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Workers Vanguard No. 874

4 August 2006

Defend Chinese Deformed Workers State!

For Proletarian Political Revolution!

China's "Market Reforms": A Trotskyist Analysis

Part One

Two years ago, two left-wing American intellectuals, Martin Hart-Landsberg and Paul Burkett, produced a harsh and sweeping condemnation of the Chinese economy in the “reform” era from a purportedly Marxist perspective. Their article, “China and Socialism: Market Reforms and Class Struggle,” was originally published in Monthly Review (July-August 2004) and subsequently brought out in book form. In particular, the authors target those “progressive” intellectuals who regard China as a successful alternative model of economic development to the neoliberal “structural reforms” dictated by U.S. imperialism and the International Monetary Fund that have devastated so many underdeveloped countries. Hart-Landsberg and Burkett write: “Not only do we disagree with those progressives who view China as a development model (whether socialist or not), we think the process by which they arrived at this position highlights an even more serious problem: the progressive community’s general rejection of Marxism.”

Among the “progressives” with whom they disagree is Victor Lippit, who with his cothinkers at Critical Asian Studies (37:3 [2005]) responded with some critical studies of “China and Socialism.” Hart-Landsberg and Burkett in turn wrote a lengthy rejoinder (Critical Asian Studies 37:4 [2005]).

A political liberal and longtime student of the Chinese economy, Lippit is basically a supporter of China’s program of market-oriented “reforms,” albeit with some left criticisms. For example, he decries the deterioration of the public health system, especially in the countryside, as “shameful.” He would have the Beijing regime expend far more resources on health care, education and improving the conditions of the rural populace, even at the cost of a short-term reduction in economic growth as conventionally measured. Nonetheless, Lippit is definitely bullish on China, citing a study by the Wall Street investment bank Goldman Sachs projecting that China’s gross domestic product will surpass that of the United States by 2041.

For all their differences, Hart-Landsberg and Burkett on the one side and Lippit on the other share certain basic premises. Both wrongly maintain that the market-oriented “reforms” have resulted in the restoration of capitalism in China and, moreover, that this was inevitable. For Lippit, the modernization of China requires its continuing and ever-greater integration into the world capitalist system. He claims that “capitalism will have to play out its historic role before it can be supplanted,” adding that “Welfare-state capitalism of the continental European variety may be the best that can be done at present.” For Hart-Landsberg and Burkett, a socialist program in China or elsewhere—which they identify with the confusionist formula of a “worker-community-centered economy”—must have little or no commerce with the corrupting evils of the world capitalist market.

Most crucially, both reject the possibility of proletarian socialist revolutions in the advanced capitalist countries in any historically meaningful time period. Lippit does so explicitly, Hart-Landsberg and Burkett implicitly. Hence the Trotskyist perspective of the modernization of China in the context of a globally integrated and planned socialist economy lies outside the conceptual boundaries of both protagonists. Yet this framework, the antithesis of the nationalist Maoist-Stalinist dogma of building “socialism in one country,” is the only road to the all-round liberation of China’s worker and peasant masses.

China Today: Myths and Realities

The ruling Chinese Communist Party (CCP) under Deng Xiaoping introduced its program of market-oriented reforms a few years after the death of Mao Zedong in 1976. This included opening China to, and subsequently attracting, an enormous volume of direct capital investment from Western and Japanese corporations and the offshore Chinese bourgeoisie, concentrated in manufacturing. Mainstream bourgeois ideologues have pointed to China’s impressive economic and especially industrial growth as proof positive of the superiority of a market-driven system over a centrally planned, collectivized economy (derogatively called a socialist “command economy”). For his part, Lippit is representative of a layer of left-of-center intellectuals who hold up China as a prime example of a successful anti-neoliberal economic strategy, one based on a significant level of state ownership and overall state direction of the economy.

