列寧與市場經濟

不破哲三
日共中央主席

2002 年8月27日，日共中央主席不破哲三應邀在我院做了以《列寧與市場經濟》為題的講演。講演共分9個部分:(1)列寧是共產主義者當中第一個向市場經濟與社會主義問題挑戰的人。(2)十月革命勝利之初列寧曾否定市場經濟。(3)「新經濟政策」是對改善與農民之間關係問題的探討與決策。(4)確立「通過市場經濟走向社會主義」的路線。(5)列寧去世後5年，上述路線中斷。(6)「通過市場經濟走向社會主義」這條道路至今無人走通。(7)「通過市場經濟走向社會主義」所需之條件。(8)市場經濟的前景。(9)「通過市場經濟走向社會主義」的道路具有世界性的普遍意義。

不破首先強調，之所以選擇這個講演題目，是因為從廣義上講這是中國和日本都要共同面對的課題。10年前，中國共產黨的代表大會確立了實行「社會主義市場經濟」這一方針，並探討通過市場經濟走向新社會的道路。目前，日本雖然正處在資本主義市場經濟階段，但日本共產黨渴望將來經過一系列的階段後日本也能進入社會主義社會。而走向社會主義當然是通過市場經濟或計劃經濟與市場經濟相結合這條道路。「這是世界史的新發展，對於科學社會主義的理論與實踐來說這也是個新問題」。

馬克思與恩格斯是科學社會主義的創始人，但作為現實中的社會主義建設問題，他們無法涉及。即使是作為理論上的有關市場經濟與社會主義之間關係的問題他們也未能真正地展開研究。所以，列寧成為共產主義者當中第一個向「市場經濟與社會主義」問題挑戰的人。但列寧也是經過一百八十度的大轉彎之後才完成了自己的新思考。

俄國社會主義革命勝利之初，在經濟建設中社會主義與市場經濟不能並存是作為一條原則而存在的，列寧對此也深信不疑。列寧眼中的共產主義經濟就是:國營工廠生產工業製品；農民生產糧食並將剩餘的糧食賣給國家，國家再分配給國民。「市場經濟」、「買賣自由」被當作反革命口號。而共產黨的首要任務是清除農民頭腦中的「市場經濟」觀念。然而，事實上這項任務的完成是非常艱難的。因此，列寧晚年將社會主義與市場經濟作為一個重大課題來加以研究，並完成了從「市場經濟否定論」到「通過市場經濟走向社會主義」的認識上的轉變。同時，制定了一條相關的新路線。

蘇聯的「戰時共產主義」政策由於農民的反對，其實施截止到1921年初。為了鞏固社會主義政權，改善工人與農民之間的關係迫在眉睫。從1921年3月開始，蘇聯實行了「新經濟政策」。最初，採用了將工業品與農產品進行「物物交換」的方式。經過半年的摸索，同年10月蘇共得出結論:從正面認可市場經濟。但這個 「不愉快的課題」立即遭到黨內一部分人的反對。其理由是「我們在監獄裡沒有學過做買賣」。對此，列寧批評說:「迴避害怕這個『不愉快的課題』對於革命家來說都是不允許的」。

可以說，研究市場經濟是出於要改善與農民之間的關係這一考慮。所謂「通過市場經濟走向社會主義」的方針，其要點為:１以市場經濟為舞台，發展社會主義經濟成分，使之在與資本主義競爭中立於不敗之地。２在一定的範圍內認可私人資本與外國資本。３確保社會主義經濟成分「居高臨下」的主導地位。４為提高社會主義經濟成分的競爭力，必須徹底學習和吸收資本主義的先進經濟。５在將來實行工農協同合作時，絕對禁止自上而來的強制性命令。

在 「通過市場經濟走向社會主義」的方針及「新經濟政策」確立僅1年零5個月後的1923年3月，列寧病倒並於1924年1月去世。5年後，斯大林強行實施 「農業集團化」，事實上宣告了「新經濟政策」的終結。此後的蘇聯再不曾執行過「通過市場經濟走向社會主義」的方針。到了戈爾巴喬夫時代才提出「導入市場經濟」問題。然而，在過去的60年中，蘇聯社會已發生了體制性轉變，這種新體制既不是社會主義也不是走向社會主義方向。

從這個意義上講，中國、越南現在所走的「通過市場經濟走向社會主義」的道路在世界史上是沒有先例的。它將成為「推動21世紀世界前進的動力」。但對這條道路的前景還有很多理論問題有待研究。如，(1)「把市場經濟作為通向社會主義的道路，其成功需要哪些條件?」；(2)「作為未來的課題，如果計劃經濟與市場經濟能夠結合併成功地實現了社會主義，其後，市場經濟該做何處理。消亡還是保留?如何保留，應是什麼時間、什麼範圍內保留?」等等。

在回答第1個問題時，不破指出，列寧在談到「通過市場經濟走向社會主義」時強調了如下3點:１「決不輸給資本主義」。列寧首先充分地分析了市場條件下社會經濟中各種成分之間的關係。如，社會主義經濟、國家資本主義經濟、私人資本主義經濟、小商品生產經濟等經濟成分之間的相互協作與競爭關係，並得出結論說， 「通過市場經濟走向社會主義」的道路不是一條退回到資本主義的道路，而是一條走向社會主義的道路。列寧曾提出兩個響亮的口號。「成為歐洲區的能做買賣的一流商人」、「在與資本主義的競爭中考驗我們國有企業的社會主義經濟成分」。在「決不輸給資本主義」的思想前提下，列寧並非只強調經濟效益，相反，更關注環境與公害問題，強調發揮社會主義的優越性。２要抓住社會經濟的要害部門，使之成為社會主義經濟成分。列寧使用了一個軍事術語「俯瞰高地」來形容社會主義經濟成分應處於「居高臨下」的地位。３用社會保障制度來抑制市場經濟帶來的負面影響。晚年，列寧特別強調提高全體國民的文化水平。

在回答第2個問題時，不破指出，準確地講，馬克思不曾談到實現了社會主義之後，市場經濟應做何處理這個課題。但馬克思在《資本論》中說過:「即使到了共產主義社會也存在著價值規律」。那麼，如果市場經濟不存在了，在未來的共產主義社會就需要有另一種「結構」來取而代之，並作為繼續作用於生產者背後的「社會過程」來衡量勞動的「價值」。但這另一種「結構」是什麼，還是一個沒有解決的重大理論問題。馬克思把它留給了未來的革命家。用列寧的話來說就是「馬克思沒有束縛未來革命家的手腳」。不破還通過舉例來說明「尋找市場經濟替代物」的艱難。

