From Socialist Worker Review, No.77, June 1985,
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
THE LEADERSHIP of the Chinese Communist Party is an endless source of surprises. Is it possible that all those slogans of the Cultural Revolution ‘Bombard the Party headquarters’, ‘Down with responsible persons in positions of authority taking the capitalist road’ – could so swiftly have been replaced by ‘Peasants, enrich yourselves’ and ‘Learn from capitalism’.
Yet consider the latest straws in the wind:
- A number of state companies have issued shares for general sale to private buyers.
- Shanghai municipality has proposed the creation of a stock exchange by 1987 to trade in shares.
- Foreign companies may now own one hundred per cent of the stock of any Chinese subsidiaries
- The state is relinquishing its monopoly of foreign trade to competing publicly owned companies
- The state is reducing its participation by privatising the housing stock.
- The People’s Liberation Army has recently been urged to modernise by borrowing, entering joint ventures to manufacture consumer goods, and trading.
It is a programme that, on the face of it, is more drastic than Mrs Thatcher’s who has not so far suggested privatising the Grenadier Guards.
The history of the People’s Republic of China is one of a constant interaction between two contrary imperatives – the maximum rate of accumulation on the one hand, and the need to retain a monopoly of power in the hands of the party on the other. The interaction has taken place in conditions of grave external threats and great domestic poverty – two outside forces that threaten at each stage to jeopardise the imperatives. The ideological commitments flow from this struggle rather than being its source.
Thus, the establishment of party control dominated the first
phase, after 1949, in the social elimination of the landlords and the
move to collective forms of agriculture. The Korean war forced
greater centralisation and the slow expropriation of private
business. Simultaneously, the rate of economic growth was
extraordinarily high until the economy had made up the losses of the
pre-1949 period and reached the limits of capacity by 1956. No
outside help – from the Russians – was forthcoming to
escape the limits, so for a dizzy six months, Mao and his associates
launched the cadres upon China to force an expansion of output by
brute strength: the Great Leap Forward.
The leap failed: party control destroyed accumulation, since workers produced vast increases, but mainly of rubbish. Peasants hid their crops from party expropriation. Between 1958 and 1962 the country was in deep slump, brought on by the party. There was evidence of famine, armed revolts and, in the northwestern province, mass flight into the Soviet Union. The retreat of the party allowed the re-establishment of rich peasant control on the land in alliance with the rural cadres, and it was here the party began a purge in 1962. Whereas in the preceding four years, the issue of party control had been subordinate to economic survival, now the struggle to restore control took priority over most other issues.
This was the so-called Cultural Revolution.
The second four year phase embodied the struggle of one section of the leadership to establish its – and the party’s – total power. Just as the peasants stopped the Great Leap Forward in 1958/59, the Russians stopped the Cultural Revolution in 1969 with armed clashes on the northern border. From then to the death of Mao in 1976, the party leadership endeavoured to secure external protection (through the United States) and internal modernisation of the armed forces to counter the Russian threat, but the process was constantly paralysed by the unresolved political issues of the Cultural Revolution. The death of Mao resolved the paralysis.
For two years after Mao’s death, there was an interregnum in which the leadership tried to expand the economy without reforms. From 1979, the policy has been one of increasingly radical reforms and an embrace of market mechanisms to force the pace of accumulation. But unlike the years before 1979, for the first time, the stress of accumulation has not been upon the growth of heavy industry, but the growth of agricultural and light industrial output. In retrospect, the Cultural Revolution has become a bad dream.
What have been the key changes since 1979? The most dramatic has been in agriculture which occupies the majority of Chinese. The ‘production responsibility system’ has broken up the old communes in order to lease land to, in the main, cultivating households. Originally the lease period was for three years, but this has now been extended to fifteen. In all but name, this is the official re-establishment of a private peasantry after over thirty years of its disappearance in collectives. The price for agricultural goods paid to cultivators has been sharply increased, and public procurements cut. Peasants are now increasingly able to decide what they will grow and what prices they will try to get in the increasing number of private rural markets.
In industry, the government is moving towards freeing all enterprises to produce what they will at whatever prices they can get, except in heavy industry.
However, the government has not yet ended all subsidies nor decontrolled consumer prices nor allowed enterprises to be shut down as the result of running deficits. Nor have they yet conceded the right to managers to freely hire and fire or set wages levels as they Wish (although the vastly expanded bonus system goes a long way towards achieving this). But there is to be a major wage reform this year.
The incentives to foreign capital to invest in China have been considerably increased, and joint ventures are now permitted to compete with Chinese operations.
The performance of the economy during the same six years has been remarkable.