This latter view has the merit of recognizing, in its own way, that the core elements of the Chinese economy, established following the overthrow of the capitalist system in the 1949 Revolution, remain collectivized. State-owned enterprises are dominant in the strategic industrial sectors, such as steel, non-ferrous metals, heavy machinery, telecommunications, electric power and oil extraction and refining. The nationalization of land has prevented the emergence of a class of large-scale agrarian capitalists socially dominating the countryside. The mass of economic surplus generated outside the foreign-owned sector is channeled into state-owned banks as well as the government treasury. Effective control of the financial system has to date enabled the Beijing regime to insulate China from the volatile movements of speculative money-capital that periodically wreak havoc with neocolonial capitalist countries from East Asia to Latin America.

It is now commonplace across the entire political and geographical spectrum, from spokesmen for the CCP regime to Wall Street analysts, to claim that China is far along the road to becoming a global economic “superpower” by the mid 21st century. This view ignores the economic vulnerabilities of China in its relations with the world capitalist market. It ignores the implacable hostility of the imperialist bourgeoisies, above all the American ruling class, to the People’s Republic of China, a bureaucratically deformed workers state issuing out of the 1949 Revolution. Further, it ignores the internal instability of Chinese society, which has seen a significant and growing level of social protest against the consequences of the CCP’s bureaucratic misrule.

In the past few years the economic strategy pursued by the CCP regime has been designed to run huge balance of trade surpluses with the United States which has led China to become the world’s largest holder of foreign-exchange reserves. This has generated increasing pressures within American ruling circles for anti-Chinese economic protectionism. In any event, the sheer size of the trade deficit with China cannot be long sustained. A major economic downturn in the U.S. and/or anti-import protectionist measures would be a severe blow to China’s industrial economy. Foreign-owned and joint operations and private Chinese companies, as well as some state-owned enterprises, whose production is geared to the export market, would be forced to sharply cut back output and lay off both industrial and white-collar workers. This would have a strongly depressive effect throughout the Chinese economy.

Recently China has begun to open its banks to partial foreign ownership. If the bankers of Wall Street, Frankfurt and Tokyo acquire a substantial degree of control over China’s financial sector, the economic effects are likely to be dire. Some large debt-ridden state-owned enterprises could be forced to cut output and payroll. There would even be a real danger of a sudden, massive outflow of money-capital, such as that which triggered the East Asian financial/economic crisis in the late 1990s.

According to conventional bourgeois public opinion, capitalism has already been restored in China or is rapidly and irreversibly being restored. However, as was the case in the former Soviet Union, the decisive arena in which a capitalist counterrevolution would have to triumph is at the political level, in the conquest of state power, not simply through a quantitative extension of the private sector, whether domestic or foreign. In their own way, the imperialist bourgeoisies, centrally the American ruling class, understand that very well. Hence the open support of the U.S. and British governments for the aggressively anti-Communist parties and forces in the capitalist enclave of Hong Kong, a former British colony that is the one part of the People’s Republic of China (besides Macao) where the CCP does not exercise a monopoly of political power and organization. Hence also the U.S. rulers’ harping on the need for “political liberalization” in China.

Aspiring to replay the counterrevolutionary destruction of the Soviet Union in 1991-92, the imperialists aim to promote an anti-Communist political opposition in China primarily based on the new class of capitalist entrepreneurs and those elements of the CCP officialdom and the managerial/professional/technocratic stratum closely tied to domestic and foreign capital.

At the same time, U.S. imperialism has been ratcheting up the military pressure on China, building bases in Central Asia, attempting to surround China with American military installations and concluding a pact last year with Japan to defend the capitalist bastion of Taiwan, whose bourgeoisie holds considerable investments in mainland China. The Pentagon is actively pursuing plans to neutralize China’s small nuclear arsenal in the event of an American nuclear first strike, a strategy openly proclaimed by the Bush gang in Washington. As Trotskyists, we stand for the unconditional military defense of China and the other remaining bureaucratically deformed workers states—North Korea, Vietnam and Cuba—against imperialist attack and capitalist counterrevolution. In particular, we support China and North Korea’s testing and possession of nuclear arms as a necessary deterrent against imperialist nuclear blackmail.