最後，不破指出，「通過市場經濟走向社會主義」的道路，「在廣義上講具有世界性的普遍意義」。他斷言，即便像日本這樣資本主義經濟高度發達的國家，「將來也會面臨同樣性質的問題」。他認為，一個國家在走向社會主義時首先面臨的就是「在市場經濟中產生的社會主義經濟成分以及在市場經濟中對這一經濟成分的合理性與優越性進行考驗並逐漸提高其比重和競爭力」的問題。因此，目前中國所致力於的改革及其經驗「不論是成功還是失敗」，日本共產黨今後都將「深深地關注，並在展望未來日本社會的同時，對此繼續進行研究」。

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Lenin and the Market Economy
Fuwa Tetsuzo
Japanese Communist Party Central Committee Chair
August 27, 2002
(http://www.jcp.or.jp/english/jps_weekly/2002-0827-fuwa.html)

Fuwa Tetsuzo, Japanese Communist Party chair, gave a lecture on "Lenin and the Market Economy" at the Chinese Academy of Social Sciences in Beijing on August 27. The translation of the lecture is as follows:

Good morning, everyone. I am Fuwa Tetsuzo. This is my first lecture outside Japan.

It is a great honor for me to visit the Chinese Academy of Social Sciences and speak to researchers from various fields.

I am going to speak about "Lenin and the Market Economy." I have chosen this subject because it has something to do with both China and Japan in a broader sense.

The Communist Party of China adopted a policy of developing a "socialist market economy" at its Congress 10 years ago. But even before that, China had addressed the subject in practical terms.

And you are now pursuing the road towards "socialism through a market economy."

Japan is in the middle of the capitalist economy. The JCP envisages achieving socialism in Japan through stages. The course we will follow will be "socialism through a market economy" or a "combination of the planned economy and the market economy. "

We will see new historical developments and also face new problems for the theory and practice of scientific socialism.

Lenin was the first communist to address the question of the market economy and socialism

From 1998 to 2001, I was engaged in research on "Lenin and Capital" and wrote about 40 articles which were published in a magazine in serial form over a period of three years. This was in an attempt to examine Lenin's theoretical activity from his younger years.

One of the major theoretical questions he tackled in his last three years until he fell ill in 1923 was the question of the market economy and socialism.

Marx and Engels are founders of scientific socialism and our great predecessors, but they never had a chance to work on the question of building socialism as a practical issue. I don't think they ever carried out theoretical research on the question of the relations of the market economy and socialism, not even from the theoretical viewpoint.

So Lenin was the first communist to take up the challenge. He had to face many difficult problems arising in the course of his study and even underwent a 180-degree shift in his views. A review of such painstaking efforts by a predecessor, I think, will teach us an important lesson that will help us study present-day problems.

Lenin rejected the market economy in the early stage of the revolution

Looking back on Lenin's activities, you will find that nothing entered Lenin's mind concerning the use of the market economy following the victorious October Revolution, Russia's socialist revolution.

While he was engaged in economic construction following the victorious revolution, he firmly believed in the principle that socialism and the market economy were incompatible with each other. This attitude grew even stronger during the war against foreign intervention and counter-revolution.

Lenin's concept of the communist economy was about industrial production at the state-run factories and grain harvest by peasants, with all grain surpluses being collected by the Soviet central authority state for distribution to the people. This way was believed to help achieve the country's industrial development and enable the Soviet authority to provide peasants with tractors, fertilizer and other necessary supplies, although the country was experiencing hardships due to the war. This being the policy at the time, the "market economy" or "free trade" was regarded as a symbol of the enemies of socialist construction, a counter-revolutionary slogan. The biggest task of the Communist party was to have the people, in particular the peasants who had been used to the market economy, abandon their inclination to favor the market economy.

This policy, later called "war communism," lasted until early 1921.

Adoption of 'New Economic Policy' to pave the way for better relations with farmers

However, this policy caused antagonisms that were difficult to solve on the ground. Farmers were ready to endure hardships to some degree during the war against the counterrevolution and outside intervention, but once Soviet Russia defeated these enemies and achieved peace, the farmers' discontent erupted causing riots in some localities. In Kuronshtadt, a naval port near Leningrad (the capital at the time and known as a stronghold of the revolution) even the revolutionary sailors rose in revolt. In those revolts they called for "free trade" or "freedom to trade."

Lenin took this dangerous situation more seriously than any other political leaders of Soviet Russia at the time.

The major question was how to improve the socialist government's relations with the farmers. How is it possible to establish a worker-farmer alliance, essential for making progress towards a new society? Lenin's statements and articles during this period show clearly that he took pains to find the answer.

Remember that even Lenin believed that the "market economy" was a counterrevolutionary slogan, and you will understand that he needed to exert courage to make the difficult decision to accept a market economy.

The New Economic Policy, NEP, began in March 1921. It is often referred to as being synonymous with the acceptance of a market economy. This is not correct. Although he put forward a drastic change, Lenin initially could not go so far as to recognize the market economy; he looked for a reform without adopting a market economy and adopted an "exchange of products" policy under which peasants bartered corn for industrial goods and other products of the cities. It did not achieve good results.

After six months of soul-searching, in October 1921, he arrived at the conclusion that the adoption of a market economy is necessary.

The announcement of this conclusion, which Lenin worked out after taking great pains, had great repercussions in the party.

Documents from a Russian Communist Party conference at the time (Lenin's report and closing speech), which are available in Lenin's Collected Works show clearly how extensive the turmoil was. A member in the discussion said, "They didn't teach us to trade in prison." Another complained that communists cannot be involved in the very unpleasant job of trade. In the concluding speech, Lenin criticized these views, saying that it is inexcusable for revolutionaries to give way to dejection and despondency.

Toward 'socialism through a market economy'

That was how Soviet Russia began to study the market economy. In short, the discussion on the market economy was prompted by the policy of improving the government's relations with peasants after the victorious revolution.

