Cooking the Books: Marxism and Panda Bonds (2006)

The Cooking the Books column from the February 2006 issue of the Socialist Standard

To mark the 112th anniversary on 26 December of the birth of Chairman Mao a new, expanded “Marxism-Leninism Academy” was opened in Beijing (Times, 3 January). According to Zhang Tongxin, of Beijing University’s Marxism Institute, “since reform, a considerable number of people have forgotten that China is a socialist country”.

By coincidence, the same day the Times reported on a number of financial reforms that came into force in the first week of January. One of them concerned the modernisation of financial markets “to steer more money to profitable projects, not white elephants, and keep the banks on their toes”. Already in 2005, the Times reminded its readers, China had seen “the launch of a highly successful commercial paper market; China’s first asset-backed and mortgage-backed securities; approval for banks to trade currency swaps and forwards; the establishment of the country’s first money broker; the first ‘panda bonds’ - denominated in yuan and sold in China by international borrowers”.

No wonder “a considerable number of people” had come to the conclusion that China is not socialist. And they are right. China is not a “socialist country” but a capitalist one. And it never was socialist. What the Chinese “Communist” Party established when they came to power in 1949 was a state-capitalist regime under their political dictatorship. The workers and peasants continued to be exploited but, from then on, by a “vanguard” which collectively exercised a monopoly, through its political control, over the state-owned means of production.

Although this state-capitalist regime was relatively successful in developing China’s heavy industry and military might, like the similar regime in Russia it proved unable to compete economically against the established capitalist powers such as the US, Europe and Japan. So, again as in Russia, a policy of “reform” was instituted involving the encouragement of private capitalist enterprise and the more rigorous subjection of state enterprises to market forces. From the point of view of the established political elite, so far this reform has been executed far more successfully than in Russia in that they are still in control of political power and on this basis can still proclaim the lie that China is a “socialist country”. Not that anybody believes them any more.

Marx wrote Capital to analyse how capitalist society worked with a view to showing how it could never be made to work in the interest of the class of wage workers on whose exploitation for surplus value it was based. He was not writing to advise political parties and governments how to run capitalism. So it is difficult to see what the Chinese government thinks it can get out of studying his writings.

Marx did write, in Volume III of Capital, about stock exchanges, financial markets and the like. Basically, he saw these as places where capitalists tried to swindle each other and small investors out of the surplus value that had already been extracted from the workers. Conceivably, Chinese government officials and the millionaires that have come into existence under the “reform” could pick up a few hints from here on how to swindle each other more efficiently.