Despite and in part because of its rapid economic and especially industrial growth, China has become a seething cauldron of popular discontents. An enormous and strategically powerful industrial proletariat confronts a society of stark and increasing inequalities and inequities. As part of its market-oriented reforms, the Beijing Stalinist regime has starved public health care and primary education of financial resources when, more than ever before, such resources are available to meet the basic needs of Chinese working people. There have been widespread and continual worker protests against layoffs from state-owned enterprises, unpaid wages, pensions and benefits, and similar abuses. The countryside is rife with angry protests by peasants, frequently involving violent clashes with the police, against the seizure of land by local CCP officials engaged in real-estate speculation.

The ruling bureaucracy is clearly divided between elements who want the economic “reforms” to continue unabated, those who want more state intervention to check the ravages of marketization and thereby stifle discontent, and others who seek a return to a bureaucratically planned economy. At some point, likely when bourgeois elements in and around the bureaucracy move to eliminate CCP political power, the multiple explosive social tensions of Chinese society will shatter the political structure of the ruling bureaucratic caste. And when that happens the fate of the most populous country on earth will be starkly posed: either proletarian political revolution to open the road to socialism or a return to capitalist enslavement and imperialist subjugation.

We stand for a proletarian political revolution to sweep away the oppressive and parasitic Stalinist bureaucracy and replace it with a government based on democratically elected workers and peasants councils. Such a government, under the leadership of a Leninist-Trotskyist party, would re-establish a centrally planned and managed economy—including a state monopoly of foreign trade—administered not by the arbitrary “commandism” of a closed-in bureaucratic caste (which produced such disasters as Mao’s “Great Leap Forward” in the late 1950s) but by the widest proletarian democracy. It would expropriate the newly fledged class of Chinese capitalist entrepreneurs and renegotiate the terms of foreign investment in the interests of Chinese working people, insisting, for example, on working conditions at least at the same level as in the state sector. A revolutionary workers government in China would promote the voluntary collectivization of agriculture on the basis of large-scale mechanized and scientific farming, recognizing that this requires substantial material aid from successful workers revolutions in the more economically advanced countries.

A proletarian political revolution in China raising the banner of socialist internationalism would truly shake the world. It would shatter the “death of communism” ideological climate propagated by the imperialist ruling classes since the destruction of the Soviet Union. It would radicalize the proletariat of Japan, the industrial powerhouse and imperialist overlord of East Asia. It would spark a fight for a revolutionary reunification of Korea—through political revolution in the beleaguered North and socialist revolution in the capitalist South—and reverberate among the masses of South Asia, Indonesia and the Philippines, ground down by imperialist austerity. Only through the overthrow of capitalist class rule internationally, particularly in the imperialist centers of North America, West Europe and Japan, can the all-round modernization of China be achieved as part of a socialist Asia. It is to provide the necessary leadership for the proletariat in these struggles that the International Communist League seeks to reforge Trotsky’s Fourth International—the world party of socialist revolution.

Economic Development and the Communist Worldview

The differences between Hart-Landsberg and Burkett on the one hand and Lippit on the other are not primarily over an empirical assessment of the changing socioeconomic conditions in China during the past quarter century of the “reform” era. Certainly, they do have important differences in this regard—for example, over the quantitative extent to which poverty has been overcome. But what basically separates Hart-Landsberg and Burkett from Lippit is what might be termed a different hierarchy of values. The former elevate egalitarian and communalist values above the expansion of productive forces, disregarding that the latter is a necessary condition for liberating the mass of humanity from want and drudgery. Thus they argue in their rejoinder: “China’s successes according to mainstream development criteria (economic growth, FDI [foreign direct investment] inflows, and exports), far from creating conditions for actual or potential success on the human welfare front, might have instead undermined the conditions of human development for the majority of Chinese working people.”

No less than Lippit, or for that matter the proponents of neoliberalism, Hart-Landsberg and Burkett believe that capitalism in its present “globalized” form is driven to maximize economic growth as measured by the increase in goods and services. This is directly contrary to the Marxist understanding that the capitalist mode of production and the nation-state system, which are rooted in the drive for private accumulation of profit, block the progressive development of productive forces on a global scale. A case in point is the profound and increasing impoverishment of the masses of semicolonial Africa, Latin America and parts of Asia. Writing in the early 1930s, in the context of a world economic depression and resurgent interimperialist rivalries that would soon lead to World War II, Leon Trotsky explained:

“Capitalism has outlived itself as a world system. It has ceased to fulfill its essential mission, the increase of human power and human wealth. Humanity cannot stand still at the level which it has reached. Only a powerful increase in productive forces and a sound, planned, that is, socialist organization of production and distribution can assure humanity—all humanity—of a decent standard of life and at the same time give it the precious feeling of freedom with respect to its own economy. Freedom in two senses—first of all, man will no longer be compelled to devote the greater part of his life to physical labor. Second, he will no longer be dependent on the laws of the market….