Once Lenin made a decision to take this course, however, he immediately began to work on this issue in more detail and developed it into a major policy that would have an important bearing on the destiny of the Russian Revolution and socialism, namely, a path toward "socialism through a market economy."

Documents at the time show that it marked a very impressive development. I think that the new policy consisted of a number of pillars.

First, it concerned the establishment and development of a socialistic structure that would not lose in competition with capitalism in a market economy. Lenin used the Russian word "uklad" for what I describe as structure. I'm afraid there is no Japanese or Chinese equivalent for "uklad."

Secondly, the market economy under certain conditions would allow private capitalism to emerge and develop as well as foreign capital to make inroads. This also marked a very important development.

Up till then, the market economy was regarded as the "enemy," the reason being that it would give rise to capitalism even from among small commodity producers. That's something the Russian Revolution could not tolerate.

Thirdly, the new policy called for the key elements of the economy to be preserved as part of the socialist structure. Lenin called these core elements the "commanding heights," a military term used at the time to mean that in an era when cannons were the main arms in war, occupying heights overlooking the battlefield was vital to winning the war.

Two years ago, we had the IT minister of Sri Lanka among the foreign guests attending the JCP Congress. I was a little bit surprised when he said that they are trying to take control of the "economic commanding heights." I said, "I haven't heard that phrase for many years." Then he told me that he had studied in Moscow when he was young.

Fourth, the new policy called for Russia to learn everything advanced capitalism could offer so that the socialist structure could gain economic power.

Fifth, the new policy also referred to peasants. It said that the future organization of peasants in cooperative unions must not be carried out by order from above or by coercion; cooperative unions should be organized based on the voluntary will of the peasants.

The Soviet Union broke it off five years after Lenin's death

In March 1923, 17 months after completing this plan, Lenin fell ill and died in January 1924. Stalin rose to power after Lenin's death. As the leader of the Soviet government and the Communist Party, Stalin from 1929 to 1930 carried out the so-called "agricultural collectivization" as a means of forcibly collecting grain from peasants.

To begin with, the NEP was intended to improve the government's relations with the peasants. So the top-down "agricultural collectivization" policy meant an end of the NEP. Since then, the policy of achieving "socialism through a market economy" never made a comeback in the Soviet Union.

Several decades later, when the Soviet Union was under the leadership of Mikhail Gorbachev, the "introduction of a market economy" was much discussed. But during the preceding 60 years the Soviet Union completely changed itself. Substantial changes took place in the socio-economic system of the Soviet Union during and after Stalin's era. In effect, Soviet society had already become a system in which socialism or even a direction toward socialism was non-existent.

No country has run through this course

So I think that " socialism through a market economy," which China and Vietnam are attempting, is a strategy that no country has ever experienced.

In my speech at the meeting to mark the 80th anniversary of the JCP this past July, I talked about motive power that gets the world to move forward in the 21st century. In that speech I cited what China is attempting to do. I said as follows:

"Although the Soviet Union is gone, projects of socialism associated with Lenin are not. There are countries tackling new projects of socialism, including China, Vietnam, and Cuba. 'Socialism through a market economy' pursued by these countries is precisely what Lenin proposed but which was thrown away by Stalin. This is a path no one has ever traveled through, so there will be many unpredictable difficulties down the road. I have no doubt, however, that results of this trial will have a great impact on the course the world will go through in the 21st century."

What is to be done to set this path toward socialism?

This being such an important issue, there will be a variety of theoretical questions that need to be studied.

Let me just comment on two points.

One is the question of what is to be done to make the path of a market economy successful as a way to achieve socialism.

In analyzing what the path of "socialism through a market economy" would be like, Lenin stated in detail that the economy would involve cooperation and competition between various sectors: socialism, state capitalism, private capitalism, and small commodity production. He also made many original suggestions concerning necessary steps for taking this course to achieve socialism without having to return to capitalism. I think that in the present-day world we can learn many things from what Lenin suggested.

Lenin first and foremost stressed the importance of strengthening the socialist sector through competition in the market so that it can be strong enough to be competitive with capitalism in the market. From this point of view, he also attached importance to learning from capitalist at home and abroad as much as possible.

One of the slogans Lenin put forward was, "to be a good trader one must trade in the European manner."

This apparently was a tough slogan for those who complained, "They didn't teach us to trade in prison." Lenin meant to say, 'To be able to trade is not enough; you must be more skillful businessmen than European businessmen.'

Another slogan Lenin put up was, "test through competition between state and capitalist enterprises."

We should note here that the call for the socialist sector to "beat capitalism" is not confined to economic advantages such as the question of productivity and economic efficiency.

Lenin wrote an article that called for workplace safety to be as good as the best of capitalism. In other words, Lenin's slogan, "Beat capitalism," involves such issues as the environment and pollution. The idea is that socialism should exert superiority in all areas.

Secondly, regarding the "commanding heights" that holds the key to the country's economy. The state must have firm control of the socialist structure so that it will be set as the direction of economic development. When Lenin discussed the importance of the "commanding heights," he was referring to the socialist state taking control of the greater part of the means of production in the industries and transportation. I think that this was an opinion Lenin had under the particular circumstances of Russia at the particular time. What the role of the "commanding heights" is a question that should be explored in accordance with the historical conditions of the country in question.

Thirdly, regarding the defense of society and the economy against negative phenomena the market economy will produce.

The market economy, anarchical and competitive, is like the law of the jungle, which is the source of greater job insecurity, unemployment, and social income gaps. The market does not have power to control such contradictions. Such contradictions can only be controlled through social welfare services and other social security measures.

Although Lenin made no significant remarks on this issue after the adoption of the NEP, I just want to touch on an interesting historical episode. The world's first principles of social security were stated in a declaration issued following the October Revolution by the revolutionary Soviet government. These principles later had a great influence on the capitalist world in that they laid the foundations of social control of negative effects of the market economy under capitalism.

I must point out that the negative side of the market economy is that it gives rise to greed and corruption. Public bodies are required to firmly maintain the principles of socialism, but if they are contaminated by various kinds of corruption, bureaucratism and autocracy will prevail. Aware of this problem, Lenin repeatedly emphasized the importance of popular supervision and inspection along with the self-discipline of public bodies. Thus, Lenin in his later years particularly stressed the need to raise the people's cultural levels and enable each individual to fulfill their responsibilities.

