strike.
All major banks in China are state-owned. Almost the entirety of household 
savings—estimated at $1 trillion—is deposited in the four main state-owned 
commercial banks. Government control of the financial system has been key to 
maintaining and expanding production in state-owned industry and to the 
overall expansion of the state sector. Continued state ownership of the 
financial system has enabled the Beijing regime, up to now, to effectively 
(though not totally) control the flow of money-capital in and out of 
mainland China. China's currency is not freely convertible; it is not traded 
(legally) in international currency markets. The restricted convertibility 
of the yuan has kept China insulated from the volatile movements of 
short-term capital which periodically wreak havoc on the economies of Third 
World neocolonial countries from Latin America to East Asia. Furthermore, 
the Beijing regime has maintained an increasing undervaluation of the yuan 
(in "free market" terms), much to the displeasure of American, Japanese and 
European capitalists. It is precisely these core collectivist elements of 
China's economy which the forces of world imperialism want to eliminate and 
dismantle. Their ultimate goal is to reduce China to a giant sweatshop under 
neocolonial subjugation.
The main weapon available to a nationally isolated and relatively 
economically backward workers state against the intervention of cheaper 
goods is the state monopoly of foreign trade, i.e., the strict control of 
imports and exports by the government. The Beijing bureaucracy's abandonment 
of the strict state monopoly of foreign trade serves to facilitate 
imperialism's plans. Despite its rapid growth in recent years, the Chinese 
economy is backward relative to even the lesser capitalist-imperialist 
powers. While China's exports continue to increase at record levels, these 
largely consist of low-wage, low-value light manufacture and consumer goods 
like clothing, toys and household appliances. China's increase in gross 
industrial output between 1993 and 2002—from $480 billion to $1,300 
billion—has been nearly completely offset by the increase in its gross 
purchases of industrial products, i.e., machinery and capital equipment. The 
ultimate answer to China's economic backwardness and the only road to a 
socialist, i.e., classless, egalitarian society, lies in world socialist 
revolution and China's integration into an internationally planned economy.
"Primitive Accumulation of Capital"
According to Kakehashi, during the 1990s the bureaucrats who had become 
managers of privatized enterprises were pocketing the profits, getting rich 
from buying and selling stock, and also buying and selling the usage rights 
to agricultural land, and are laying off workers. In an attempt to give a 
Marxist veneer to their political appetites, Kakehashi describes this 
process as the "primitive accumulation of capital."
On a much smaller scale, the situation which Kakehashi describes is similar 
to that of the bureaucracy of several trade unions in Japan. Take for 
example Jichiro [civil servants union]. The misleaders of this 
one-million-strong trade union have been taking the dues money that their 
members pay every month and enriching themselves. They have set up 
"subsidiaries" of the union, whose profits do not go back into the trade 
union to be used to better the conditions of the members or to prepare for 
future class battles against the government. Some of the profits go into the 
pockets of the union bureaucracy. In addition, it is the bureaucracy which 
oversees the management of the subsidiaries, controls production, and lays 
off and fires the workers. Is Kakehashi now going to argue that Jichiro is a 
capitalist organization and not a real trade union; that this union, whose 
leadership is completely pro-capitalist, should not be defended against the 
What the bureaucrats in China are doing is certainly criminal from the 
standpoint of the workers, but it is not what Marx meant by "primitive 
accumulation of capital." Marx used the term, primitive accumulation of 
capital, to refer to the initial phase of capitalist development in West 
Europe when the massive economic surplus appropriated by the bourgeoisie did 
not yet derive from wage labor but rather from the peasantry and slave labor 
in the colonies. This wealth was then transformed into capital and used for 
the initial financing of European industrialization. (See Capital and 
Theories of Surplus Value.) To get a sense of what Marx meant by the 
primitive accumulation of capital, think about the 1873 Land Tax that was 
enacted during the early Meiji period. At that time, the Meiji leaders 
maintained an exceptionally high level of exploitation of the peasantry and 
channeled the resulting economic surplus into the rapid construction of an 
industrial-military complex.
Insofar as the economic surplus appropriated by the Chinese 
bureaucrat-turned-entrepreneur is used for his personal consumption or 
speculation, for example in real estate, this is the antithesis of the 
accumulation of capital. Rather it is the squandering of the existing 
productive wealth of society, a form of social parasitism. In China, over 
the past two decades a large fraction of state-owned industry—whether 
measured by number of enterprises, labor force or volume of production—has 
been privatized. Most small enterprises were simply sold off to individuals, 
typically the managers who had been running them. The larger enterprises, 
however, were "privatized" through a shareholding scheme. When, a decade or 
so ago, China opened its first stock market, much of the bourgeois media 
hailed this as proof that "communist" China had taken a decisive step on the 
road to capitalism. But what has actually happened?
Of the 1,253 companies listed on China's two main stock exchanges, in some 
cases the government holds a majority of shares, in others a substantial 
minority. But even the latter remain effectively government-controlled 
because the CCP has retained a monopoly of political power. According to the 
28 March Financial Times, "Only one-third of issued shares in listed 
companies form the free float for trading on the exchanges. The rest are 
mostly owned directly by the state or its companies.… Permission for initial 
public offerings is given first and foremost to state companies, leaving 
private enterprises without an easy funding route." There is no workers 
democracy in China—but neither is there shareholders' democracy. 
