Colonial politics and imperialism are not healthy, curable deviations of capitalism…they are the inevitable consequence of the very foundations of capitalism. Competition among individual entrepreneurs either to become ruined, or to ruin others; competition between individual countries places before each of them the alternative of their remaining behind, running the risk of [falling behind], or ruining and conquering other countries, thus elbowing their way to a place among the great powers – V.I. Lenin, “Imperialism and Socialism in Italy”
May 12, 2022
By Stephen Gowans
From The Wall Street Journal we learn that China’s President Xi Jinping has hammered home the need for tighter party control over the economy with a wider role for state enterprises. Under Xi, China’s Communist Party has tried to transition from ‘economics in command’ to ‘politics in command.’
But now “China’s economy is struggling, and its financial markets are suffering. Some economists expect growth to contract this quarter. Millions of graduates are struggling to find jobs.”
Premier Li Keqiang is “helping press Xi to dial back some measures that have contributed to China’s economic slowdown.”
“As a young man, Li pursued a doctorate in economics under a prominent Chinese economist known for advocating Deng Xiaoping’s market-reform agenda and privatizing state firms.”
“Under Mr. Li’s influence, Beijing recently eased a regulatory crackdown on private technology firms, loosened lending to property developers and home buyers, and acted to help some manufacturers”, including Tesla, controlled by Elon Musk, the world’s richest person, “resume production when much of China has been forced into lockdowns by Mr. Xi’s zero-Covid approach.”
As the Marxist sociologist Albert Szymanski once pointed out, communists, like Xi, who choose to operate within the capitalist system soon discover that state policy is structured by capitalism, not by their policy preferences. Decision-makers who defy capitalism’s imperatives find their actions precipitate crises. Humbled, they quickly back peddle.
In a Chinese idiom, economics, i.e., capitalism, is in charge.
I explore this issue in my new book The Killer’s Henchman: Capitalism and the Covid-19 Disaster.
“The political orientations of the people who hold high-level positions in the capitalist state are largely irrelevant. The logic of capitalism structures the policy boundaries within which policy- and decision-makers operate, forcing conservatives, liberals, social democrats, and even communists who elect to work within the capitalist system, to operate within the same narrow pro-capitalist policy space. The prosperity and stability of a capitalist society depends on the private owners of capital accumulating sufficient profits. If they cannot generate enough profit, they cease to invest, and economic activity grinds to a halt. To maintain stability, governments must pursue policies to support the profit-making activities of their business communities. If they choose not to, their only option is to mobilize popular support to bring the economy under public ownership and control, so that investment decisions can be transferred from private hands to the public sphere, from profit-making as its goal to satisfying public needs as its end. There is no middle ground, where working-class interests can be robustly and continually expanded within a capitalist framework at the expense of the capitalist class.”
Capitalism structures state policy, not only in the realm of domestic matters, but in foreign relations, as well. Communists who elect to operate within the capitalist system are constrained to compete with other capitalist states for markets, raw materials, spheres of investment, and strategic territory, vital to their investors and profit-accumulating enterprises. If they are to play the capitalist game, states can no more absent themselves from rivalry with other states— with potential to escalate to war—than a private firm can absent itself from rivalry with its competition.
As two Bolsheviks wrote in their ABC of Communism , each “producer wants to entice away the others’ customers, to corner the market. This struggle assumes various forms: it begins with the competition between two factory owners; it ends in the world, wherein capitalist States wrestle with one another for the world market.” And in the struggle of capitalist states for the world market—in arms, oil and natural gas, rare earths, vaccines, robotics, supercomputers, AI, autonomous vehicles, 5G, and other commodities—lies the potential for war.
There is no doubt that Beijing has chosen to play the capitalist game. It is the centerpiece of its development project. There is, therefore, no option for China to excuse itself from imperialism. If it is to develop along capitalist lines, it must behave as a capitalist state, including by vying with other states for capitalist advantage around the world and indulging billionaires like Elon Musk and Apple’s Tim Cook, capitalists who have grown immensely wealthy by exploiting cheap Chinese labor.
That China’s capitalist development project is under the command of communists, neither negates the reality that the project is one of integration into a world capitalist system based on exploitation, or that, as Xi is finding out, politics in command can be checked by capitalism in command.
As political science professor Minxin Pei told The Wall Street Journal, Xi may be a “leftist deep down, but he has to make tactical compromises over the economy.” That is, the world capitalist economy.
In sum, despite the Communist Party being nominally in charge, and the president being a leftist “deep-down,” China is integrated into the world capitalist economy as a major, if not the major player, by the choice of China’s Communist Party rulers. State policies are not structured by communists seeking to end the exploitation of one human by another, but by the imperatives of the capitalist system Chinese communists have consciously embraced.
The idea that China is socialist is as far-fetched as the idea the moon is made of cheese.
This doesn't mean anything. Indonesia, Argentina and Malaysia have similar commanding heights over the SOE which continued to be weakened. This is not similar to the NEP at all. You also don't point out the SOR reforms that occurred under Deng where SOE are given autonomy and its efficiency is measured by how profitable they are. The state can exercise control over the SOE is because profits are high. When the next crisis comes, I don't see a way out of for China, I've not been assured that China is not following the world market and can be immune to capitalist crisis, a rude awakening is trembling below.
Indonesia, Argentina, and Malaysia lacked the degree of public control over the commanding heights of the economy that China or even the NEP-era Soviet Union had with their effective state monopolies over a number of major industries. The US-China Economic and Security Review Commission found that the contribution of state-owned enterprises, urban collectives, publicly-owned township and village enterprises, and other CPC controlled entities (both direct and indirect) accounted for almost 50% of GDP (state-owned enterprises/directly controlled enterprises accounted for about 40%). No capitalist country has the level of public control of banking that China has, which is dominated by state-owned banks with deposit and lending policies being directed by the government. A study on public sector investment and growth showed that China had a stock of public sector assets worth about 150% of annual GDP. Every major capitalist economy other than Japan had less than 50% of GDP in public assets. Also, there are nearly three times as much stock of public productive assets to private capitalist sector assets in China. In the US and the UK, public assets are less than 50% of private assets. In India and Japan, the ratio of public to private assets is no more than 75%.
State-owned enterprises in the Soviet Union under the NEP also operated on a profit basis and were given more autonomy in management compared to the old system of War Communism (the NEP was a significant influence in guiding the Chinese market reforms for Deng). Economic reforms in the Soviet Union and East Germany during the 1960s also introduced and emphasized profitability as a key indicator of enterprise success and efficiency as well as providing more autonomy for enterprise managers.
A recognized major role and benefit of the state-owned enterprises in China is that they act as a buffer against internal shocks and external threats while stabilizing economic growth during downturns through massive investment and promoting technological progress. With a robust state-owned sector, China was able to fare significantly better than much of the major capitalist economies during the Great Recession and the pandemic. The Chinese economy was also able to bounce back well from the stock market turbulence from 2015 much to the chagrin of the many western analysts who were predicting a Chinese economic catastrophe then.