I would like to say one more word. In the present-day world, capitalism's major issue is a choice between accepting the market economy as panacea or placing the market economy under social or democratic control. By and large, the tendency to view the market economy as almighty is clearly represented by the U.S. Bush administration, and the call for democratic control over the market economy is manifest in many European countries. This issue involves a number of global economic issues such as environmental destruction, social disparity and the economic independence of each country.

I am convinced that the important subject of future research from the historical context will be to prove that countries and their economic systems striving for socialism through a market economy will demonstrate their superiority to promote social progress.

What will the future market economy be like?

The other point I want to raise as a subject of study is something more theoretical and concerns the future. It's about the destiny of the market economy. When the combination of the planned economy and the market economy successfully achieves the goal of socialism, will the market economy perish or survive?

I touched upon the negative aspects of the market economy, but a study of the market economy from the perspective I have just mentioned will make it clear that it has some important economic effects that cannot be replaced by other methods or mechanisms.

Take the function of the market economy in adjusting demand and supply.

You may be able to estimate the demand of shoes in a country without having to use market mechanisms. But, when it comes to demand for particular types and colors of shoes, you will have to count on market mechanisms for a long time to come in areas like this, even if you use a computer with high performance.

Likewise, the market's judgment is useful in assessing or comparing labor productivity or corporate performance.

In dealing with the question, "how much more value does skilled labor create than unskilled labor?", Marx said that it is measured by the market mechanism. In Marx's words, such value is determined by a "social process" behind the producers. What he meant was that there is this aspect of market mechanisms.

It is very suggestive that the Soviet-style planned economy turned into a complete fiasco in this regard, as shown clearly by reports delivered by Khrushchev during the 1950s and 1960s at the CPSU Central Committee meetings.

At one point, he stated that in the Soviet Union achievements of productive activities are measured by the weight of products; producing heavier chandeliers is evaluated as better job performance; heavier chandelier may increase the enterprise's earnings, but for whom?"

On another occasion he said: "Why is furniture made in the Soviet Union so unpopular? It is because factories are producing heavy products. Foreign-made furniture is lighter and easier to use. In our country, achievement of production of most machineries is measured by the weight of products. Twice as much iron as that needed for machinery platforms is used; that way may enable the factories to achieve their goals, but they are only making products that can't be of any use. We need to establish new standards to measure achievements of factories."

Such was the Soviet Union's level of study on standards for evaluating economic results 30 years after it abandoned the market economy.

We have an interesting experience in relations to this issue.

After the U.S. war of aggression against Vietnam ended and peace was restored there, we sent a delegation to Vietnam to study the Vietnamese economy and give them advice on economic reconstruction.

The delegation visited farming districts. As you know, they grow rice in paddies. To assist in the mechanization of Vietnam's agriculture, the Soviet Union had sent in rice transplanting machines to Vietnam. Being a product of the Soviet-style planned economy, they were very heavy machines, so heavy that they sank into the mud of the paddies. The Vietnamese felt obliged to use the gift, and decided to use them by attaching two boats on both sides of the machine to prevent the planting machines from sinking. They could plant rice seedlings all right, but the attached two boats pressed down the rice seedling just planted. They finally decided to stop using those machines.

This example shows how difficult it is to find a substitute for the market economy as a system to improve labor productivity and efficiency of economic activities.

This question was not on Marx's mind. In Capital Marx stated that the concept of value remains in communist society. However, we cannot use this remark to speculate that he thought that the market economy would continue to be valid too. If the concept of value will remain valid, it is necessary to think if it is possible for the concept of value to survive without a market economy.

For the concept of value to be valid in the communist society, there must be some kind of mechanism to measure the "value" of labor in place of the "social process" that operated behind the producers, namely the "market economy."

I believe that this involves major unsolved theoretical questions in this area. These are questions that can only be solved as time passes and practical experiences are accumulated worldwide.

Marx based his theory of socialism and communism on scientific criticism of capitalist society and showed that capitalist society will be replaced with a higher form of society as a historical necessity. In so doing, he rejected any attempt to draw up a detailed blueprint for a future new society and instead confined his project to establishing a generality concerning how society makes progress. This is what his theory on socialism and communism is about. Marx maintained a general view that this question should be elaborated by future generations as they carry out practical activities in which they will accumulate and learn from various experiences.

Lenin liked this way of thinking by Marx and said, "Marx did not commit himself, or the future leaders of the socialist revolution, to matters of form, or ways and means of bringing about the revolution."

I think we must bear in mind that we are the protagonists in the effort to create a new society.

This course has a universal nature

Before concluding my lecture, I would like to stress that nothing about "socialism through a market economy" came to Marx's mind; it was born out of needs on the ground. I said earlier that this is a "new historical challenge." It is also a new theoretical challenge.

Broadly speaking, it shows that has universality. No one would doubt that highly developed capitalist countries like Japan will face similar issues in future. When governments striving toward achieving socialism are established in these countries and start making progress toward that goal, they will create a socialist sector within the market economy. The rationality and superiority of the socialist sector will be tested in the market economy and will increase its importance and effectiveness. The process and form of progress in that process will differ from one country to another. Nevertheless, the basic course "through a market economy to socialism" will be common among many countries.

I will carefully follow your present efforts and experiences. There can be zigzags, success, and failures. I will continue to study what you are pursuing in conjunction with a future Japanese society we are envisaging. Thank you for your attention.

FUWA Tetsuzo in China

(Translation by Japan Press Service)

What kind of society is China?

--- The triumph of state capitalism

Steve Freeman

Weekly Worker, No.727

June 26 2008

http://www.cpgb.org.uk/worker/727/triumph.htm

(Weekly Worker is a publication of the Communist Party of Great Britian. Steve Freeman analyses the facts and figures following his recent visit.)

The world is getting ready see the new China through the prism of the Olympic Games. So I was fortunate enough to visit Beijing, capital of the People’s Republic, earlier this year before it all kicks off. China has been transformed since a popular revolution brought Mao’s Communist Party to power in 1949. The party, with 73 million members, officially leads 1.3 billion people in the building of “socialism with Chinese characteristics”.

What kind of economy and society is it? Beijing is certainly a very modern city. It has a population of 15 million. It is ringed by six concentric, three-lane motorways, jam-packed with cars. There are three million of them, growing by a thousand per day, boasts China Daily.[¹] A grey haze of pollution hangs over the city. In the 1970s pictures of Beijing showed almost everybody on bicycles. Just as we in the west are being encouraged to get on our bikes, Beijing has gone in the opposite direction.

