However, Mr Xi’s plan is fundamentally misguided. One flaw is that it neglects consumers. Although their spending dwarfs property and the new productive forces, it accounts for just 37% of gdp, much lower than global norms. To restore confidence amid the property slump and thereby boost consumer spending requires stimulus. To induce consumers to save less requires better social security and health care, and reforms that open up public services to all urban migrants. Mr Xi’s reluctance to embrace this reflects his austere mindset. He detests the idea of bailing out speculative property firms or giving handouts to citizens. Young people should be less pampered and willing to “eat bitterness”, he said last year.
Welp. It's time for me to take down another fallacious liberal economic premise. Liberals these days seem to have quite the obsession with "consumer spending", and well, it partially makes sense. Capitalist economies operate at less than 100% of their full capacities. If they operated at full capacity, there would be no unemployment (unemployment is by definition, idle labor), which would cause the exploitation rate to fall to 0% (or in terms liberals might understand, cause the price of labor-power to reach equilibrium). In a capitalist economy, such a situation would pretty much instantly tank the economy.
In a developed capitalist economy, controlling consumer spending is important because it is one the few mechanisms that governments can use to control the operational capacity of the economy. If there is high consumer spending, then businesses are incentivized to produce closer to their full cap. It also stimulates investment. Obviously, the whole matter is a delicate balancing game, too low consumer spending = sluggish growth and high poverty, too much consumer spending = inflation and low profits for capitalists.
So far, this is relatively standard theory. What liberals don't understand however, and what is a key Marxist innovation in economics is that the size of the consumer sector is limited by the size of the means of production/capital goods sector. Given some size of the consumer sector, you will need a minimum size in production goods simply to supply the consumer goods sector. You cannot indefinitely increase the amount of bread your nation produces. To produce bread, you eventually need steel (to make bread making tools + tractors), gas (baking and tractors), fertilizer, etc. Any production goods you have left over after supplying the consumer goods sector can then be used to grow the economy. This is the primary reason why socialist societies, especially underdeveloped ones are able to grow at such ungodly speeds. They both utilize close to 100% of their labor, and put huge emphasis on production goods.
China here is in a relatively unique situation. Perhaps the late soviet economy faced this situation as well, but I am not so knowledgeable there. They have grown their productive sector to the point where they are essentially a developed economy. For developed economies, the productive goods sector matters even more than in underdeveloped economies. You can see what happens to developed economies that ignore heavy industry by looking at Europe and America. The whole economy decays. This is because developed economies have accumulated such great masses of capital, that simply maintaining it, and replenishing losses requires a large % of the workforce. This is why growth for developed economies slows down and becomes dependent on automation (i.e, producing more capital per worker). But even improvements in automation require dedicating a lot of workers to the production sector.
If China were to do what the liberals want it to do, China would become just like Europe or America. It would deindustrialise fairly rapidly and become dependent on other countries producing consumer goods. Expect, China is the one that Europe and America rely on for consumer goods, so China following the liberal recipe would not just tank the Chinese economy, but pretty much the whole world's economy. Worst case-scenario, liberalisation of China causes manufacturing output to halve (as it did in the USSR). The whole world then looses 15% of its manufacturing by value. But Chinese manufacturing is generally undervalued (deliberately, to boost exports), so in reality, more like 20% of world manufacturing is lost. Then you account for the interconnections of global supply chains and the situation looks very grim.
If China were to do what the liberals want it to do, China would become just like Europe or America. It would deindustrialise fairly rapidly and become dependent on other countries producing consumer goods.
This is one of the things that makes me wonder if they want China to adopt western models because it will destroy China's economy. I'm honestly wondering how much they believe their own bullshit and how much they say this stuff hoping to destroy China (so the western imperialists can give them another century of humiliation to keep the western economy afloat for a little longer).
Obviously, the caps know that liberalising china would allow then to yeild stupendous profits. But it may be unclear whether or not they are truly insane enough to do to china what they did to the USSR. The USSR economy was heavily insulated from the west. Dismantling it wasn't a problem. With China, they have got to know that it's best to slowly decouple from it before trying any drastic moves. Hopefully anyway.
This is an excellent explanation of the why the liberal understanding of economics is fallacious! You went into much more depth on this point than i did.
At a 0% unemployment, you cannot growth the capital stock by simply putting more workers into the economy. That would require population growth, which the developed economies rarely do. The only way to achieve growth of the capital stock in value terms is to redirect workers from luxury goods production to capital goods. The luxury goods sector is squeezed from the other end by ultra-high working class wages, which requires workers to be redirected into mass consumption production.
That is the long-term effect. The short term effect is that with 0% unemployment, you will pretty much instantly see unionisation come to dominate the economy.
