China and the global crisis of capitalism


This article was presented by the author at the Left Forum At CUNY in June of this year. 

First let me say that I am an historian, a Marxist Leninist historian, not an economist. If we are to try to understand what China is trying to accomplish in the present world situation, we should apply Marxism as a guide, looking as Marx and Lenin and Mao Tse-tung did at contemporary events in terms of both history and political economy.

China is trying to do, as I see it, what the Soviet Union sought to do from the early 1920s-that is build socialism in one country, a very large country like the Soviet Union, albeit a very different one. The Soviets from the beginning of their revolution faced a hostile capitalist world, one where the capitalist /imperialist powers fought among each other. They were united only by their commitment to suppress workers movements in their own countries and colonies and quarantine contain the Soviet revolution until they were in a position to destroy the USSR.    After WWII and many revolutions, they finally achieved their goal, but not without a great deal of help from their "friends", the Gorbachev leadership of the CPSU.

The relationship of the major capitalist/imperialist powers toward China in regard to trade and investment is profoundly different than their previous relationships to the Soviet Union throughout its history. But the major capitalist/imperialist states, as I see it, seek to liquidate both Chinese socialism and the leading role of the CCP while  at the same time preventing a future  capitalist China from emerging as a major competitor to them, returning to the old dreams of a "China market" and cheap Chinese labor that they would in effect control, completing the "new world order" they proclaimed when the Soviet Union was dismembered.

So far, they have failed miserably and have even lost ground, because the CCP has maintained its leading role and has implemented serious developmental policies rather than the Potemkin Villages that passed as policies in the Gorbachev era. Nor has the CCP followed the appeasement policy that the Gorbachev leadership advanced toward the Reagan and Bush I administrations and the whole U.S./NAT0 bloc, a policy that after 1989 turned from appeasement to collaboration in the dismemberment of the USSR.

China's strategies, while superficially resembling some Soviet strategies, particularly the New Economic Policy (NEP) of the 1920s are essentially different from those policies.  Of greater importance, China's overall concept of socialist construction is different from the Soviet model. The Soviets during the last years of Lenin's leadership embarked upon the NEP to recover from the devastations of WWI and the ensuing Civil War, and to establish, as a kind of stop gap, a mixed economy that would permit capitalist relations in agriculture and in internal trade.  The NEP would permit the Soviets to import foreign capital and technical assistance for internal development, while controlling what Lenin called the "commanding heights" of industry.

The NEP was never seen as a long-term model for socialism.   Its contradictions and failures, along with fierce factional conflicts in the CPSU led to its elimination  and the establishment of the five year plan economy, based on no private enterprise or market relations,  the rapid collectivization of agriculture, and  the use of the surplus so developed to rapidly develop industry.

This meant, the removal of all internal capitalists, rich peasants and money lenders or Kulaks,  and commercial middlemen/facilitators, directing and profiting from the flow of goods or "NEP men" as they were called. The Kulaks especially had been undermining the policies of the central Soviet government with demands for higher prices for the agricultural surplus and openly ignoring party committees and cadre in the countryside.

The Five Year Plan Planned Economy then became the Soviet model for Socialism, for the rest of Soviet history and the basis for socialist construction globally.  This was true not only in socialist countries led by Communist parties, but also an influential force in countries emerging from colonial domination and seeking a path of development. India under the leadership of Nehru and his daughter Indira Gandhi is the best example of this, although examples can be found in Near Eastern and African countries

Against the background of the World Depression(1928-1939), where the export of capital in effect dried up and global trade plummeted, the Soviet model was, I would say, essential and necessary, with all of its contradictions and destructive distortions, for the rapid industrialization of the Soviet Union, the most dramatic industrialization in history, which was then decisive in the defeat of the fascist Axis in WWII and all that followed, including the Chinese Socialist revolution. While their aid to revolutionary forces was distorted and hugely exaggerated in capitalist propaganda, the Soviet Union through this period served as the principal bulwark against imperialism in all of its forms and a beacon to all progressive and revolutionary forces in the world.

 Although many factors were involved, the failure of the Soviet Union and China, following the triumph of the Chinese revolution, to maintain an economic/political alliance that would serve as the foundation for a global socialist community was a central factor in the deceleration of revolutionary socialist movements from the 1970s on, followed by the "long march to the right" which has characterized capitalist political economy for nearly four decades.

 We do not have time to analyze the policies advanced by the Chinese Communist party in the period from the establishment of the Peoples Republic to today: the initial Soviet influenced model of development; the reasons behind the  collapse of the Sino-Soviet alliance and China's subsequent Great Leap Forward without any Soviet aid in material and human resources which doomed it to failure; the Great Proletarian Cultural Revolution and its Impact; the planned and categorized modernizations; and the concept of a Socialist Market Economy which has develop since the end of the 1970s. None of these policies both in regard to their achievements and failures  were static or empty and the Peoples Republic of China, unlike the Soviet Union, learned from its tactical errors rather than learning to live with them.