Agricultural output, blessed with good harvests, has expanded by about six per cent per year, and foodstuffs by 10 to 12 per cent (grain yields rose between 1979 and 1983 from 2,947 kgs, per hectare to 3,655, one of the highest levels in the world.) Industrial output increased by some seven per sent per year – 3.3 per cent for heavy industry (compared to 13 per cent, 1952-79) and 11.9 per cent for light (compared to 9 per cent). Incomes in urban areas are said to have gone up by nearly 5 per cent per year in the towns, and half as much again in the rural areas. Urban unemployment is said to have fallen from 15 per cent in 1979 to two or three per cent. In 1984, there was again a great surge in output, increasing by 14 per cent (against the target of 4-5 per cent).
Visitors universally testify to the prosperity that has become
apparent. How patchy it is remains unclear – but it seems the
process must have considerably widened differences both between rich
and poor and between advanced and backward areas. Furthermore, the
state has found its control slipping. Inflation has officially risen
to 5 per cent, but it is said to be 50 per cent for some commodities
because wages have expanded so much faster than output.
The banks competed to lend, and so overlent. Furthermore, corruption seems to have become endemic. There were 36,000 arrests and 5,000 executions for economic crimes between 1983 and 1984 – ranging from speculating in raw materials, bribery, levying special taxes or commissions, to the sale of illegal imports and visas to Hong Kong. The splendid Auditor General Yu Mingtao is said to have ‘lost’ the equivalent of 1.67 billion US dollars in 1984.
The use of the market to expand output (and secure peasant loyalties) is not new. There were versions of this in China between 1959 and 1962 (after the Great Leap) and 1969 and 1973 (after the Cultural Revolution). But these were strictly temporary and for limited purposes. What is happening in China now is much more far reaching, and short of a major break in the leadership group, unlikely to be reversed. This does not seem just another zig in the tortuous zigzags of the party.
The supporters of the old Gang of Four (known as widowists in some quarters, after Mao’s widow) say that the new order represents counter-revolution, a restoration of capitalism. This is phrasemongering to imply socialism existed under Mao – particular great heroes have one or other word attached as a sort of shadow. But there has been no radical change in the social structure of China, only some changes in the leadership clique. If China was socialist before, it must be so now; if it is now capitalist, it must always have been so. In fact, the Chinese ruling order has been consistently dominated by the task of capital accumulation since 1949, although not always with the same intensity or in the same form. The factional dispute in China is not about ending capital accumulation, the ‘abolition of the wage system’ but about whether accumulation should take place through state direction or a market (or rather what ought to be the precise mixture of each).
The process of economic liberalisation in China is only part of a much wider world change affecting not only the Third World, but as much, Mrs Thatcher and Reagan. The Chinese have been slightly more radical than the Hungarians, slightly less so than the Yugoslavs. The Poles tried and came a cropper. Virtually all Third World countries are doing something similar – not least in India with a new liberalising prime minister and Seventh Plan.
In retrospect, we can see that what was called ‘socialism’, the autarchy and state dominated planning of the newly independent countries in the fifties, was no more than a phase in primitive accumulation: both forced on the backward countries by the world market, and embraced by them as the means to defend their newly won political independence. Once that phase was over, continued accumulation demanded reintegration in the system. It is a return to the world economy, to world capitalism, now that the first phase of accumulation has been accomplished.
There were special problems in China. The condition for working
class passivity in 1949 and the intensified exploitation that
followed was the promise of a guaranteed if austere standard of
living, the ‘iron rice bowl’. But moderating the
insecurity of a wage system inhibits the possibility of increasing
exploitation and sustaining accumulation. The party tried many tricks
to make up – campaigns (with considerable intimidation),
sending workers down to rural areas, diluting urban labour with
peasant lads – but none could do more than have a temporary
effect, particularly when wages were very low as well. The party is
now employing the world market to achieve a change in the balance of
class power, to end the ‘iron rice bowl’ and thus its
neutralisation of the working class.
The party leadership can begin the process, but insofar as they are successful in freeing the market, they become victims of events. Not only is the nakedness of class relations exposed – particularly with reference to urban workers – but also they permit the emergence of China’s overwhelmingly largest class, the petit bourgeoisie. The rich and middle peasants dominate here, but in the cities, the new policies promote the creation of a significant class of self-employed artisans, petty traders, small businessmen, many of them fashioned out of the Cultural Revolution warriors who marched off to the countryside with messianic hopes and have now slunk back illegally into the cities.
It will be difficult to restore the old forms of party control or authority in such circumstances. The party tries to match its economic liberalisation with tight ideological control – over meetings, posters, publications, speech, culture – but the one will inevitably erode the other, even if in the short term this only produces deep mass cynicism. Given that external challenges have by no means ended, that the weather and other natural hazards still affect agriculture, that the domestic class struggle is likely to increase, China in the future will produce no fewer surprises than in the past.
Last updated: 28 March 2010