Cooking the Books: Capitalism with Chinese characteristics (2020)

The Cooking the Books column from the December 2020 issue of the Socialist Standard

Last month a pro-Beijing think-tank, Anbound, sent us (and others) an op-ed on ‘China’s state capitalism in the Eyes of the West’. Although the words ‘state capitalism’ were sometimes in inverted commas, sometimes they weren’t suggesting that they had no real objection to the term.

The article was in response to one that had appeared in the Economist on 15 August entitled ‘The new state capitalism: Xi Jinping is trying to remake the Chinese economy’. This argued that the head of the Chinese dictatorship, Chairman Xi, ‘is presiding over what he hopes will be the creation of a more muscular form of state capitalism. The idea is for state-owned companies to get more market discipline and private enterprises to get more party discipline, the better to achieve China’s great collective mission.’

The Chinese think-tank summarised the Economist article:

  ‘China is gradually establishing a commercial legal system, and its response to enterprises is more sensitive. The formulation of bankruptcy and patent regulations has increased fivefold since 2012. Predictable rules make the market run more smoothly as well as increase economic production. Finally, the last element is to blur the boundary between state and private firms. State-owned enterprises are forced to increase financial returns to attract private investors’.

This sounds like the sort of ‘mixed economy’ that exists in the West, so why is it called ‘state capitalism’ and not just ‘capitalism’? The answer seems to lie in the sentence that followed:

 ‘At the same time, the state has also strengthened the implementation of strategic control over private enterprises’.

Even this is not that different from what some governments of traditional capitalist states aspire to, though in China’s case it is being done more systematically and by a state controlled by a single dictatorial party.

In any event, it is not the same as the state capitalism that used to exist under Mao where most of the industrial means of production were owned by the state, itself monopolised by a bureaucracy whose top members effectively owned them collectively and benefited from this in terms of a privileged lifestyle. When referring to the USSR, which was the same, Maoists called the privileged ruling group a ‘red bourgeoisie’. A case of people in glasshouses throwing stones.

What exists today is more akin to the New Economic Policy that the Bolsheviks were forced to adopt in 1921 and which Lenin described as the development of capitalism under the control of ‘the proletarian state’, by which he meant a state controlled by a vanguard party (falsely) claiming to represent the working class. For Lenin this was to be a temporary expedient to help overcome Russia’s economic backwardness, and the capitalists it generated were small fry. In China it is seen as a permanent situation in which the one-party state controls and directs the activity of large shareholder-owned capitalist corporations, many export-oriented.

Is it a viable alternative way of running capitalism to the multi-party political system that exists in the capitalist countries of the West? It is certainly working at the moment. The new class of private capitalists seem content with the situation and are not campaigning for the end of one-party rule. They probably prefer the stability this brings, just as their counterparts in fascist Italy and Nazi Germany did.

In fact, like them, China is seeking to control and direct private capitalism to achieve the same ‘great collective mission’ of winning a place in the sun at the expense of the older, more established capitalist states that dominate the world.

Capitalism vs the Environment (2020)

From the December 2020 issue of the Socialist Standard

Ever since the dawn of the industrial revolution, capitalism has had a relentless impact on the environment, causing devastating climate change. With production motivated by making money rather than safeguarding the environment or satisfying people’s, needs wasteful and polluting methods will be used if they minimise costs and maximise profits. Any legislation which aims to curb environmental damage still has to fit into this framework. We in the Socialist Party do not shout for minimum reforms or minor changes to current worldwide production methods in an attempt to mitigate or offset the damage already done. Instead we believe that the only real solution is an end to the root cause of the problem, that is capitalism itself – nothing more, nothing less

We believe that it is the workers of the world who do all the producing and wealth creation, yet we are the last to realise the benefits when profits are growing. And the first to experience the hardships of downturns, recession and austerity.

The Socialist Party, which is part of the World Socialist Movement, is like no other organisation, insofar as we are the only group calling for an end to capitalism, and for it to be replaced by global socialism. This would be a world based on a revolutionary change of the means of production, from being owned by a tiny minority to being held in common ownership with free access to goods and services according to individual and self-defined needs.

The Socialist Party has been advocating revolutionary change since its inception in 1904. If you would like to learn more, then please visit spgb.net where you will find all the information you need, including details of points of contact in your local area.

Covid and capitalism’s unnecessary dilemma (2020)

From the December 2020 issue of the Socialist Standard

The crisis provoked by the coronavirus pandemic has brought out clearly the nature of capitalism as a system where most people depend on the income they get as wages from employment. They are in this position because they are excluded from ownership and control of the places where they work and where wealth is produced. These are in the hands of a minority, generally through joint-stock companies, who use them, in fact only allow them to be used, to produce goods and services for sale with a view to profit.