Like the Soviet NEP of 1920s, the Chinese Communist Party today is seeking to advance what is essentially a mixed economy strategy, but one where the Chinese are not hampered by a lack of capital or industrial development as was the case of the NEP, which  undermined Lenin's "Commanding Heights" concept. Unlike the Soviets, China even with its huge population and limited internal natural resources, is no longer capital poor, but is a major exporter of high value consumer goods to the capitalist world. Unlike the Soviets from their beginning to their end, China is a creditor nation, holding both a part of the U.S. debt and its own investments in capitalist countries. For China though the Socialist Market Economy is something different than the New Economic Policy of the 1920s or Mikhail Gorbachev's Perestroika, the "paper tiger" policy which dismantled the centrally planned Soviet economy and replaced it with nothing except a shell. China is attempting to establish a viable model for socialist construction.  Its success or failure will be a vital force in determining the fate of both the socialist movement and social economic development globally for generations to come.

Many on the left in the U.S. are indifferent to China, and others are hostile. This I would say should tell them more about themselves than it does about China. 

First, on the social democratic left, those who look toward a mixed economy as a road to social progress, condemn China's internal labor and environmental policies while turning a blind eye to the Social Democratic led mixed economies of Western Europe, which have been in sharp decline as austerity policies and denationalization of industry have become the "new normal." It is ironic, perhaps, to see those who have long hailed Sweden, a very small country, as the "third way" model for the mixed economy/welfare state path, today refuse to see that Sweden and all other West European mixed economies are trapped in capitalist austerity policies while China's mixed socialist market economy continues to advance, moving forward in  terms of the welfare of the Chinese people.

On the far left, those who continue to support the globalization of some version of the Soviet model, ironically groups who derive from Joseph Stalin's most important left adversary, Leon Trotsky, condemn the Chinese Communist Party as they did the Soviet Communist Party as a state capitalist dictatorship and an imperialist force. These groups use phrases like "workers power" and "workers democracy" to call for  the overthrow through revolution of all existing governments, including China's and the spread somehow of a world revolution (the doctrine when Trotsky lived was called "the permanent revolution") rapidly through the world.   In practice, these groups see China as completely capitalist and an Asian version of Gorbachev's Perestroika.

However, China's struggle to construct a socialist market economy and socialism with Chinese characteristics is radically different in both theory and practice than the Gorbachev policies. Whereas Perestroika permitted already established Black Marketers to join with Soviet bureaucrats to siphon off resources from the public socialist planned  economy, to use Perestroika  as a shill to accumulate wealth for themselves and drain ii until it became a shell of itself, the Chinese Communist Party is using the internal capitalist sector  and attempting to use foreign direct investment to pursue dev elopement  along the lines of the socialist market economy, controlling the commanding heights of  internal finance/investment capital, as I understand it.

Whereas Gorbachev, proclaiming a policy of "glasnost'(openness) and using slogans like "more socialism, more democracy," used his position to have the Communist Party of the Soviet Union formally relinquish its leadership role in social construction in 1988, the Chinese Communist party has never dreamed of such  action. While some fairly sophisticated capitalist commentators contend that the CCP is today faction ridden, even these commentators do not see CCP groups forming "united fronts" with open anti-Communist groups, as happened in the Soviet Union with the encouragement of the Gorbachev leadership in the last years of the USSR.

But what is happening in the global economy today? Economists increasingly call the period from 2008 to the present "the great recession."

The Great Depression saw the victory of fascism in Germany, a top five industrialized nation which sought to solve the economic crisis by creating what was a colonial empire in Europe. At the same time Japanese imperialism's embarked on what was essentially a strategy to colonize and  control China, settling Japanese in Manchuria, ruling through occupation zones and local warlords, controlling the entire economy by brutal conquest comparable to the Hitlerite strategy of controlling Europe by brutal conquest and the colonization of Eastern Europe along with the dismembering of the USSR.  This was the old fascist imperialism, decisively defeated in WWII.

Today, fascist movements are being used as a weapon against capitalist dominated Russia, and the danger of a fascist party winning out in a major country, France, is real, thanks to the austerity policies advanced throughout Europe and in the French case by the nominally socialist government, which controls the commanding heights of nothing, proving the truth of Lenin's view of the Social Democrats that the Communist movement broke from as serving the interests of capital. There are also reactionary forces in Japan, whose current Prime Minister, Abe, the grandson of a member of the Tojo cabinet whom the U.S declared to be a "class a war criminal," plays with nationalist sentiments and is praised by U.S/NAT0 bloc countries for his authoritarian rule. These are real dangers to world peace-a militarized Japan seeking to restore its power in Asia, a xenophobic France, joining perhaps with rightist forces in Germany to "defend Western civilization" from Asians and Africans, with Muslims playing the part for the new fascists that Jews played for the old fascists.

