First Published: Proletarian Unity No. 15 (Vol. 3, No. 3) February-March 1979
Transcription, Editing and Markup: Paul Saba
Copyright: This work is in the Public Domain under the Creative Commons Common Deed. You can freely copy, distribute and display this work; as well as make derivative and commercial works. Please credit the Encyclopedia of Anti-Revisionism On-Line as your source, include the url to this work, and note any of the transcribers, editors & proofreaders above.
While the so-called Canadian Communist League Is working very hard at defending the “socialist principles” which explain and justify the sale of Coca-Cola to China, the leaders and theorists of the Communist Party of China (CPC) are busy with other, more serious tasks. Deng Xiaoping (Teng Hsiao-ping), for example, recently realized a “dream” he’d cherished “for many years, at least” when he flew off to the United States, looking for technology, management know-how and a more solid alliance with one half of the “first world”, the half that’s part of the “united front against hegemonism and for the defence of world peace, security and stability”[1a]. Deng’s U.S. tour was more than a “diplomatic visit”. It was a cornerstone of China’s strategy to win itself a choice place on imperialist markets. It also provided another opportunity for the proletariat and peoples of the world to size up the “powerful China” that the country’s leaders want to build by the year 2000: a China powerful enough to play a major role in inter-imperialist contention.
While activities on the diplomatic circuit are a clear indication of the political line of the current leaders, they are overshadowed by the internal upheaval instigated by the theorists and leaders of the CPC and consecrated by the Third Plenary Session of the Central Committee elected by the Party’s Eleventh Congress. This upheaval has affected every facet of the life of people In China, Including the economic base, and especially relations of production in factories; politics; culture; science; military doctrine; and the relationship between the city and the countryside. All these measures touch the basics of building socialism, especially relations of production, which are the economic basis of all socialist construction.
The particular thrust the Chinese leaders lend to this task is clear in the communiqué issued after the Third Plenary Session of the Central Committee. In it, “the socialist modernization” of the country is equated with the “construction of the motherland”, which “all patriots” – without distinction as to class – are exhorted to participate in. After all, “all patriots are from the same family”.
The communiqué also reveals that “there is every condition needed... to shift the focus of our work to the field of the economy and technical revolution”. This is based on an analysis of the Central Committee to the effect that “the large-scale turbulent class struggles of a mass character have in the main come to an end”. And this is understandable, since the class enemy has been reduced to “a small handful of counterrevolutionary elements and criminals”. All this means that the class struggle has indeed melted away to very little and from now on the masses can devote their full energies to production instead of wasting time fighting a practically negligible enemy. In light of all this, it should come as no surprise that the Central Committee has decided to accord “independence as is appropriate” to “procuratorial and judicial organizations”. The message is all too clear: the masses should concentrate on production and the judges will take care of the class struggle for them.
This, in a nutshell, is the springboard, the ideological and political framework for the reconstruction of the Chinese economy. It provides an excellent clue as to how the current Chinese leaders perceive the link between the development of the productive forces and the relations of production and, more importantly, how they intend to deal with those relations. For them, it is necessary to stop “wasting” time with “large-scale turbulent class struggles” and put it to better use by devoting more time to production. And what better way to tie a worker to his machine than to use the management techniques developed in the major capitalist countries?
To justify their “four modernizations” program, the leaders and theorists of the CPC have formulated a theoretical argument based on the objective nature of economic laws and the regulating function of the law of value under socialism. They use their argument to justify a greater role for economic methods and organizations like banks, specialized corporations, the “contract system”, production bonuses, sanctions against people who don’t produce enough and increased autonomy for factory managers.
The CPC’s Central Committee claims that this line will consolidate the dictatorship of the proletariat and socialist construction and that it is a rigorous application of Marxism-Leninism. But a serious analysis of the speeches and resolutions of Chinese leaders clearly indicates that they have radically revised Marxism-Leninism and that their line and their justifications can only lead to the restoration of capitalism in China.
Since Marxism proved its overwhelming superiority over all other theories and world views that claim to point the way to socialism, many people have tried to rob Marxism of its scientific and fundamentally revolutionary character. Many have tried to pit one aspect of Marxism against another on the pretext of adopting it to a concrete situation but in the hope of discrediting the entire theory.
Of these revisionist distortions, the “theory of productive forces” is no doubt one of the most tenacious, the most dangerous and the most difficult to expose, because it hides behind the appearance of strict materialism. Historically, this theory evolved as a rejection of political revolution on the pretext that economic evolution itself would lead to socialism and that therefore the political task of the working class should be confined to fighting for social reforms which, combined with the evolution of the economy, would make capitalism “outmoded”. It is summed up in Bernstein’s famous phrase, “the movement is everything, the final goal nothing”, which today is the basic strategy and tactic of social democrats and revisionists.
The “theory of productive forces” claims to be based on the Marxist tenet that, in the final analysis, the economy determines political, ideological and legal forms. The theory also invokes the basic Marxist tenet which says that economic laws are not the product of man’s imagination, dependent on his mood or intelligence, but that they are objective, independent of the consciousness of men. They are historical in character to the extent that they exist in conditions which are not immutable, conditions which are constantly changing, and which bring with them modifications in the laws.
In short, the “theory of productive forces” claims to be based on a materialist conception of the world as formulated by Marx and Engels. The problem is that it denies other aspects of Marxism, namely dialectics and the historical perspective. It denies or largely downplays the fact that political forms and consciousness interact with the economic base and that this interaction can determine the form of that base, either by speeding up its development or slowing it down. This denial of the importance of political and ideological struggle in the name of materialism is a trait of most revisionist currents, and it characterizes the current conceptions of the CPC’s leaders and theorists. All their economic and political measures stem from this anti-Marxist and fundamentally anti-revolutionary conception.