“Technology liberated man from the tyranny of the old elements—earth, water, fire, and air—only to subject him to its own tyranny. Man ceased to be a slave to nature, to become a slave to the machine, and, still worse, a slave to supply and demand. The present world crisis testifies in especially tragic fashion how man, who dives to the bottom of the ocean, who rises up to the stratosphere, who converses on invisible waves with the antipodes, how this proud and daring ruler of nature remains a slave to the blind forces of his own economy. The historical task of our epoch consists in replacing the uncontrolled play of the market by reasonable planning, in disciplining the forces of production, compelling them to work together in harmony and obediently serve the needs of mankind. Only on this new social basis will man be able to stretch his weary limbs and—every man and every woman, not only a selected few—become a full citizen in the realm of thought.”

—“In Defense of the Russian Revolution” (1932), reprinted in Leon Trotsky Speaks (1972)

This genuinely Marxist vision of the future is completely alien to the thinking of Hart-Landsberg and Burkett.

Anarcho-Populist Nostrums...

What Hart-Landsberg and Burkett counterpose to neoliberalism is the notion of a “worker-community-centered economy.” The term as well as the concept are totally foreign to Marxism. “Community” is a conventional bourgeois term that serves to obscure the class divisions and conflicts of interest in society. Applied in particular to China, the notion of a “worker-community-centered economy” obscures the class difference between workers and peasants. The latter is a petty-bourgeois stratum whose income is derived from the ownership and sale of commodities. Peasants have a material interest in high prices for the foodstuffs and other agricultural produce that they sell relative to the price of the manufactured goods that they buy both for production purposes (e.g., chemical fertilizer, farm equipment) and for personal consumption. Moreover, the interest of peasants in high prices for foodstuffs is not eliminated by the transformation of family farms into agricultural collectives. The income of the collective’s members is still largely dependent on the prices received for their produce, whether from a government procurement agency or on the private market.

Despite their professed Marxism, Hart-Landsberg and Burkett’s outlook amounts to a form of anarcho-populism. Their notion of a “worker-community-centered economy” has an affinity with the classic program of a federation of politically autonomous and economically largely self-sufficient communes associated with the 19th-century anarchist adventurer Mikhail Bakunin. This can be seen by the nature of their criticism of the Chinese economy during the Mao era. They maintain that over-centralization of the economy was inefficient and, more importantly, implicitly identify a centrally planned economy with authoritarian political rule:

“Economic planning had become overly centralized and, as the economy grew more complex, unable to effectively and efficiently respond to people’s needs....
“There was a critical need to build on the strengths of China’s past achievements while empowering workers and peasants to create new structures of decision making and planning. Among other things, this implied a restructuring and decentralization of the economy and state decision making to enhance the direct control of the associated producers over the conditions and products of their labor.”

Hart-Landsberg and Burkett condemn the increasing inequalities generated by the market-oriented “reform” program. However, the achievement of a uniform level of wages and benefits across different enterprises, industries and regions necessarily requires a centrally administered economy. Only such a system is capable of redistributing economic resources from more productive enterprises, industries and regions to less productive ones.

In the roughly 150 pages of “China and Socialism” and the rejoinder to Lippit et al., Hart-Landsberg and Burkett do not explain how a “worker-community-centered economy” would operate in practice. For the most part they use the formula as a mantra to ward off the evils of neoliberalism. At one point they give as a hypothetical example “the creation of a national healthcare system,” explaining that this:

“would require developing a construction industry to build clinics and hospitals, a drug industry to treat illnesses, a machine-tool industry to make equipment, a software industry for record keeping, an educational system to train doctors and nurses, etc., all shaped by the developing needs and capabilities of the people on local, national, and regional levels.”