Unlike the Soviet Union, through its history and the Russian Rump of the dismembered USSR today, China is not yet directly threatened by these developments in military terms (although I know that some fear it is).  The U.S./NAT0 bloc, which itself is increasingly weakened by the divisions between U.S. and EU capitalist states, is pursuing dangerous anti-Chinese "containment" policies, reminiscent of the anti-Soviet cold war policies we know so well.

 First, the policy of using Vietnam as an anti-Chinese containment state, exacerbating conflicts between Vietnam and China by bringing Vietnam into the TPP is an excellent example.

If we remember or want to remember Lenin's theory of imperialism, these various trade/investment alliances, in the name of "free trade" and development in reality are, like the creation of great monopolies such as Standard Oil, U, S. Steel, and General Electric more than a century ago in the U.S, the establishment  of syndicates of capital that will absorb or destroy smaller competitors through collusive agreements and then  fight for global control of markets, raw materials and labor pools with rival  large syndicates.  Eventually, the creation of these syndicates and economic alliances led to military alliances to re-divide the globe, to militarization and world wars which were, using the technologies and "global reach", the greatest wars in history. This could, even in the present nuclear age, happen again.

We can discuss China's economic achievements and failures, its commitment to developing its mixed socialist market economy policy, "socialism with Chinese characteristics" which potentially offers the people of the world a model of socialism, what the Soviets used to call "real existing socialism," that will supplant the Soviet model. 

Whether China will succeed or fail will as I see it depends on the leadership of the Chinese Communist party in controlling the flow of investment internally. This will mean using rather than being used by foreign direct investment, and developing economic policies toward the predatory imperialist powers of the U.S. NAT0 bloc which will discourage these states from escalating political or military conflicts against China, developing an anti-Chinese military alliance in Asia, and  engaging in the sort of reckless actions that they currently are toward Russia in Ukraine. In capitalist Russia, the remnant of the former Soviet Union, they achieved through Gorbachev and Yeltsin the victory that they still dream of gaining over China, which at present remains an impossible dream.

China would like to play the role that the U.S. did from the Civil War to the end of WWII, not the role that the Soviet Union played from the Revolution to its dismemberment.  I mean China would like to profit from economic relationships with the capitalist states but stand a world apart from their political/military alliances, and thus profit from the divisions among its capitalist imperialist blocs, avoid the global costs, especially the military costs of its rivals, and export goods as against capital.  It does not wish to be the beacon and center of a global revolutionary socialist movement, which the Soviets were, combining a commitment to construct socialism in one country with a commitment to the building of global revolutionary socialism.

 But I would suggest that in this difficult time China, if it is to advance its model of socialist construction, must try to do something of both. Instead of merely engaging with governmental and business power structures, organization men and institutional managers, it should begin to engage more with the people's movements in the world which want what it wants, protection and rights for labor and the people, a road out of poverty, exploitation and oppression.

China must seek, for its own defense, to be a deterrent to the abuses of the U.S./NAT0 bloc not as the Soviets were at the center of a military alliance engaged in arms races with the U.S. NAT0 bloc but as a force for peace and at the same time a force against the more predatory examples of jungle capitalism through the world.

The best way it can overcome the propaganda of its left critics is to identify itself with the movements in the world to raise minimum wages in countries like the U.S., protect the environment and save public education.

At a time when social democracy is collapsing in Western Europe and the Democrats in the United States are doing business as usual politics that they expect will put the organization woman Hillary Clinton in the White House, China by identifying itself, not with dogmatism and the sectarian positions of its left critics, but with labor and peoples movements can advance its own vision of socialist construction and at the same time begin to, to paraphrase Mao Tse -tung, both struggle and win the ideological battles of our time.

Let me conclude by saying  that China, regardless of what Mao Tse-tung used to call the running dogs of capitalism and imperialism and the left tails to some of those dogs,  has been advancing while the major capitalist states have been stagnating and declining.  China  is becoming not only more prosperous as it develops among its people many millions of technical and professional  workers, but it is also becoming a more humane society sensitive to human needs while the capitalist societies, which both do business with it and smugly mock, it become more desensitized, and fragmented in their thinking and acting.


There is a real danger developing in the world out of the global capitalist crisis. China's role relative to the nations of the U.S./NAT0 bloc has been and continues to be a positive a force for both peace and an emerging socialist alternative to contemporary capitalism. 

Photo: Chinese President Xi Jinping with Mexican President Enrique Pena Nieto, June 2013. 