One of the first things that struck me was how modern-looking the city is. Certain parts are like Canary Wharf, the home of London’s financial centre. Skyscrapers are occupied by banks, insurance companies, advertising agencies, international hotel chains and many of the famous brands you see in London. On the ground modern shopping malls are everywhere. It was impressive to see the transformation of what I had imagined from the 1980s as a relatively poor third world country.

The official English-language newspaper, the China Daily, tells the story of Jia Changzhen, who is leaving the city of Shenzen, fed up with having to fight to get paid. He explains the power equipment company he worked for had not given him his wages over five months: “Some of my colleagues are willing to kneel down and beg for their salaries. They have rent to pay and need the money simply to survive.” Although there are labour laws to protect workers, he says, these are not always guaranteed in private companies which make up the majority of businesses.[²]

Li Jian, a consultant in an electronics company, was given the job of legalising his company’s payment system because hundreds of workers have left. The company paid only the city’s minimum wage and no overtime pay. Many workers in Chinese cities are in effect illegal immigrants from the countryside and need work permits. Shenzen business was now suffering growing labour shortages and surveys showed that 18% of the city’s migrant workers had decided to leave and not come back.[³]

Another article tells of students at the Beijing film academy making a film about the lives of building workers on the site of the national stadium for the Olympics. The film deals with three migrants from Jiangsu province. The work on the upper part of the stadium is dangerous. Consequently they earn relatively high wages, over 3,000 yuan, or £214, per month, plus meals and accommodation. Work safety is a constant concern. One of the workers is saving for a new house to replace his old dilapidated home. He intends to save to buy a car.[⁴] Such everyday stories are recognisable to us on the other side of the world. They could just as well have been stories about workers here.

Today the Chinese working class produces goods and services to the value of $7.2 trillion (gross domestic product). The reference point is the United States (GDP: $13.8 trillion). Four years ago 712 million Chinese working people, including about 170 million industrial workers, produced 13% of the world’s output.[⁵] There are an estimated 325 million peasants.[⁶] The size of the reserve army of labour is unknown, but the Chinese Academy of Social Sciences estimates this at 14% among urban residents.[⁷]

Capitalism?

Despite the official designation of “socialism with Chinese characteristics” there is no doubt in my mind either from what I observed, from conversations with local people or from what I have read that China can be accurately described as “capitalism with Chinese characteristics”. This is hardly a novel designation.[⁸]

Let us begin with two sectors featured in capitalist economies - the financial sector and the productive sector. The financial sector extracts surplus capital and redirects it into profitable investment. It enables financial assets to be valued and ownership transferred. Despite its importance for capitalism it is unproductive and parasitical. Real wealth is generated by wage labour employed in the corporate or productive sector, which adds value in the production of goods and services.

Financial sector
China has three stock exchanges: Hong Kong, Shanghai and Shenzen. The Shanghai stock exchange (SSE) has a market capitalisation of nearly $2.38 trillion, making it the fifth largest in the world. The stock market has been undergoing a boom. Between 2005 and 2007, share prices rose by 400%. Some experts see this as evidence of a bubble - a ‘downward adjustment’ is waiting to happen.

In 2007 the Shanghai stock market index topped 5000. It had risen 90% since the beginning of that year. The total value of Chinese shares (capitalisation) exceeds the GDP. The Chinese media were enthusiastic that this was “progress towards a more advanced stage of capitalism”.[⁹] In January 2008 share prices fell across Asia by about 10%. The Hang Seng index (Hong Kong) fell 5.4% on January 16 2008. But the Shanghai market fell by only 2.8%.[¹⁰]

Of the top 10 Chinese firms quoted on the SSE, seven are financial corporations, including banks and insurance companies - China Life, China Merchants Bank, Ping An Insurance and China Pacific Insurance. It is hardly surprising to find that one of the most profitable sectors is that of stockbroking and securities companies. China’s largest stockbroker, CITIC Securities, predicted net profits growth of over 400% for 2007. The Shanghai-based Haitong Securities posted net profit increases of 700%.[¹¹]

China has some very large state-owned banks. The four biggest are the Industrial and Commercial Bank of China (ICBC), the Bank of China, China Construction Bank and the China Development Bank. These have been caught up in the sub-prime crisis. In August 2007 the Bank of China said it had a $9.6 billion exposure to US subprime mortgages and would put aside $151 million to cover its losses.[¹²] The ICBC and China Construction Bank also had subprime holdings of $1 billion.

The Chinese government has told speculators not to worry because its banks are very profitable, with earnings growing by 40% per annum. They can ride out the storm because Chinese bankers have lots of money and not much to do with it. The China Development Bank (CDB) meanwhile announced it was taking a stake in Barclays and will have a seat on the Barclays board.[¹³]

Corporate sector

Today China is a ‘mixed economy’. Productive workers may be employed in state enterprises, foreign multinationals, joint ventures with Hong Kong and Taiwanese firms or in township and village enterprises (TVE). In the 1980s 100% of all capital was state-owned. By 2005 there were 140,000 state-owned enterprises (SOEs) employing about 40 million workers. These enterprises owned half of all industrial assets and produced about a third of the GDP.[¹⁴]

In the 1990s state planners set out to reform the state enterprises and build world class ‘corporate dragons’. The aim was to take 30 to 50 of the best SOEs and turn them into globally competitive multinationals.[¹⁵] The number of SOEs was reduced by closures, mergers and privatisations. An estimated 20-30 million workers were made redundant.[¹⁶] Now there is a group of 169 centrally controlled SOEs which are very profitable.