Shareholders in China's corporations do not have ownership rights in the 
capitalist sense. They have the right to income from their financial assets 
and they can sell their shares. But they cannot determine, or even 
influence, the management and corporate policies. These are determined by 
various and often conflicting political as well as economic pressures.
Capitalists in a Communist Party
Ever since the Deng regime introduced market-oriented economic "reforms" in 
the early 1980s, bourgeois opinion and some leftists have maintained that 
the Communist Party itself is gradually restoring capitalism in China while 
keeping a tight grip on political power. This position was widely and loudly 
trumpeted in 2002 when the 16th Congress of the CCP legitimized party 
membership for capitalist entrepreneurs. In fact, this Congress did not 
introduce a significant change in either the social composition of the CCP, 
which has 66 million members, or its functional ideology. According to an 
official survey, of China's two million private business owners, 600,000 are 
party members and have been for some time. The overwhelming majority of 
these were longtime CCP managerial cadre who took over the small state-owned 
enterprises they were running when these were privatized over the past 
several years.
Kakehashi claims that, "The Chinese Communist Party has officially become a 
capitalistic peoples political party, and under the one-party rule of the 
Communist Party, the Chinese state has officially become a bourgeois state." 
Many in the bureaucracy may aspire to a place in the ruling class of a 
capitalist China for themselves and their children. But this would require a 
social counterrevolution that destroys the workers state and creates a new 
bourgeois state. In East Europe and the Soviet Union, the bureaucracy as a 
caste did not transform itself into a capitalist class. It disintegrated, as 
did its political instruments, the ruling Communist parties. Various 
elements of the bureaucracy then regrouped into hostile political factions, 
and in many cases united with former anti-Communist "dissidents" whom they 
had previously suppressed. The new capitalist classes in East Europe and the 
former Soviet Union derive, with differing weight in different countries, 
from elements of the bureaucracy and also the intelligentsia, many of whom 
were not at all privileged, at least not economically. A capitalist 
counterrevolution in China would be accompanied by the collapse of Stalinist 
bonapartism and the political fracturing of the ruling Communist Party.
China's high rate of economic growth in recent years has produced a certain 
triumphalist mood among the CCP leadership and cadre and affiliated 
intelligentsia. One would certainly encounter a very different mood among 
the millions of workers laid off from state-owned enterprises, impoverished 
migrants from the countryside and poor peasants barely eking out a living 
toiling on tiny plots with rudimentary equipment. Hu and his cohorts are 
driven by delusions of grandeur exceeding the wildest imaginings of Chairman 
The present CCP leaders believe that they can modernize China, transforming 
it into a great world power—indeed, the global superpower of the 21st 
century—through ever-greater integration into the world capitalist economy. 
They truly believe they can control and manipulate Citibank, the Bank of 
Tokyo-Mitsubishi and the Deutsche Bank, to help build up China so that in a 
generation or two it will surpass the United States, Japan and Germany. 
Believing they are transforming China into a global superpower, they are 
actually clearing the path for returning China to the pre-revolutionary era 
of untrammeled imperialist subjugation.
Constitutional Amendments Cannot Change the Class Nature of a State
During the National People's Congress which took place in 2004, the 
bureaucrats amended the Chinese constitution to read: "Citizens' legally 
obtained private property shall not be violated." In an attempt to appease 
the populace, the Chinese government announced that the amendment would help 
prevent state officials from requisitioning private property and 
possessions. This amendment is surely a dangerous development, which a 
section of the workers in China understands. It was first proposed two years 
earlier at the 16th Congress and provoked something of a popular backlash.
This amendment is one reason that Kakehashi has decided that capitalism has 
been restored in China. In a disingenuous attempt to give itself an orthodox 
Trotskyist covering, Kakehashi even quotes from Trotsky's Revolution 
Betrayed. This was disingenuous because the chapter in Revolution Betrayed 
that immediately follows the quote they use deals with the 1936 Soviet 
constitution, which incorporated inheritance rights and the "guaranteeing of 
personal property." Trotsky understood that this new provision in the 
constitution would be used to benefit the bureaucrats and not the Soviet 
working masses:
"… a protection by law of the hut, cow and home-furnishings of the peasant, 
worker or clerical worker, also legalizes the town house of the bureaucrat, 
his summer home, his automobile and all the other objects of 'personal 
consumption and comfort,' appropriated by him on the basis of the 
'socialist' principle.… The bureaucrat's automobile will certainly be 
protected by the new fundamental law more effectively than the peasant's 
Trotsky went on to warn that, "By juridically reinforcing the absolutism of 
an 'extra class' bureaucracy, the new constitution creates the political 
premises for the birth of a new possessing class." But he added:
"If these as yet wholly new relations should solidify, become the norm and 
be legalized, whether with or without resistance from the workers, they 
would, in the long run, lead to a complete liquidation of the social 
conquests of the proletarian revolution. But to speak of that now is at 
least premature. The proletariat has not yet said its last word." [our 
The new amendment is a reflection of already existing reality. Private 
property has existed in China for years. Inheritance has existed since 1982. 