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  • A Paragon for Socialist Construction:
    What is impressive about Chinese Communism is how pragmatic and practical the Chinese Communist Party (CCP) has been about ‘building socialism in one country.’ As Professor Markowitz points out, the Chinese have learned from their mistakes, not learn to live with them. They are also astute students of the mistakes of other socio-political-economic systems. China’s mixed socialist market economy is far superior to the West’s austerity mixed economies in terms of workers’ power and support. Nor will China’s mixed economy lead to the collapse of Chinese Socialism because the CCP is determined to keep its leadership role in the present and future construction of Chinese Socialism. China has been able to make socialist market reforms without the catastrophic effects of Gorbachev’s perestroika which destroyed and dismembered the Soviet Union, and glasnost which destroyed the leadership role of the Soviet Communist Party. We can say with confidence that finance and investment capitalists will never control the ‘commanding heights’ of the Chinese economy. The more important question is: Will the capitalist West allow Chinese Communism a peaceful rising? The West wishes to relegate China to the bottom rung of a hierarchical global ‘New World Order,’ and to take advantage of her cheap labor force and huge markets. Already, with respect to China’s claims to the South China Sea, the U.S. is attempting to demonize China with what Robert Parry calls ‘stupid propaganda stuff.’ With the demise of the Soviet Union, a new scapegoat is needed to revive a new Cold War, to contain China, and to conceal the global economic failings of capitalism. It would irk the West even more if China were to become the center of a global revolutionary movement, engaging with labor and people’s movements around the world. As a paragon for socialist construction, the capitalist West has more to fear from China’s peaceful rising, and will do everything possible to demonize and/or destroy China’s political and economic system. NT

    Posted by Nat Turner, 07/20/2015 8:25am (9 years ago)

  • They can go on retaining the present system but it will suffocate them by demands for safety nets. The market plunged so the consequences of Depression will ensue. Better to adopt the Leninist centralist economy. The centralist economy is as simple as producing where the demand counts. Transfer resources to where it is needed and slash resources where they will exceed. Simple arithmetic. We do not have to go to the anarchic laissez faire where only the 1% can afford the decent steak.

    Posted by Rainerio Tayco, 07/16/2015 8:23pm (9 years ago)

  • I think the hopefulness of this article is confirmed by many developments occurring in China both internally and externally. No doubt with the entrenchment of a billionaire class, the CCP has a tiger by the tail. On the other hand, if China is 'imperialist' which I think is questionable, its investments abroad seem to be very constructive as compared to the exploitative US model. Years ago I was very encouraged by Wahid Halabi's analysis of China's socialism as I now am by Norman Markowitz's assessment!

    Posted by John Mackoviak, 07/09/2015 12:18pm (9 years ago)

  • Excellent article. Thank you for your input.

    Posted by Michael Merritt, 07/08/2015 3:13pm (9 years ago)

  • Bruce
    I understand your points. The Chinese state controls the flow of internal capital and the Chinese capitalists do not control the Chinese state or the Chinese Communist party. The present leadership has acted directly to strengthen the public sector and public control. Furthermore China has established a bank for infrastructure development internationally which offers poor countries much more than the present World Bank system.
    The Chinese capitalists are there, but their situation in terms of class power is different at this time than any other group of capitalists in any major country in the world.
    You have a right to not understand, because whether the Chinese mixed economy will develop into a model of socialism, one in which private investment and market relatons are controlled to provide a more abundant society for all, one in which the workers become more secure, more equal and more powerful, with the capitalists serving them, not vice versa, and those "billionaires eventually seeing their wealth brought into the public sector, no one can really say. Maybe it will fail. Maybe it will change. Maybe the capitalists in China will win out. But the capitalists here and everywhere know that China is simply not another business competitor of them, which is why they are busy using cold war containment policies toward China in Asia and why they are trying to make U.S. workers fear and hate China the way they did Japan in the 1980s.
    Thanks for you comments Bruce.
    Norman Markowitz

    Posted by norman markowitz, 07/08/2015 11:42am (9 years ago)

  • interesting piece. I cannot understand how we have Chinese corporations" managed by Chinese billionaires that is exporting capital & playing a role of clear, outright, capitalist corporations, AND still have any kind of "socialism." As well, the horror stories we receive here of levels of outrageous exploitation of Chinese workers, working at US owned multi-national corporations for next to nothing. I do not understand how this, in any way, is any type of "socialism."

    I certainly can be wrong---I just do not see anything there that points to anything I'd learned to define socialism.

    As well, I do not see China playing the anti-imperialist role that the Soviet Union/socialist bloc played (with whatever warts they may've had). Instead, they've gone to war with India, Vietnam & clearly seem to me to be operating as a classical expanding imperialist nation.

    Again, this is an area I just plain don't understand. I do appreciate the effort to explain it. However, China has clearly let the capitalist cat out of the bag. I hope, but I'll be surprised if they are able to stuff it back in.

    Posted by bruce bostick, 07/04/2015 12:17pm (9 years ago)

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