Even if you don't see formal unionization, the simple fact that there isn't someone more desperate for work forces a pretty high minimum standard for working conditions. As things stand with the 5% unemployment rate western nations target, the floor on working conditions is what's legally required, as there will always be someone willing to accept work for those terms. With 0% unemployment the worker can more or less choose what terms they'll accept, with or without formalized collective labor power.
Welp. It's time for me to take down another fallacious liberal economic premise. Liberals these days seem to have quite the obsession with "consumer spending", and well, it partially makes sense. Capitalist economies operate at less than 100% of their full capacities. If they operated at full capacity, there would be no unemployment (unemployment is by definition, idle labor), which would cause the exploitation rate to fall to 0% (or in terms liberals might understand, cause the price of labor-power to reach equilibrium). In a capitalist economy, such a situation would pretty much instantly tank the economy.
In a developed capitalist economy, controlling consumer spending is important because it is one the few mechanisms that governments can use to control the operational capacity of the economy. If there is high consumer spending, then businesses are incentivized to produce closer to their full cap. It also stimulates investment. Obviously, the whole matter is a delicate balancing game, too low consumer spending = sluggish growth and high poverty, too much consumer spending = inflation and low profits for capitalists.
So far, this is relatively standard theory. What liberals don't understand however, and what is a key Marxist innovation in economics is that the size of the consumer sector is limited by the size of the means of production/capital goods sector. Given some size of the consumer sector, you will need a minimum size in production goods simply to supply the consumer goods sector. You cannot indefinitely increase the amount of bread your nation produces. To produce bread, you eventually need steel (to make bread making tools + tractors), gas (baking and tractors), fertilizer, etc. Any production goods you have left over after supplying the consumer goods sector can then be used to grow the economy. This is the primary reason why socialist societies, especially underdeveloped ones are able to grow at such ungodly speeds. They both utilize close to 100% of their labor, and put huge emphasis on production goods.
China here is in a relatively unique situation. Perhaps the late soviet economy faced this situation as well, but I am not so knowledgeable there. They have grown their productive sector to the point where they are essentially a developed economy. For developed economies, the productive goods sector matters even more than in underdeveloped economies. You can see what happens to developed economies that ignore heavy industry by looking at Europe and America. The whole economy decays. This is because developed economies have accumulated such great masses of capital, that simply maintaining it, and replenishing losses requires a large % of the workforce. This is why growth for developed economies slows down and becomes dependent on automation (i.e, producing more capital per worker). But even improvements in automation require dedicating a lot of workers to the production sector.
If China were to do what the liberals want it to do, China would become just like Europe or America. It would deindustrialise fairly rapidly and become dependent on other countries producing consumer goods. Expect, China is the one that Europe and America rely on for consumer goods, so China following the liberal recipe would not just tank the Chinese economy, but pretty much the whole world's economy. Worst case-scenario, liberalisation of China causes manufacturing output to halve (as it did in the USSR). The whole world then looses 15% of its manufacturing by value. But Chinese manufacturing is generally undervalued (deliberately, to boost exports), so in reality, more like 20% of world manufacturing is lost. Then you account for the interconnections of global supply chains and the situation looks very grim.
This is one of the things that makes me wonder if they want China to adopt western models because it will destroy China's economy. I'm honestly wondering how much they believe their own bullshit and how much they say this stuff hoping to destroy China (so the western imperialists can give them another century of humiliation to keep the western economy afloat for a little longer).
Obviously, the caps know that liberalising china would allow then to yeild stupendous profits. But it may be unclear whether or not they are truly insane enough to do to china what they did to the USSR. The USSR economy was heavily insulated from the west. Dismantling it wasn't a problem. With China, they have got to know that it's best to slowly decouple from it before trying any drastic moves. Hopefully anyway.
Hence why reform and opening up was a 4D chess move and learnt from the mistakes of the Soviet Union
This is an excellent explanation of the why the liberal understanding of economics is fallacious! You went into much more depth on this point than i did.
Damn, leftist wall of text lmao
Can you expand on this? Is it due to the increased bargaining power of the workers, or something else? Genuinely curious.
At a 0% unemployment, you cannot growth the capital stock by simply putting more workers into the economy. That would require population growth, which the developed economies rarely do. The only way to achieve growth of the capital stock in value terms is to redirect workers from luxury goods production to capital goods. The luxury goods sector is squeezed from the other end by ultra-high working class wages, which requires workers to be redirected into mass consumption production.
That is the long-term effect. The short term effect is that with 0% unemployment, you will pretty much instantly see unionisation come to dominate the economy.
Even if you don't see formal unionization, the simple fact that there isn't someone more desperate for work forces a pretty high minimum standard for working conditions. As things stand with the 5% unemployment rate western nations target, the floor on working conditions is what's legally required, as there will always be someone willing to accept work for those terms. With 0% unemployment the worker can more or less choose what terms they'll accept, with or without formalized collective labor power.