capitalist restoration, China’s Structural Transformation, Deng Xiaoping, deregulation, directly controlled state enterprises, industrial dominance of the private sector, marketization, Martin Hart-Landsberg, Privatization, Solidarity, state planning and production, the Chinese experience, the market reform process
The Realities of China Today
Martin Hart-Landsberg / November-December 2008
INTEREST IN THE post-1978 Chinese market reform experience remains high and for an obvious reason: China is widely considered to be one of the most successful developing countries in modern times. The Chinese economy has recorded record rates of growth over an extended time period, in concert with a massive industrial transformation. Adding to the interest is the Chinese government’s claim that this success demonstrates both the workability and superiority of “market socialism.”
There are those on the left who share this celebratory view of the Chinese experience, believing that it stands as an effective rebuttal to the neoliberal mantra that still dominates economic thinking. Therefore, they encourage other countries to learn from China’s gradual, state controlled process of marketization, privatization, and deregulation of economic activity. A small but significant number share the Chinese government’s view that China has indeed pioneered a new type of socialism.
Many on the left also believe that China may soon be capable of anchoring an alternative international economic system, thereby offering other countries the opportunity to reduce their dependence on the current U.S. dominated system and pursue their own independent development strategies.*
Unfortunately, as argued below, there is no justification for this positive perspective on the Chinese experience. First, regardless of what Chinese leaders say, China is not pioneering a new form of market socialism – rather the reforms have led to the restoration of capitalism. As a result, Chinese internal dynamics are clearly hostile to the creation of any anti-capitalist alternative. Second, the reforms have produced an increasingly exploitative growth process, one that is generating considerable wealth for a small minority at unacceptably high cost for the great majority of Chinese working people.
Finally, China’s growth process is now structurally enmeshed in, and dependent upon, the operation of a broader process of regional and international restructuring, one controlled by transnational capital. As a result, China is not only incapable of serving as an anchor for an alternative global economy, its accumulation dynamics actually contribute to the strengthening of existing international structures of power and the global imbalances and tensions they generate.
The stakes are high in this engagement over the nature and significance of the Chinese experience. For example, left support for the Chinese reform experience encourages, consciously or unconsciously, the mistaken belief that socialism can be built through the use of markets and a closer integration with global capitalist accumulation dynamics. At a minimum, this leads to confusion about the nature of socialism, and of capitalism as well.
This is more than a theoretical concern: one finds in many countries – including Cuba, Venezuela, South Africa and Brazil — advocates for socialism who argue that their respective governments should implement Chinese style market reform policies.
Chinese workers, in growing number, are beginning to challenge Chinese state policies, not just in response to the exploitation they experience but also because of their renewed interest in socialism itself. It is therefore vital that we develop an accurate understanding of the Chinese experience, both to provide support for those seeking socialist renewal in China and to ensure that efforts at social transformation in other countries are not compromised by false understandings of the dangers of markets and capitalist imperatives.
China’s Structural Transformation
In 1978, two years after the death of Mao Zedong, the leadership of the Chinese Communist Party, led by Deng Xiaoping, decided to radically increase the economy’s reliance on market forces. The leadership claimed that such a step was necessary to overcome the country’s growing economic problems which were alleged to be caused by Mao’s overly centralized system of state planning and production.
Political and economic changes were definitely desired by the majority of Chinese. Deng and his followers, however, greatly overstated the severity of existing problems and, more importantly, ignored popular calls for an exploration of other, non-market reform responses.
Once begun, the market reform process quickly became uncontrollable.(1) Each stage generated new tensions and contradictions that could only be resolved (given the leadership’s opposition to worker-community centered alternatives) through a further expansion of market power. The “slippery slope” of market reforms thus led to an eventual privileging of market dynamics over planning, private ownership over public ownership, and foreign enterprises and markets over domestic ones.
Economic transactions are now overwhelmingly shaped by market prices. The share of retail sales made according to market determined prices rose from 3% in 1978 to 96.1% in 2003. For producer goods, the share rose from zero to 87.3% over the same period.(2)