The Chinese market provides a vast opportunity to build a manufacturing base from which to go global. Chinese corporations have become multinationals. Take Hisense, a $3.6 billion consumer electronics group producing TVs for over 10% of the Chinese market. The firm also produces air conditioners, personal computers and telecomms equipment. It manufactures in Algeria, Hungary, Iran, Pakistan and South Africa and sells 10 million TVs and three million air conditioners per year in 40 countries. It is the best selling brand of flat TVs in France.[¹⁷]

BYD has become the world’s largest maker of nickel cadmium batteries. Johnson Electric, a Hong Kong-based firm, has half the world market in tiny electronic motors used in cameras and cars. The BMW series 5 has over 100 such motors to operate wing mirrors, open sun roofs, etc. Johnson produces three million such motors per day.[¹⁸]Chery automobiles is China’s leading car exporter. It has plans to build factories in eastern Europe, the Middle East and South America. Lenovo has bought out IBM’s personal computer business.[¹⁹]

Accumulation
No country in the history of the world has had such rapid growth sustained over 30 years. Since 1978 GDP has grown by almost 10% per annum.[²⁰] The economy has doubled three times over. It is a pattern of capital accumulation that has no equal since capitalism began. Between 2003 and 2007 the growth of real GDP averaged 10.8%. In 2007 it rose by 11.9%. Although the rate is expected to slow down, the economy is still predicted to grow by 8.5% in 2012.

Rapid economic growth has enabled the state to direct investment into information technology and transport infrastructure. There are now 210 million internet users in China. With 500 million mobile phone users, China has more than Europe. Within a few months China will have more internet users than America. Yet the proportion of the population using the internet remains low at about 16%. Rapid growth is likely to continue for some time. Operating profit margins for leading internet firms are 28% in China, compared with 15% in America.[²¹]

The state is directing massive capital investment into transport infrastructure. Rapid economic growth has put massive strain on the transport system. The cost of transportation or logistics amounts to 18% of China’s GDP, compared to 10% in America.[²²] The pace of China’s rail and road construction is “mind-boggling”, according to a World Bank adviser. Between 2001 and 2005 more has been spent on roads, railways and other fixed assets than in the previous 50 years.

Symbolising the investment boom, Beijing’s new airport is ready for the Olympics. Designed in the shape of a Chinese dragon, you can see it as you descend from the clouds. The world’s largest terminal is three kilometres long and with floor space 17% bigger than all the terminals at London’s Heathrow combined.[²³] It was built in four years by an army of 50,000 workers.

Air passenger traffic has increased from seven million passengers in 1985 to over 185 million in 2007. By 2020 the state plans to build another 97 airports to add to the 142 already in operation. Since the 1990s China has built the world’s second biggest motorway express network, comparable to America’s interstate highway system in length. At the end of 2007, some 53,600 kilometres of toll expressways had been built. The ministry of communications can claim with justification that China’s motorway builders achieved in 17 years what took developed western capitalism 40 years to accomplish.[²⁴]

These roads are not ‘socialist freeways’. They are ‘marketised’, with traffic-slowing toll booths. ‘Socialist’ China is responsible for 70% of the world’s tolled roads. Prices are the highest in the world. Not surprisingly, lorries are routinely overloaded to cut costs. This contributes to making Chinese roads among the most dangerous in the world and the most costly to maintain. There were 89,000 deaths in 2006.

China’s railways carry 25% of the world’s railway traffic on just six percent of its track length. Chinese state capital is now undergoing the biggest expansion of railway capacity undertaken by any country since the 19th century.[²⁵] The 115-kilometre journey from Beijing to Tianjin, its nearest port, will be reduced to half an hour with the advent of a bullet-train link. Work began in January 2008 on a 1,300-kilometre line between Beijing and Shanghai. It will reduce travel time by rail between the two cities from ten hours to five.[²⁶]

In building bridges and ports the state has chalked up more world-busting achievements. Shanghai is the current world-record holder for the longest structure, the 32-kilometre Donghai bridge. It links the city with Yangshan, a port being built on two flattened islands. Even bigger will be the world’s longest sea-crossing bridge, due to open in 2008: a 36-kilometre, six-lane highway across Hangzhou Bay. It is about the same length as the Channel Tunnel and will cut travel time in half between two of China’s busiest ports, Shanghai and Ningbo.[²⁷]

New colonies

In 2007 the Congolese government announced that Chinese state-owned firms would build or refurbish various railways, roads and mines around the country at a cost of $12 billion. They would do this for the right to extract copper ore of an equivalent value. This investment was more than three times Congo’s annual budget and roughly 10 times the aid provided by western donors.[²⁸]

The booming Chinese economy has been forced along the path identified by Lenin’s Imperialism, the highest stage of capitalism. Hunger for natural resources has set off a global commodity boom.[²⁹] With about a fifth of the world’s population, China now consumes half the world’s cement, a third of its steel and over a quarter of its aluminium. Shipments of iron ore, for example, have risen by an average of 27% a year for the past four years.

China has doubled its own production of iron ore since 2003. It is now the world’s largest producer. Steel production rose by 15% last year. Since 2000, China has roughly tripled its steel output. With 37% of global output, it is by far the world’s biggest producer. It accounts for about three-quarters of the global growth in steel production between 2000 and 2005.[³⁰]

China cannot dig up iron ore fast enough to supply its hungry steel mills. Imports of iron ore have been growing rapidly from 148 million tonnes in 2003 to 375 million tonnes last year. They now account for half the world’s seaborne trade in iron ore.[³¹]

In 1990, China consumed 2.4 million barrels of oil a day. It exported a surplus of 400,000 barrels. Now China uses up seven million barrels a day and imports half of this. It is estimated that by 2030 it will guzzle 16.5 million barrels, mostly imported, and more than Saudi Arabia currently produces.[³²]

From Australia to Canada, Indonesia and Kazakhstan, Chinese firms are buying up oil, gas, coal and metals, paying for the right to explore for them or buying up firms that produce them. This has helped to fuel a commodity boom and economic growth in African and Latin American economies. In 2006 Angola was receiving so much aid and investment from China that it decided it no longer wanted money from the International Monetary Fund. In Sudan, China is investing in oilfields and buying up the oil.[³³]

Australia is the world’s biggest exporter of iron ore and coal. It exports diamonds, zinc, lead, gold, nickel, manganese and copper. Western Australia grew by 11% in the year up to September 2007, faster than in China itself. Australian miners cannot dig quick enough to satisfy the dragon’s hunger. Ships are queuing off Australia’s biggest coal port, Newcastle, to load cargoes destined for China. At one period in 2007 the line was 79 ships long.[³⁴]

Triumph

In terms of rapid and sustained capital accumulation and economic growth the Chinese state and the Communist Party have been very successful. But everywhere the Chinese working class is not free. There is no democracy. What limited social rights workers had gained are under threat. The triumph of state capitalism is not the liberation of the working class but its further enslavement. In what sense then can we speak of ‘triumph’?