The speech we examine below is proof of this.
In July 1978, Hu Chiao-mu, President of the Chinese Academy of Social Sciences, delivered an important speech before the State Council. The speech, entitled “Observe Economic Laws, Speed up the Four Modernizations”, outlined an overall plan to reorganize the Chinese economy. An examination of the communique, issued after the Third Plenary Session of the Central Committee, indicates that Hu Chiao-mu’s major ideas and recommendations have been adopted by the party leadership, and we will therefore use the speech to analyse the CPC’s view on economic development.
In the speech, Hu Chiao-mu describes his objectives as “fighting the pernicious influence of Lin Piao and the Gang of Four” as well as of those “who either do not recognize the objective nature of economic laws... or refuse to take (them) into account”, the people who “take the will of society, the government and the authorities as economic law which can be bent to political expediency.”. With this initial erroneous interpretation of Marxist theory on the relationship between the economic base and the superstructure, between economics and politics, one might expect the author to go back and set things straight by offering a correct version of the relationship between economics and politics, especially under socialism. There is all the more reason to expect this since the author of the speech, Hu Chiao-mou, quotes Huo Guofeng (Hua Kuo-feng), Chairman of the CPC Central Committee, on the importance of “studying, mastering and applying the economic laws of socialism”.
Clearly we are not talking about just any economic laws; we are talking about the economic laws of socialism, in opposition, no doubt, to the economic laws of capitalism. At least, this is the general impression given by the speech. Alas, there is a substantial difference between what the author implies he will deliver and what he does in fact deliver.
The first three sections of Hu Chiao-mu’s speech are entitled “1. Objective nature of economic laws; 2. Observe economic laws; 3. Expand the role of economic organizations and economic means.” Already, the outline of the author’s logic emerges. It consists first of dwelling on the objective nature of economic laws and the fact that we are subjected to them just as we are subjected to the laws of nature. The second step consists of describing socialism only in terms of it being the historical period when man can act consciously in accordance with these laws – this alone would distinguish socialism from capitalism. Finally, the last step consists of proposing that the role of economic methods and organizations be increased –after all, the laws we are dealing with are economic laws and the economy is the decisive factor in society. This logic appears coherent, and it is easy to be left with the impression that the problem has been dealt with.
In fact, the dice are loaded from the word “go”. By dragging us into a debate on whether or not economic laws are objective in nature, this CPC theorist is trying to hide the real question, which is the relationship between economics and politics under socialism, in particular how these laws operate under socialism. Do these laws operate the same way under socialism as they do in the capitalist mode of production?
Yet, even the most careful re-reading of the theoretical part of this speech will only turn up unilateral insistence on the objective character of economic laws and the need to conform to them. Of course, the author refers to Marx and Lenin but, he could hardly do otherwise in present-day China. The fact remains that his use of Marxism-Leninism in approaching such an important problem is superficial in the extreme. It is based on two quotations.
From Marx comes the following lines:
No natural laws can be done away with. What can change in historically different circumstances is only the form In which these laws assert themselves.
From Marx’s words we can deduce that what can be changed in different historical circumstances is precisely what is relative in the economic laws. So even if they cannot be completely done away with, they can undergo modification, depending on the particular historical situation. So the statement that economic laws are objective, as are the laws of nature, is an absolute truth. However, like all truths, it also has a relative aspect.
But all Hu Chiao-mu retains from this quotation is the absolute character of economic laws. He totally ignores the relative aspect, the fact that these laws are dynamic and historical.
When Marx speaks of “the form in which these laws assert themselves”, he is referring to this historical and relative aspect of the laws in question. It is far more than a simple question of style. The form, or rather the various forms, these objective economic laws have taken in history, is what distinguished history’s successive economic regimes and corresponding political regimes. For example, the commodity form of the products of labour and the circulation of commodities emerged long before the capitalist mode of production. The general laws of commodity production had an impact even on feudal economic life. But the impact remained within the context of the forms and limitations of the feudal regime both in economic and political terms. The feudal regime, of course, was based on landed property. And the limits within which the commodity economy operated – which included the limited use of wage labour, the limited nature of production itself and feudal fetters on the free circulation of commodities – had a primordial impact on the “form in which” the laws on commodity production operated.
Contrary to Hu Chiao-mu’s contention, this is not secondary. In fact, the form in question is what shaped the feudal mode of production to a large degree from an economic point of view. In historical terms, it was precisely the abolition of this form taken by the laws of the commodity economy under feudalism, with all of its manifold limitations, that led to the rise of the capitalist mode of production and, ultimately, its definitive victory.
In essence, the transition from one form of application of economic laws to another form of application –that is to say, the modification of the relative and historical aspect of these laws as opposed to their absolute aspect – explains the transition of one mode of production to another. This, clearly, is more than a simple secondary aspect of economic laws. In fact, this succession of forms is the very evolution of society down through history. Yet this is the type of little “details” our theorist has slipped into the presentation of his case. Why he resorts to these acrobatics will become clear when we look at his conception of how economic laws operate under socialism. Already, though, there is the hint that according to Hu Chiao-mu the difference in the operation of economic laws under capitalism and socialism is slight indeed.
But before we move on, let us look further at the question already before us the relationship between economics and politics, and specifically, their relationship under socialism.