Nowhere do they indicate the political institutions and structural economic mechanisms necessary to achieve this laudable goal. How would the fraction of total available economic resources expended on the health care system be determined as against other needs, such as investment in industrial expansion and infrastructure, military defense, education, pensions, etc.? The coordination of different economic activities (e.g., construction, medical equipment, computer software) to develop a health care system would require centralized planning and administration. Such a system is entirely compatible with the active democratic participation of workers at the point of production, for example, advising on the best use of technology, establishing and enforcing safety standards, maintaining labor discipline and the like. The division of total economic resources among competing needs should be debated and decided at the highest level of a government based on proletarian democracy—i.e., the rule of workers and peasants councils. Proletarian democracy is essential for the rational operation of a planned economy.

...And Maoist-Stalinist Ideology

Lippit points out that the Chinese economy in the Mao era was institutionally modeled on that of the Soviet Union under Stalin and that “there wasn’t even a hint of worker control in either country.” Hart-Landsberg and Burkett do not dispute that. What they find attractive in pre-“reform” China are certain elements of late Maoist ideology, notably the rhetorical egalitarianism associated with the Cultural Revolution of 1966-76.

The grotesquely misnamed “Great Proletarian Cultural Revolution” was launched by Mao to purge the wing of the bureaucracy, led by Liu Shaoqi and Deng Xiaoping, that had led China during its recovery from the devastating results of the “Great Leap Forward” of the late 1950s. The latter was an insane adventure in economic autarky, exemplified by backyard steel furnaces, which ended in total collapse and widespread starvation. During the destructive frenzy of the Cultural Revolution, millions of students were mobilized as Red Guards, supposedly to fight against bureaucratism and so-called “capitalist roaders.” In January 1967, when workers in Shanghai organized a general strike to defend their standard of living, alongside a national railway strike, Mao sent the Red Guards to smash the strikes.

During the Cultural Revolution, material self-interest was denounced as a “bourgeois” attitude. “Building socialism” was defined as changing the social psychology of the masses such that they identified themselves with the collective well-being (“serving the people”). A well-publicized credo of a Maoist partisan at the time was: “I must remember Mao’s teachings to set myself high political standards and low living standards.”

Hart-Landsberg and Burkett do not subscribe to this kind of “socialist” asceticism. But they do divorce socialist consciousness from the overcoming of economic scarcity and the achievement of material abundance in a future communist society, in effect counterposing technological progress to the egalitarian development of mankind. In their reply to Lippit et al. they contend:

“Human development in the Marxist view does not simply get floated up on a sea of productive forces and consumer goods produced by capital, but rather occurs largely in and through the class struggle—understood (even while capitalism still rules, as well as after the establishment of the dictatorship of the proletariat) as a long struggle for the de-alienation of all the conditions of production.”

Significantly, they here identify raising the productive forces and increasing consumption levels with capitalist development. Unlike Hart-Landsberg and Burkett, Marxists do not counterpose class struggle to raising the productive forces of society. Quite the contrary. The ultimate goal of working-class struggle is to overthrow the capitalist mode of production and the bourgeois nation-state system, which limit the productive forces, and replace them with an internationally integrated and planned socialist economy. And the goal of the latter is to create a global communist civilization in which all members of society have access to material and cultural resources sufficient to fully realize their capacities.

It is, as they say, no accident that “China and Socialism” was first published in Monthly Review. This has long been the main journal of American left-wing intellectuals of Maoist persuasion or sympathies going back to the 1960s when its leading figure was Paul Sweezy. Sweezy asserted that “the experience of the Chinese Revolution...has shown that a low level of development of productive forces is not an insuperable obstacle to the socialist transformation of social relations” (Monthly Review, November 1974).

The whole framework for the present-day debate between Lippit and Hart-Landsberg/Burkett is fundamentally false: that the choice is either integration into the capitalist world market or one form or another of pseudo-egalitarian national economic self-sufficiency. For Mao, the doctrine of “self-reliance” in “building socialism” was a typical Stalinist expression of making a virtue out of necessity. Socialism, the lower stage of communism, presumes a classless, egalitarian society based on material abundance. The notion that socialism can be achieved in one country is profoundly anti-Marxist. Socialism demands an internationally planned economy in order to direct productive resources on a global scale. In reality, “socialism in one country” in China, as in the USSR of Stalin and his heirs, meant opposition to the perspective of workers revolution internationally and a general accommodation to world imperialism.