Twenty years ago the USSR collapsed and American capital ruled the world. Privatisation and free markets were proclaimed as the only rational means of organisation. It was not just that socialism, identified with state ownership, was dead, but even limited public ownership or state enterprise was simply an anachronism. Many western bourgeois writers on China assume that state capital was by definition moribund. It simply could not work.

The only option was complete privatisation and market rule. In Russia, Yeltsin engineered a Chicago-inspired shock therapy as the quickest route to prosperity. China did not fall into line with that theory. Of course, Chinese capital engineered its assault on workers’ rights through factory closures, redundancies and privatisations. Just as Thatcher attacked the welfare estate in the UK, so the Maoist welfare state, the ‘iron rice bowl’, was dismantled.

But just as we adjust to the triumph of free markets a different picture is starting to emerge. It is surely an ironic twist of fate that Wall Street, the flagship of private capitalism, has been bailed out by state capital - funds from state investors. Merrill Lynch received $6.6 billion and Citigroup $14.5 billion. Much of this state capital from Asia and the Middle East was provided to save American bankers from the subprime crisis.[³⁵] Free market enthusiasts are not so cocky now.

State capital

Chinese state-owned corporations have been climbing the rankings of the largest firms in the world. The state-owned Industrial and Commercial Bank of China has recently overtaken Citigroup as the world’s biggest bank by market value. No fewer than three of the world’s top six firms are Chinese state enterprises - in addition to ICBC, there is PetroChina and China Mobile. China now has six of the world’s largest 25.

PetroChina is China’s largest company by asset value. If it were to sell shares, it would soon overtake Exxon and Mobile as the world’s largest oil business. In addition Sinopec and the China National Offshore Oil Corporation (CNOOC) are major oil companies which operate in more than 12 countries. CNOOC, for example, is Indonesia’s largest offshore oil producer.

The fact that China Mobile is the sixth largest company in the world indicates that the new China has a strategic position in information technology. The Sinosteel Corporation is China’s leading raw material and service provider which saw its sales increase by 83% last year and its profits rise by 180%. China’s largest steel maker, Baosteel, is a state-owned multinational with operations in Australia, India and South Africa.[³⁶]

According to the theory of free market capitalism, this simply cannot happen. The world has turned upside down. Will Hutton’s recent book Writing on the wall shows that privatisation played no part in China’s growth before 1997. Chinese domestic growth came from township and village enterprises in the 1980s. We cannot deny the role of foreign multinationals. But what about Chinese private capital?

Hutton cites a World Bank study of firms listed on the stock exchange. He says: “At first sight it seemed that the state had relinquished control of more than 90%. However, once the labyrinth of the share structure had been unravelled, the opposite was the case. The state had de facto control of 84% of the listed companies”.[³⁷]

Sovereign-wealth funds

The argument about state capitalism was focused for the post-war period on the USSR. For most socialists, state capitalism ended with the collapse of that regime. Yet capitalism moves on. New forms arise whilst we are thinking about other things. The recent development of sovereign-wealth funds is a case in point.

Sovereign-wealth funds are a new form of state capital - capital funds owned by states and invested internationally. We are used to thinking of state capital in national terms, whether it was British Rail, British Gas or the Lenin No2 Steel Works. Today we have 29 sovereign-wealth funds with capital assets worth about $2.9 trillion.[³⁸]

State capital can no longer be identified primarily with Russia, the German Democratic Republic or even North Korea. The Abu Dhabi Investment Authority of the United Arab Emirates is worth $875 billion. It is the biggest pool of state-owned capital. Norway has $380 billion from its pension fund. Then there is Singapore’s $330 billion and Saudi Arabia and Kuwait. None of this has anything to do with socialism, bureaucratic or otherwise.

Although this form of state capital makes up only two percent of the world’s $165 trillion of traded securities, these funds have a lot of financial firepower. They own more equity than private equity firms and more funds than hedge funds.[³⁹] Sovereign wealth or state capital is growing fast and making its mark rescuing the private banks that came a cropper in the subprime crisis.

In 2007 China decided to set up its own fund of state capital called the China Investment Corporation (CIC). It was sent out with $200 billion to spend. The CIC invested $3 billion in Blackstone, a private equity group. This asset was soon devalued by $1 billion in the recent credit crunch. However, these funds are also buying assets and funding activity in Africa and Australia.[⁴⁰] We are witnessing the internationalisation of Chinese state capital.

How has China grown?

Why has Chinese capital been able to accumulate at such a rapid rate that it has transformed itself and is having a major impact of the world economy? One expert from China Economic Quarterly put the source of the surplus to a “unique combination of first world infrastructure and third world labour costs”.[⁴¹]

Three factors stand out - investment, workers’ wages and internationalisation. First China has a high rate of investment at about 45% of GDP.[⁴²] This is a pattern which has its parallel with the old-style Soviet system. In the USSR consumption was severely restricted in favour of investment and military spending. The Chinese state has kept up the pressure on working class consumption.

Restricted consumption means relatively low wages. Chinese capital has access to a massive pool of cheap labour. Some estimates have claimed that there are almost 200 million underemployed people in the countryside who can be drawn into industry. It will be years before this labour is absorbed.

The Economist says: “Nor is China close to running out of cheap labour … there are shortages of managers and skilled workers, but it will take at least another decade before China’s surplus rural labour is fully absorbed by industry. It is true that average wages have jumped by 15% over the past year, but productivity in manufacturing has been growing faster still, so unit labour costs have fallen”.[⁴³]

Migrant workers from rural China make their regular pilgrimage to the cities to find work. There is a vast movement of around 20 million people which has fuelled the manufacturing boom in southern China.[⁴⁴] Hutton argues there are 150 million migrant workers in Chinese cities working long hours in terrible conditions.[⁴⁵]

The Great Wall

The third factor absolutely central to accumulation has been the ‘globalisation’ of the Chinese economy. The ‘Great Wall’ has been broken down by trade. The process of opening up the Chinese economy was begun under Mao and was accelerated after 1978 by Deng Xaou Ping. Today China has one of the most open economies in the world. It now produces 70% of the world’s photocopiers, 70% of computer motherboards, 50% of the DVD players, 30% of personal computers, 25% of TV sets and 20% of car audio equipment.[⁴⁶]

China was transformed into an export platform as western capitalist firms began outsourcing activities to reduce costs. In 1990 the ratio of exports to GDP was 16%. By 2003 it had risen to 36%.[⁴⁷] Net exports account for 35% of growth since 2005.