Just as he falsifies the ideas of Marx Hu Chiao-mu deforms Lenin. In this case, he inserts the question of the relationship between politics and economics more explicitly.
Look at how he represents Lenin’s position:
Lenin pointed out that the economic formation of society does not allow ’all sorts of modification at the will of the authorities (or, if you like, at the will of society and the government)’, that its development is ’a process of natural history’ while its laws of development are ’not only independent of human will, consciousness and intentions, but, rather, on the contrary, determining the will, consciousness and intentions of men’.
Earlier on, the author dwelt exclusively on the absolute nature of the fact that economic laws are objective. Here, in an equally absolute way, he makes the absolute nature of the economic laws the determining factor in politics.
Of course no Marxist-Leninist would challenge the validity of the materialist tenets of Marxism. The problem here is that the author comes up with the right answer – to the wrong question. The question here is the relationship between economics and politics, not in general, but specifically under socialism, and more specifically in contemporary China. The answer we get is once again simplistic, unilateral and ultimately dogmatic. Yet the only proper and scientific way to answer this complex question is to use historical and dialectical materialism.
The “simplistic” approach we are treated to by the author of this speech is not a simple error. It is a viewpoint which serves a specific political cause. In fact, Hu Chiao-mu uses only the part of Marxism-Leninism that “suits” him, namely its materialist aspect, which maintains that the consciousness of man as well as political and legal forms are determined by his material living conditions. By dwelling only on this, the author, supposedly a man of science, in fact robs Marxism of its scientific quality, its materialist character, which is simultaneously historical and dialectical. This is what led him earlier on in the speech to present the objective economic laws as laws outside of history, as if they undergo no significant modification in the changeover from one mode of production to another... aside from a slight modification in form.
Here is what Engels said about this type of “Marxist” interpretation:
...According to the materialist conception of history, the ultimately determining element in history is the production and reproduction of real life. More than this neither Marx nor I have ever asserted. Hence if somebody twists this into saying that the economic element is the only determining one, he transforms that proposition into a meaningless, abstract, senseless phrase.
Indeed, with “meaningless, abstract, senseless phrases”, any conceivable viewpoint can be justified. Anything – like the idea that the objective economic laws apply equally in all social form throughout history.
Let’s examine this contention by looking at the phenomenon of revolution in history. The situation in a revolutionary era is precisely a situation where the superstructure (politics, the political struggle, legal forms, etc.) plays a preponderant role. Before – and after – the revolutionary class seizes power, the political aspect (that which concerns the superstructure and all forms of consciousness) plays a major role. There was no doubt in Engels’ mind about this, as he explained later on in this letter to J. Bloch, part of which we have already quoted.
The economic situation is the basis, but the various elements of the superstructure – political forms of the class struggle and its results, to wit: constitutions established by the victorious class after a successful battle, etc., juridical forms, and even the reflexes of all these actual struggles in the brains of the participants, political juristic, philosophical theories, religious views and their further development into systems of dogmas –also exercise their influence upon the course of the historical struggles and in many cases preponderate in determining their form.
Engels delves into the context after the revolutionary class seizes power to explain how elements of the superstructure (including political theories, etc.) can be decisive. And this is what he means when he speaks of the “form” taken by the “course of the historical struggles”. Once again, it is important to note that the notion of “form”, used earlier by Marx, is more than a simple “ornament”. The “form” taken by “the course of the historical struggles” designates the great moments in the history of class struggle. It means, for example, the revolutionary form of overthrowing one class by another. It also means the political forms and the political structures through which a given class consolidates its hold on society and liquidates the reactionary class. In short, to say that the superstructures can act on “the course of the historical struggles” and “preponderate” in determining their form in many cases is to say that in given historical conditions, in particular during a revolutionary era, politics can play the principal role.
What, then, is left of the theoretical outpourings of Hu Chiao-mu and his political bosses who repeat like a broken record that economics is what is decisive, that objective economic laws are absolute, and that “politics itself cannot create other laws and impose them on the economy”? What remains is a vulgar attempt to debase Marxism-Leninism and justify political opportunism. What remains is an attempt to liquidate revolutionary proletarian politics and to promote bourgeois politics, all on the pretext that the economy is the primary base for the consideration of all things and that everything must be made to conform to objective economic laws. This bourgeois policy is interested in imposing on the proletariat any “economic laws”, including capitalist ones.
The Third Plenary of the CPC’s Central Committee clearly delineated the new phase of the “Chinese revolution”: “to shift the focus of our work to the field of the economy and technical revolution”. The theoretical section of Hu Chiao-mu’s speech is aimed at explaining the framework the Central Committee has in mind for the new phase. Based on it, the situation indeed looks bleak for the Chinese people.
When politics means the economy and the economy is politics, and further, economics determines politics, isn’t it logical to transform political organs into appendages of the bodies in charge of economic management? Didn’t Lenin say, as Hu Chiao-mu points out, that “politics is the most concentrated expression of economics”? Yet for the author, economics is synonymous with objective economic laws. And so having a correct viewpoint on economic development simply means applying economic laws as faithfully as possible. Once done, the economy will develop, pulling politics along behind it.
Presto, this is how Lenin’s sentence, “Politics is the most concentrated expression of economics”, is used as the basis for the Chinese economists’ justification of the “theory of productive forces”.
To do this, Hu Chiao-mu first has to rid economics of its dynamic facet – the relationship between men – and consider it only as a set of laws to be discovered and applied.
This distortion of economics amounts to robbing economic life in society of its political relationships and only considering political struggles as a sidelight to the life of a society. This is how Hu Chiao-mu ends up concluding that it is necessary to “expand the role of economic organizations and economic means”.