With this amendment, the bureaucracy is trying to ensure their privileges 
through the legal recognition of private property and the right to inherit. 
By late November 2003 there were 2.97 million private firms with capital 
exceeding $40.5 billion (Chinese embassy Web site). While this sounds like a 
lot of money, broken down it is $13,636 per company. Most workers in Japan 
have many times this amount in their postal retirement account.
Private property in China is as unstable as the bureaucracy itself. Private 
property and capitalists exist in China today to the extent the bureaucracy, 
acting under the pressures from imperialism on the one hand and the 
proletariat on the other, has allowed them to exist. Whether or not private 
property will be "inviolable" will not be decided by the constitution, but 
by social conflict. It is possible that "inviolable" private property would 
be violated by the bureaucracy under the impact of proletarian struggle 
and/or open counterrevolutionary threats from the imperialists and the 
bourgeoisie, or, more fundamentally, by an ascendant working class 
struggling for political power.
Those who argue that China is capitalist must reject one or another 
fundamental element of classic Marxism, usually the theory of the state. If 
a workers state, however deformed, can become a capitalist state through 
amending a constitution, which Kakehashi claims, then logically the reverse 
would also be true. That is, a capitalist state, such as Japan, could be 
transformed into a workers state by making changes to the Japanese 
constitution. This would mean that there is no need for a workers revolution 
that smashes the capitalist state apparatus—the police, courts, 
military—expropriates the zaibatsu and the other capitalists, and creates 
organs of workers rule. Therefore, there is no need for a party similar to 
the one that Lenin and Trotsky built which can lead the proletariat. This is 
the historic position of social democracy, in which Kakehashi can now be 
completely welcomed, now that it has thrown off its last pretenses to 
The Fight for Authentic Trotskyism
For the past four decades, the ICL has exposed the impostors who masquerade 
as Trotskyists as they abandon every principled position Trotsky stood for, 
above all the fight for an independent Trotskyist vanguard. Those who 
cheered the forces of anti-communist counterrevolution share the 
responsibility for selling out the gains for which the working class fought 
so hard. They have openly shown themselves for what they are: not 
Trotskyists, but traitors to the October Revolution.
Kakehashi's international organization, the United Secretariat [USec], 
supported every counterrevolutionary and nationalist movement in the USSR 
and East Europe. They hailed clerical-nationalist Polish Solidarnoúã as a 
model of a revolutionary working-class movement. The USec embraced the 
fascistic fringe of the Baltic nationalist movements, which sought 
capitalist restoration in the guise of "independence." A key battlefield of 
the capitalist counterrevolution was the struggle over East Germany [DDR] in 
1989-90. What was immediately posed was: either proletarian political 
revolution linking up with socialist revolution in West Germany, or 
capitalist reunification leading to an imperialist Fourth Reich. At this 
critical juncture, the USec was politically paralyzed. They were unable to 
agree whether capitalist reunification should be greeted with champagne or 
aspirin. In contrast, we fought with everything we had for proletarian 
political revolution in the DDR before it was too late, as the only way to 
defend the anti-capitalist conquests of the world proletariat from Berlin to 
Beijing. We lost, but the lessons of that struggle will be important for 
future struggles of the international proletariat.
The central event of the Russian counterrevolution was Yeltsin's August 1991 
"countercoup" against the inept "perestroika coup" by the Stalinist 
has-beens of the "Emergency Committee." Yeltsin's consolidation of his 
imperialist-backed power grab for "democracy," in the absence of mass 
resistance to the encroaching capitalist counterrevolution by a working 
class atomized and demoralized by decades of Stalinist rule, spelled the 
destruction of the Soviet degenerated workers state. On this question, the 
USec was united: they were first on the barricades of counterrevolution. The 
Japanese USec organization even went so far as to support the anti-Communist 
red purge directed against the Soviet Communist Party. "The CPSU should be 
disbanded and must be disbanded, which is the starting point for struggles 
to establishing minimum political democracy" (Sekai Kakumei, 16 September 
The fate of the People's Republic of China—proletarian political revolution 
or capitalist counterrevolution—is of huge importance to the working class 
throughout the world. The Chinese workers and peasants have waged many 
struggles in the past ten years, but they are atomized and without a 
leadership whose perspective is to overthrow the political rule of the 
bureaucrats and place power in the hands of the workers, soldiers and 
peasants soviets. In addition to coordinating and leading the spontaneous 
and localized workers struggles, an international Trotskyist party would 
link the fight against the corrupt bureaucracy in China with that of the 
North Korean and Vietnamese workers against their Stalinist rulers. Such a 
party would work in concert with their comrades in Japan fighting for a 
workers revolution, and together with the class struggles of the militant 
Philippine and South Korean workers against their capitalist rulers. Only 
through a socialist revolution in imperialist Japan will the basis be laid 
for the development of a socialist Asia.

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