Since 1990 there has been a rapid increase in foreign direct investment (FDI) flowing into China. The share of foreign-owned production in China’s manufacturing sales grew to 31% by 2000. In 2002 China became the largest recipient of FDI in the world.[⁴⁸] China became a major supplier of cheap goods to the USA, symbolised by the success of low-cost Wal Mart.

Chinese revolution

If we are to understand the Chinese economic miracle, we need to go back to the revolution of 1949, which brought Mao and the Chinese Communist Party to power. How was this revolution connected to present-day ‘capitalism with Chinese characteristics’? We can divide the intervening 59 years into the Maoist period (1949-78), followed by the opening of China to the world market after Deng Xaou Ping came to power (1978-89). Finally we have the period from the Tiananmen Square demonstrations and their bloody repression to the present (1989-2008).

How should we view the Maoist period, known as the ‘iron rice bowl’? The real comparator is with India. India had a similar-sized peasant population and its own revolution in 1947. What is clear is that the Chinese revolution triggered more rapid economic development. It was a popular democratic revolution. Like any revolution in the mid-20th century, it was carried out under the ideology of Marxism. But red flags and singing ‘The Internationale’ does not make communism.

The Chinese revolution destroyed the old system of landlordism. Land was nationalised. This was far more effective than anything that happened in India, whose revolution turned into a reactionary muslim-hindu civil war. The Chinese revolution acted like a forest fire, burning the old system and preparing the virgin soil in which capitalism could take root. Dealing with the land question, establishing a unified state, free from foreign domination, with a single currency and central bank and educating a workforce are essential for capitalism.

All this was achieved by state direction, with popular support thanks to the social programmes of education and welfare. The policy of the ‘iron rice bowl’ placed emphasis on developing agriculture and heavy industry. Despite failures and disasters like the Great Leap Forward and the resulting famine, this period laid the basis for subsequent growth. State ownership and planning played the historic role assigned to the bourgeoisie.

If we view this period in Chinese history as ‘socialism’, in which the working class ruled China through soviets, we have to explain how the working class was removed from power. But if we can recognise the difference between a peasant-based Maoist Communist Party and the rule of the working class then there is no problem. In the Maoist period China remained a peasant-dominated rural society. The state began the task of employing industrial wage labour. It could hardly yet be called full-blown capitalism.

The Maoist period was no more than the primitive beginnings of ‘capitalism with Chinese characteristics’. Bourgeois ideologues like to paint the Maoist period as a complete disaster because they view any revolution with fear and disdain. But their theory cannot explain the higher rate of accumulation than a more conservative India. It is worth quoting Will Hutton, who gets to the heart of the issue. He says: “Today’s China could not have started from nothing in 1978".[⁴⁹]

It didn’t. Charlie Hore continues Hutton’s theme. He says: “The economy was not a complete failure under Mao Zedong. There was substantial economic growth, and both living standards and life expectancy rose substantially after 1949.”[⁵⁰] In the 1980s the township and village enterprises encouraged by Maoist decentralisation began to blossom. It was Mao who welcomed Nixon to China as the political beginning of the opening up to the world market.

The events in 1989 in Tiananmen Square add one more piece to the jigsaw. First it shows that the workers, students and intellectuals did not have political power. With the development of capitalism in China ordinary people wanted more freedom and more rights. The working class needs democracy if it wants liberation. But the proto-democratic revolution was crushed. The multinational corporations recognised one stable power in China. It was not the working class. Since the 1990s foreign direct investment has flowed in more freely to exploit the workers.

Back to the working class
How can we understand what is happening in China? Is it private capitalism, market forces, and multinationals replacing socialism with capitalism? Is it proof that state capital, one-party rule and central state planning really works after all? The issue is not which is the best type of capital. The question comes back to the working class.

The one factor missing from view, unseen and unknown, is the working class. In 60 years the Chinese revolution freed the peasants to become workers. The real source of all this accumulated capital has been the hard work, sweat and toil of millions of new workers. For capital, China is a vast pool of cheap, exploitable labour.

I have concentrated on the accumulation of capital. But on the other side of the coin is proletarianisation. China is becoming a working class country. That should fill us with optimism for the future. It is the struggles of the new working class that will make the world a different place. Surely that is an argument for Chinese workers to support a new international revolutionary democratic communist party.

Notes

1. China Daily January 19 2008.

2. China Daily January 18 2008.

3. Ibid.

4. Ibid.

5. The Economist October 2 2004.

6. C Hore International Socialism spring 2008, p147.

7. Mobo Gao The battle for China’s past London 2008, p178.

8. See G Chin Building capitalism with Chinese characteristics York, Canada, 2003; and N Holstrom, R Smith, ‘The necessity of gangster capitalism: primitive accumulation in Russia and China’ Monthly Review February 2000.

9. The Economist September 1 2007.

10. China Daily January 17 2008.

11. Ibid.

12. The Economist September 1 2007.

13. Ibid.

14. The Economist March 25 2006.

15. The Economist January 8 2005.

16. The Economist March 25 2006.

17. The Economist January 12 2008.

18. Ibid.

19. Ibid.

20. The Economist September 29 2007.

21. The Economist January 31 2008.

22. The Economist February 14 2008.

23. Ibid.

24. Ibid.

25. Ibid.

26. Ibid.

27. Ibid.

28. The Economist March 13 2008.

29. Ibid.

30. Ibid.

31. Ibid.

32. Ibid.

33. Ibid.

34. Ibid.

35. The Economist January 17 2008.

36. China Daily January 18 2008.

37. Quoted in C Hore International Socialism spring 2008, p141.

38. The Economist July 26 2007.

39. Ibid.

40. The Economist January 17 2008.

41. The Economist January 8 2005.

42. The Economist September 29 2007.

43. The Economist August 4 2007.

44. The Economist March 13 2008.

45. Quoted by C Hore International Socialism spring 2008, p149.

46. Ibid.

47. M Hart-Landsberg, P Burkett China and socialism: market reforms and class struggle New York 2005, p121.

48. Ibid p48.

49. Quoted by C Hore International Socialism spring 2008, p142.

50. Ibid.