The question of the orientations assigned to these “economic organizations and economic means” is no longer related to politics as far as he is concerned. He is not interested in which class is using these economic means and organizations. His only concern is whether they are being used “rationally”. Thus, the political economy of the Chinese leaders has reduced classes and class struggle to naught; “reason” and reason alone henceforth guarantees the correctness or error of the economic policies of the Chinese State!
But who is in a position to deliberate on this “rationality”? The experts. The scientists. The factory managers. The specialists in economic planning. In short, all these people who, if they get the chance (and if they are “rationally” compensated for their work), if they get the tools to translate their initiatives and sense of responsibility into practice, will indeed come up with solutions to the social and economic problems of the Chinese masses. Not only that, they’ll also solve the problems much more quickly and efficiently than if the workers took care of these questions! “Couldn’t it be more effective if we entrusted a large part of the economic administrative work... to some economic units to handle through economic means?” asks Hu Chiao-mu.
We have overextended the scope of relying on purely administrative means to do our work and, moreover, have unnecessarily set up many overstaffed, Inefficient organs, so much so that they hinder us from making use of simplified ways of economic management left us by capitalism and hinder us from running economic affairs according to economic laws.
When people are as convinced as the Chinese economists are that economic laws are “universal” and transcend time, there is no problem in considering efficiency as being equally “universal”, something independent of specific class interests. So it is then entirely “natural” to consider that:
It is imperative that we transfer the greater portion of our economic work from government administration to the field of enterprise management. The enterprises themselves must curb the running of business by purely administrative measures and expand management through economic means.
The administration referred to here includes the government organizations, the political organizations that are some of the ways the masses exercise power in economic life. The administrative measures within enterprises are the ways the Chinese working class intervenes (or used to intervene) in the management of the factories (one example is the revolutionary committees set up during the Cultural Revolution in the 1960’s). When Hu Chiao-mu invokes administrative slowness and unwieldiness, he wants to do away with all these administrative means. Henceforth, time “lost” in collective decision-making about how production should be organized will be drastically cut back. Decisions will be left in the hands of the organisms and managers charged with “management through economic means”.
By “management through economic means”, the author means “simplified ways of economic management left us by capitalism”. Why Deng Xiaoping himself saw it with his very own eyes at Ford factories in the USA: the vast American industrial complex works very well indeed. There, the managers have total freedom in applying “objective economic laws”. There, efficiency is not upset by movements of the masses who want to take part in the planning and organizing of production. Deserving managers, the ones who succeed in milking the maximum amount of work out of the workers, are rewarded. This stimulates them to show more initiative and imagination in running the factory – one of the famous economic methods Hu Chiao-mu is talking about. These economic methods (which are neither capitalist nor socialist), are the wave of the future, the guarantee of the increased productivity of labour. Enough of cumbersome “political methods” like revolutionary committees. From now on, sound efficient “management through economic means”, in conformity with objective economic laws (neither capitalist nor socialist) will play the central role.
Two particular measures give us a good idea of what this means: one deals with strengthening “the role of banking”, and the other consists in “developing economic legislation and enforcement”. Concerning banks, Hu Chiao-mu writes:
The bank is the nation’s centre for settlements, credits and receipts and payments, and has branches all over the country. It is thus capable of engaging in economic management in many fields in place of the State. This way, things can be done with greater flexibility and effectiveness than through administrative means. It is in a position to promote or supervise each and every managerial operation of an enterprise.
From this reasoning stems the necessity to “reactivate and strengthen the functions of banking”.
A brief summary of the author’s main arguments may be helpful here. The bank is in a better position than the State to “engage in economic management” because: 1) it has “branches all over the country”; 2) its methods offer “greater flexibility and effectiveness”; 3) it is “in a position to promote or supervise each and every managerial operation of an enterprise”. It’s true that, if a socialist State is incapable of having as many “branches” throughout the country as a bank, if, by definition (since Hu Chiao-mu poses the problem in these terms), it is ineffective and rigid, if finally it can in no way “supervise” or “promote” the managerial operations of an enterprise, then such a State undoubtedly deserves to be supplanted by a bank in economic matters. But if a bank is able to replace the State on this level, it is because the bank is seen as a separate entity operating according to Its own rules and regulations.
Hu Chiao-mu refers back to Marx and Lenin to justify this conception. Didn’t Marx speak of the bank as a “powerful lever” in a socialist economy? As for Lenin, didn’t he declare that the bank in a socialist society is “the country-wide bookkeeping, country-wide accounting of the production and distribution of goods... something in the nature of the skeleton of socialist society”?
It is important to note that Hu Chiao-mu is concerned solely with Marx’s and Lenin’s technical description of the bank’s role under socialism. He has very little interest in the other aspects that characterize the bank in a socialist society. For example, Lenin, in the same text, specifies that banks must be democratic and that they are a State apparatus, subject to the ruling policy of the State. “Our task here”, says Lenin, “is merely to lop off what capitalistically mutilates this excellent (State) apparatus...”. If we were to give this sector the autonomy Hu Chiao-mu recommends, if –rather than political organisms – banks were entrusted with the control and supervision of entire sectors of socialist economy, we would just end up reintroducing capitalism’s “efficient” bureaucracy, which cuts the people off from the economy’s vital centres.