When China entered the Korean War in late 1950, the American imperialists and their allies like Japan imposed a trade embargo against China, prohibiting the export of a wide range of industrial products, especially technologically sophisticated capitalist equipment. This embargo was maintained for the next two decades. During the 1950s, the Soviet Union’s aid to and trade with China contributed to its rapid economic development—on a par with existing growth rates—particularly the construction of large-scale, modern industrial plants. However, as the rift between the two nationalistic bureaucracies in Beijing and Moscow deepened, the Kremlin leaders severed economic relations with China in the early 1960s. It was then that Mao and his ideologues began preaching the virtue of “self-reliance,” i.e., national economic autarky, as a basic principle in “building socialism.”

However, a few years later the international political climate changed radically when China entered into a strategic alliance with American imperialism against the Soviet degenerated workers state. This was signaled in 1972 when Mao embraced U.S. Commander in Chief Richard Nixon while American warplanes were bombing North Vietnam. Beijing’s alliance with Washington was sealed in blood by China’s invasion of Vietnam in 1979. In return, the imperialists opened their markets and sources of supply to China. In the last half decade of the Mao era, the value of China’s trade, mainly with the advanced capitalist countries, more than doubled, albeit from a very low base. However, the ideological posture of “self-reliance” was maintained.

Hart-Landsberg and Burkett denounce the strategy of export-led growth that China has pursued for the past few decades. To be sure, they insist that they do not oppose foreign trade as such but only foreign trade governed by the laws of capitalist profitability: “The problem faced by workers is not export production per se, but rather the absence of alternatives to profit-driven export activity—alternatives that serve the needs of human development” (emphasis in original). But China exists in a world dominated by capitalist corporations, banks and states; thus its exports are necessarily subject to the laws of the capitalist world market.

As revolutionary Marxists, we do not oppose as such China’s extensive economic relations with the capitalist world through trade and joint ventures with Western and Japanese corporations. A government based on workers and peasants councils in China, led by a Leninist-Trotskyist party, would seek to utilize the world market to accelerate economic development. But in doing so it would re-establish a state monopoly of foreign trade, while renegotiating the terms of foreign investment. More fundamentally, a revolutionary socialist government in China would actively promote proletarian revolutions internationally.

The real crime of the Chinese Stalinist bureaucracy—past and present—is that it has helped to perpetuate and indeed strengthen the capitalist-imperialist system on a global scale. In particular, China under both Mao and Deng was a strategically important component in the U.S.-led alliance against the Soviet Union during the last two decades of the Cold War. The Chinese Stalinists thus bear direct and no small measure of responsibility for the counterrevolutionary destruction of the USSR, a world-historic defeat for the international proletariat.

In the post-Soviet period, the CCP regime has continued to accommodate the interests and aspirations of American imperialism. Thus the government of Hu Jintao has endorsed Bush’s global “war on terror,” the political rationale for the U.S. invasion and occupation of Iraq and Afghanistan and the current military threats against Iran, the second-largest supplier of China’s oil imports. Beijing has collaborated with Washington and Tokyo in brokering “negotiations” aimed at stopping nuclear weapons development by North Korea. Any weakening of the defense of the North Korean deformed workers state against imperialist militarism will redound against China. While railing at China’s commercial relations with the capitalist world, Hart-Landsberg and Burkett make no mention of the real crimes of the Chinese Stalinist bureaucracy—from Mao to Deng to Hu Jintao—against the international proletariat. In utter contrast to the Beijing Stalinist bureaucrats past and present, among the very first acts undertaken by Lenin, Trotsky and the other Bolshevik leaders of the 1917 October Revolution in Russia was to forge the Communist International as the necessary instrument to lead proletarian revolutions against the rapacious capitalist system.



Workers Vanguard No. 874

WV 874

4 August 2006


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