To obtain the money to buy what they need, the excluded majority has to go out on to the labour market and successfully sell their ability to work in return for a money wage (sometimes called a salary). Some, who have a long-term job and so a regular income, are able to convince a bank or a building society to grant them a long-term loan to buy a house or flat, which will be theirs if they keep up repayments and interest for 25 years or so. Others work in precarious, low-paid jobs and have to rely between jobs on state hand-outs or the informal economy to survive. Those who are unemployable, through long-term sickness or disability, have to rely entirely on meagre hand-outs from the state.

When wages stop

One of the measures taken by the government to try to slow down and limit the spread of the virus has been to close down all but ‘essential’ businesses, defined mainly as those engaged in producing, transporting or selling food and other everyday household essentials. Over ten million workers – some 35 percent of the employed workforce – have been affected. If the government had not stepped in, all these would have been without resources within a few months, if not before. Such is the precarity in the end of all those dependent on working for a wage. They can’t stop working for much more than a month or so without having to beg for a handout from the state to survive.

A fall in living standards affecting so many people was something that the government could not let happen, if only to maintain public order and avoid widespread civil unrest. The scheme it came up with to avoid this was ‘furlough’ – enabling employers to keep workers on their books without them working but with the government paying 80 percent of their previous earnings. On 8 May, 8.9 million workers were furloughed. Some 1.6 million more were not so lucky. They lost their job and had to rely on means-tested Universal Credit, the number claiming this surging from 2.6 million in February to 4.2 million in May. Since Universal Credit only brings your income up to the official poverty line these suffered a drop in income of considerably more than 20 percent.

The government was prepared to fork out the money – obtained by borrowing it – but only on a temporary basis on the assumption that the business closures would only need to last a few months. Since a government has no resources of its own, it can get money to spend only by borrowing it from capitalists or from taxes that will ultimately fall on capitalists. No government can go on compensating workers for any lengthy period for being deprived of their usual source of income – the wages paid by their employers for the use of their working skills to produce some good or provide some service for profit. It’s just not sustainable.

The government has to aim to get the economy – production for profit – going again as soon as possible, with workers producing sufficient amounts of new value to provide a profit for their employer and to cover their own consumption. The government did try to do this after a few months but this proved to be too soon and the virus began to spread again, threatening once more to overwhelm the health service, though epidemiologists had been warning that this was likely to happen anyway.

Hence the government’s dilemma – which to give priority to: profit-making or public health? Hence, too, a particular problem for the present Tory government under pressure to prioritise the economy from the small businesses, which mainly cater for workers’ consumption and many of which risk going under, whose owners are an important support base for that party. In the end, as long as no effective vaccine is widely available and if the virus continues to spread, that is what the government will have to do.

They won’t have a choice. Despite the inevitable public outcry and political consequences, the government would be forced to sacrifice the health of the old who, in any event from a capitalist point of view, are a burden as they no longer work to produce the profits that capitalism is all about. It might not come to this –vaccination might become widespread or else the virus might peter out – but if neither of these happen within a year or so this is what would have to happen.

As it might be

In a socialist society a pandemic like the present one could be dealt with rationally without the complications that occur under capitalism due to its production for profit and working for wages. Where the means of wealth production are the common property of society these will be used to produce solely and directly to satisfy people’s needs and not for sale with a view to profit.

Even in such a society a pandemic of the kind we are currently experiencing could occur and the measures to be taken to contain it – basically, social distancing while a vaccine is developed – would be the same. However, these measures would be being implemented within a quite different framework. Everybody would already have access to what they need simply by virtue of being a member of society, without having to pay for it out of money wages obtained by working for an employer. Those able to contribute in terms of work would cooperate to produce what was needed, while everyone would have free access to what they required to meet their needs. In short, the principle of ‘from each according to their ability, to each according to their needs’ would apply.

This would be a much better framework within which to deal with any pandemic. To reduce contact between people, some production units and distribution centres might have to be closed and most people expected to stay at home except to collect food and other essentials as now. However, this would not be accompanied by the problems that result from doing this under capitalism. No production unit would ‘go out of business’ and not re-open; productive units would simply be temporarily closed. No-one would suffer a reduction in what they needed; free access for all, whether at work or not, to food and everyday essentials would continue. It would be inconceivable, indeed incomprehensible, that some children would have to go without a meal outside of term time.

If there was a longish delay in finding an effective vaccine or if the virus continued to spread for a couple of years or more, this would amount to a ‘natural disaster’ situation and some temporary rationing of non-essentials might have to be introduced. Once again, this would be done rationally, without the complications of maintaining production for profit and workers’ incomes, as the context would be a world of common ownership and production directly to satisfy everybody’s needs.

Adam Buick