When Hu Chiao-mu refers to administrative unwieldiness, he has in mind specifically the fact that the dictatorship of the proletariat subjects the capitalists and new bourgeois elements (found amongst management, scientists, technicians and others) to political “worries”. Not once does he even mention the possibility of mobilizing the people to fight “bureaucracy” and administrative unwieldiness. On the contrary, he insists solely on the need to “strengthen” economic legislation and jurisdiction. If conflicts occur on the economic level, they must be settled by “judicial organs according to law”. What Hu Chiao-mu cannot achieve by calling upon the workers’ class consciousness and discipline, he wants to achieve by constraint and dealing with “things conscientiously and strictly” and by meting out “proper punishment”. And there we have the essence of truly bureaucratic management. Revisionists have a way of simplifying management problems: it’s just a question of knowing how to use the carrot (bonuses) and the stick (economic legislation) to achieve higher productivity. No wonder they were so eager to import management methods from the USA and other advanced capitalist countries.
This “policy” consists, in fact, in putting economic measures in command, and reduces the working class and peasantry to the level of a meek and down-trodden productive force. But this doesn’t seem to worry Hu Chiao-mu and Deng Xiaoping. Economic matters are economic matters, politics is a different story. And politics is the sum total of the objective laws that we must discover and learn to comply with rationally. So economic means can replace political means, which makes it all much less “bureaucratic” and much more “efficient”.
Thanks to Hu Chiao-mu, we have made many very important discoveries about socialism. We now know that Marx and Engels were wrong when they thought that relations of production formed the basis of economics or, more exactly, the economic basis of society. As Engels wrote, these relations of production are “in the final analysis, relations between classes”. If Marx and Engels had read Hu Chiao-mu, they would have understood that the economy is simply a matter of objective laws that we have to understand and apply rationally. They would also have understood that the working class simply constitutes a quantity of labour power to be used as efficiently as possible. To do this, to use this labour power to its full capacity, society has to entrust the job to experts, the specialists in economics who, having discovered the economic laws, can now subject labour to these natural imperatives.
As far as they are concerned, there are only general, objective economic laws. These laws are equally valid (in the same way and the same form) for all historical periods and all modes of production. This being the case, it is irrelevant to worry about transforming relations of production under socialism. The objective economic laws are the key to everything. Learn to understand and use these laws, say the revisionists, and all will be well, including relations of production. How? Why, it’s quite simple, according to Hsueh Yung-ying’s article entitled The Four Modernizations: a Deep-Going Revolution:
... because the productive forces are the ultimate, decisive factor in promoting the development of history, and in changing the relations of production, the superstructure as well as the physiognomy of society.
But what will guide the transformation of the relations of production? What stage has this transformation reached in China today? What are the economic laws that govern the transformation of the relations of production? The Chinese revisionists are only concerned with one of these questions: the question of economic laws. They never even mention the revolutionary transformation of the relations of production. To fully grasp the way they have chosen to deal with the relations of production, it is necessary to analyse their conception of economic laws and their action in the economic life of Chinese society. One of the most important laws in the eyes of the Chinese revisionists, is the law of value.
Throughout his speech, Hu Chiao-mu deals with the questions of lowering the unit-cost of production, of making “strict economical use of time” and of combining “the expenditure of labour and material” to obtain better economic results. According to Hu Chiao-Mu, it is also important to make sure that “prices correctly reflect value”, because “a fair price will bring greater profit to its production units, otherwise, there will be less profit”. (Some will probably wonder who will suffer from “less profit”? Does the author oppose the “profits” of society in general to those of production units? Precisely so, as we will see a little further on.) Concerning prices, Hu adds:
We should apply the law of value to our price policies so that our planned prices will facilitate rational adjustments in the relationship between the interests of the state, the collective and the individual as well as between the workers and the peasants, and will play a positive role in regulating social production.
What exactly is this law that regulates production and must determine merchandise prices?
The law of value is the universal law of commodity economy. Its essential feature is that the value of every commodity is determined by the socially necessary labour time required to produce it. Commodity prices are based on value and commodities are exchanged on the principle of the exchange of equal values. Under socialism, the production and circulation of commodities will continue for a long time; they should be greatly developed in our country and the law of value will continue to play an indispensable part in our economic life.
It is interesting to note that the author never mentions the reasons that justify the need to “greatly develop” the “production and circulation of commodities”.
So the law of value should regulate China’s economic life. That’s fine and dandy! But how can this be justified in a socialist country where production is planned? Hu Chiao-mu prefers to remain silent on this question. Instead, he makes general statements and tries, as usual, to make a relative truth into an absolute one: if the law of value is a universal law of commodity economy and if a socialist economy is a commodity economy, then the law of value plays the same role in a socialist economy as in any other commodity economy. But what happens when the law of value is applied to such an extent that it regulates social production?
If the law of value is fully and thoroughly respected in all domains of social production, the products of labour must be considered above all as commodities, that is, as the material form of value. If the State and, especially, the “production units” are mainly concerned with the value of commodities, it then becomes necessary, as Hu Chiao-mu points out, to ensure that commodities are sold for the price of their value. This entails making sure that the prices decided upon reflect this goal. But we know that in China the prices of certain commodities have remained the same for many years. The new policy will put an end to this situation, and prices will start to climb. Quoting Hua Guofeng in a speech on agriculture, Hu Chiao-mu declares that “we must appropriately raise the purchasing prices of agricultural products”. There are no two ways about it: either prices are controlled and the law of value plays a limited role, or the law of value plays a regulating role and prices start to climb.
If the law of value is as important in determining prices as Hu Chiao-mu suggests, and if production units organize their activities primarily according to the law of value, in order to make as much profit as possible, we can easily expect the State’s role as centralized planner to become less and less important. Thus, the “initiatives” taken by the production units become more and more important as the driving force of social production.
This line transforms production units (factories, people’s communes, production brigades and others) into commodity producers whose relations are regulated by the action of the law of value. This opens the door to the possibility that the interests of each and every production unit become more important than the collective interests of the country as a whole. This is what Hu Chiao-mu calls facilitating “rational adjustments in the relationship between the interests of the state, the collective and the individual as well as between the workers and the peasants”!
What class interests does such a policy serve in practice? Does it serve the interests of the urban and rural Chinese workers? We seriously doubt it. Such a policy best serves the interests of those who are busy cutting themselves a big piece of the cake, busy building themselves small economic empires. The “managers” want an open field, they want to free themselves from political restraint and controls that hinder their ardour and initiative as entrepreneurs.
But there is also more to it than that. Indeed, if everything is to be considered from the point of view of the commodity relations that must be “greatly” developed in China, then the law of value will have to be just as rigorously applied to policy on wages, for in a commodity economy, man’s labour-power is also a commodity. As a commodity, the value of man’s labour-power is determined in the same way as that of all other commodities. If the law of value is applied here integrally, it will necessarily widen the existing differences in wages. This will in turn develop social disparities, to the detriment of manual labour. Why?
Because if the value of a commodity is determined by the labour-time that society must spend to produce it, the value of the labour-power of the engineer, the technician or the intellectual will usually be greater than that of the manual worker, since society will have invested more time in their formation than in that of the worker. All this is quite logical when we look at things strictly from the point of view of the law of value in a commodity economy.
But certain questions arise with which the Chinese revisionists would rather not deal. Is there no difference between socialism and capitalism? Is a socialist economy merely a more “rational”, centralized commodity economy, as the new leaders of the CPC would have us believe? Can economic laws be applied under socialism in the same way as they are under capitalism? The art of revisionist reasoning resides precisely in the ability to confuse these things and to make absolute that which is relative and historical in economic laws.
For example, because the production and circulation of commodities continue to exist under socialism, the Chinese revisionists conclude that this phenomenon is in no way modified under socialism. The result?
They completely deform what socialism is and what distinguishes it from capitalism. For, although the law of value continues to play a role under socialism, it most definitely cannot be the same as that which it plays in an ordinary commodity economy. In a socialist society, the law of value is a tool to measure and account tor the distribution of labour-power in the different economic sectors. It is not a tool that serves to regulate.
In Economic Problems of Socialism in the USSR, Stalin explains this in the following manner:
... our enterprises cannot, and must not, function without taking the law of value into account. Is this a good thing? It is not a bad thing. Under present conditions, it really is not a bad thing, since it trains our business executives to conduct production on rational lines and disciplines them. It is not a bad thing because it teaches our executives to count production magnitudes, to count them accurately, and also to calculate the real things in production precisely, and not talk nonsense about “approximate figures”, spun out of thin air..
Stalin also recognizes that the law of value influences the setting of prices even under socialism, and that this action closely resembles that in a capitalist society.
So the question is not whether or not we can do without the law of value under socialism. The question is to what extent and under what limits and forms the law of value intervenes in the production and distribution of goods. In other words, it is a question of what distinguishes socialism from capitalism as far as the law of value is concerned. Stalin poses the question and answers it.
But does this mean that the operation of the law of value has as much scope with us as it has under capitalism, and that it is the regulator of production in our country too? No, it does not. Actually the sphere of operation of the law of value under our economic system is strictly limited and placed within definite bounds. It has already been said that the sphere of operation of commodity production is restricted and placed within definite bounds by our system. The same must be said of the sphere of operation of the law of value. Undoubtedly the fact that the private ownership of the means of production does not exist, and that the means of production both in town and country are socialized, cannot but restrict the sphere of operation of the law of value and the extent of its influence on production.
Stalin also adds two other factors that limit the action of the law of value under socialism: the “law of balanced (proportionate) development of the national economy, which has superseded the law of competition and anarchy of production”, and that of economic planning. But the Chinese revisionists disagree with Stalin.
Stalin was going too far when he said that the law of value had no regulating function in the production under socialist system but at most some influence on production. Marx said (in Capital,), “After the abolition of the capitalist mode of production, but with social production still in vogue, the determination of value continues to prevail in such a way that the regulation of the labour time and the distribution of the social labour among the various group of production, also the keeping of accounts in connection with this, become more essential than ever.
One has to either completely ignore the laws of commodity production or be totally opportunist to conclude that Marx’s position implies that the law of value must regulate social production under socialism. There is an important difference between using the law of value as an Instrument to plan production and the distribution of labour-power on a country-wide scale and using it to regulate social production. When Marx talks of the necessity of regulating labour time, he examines the conscious organization of the distribution of labour on national scale. To do this with maximum efficiency, the quantity of available labour must be calculated in relation to the needs. The most useful tool for calculating this is the value, that is, the time socially necessary to produce each category of product needed. By calculating this value with precision and rigour, labour-power is not wasted. But when value is calculated, it is calculated from the point of view of the collective interests of society, and not from that of a particular group of producers or production units.
The situation is quite different under capitalism, where the law of value is blindly to regulate social production. In a commodity economy of this kind, the law of value regulates production on the basis of the market and competition. It can regulate production, in as much as competition and the fluctuation in prices that stem from it, exist. Price fluctuations tell producers what products exist in excess of the population’s capacity to pay for them and which ones are in insufficient supply. Prices fluctuate around their value and thus spur producers to expand or restrict production in given sectors. That is how the law of value regulates commodity production based on the private ownership of the means of production. That is how the law of value regulates the distribution of labour-power and the means of production in a capitalist society.
In a socialist society, production is regulated. But this regulation is not due mainly to the action of the law of value, but rather to the conscious planning of social production as a whole. The law of value thus becomes a tool to account for different aspects. Consequently its action is limited. It is in a way tamed and subjected to the decisive action of a national production plan.
But the Chinese revisionists do not see things this way. For them, the commodity economy under socialism is the same as under capitalism. According to this theory, there would be no difference between feudalism and capitalism, or even between feudalism and socialism, because in each case we find a commodity economy and the law of value!
By denying that the law of value is a historical category that is applied differently depending on the economic regime, Hu Chiao-mu and his friends theoretically justify the restoration of capitalism In China. They are pushing the country down a road where the laws of capitalism will have their effects sooner or later, effects like unemployment, price hides and social disparities. A new ruling class will appear. Though it will not legally own the means of production, it will nonetheless have all the characteristics of the bourgeoisie (economic privileges, control over production, political power, and so on). When the law of value regulates socialist economy, the door is thrown wide open to the anarchy that characterizes the capitalist system, and the path is paved for the return of the crises that are the inevitable consequence of capitalist anarchy.
Hu Chiao-mu’s line of reasoning concerning the objective nature of economic laws and the necessity of complying with them cannot lead to anything else. It is aimed at subjecting the Chinese working class and peasantry to the laws of capitalism.
It is now easier to understand how the theorists and leaders of the CPC conceive of socialism. In a speech given at the State Council meeting, Hu Chiao-mu defines socialist economy in the following manner:
...socialist economy means highly socialized mass production based on public ownership.
To this characteristic, he adds that the “production of socialist society is consciously and socially regulated through state planning”. This conscious regulation and “the possibility of doing things according to objective economic laws” combined with “public ownership” and “highly socialized mass production” are what distinguish socialism from capitalism. As for the “rest”, namely commodity production, the law of value, how and on what basis work is remunerated, the forms and development of the division of labour (between the country’s different regions, between the city and the countryside, and within each production unit) – in other words, the production relations that exist between men and the forms of commodity distribution – for all these “details”, there is no difference between socialism and capitalism.
As for socialism being a transitional period between capitalism and communism, Hu Chiao-mu says nothing. Nor does he breathe a word about socialism being a
period of struggle between dying capitalism and nascent communism – or, in other words, between capitalism, which has been defeated but not destroyed, and communism which has been born but is still very feeble (Lenin).
This “omission” is, to say the least, rather surprising in a speech that is supposed to explain economic characteristics of socialism! But this same “omission” comes as no surprise when we realize that this speech aims to liquidate the socialist transformation of the relations of production.
What is most striking about the concepts defended by the theorists and economists of the CPC is that their definition of socialism only mentions the form of ownership of the means of production. They completely ignore two other important aspects of the relations of production: a) the place men occupy in production and their relations, between each other; and b) the form of commodity distribution. It would seem that, for the CPC’s economists and theorists, the only difference between capitalism and socialism in terms of the relations of production is the public ownership of the means of production.
It is important to note that the author is not dealing here with a given period or stage of building socialism in China. He is talking about what distinguishes capitalism from socialism, from the economic point of view. It would be an entirely different story if the problem was that of the historical development of socialism in a given country, at a given period. If such were the case, we would have to concretely analyse the different stages of development on the basis of the concrete conditions prevailing in the country. For example, it would then be possible to declare that, during a given period, the revolutionary transformation of the form of ownership of the means of production is the decisive factor. The history of building socialism in the world has taught us that the revolution’s first task on the economic level is to expropriate the exploiting classes and establish socialist public ownership. This task must be basically realized in order to transform fundamentally the other aspects of the relations of production. In other words, to change men’s relations in production, it is necessary to expropriate the capitalists and big landowners. If this is not done, nothing can be changed. And the combination of both these factors is necessary if production is to develop enough to render obsolete the commodity form of the fruits of labour (this will only be completely possible under communism). But it is a completely different matter to declare that socialism has been achieved solely because “public ownership” has been established. Though this first step is indispensable to build socialism, it is nonetheless insufficient. To reduce socialism to this step is to deny its distinctive characteristics and undermine socialist construction.
Socialism is a period of transition, a period often referred to by Marx as the inferior stage of communism. As such, this “transition period... must combine the features and properties of both these forms of social economy” “that are capitalism and communism (Lenin). But this original combination of the “features and properties” of capitalism and communism is in no way static. There is no “peaceful coexistence” of capitalism and communism under socialism. Nor does capitalism become extinct, or peacefully integrate itself into Communism. The combination of the “features and properties of both these forms of social economy” is in fact a struggle to liquidate the remnants of capitalism and develop the embryonic forms of communism.
The CPC leaders deny the distinctive features of socialism and present it as a static melting-pot of certain aspects of capitalism and certain aspects of socialism. This melting-pot can be summed up in the following equation: public ownership + planning + socialized mass production + law of value + commodity production = socialism. Stir, and there you have the recipe for developing productive forces. This development should in turn automatically entail the eventual development of the relations of production...
For the Chinese revisionists are forced to take a stand on the relations of production. Twenty years of struggle to build socialism in China cannot be discarded that easily. It is thus necessary to proceed cautiously, step by step. This is why Hsueh Yung-ying wrote in the article The Four Modernizations: a Deep-Going Revolution:
At present, the socialist relations of production in our country are basically in correspondence with the development of the productive forces. However, these relations are still far from perfect, and this imperfection stands in contradiction to the steady growth of the productive forces. In the process of carrying out the four modernizations, these contradictions will crop up or\e by one tor us to solve as we go along. Take agriculture for instance. With the development of large-scale modernized farming, the existing relations of production will no longer suit the developed productive forces and this will call for a corresponding readjustment in the relations of production.
Hu Chiao-mu’s article would seem to indicate that the present imperfections in the relations of production do not require greater revolutionary transformation of these relations but rather a slackening-off in their transformation. Thus, workers participate less and less, if at all, in the management of enterprises, and are increasingly replaced by the leaders and economic organisms. Intellectuals and cadres will once again hold a choice position in economic organization and planning... So, the material basis for the preservation and development of the bourgeoisie in China is to be found here, in the relations of production that constitute the basis of the whole social structure.
This is the price China will have to pay if it follows the path of the “four modernizations”. This is the price China will have to pay to become a “great power” in the coming decades. Any other way of looking at the development of the productive forces can only lead to failure, declare Deng Xiaoping and his theorists. As far as they are concerned, all that is important is to speed up “development”. The revisionists are not the least bit concerned about the fact that this type of development will lead to the inevitable consequences of capitalism, e.g. unemployment, relative overproduction, increasing social disparities. China will be caught up in the imperialist network of competition, financial dependency and inter-imperialist political struggle, up to and including imperialist war, because of this “development”; but no matter – it is of no consequence as long as China is “powerful”! There will indeed be development in China; but it will be the development of capitalism and imperialism, not the development of socialism.
 See The Forge, vol. 4, no. 3, January 26,1979, p. 9: “On the question of Coke In China”. Among the article’s gems of wisdom Is the following product of deep reflection: “The Coke produced will be supplied to the major cities like Shanghai and Beijing (Peking), principally to serve the growing number of foreign tourists who are visiting China. The Increasing tourism Is allowing many people from all over the world to see first-hand the accomplishments of the Chinese socialist revolution.” So, says The Forge, “there Is nothing un-socialist” about this. In other words, Coke has become a vehicle for building socialism In China.
[1a] Sea the Interview with Deng Xiaoping in Time, February 5, 1979.
 See Peking Review no. 52, December 31, 1978.
 Ibid., p. 7
 Ibid., p. 9
 Ibid., p. 9
 Ibid., p. 9-10
 Ibid., p. 11
 Ibid., p. 11
 Ibid., p. 14
 Speech published In no. 45,46 and 47 of Peking Review, 1978.
 Hu Chlao-mu, op. cit, Peking Review, no. 45, 1978, p. 8
 Ibid., p. 7 (our emphasis)
 Karl Marx, Letter to Kugelmann, July 11, 1868; as quoted by Hu Chlao-mu In Peking Review, no. 45, 1978, p. 7 (our emphasis)
 Hu Chlao-mu, op. cit. Peking Review, no. 45, 1978, p. 7-8
 F. Engels, Letter to Joseph Bloch, September 21,1890; In Marx, Engels, Selected Works, New World Paperbacks, International Publisher, New York, 1968, p. 692
 Ibid, (our emphasis)
 Hu Chlao-mu, op. cit. Peking Review, no. 45, 1978, p. 8
 “Communique of the Third Plenary Session of the 11th Central Committee of the Communist Party of China”, Peking Review, no. 52, December 31, 1978, p. 9
 Lenin, The Trade Unions, the Present situation and Trotsky’s Mistakes, In Collected Works, Vol. 32; quoted by Hu Chlao-mu, op. cit. Peking Review, no. 45, 1978, p. 8
 Hu Chlao-mu, op. cit. Peking Review, no. 47, 1978, p. 13
 Ibid., p. 13 (our emphasis)
 Ibid., p. 13 (our emphasis)
 Ibid., p. 14
 Ibid., p. 16
 Ibid., p. 17
 Ibid., p. 17 (our translation and emphasis)
 Lenin, Can the Bolsheviks Retain State Power?, Collected Works, Vol. 26, p. 106
 Hu Chlao-mu, op. cit, Peking Review, no. 47, 1978, p. 17
 Ibid., p. 17
 F. Engels, La Contribution A la critique de economie politique de Karl Marx, In Marx, Engels, Etudes philosophiques, Editions sociales, Paris, 1974, p. 131, our translation
 Peking Review, no. 36, 1978, p. 10
 Ibid, p. 11
 Hu Chlao-mu, op. cit., Peking Review, no. 46, 1978, p. 18
 Ibid, p. 18
 Ibid., (our emphasis)
 Ibid., p. 17-18 (our emphasis)
 Hu Chlao-mu, op. cit, Peking Review, no. 47, 1978, p. 18
 Hu Chlao-mu, op. cit., Peking Review, no. 46, 1978, p. 19
 Ibid., p. 18
 Stalin, Economic Problems of Socialism in the USSR, Foreign Language Press, Peking, 1972, p. 19
 Ibid., p. 20-21
 Ibid, p. 21
 Hu Chlao-mu, op. cit, Peking Review, no. 46, 1978, p. 19
 Hu Chlao-mu, op. cit., Peking Review, no. 45, 1978, p. 9
 Ibid., p. 8
 Ibid., p. 9
 Lenin, Economics and Politics in the Era of the Dictatorship of the. Proletariat, in Collected Works, Vol. 30, p. 107-108, (our emphasis)
 Ibid., p. 107
 Hsueh Yung-ying, Peking Review, no. 36,1978, p. 11-12