The Emperor has no clothes: The myth of United States military might

‘The emperor has no clothes’ – this is the assessment of more and more parts of the world concerning the United States.

It is most notable on the Korean Peninsula, where the two parts have been actively working towards reunification and leaving the USA out of the loop. But one can find it throughout eastern, central and western Asia, as they work out their own regional problems. Russia, Eastern Europe, Africa, Latin America, even the Pacific increasingly have the same sense. This leaves a very small number of countries – perhaps 12 or at most 15 – who would count themselves as ‘Western’; they seem to hold onto the myth of the invincibility of the United States.

Until quite recently, the United States has relied heavily on maintaining this myth. The threat of economic largesse or the cold shoulder – most bluntly manifested through sanctions – has cowed one country after another in the past. But no longer: the more the United States arbitrarily imposes sanctions on all and sundry, the more ineffective they become. Global reserves and transactions in US dollars, which are the hard edge of sanctions, continue to decline (only 39 percent in 2018). And once you do not use US dollars, you can sidestep the sanctions (as is the case with the DPRK).

We may add to this the following facts: the United States internally is tearing itself apart, as it rapidly destroys all of the post-Civil War agreements and thereby the unstable truce of the internal Cold War; it is falling further and further behind in technological know-how, so much so that it is technologically backward; it has been largely de-industrialised since 1989 and its infrastructure is crumbling; its political model – a peculiar version of bourgeois democracy – is not merely a shambles, but a laughing stock of the rest of the world.

Here I would like to focus on another dimension. Many who would agree to some extent with this assessment will still say, ‘But the United States has the best military force in the world, which can defeat anyone’. While pondering this, I began to think back, trying to find a war that the United States has actually won.

Syria: it failed in its effort to topple the government.

Islamic State: this was defeated largely by the Russians, who know how to finish a job.

Afghanistan: ongoing failure.

Iraq (Gulf War): clearly a failure, at immense cost.

Libya: disaster, leaving a country in chaos.

Grenada and Panama (invasions in 1983 and 1989): perhaps these may seem like ‘successes’ over tiny countries, much like its earlier efforts in Latin America, but the result was a significant turn to the Left in Latin America and increasing rejection of US interference.

Cambodia: defeated.

Vietnam: a major loss.

Laos: lost again.

Cuba (Bay of Pigs): clear loss.

Korea: all they could manage was an armistice.

Second World War: while the Soviet Red Army clearly defeated Hitler’s Germany (with the western front a sideshow), one may argue that the United States ‘won’ the Pacific War against Japan. But they struggled mightily to do so, and – as historians point out – the Japanese began to sue for peace only when the victorious Red Army began to move east. The nuclear bombing of Japan was a rushed job to make it look like the United States was on top. What the United States did do – since its war losses were relatively minor – was make the most of the situation and impose its economic model on a Western Europe bled dry by the war. The United States did so by relying on the long post-war economic depression in Europe to assert economic control.

First World War: reluctant to enter into what they saw as a European problem, they arrived late and sustained few losses.

United States Civil War: at last, we can find a major conflict, but is this a loss or a win?

American War of Independence: they did indeed win this one, but it is some time ago now.

In fact, we need to go back to the eighteenth, nineteenth and early twentieth centuries to find wars that were won – such as the ‘Indian’ wars of extermination, internal rebellions, those with immediate neighbours (for example, Mexico, Canada and Latin America, as part of expansion and local domination), or occasional raids in the Pacific, to find actual examples of ‘victories’. Hardly glorious.

One may suggest that the United States has managed somewhat better when it has used someone else to do the dirty work. A good example here is the funding and arming of the Taliban in Afghanistan in order to resist the Soviet Union’s invasion of the 1980s (an effort to quell a restless border country). This example could be multiplied, but it came at immense cost, manifested above all in the successful attack on the World Trade Centre in New York in 2001. If anything was a symbol of US military weakness, this was it.

The question remains: why has the United States consistently lost wars for more than a century? One answer is the simple fact that United States ground troops are of inferior quality. As Stalin already observed in relation to the Atomic Bomb: weaponry is one thing, but the key is the quality of the ground troops. Thus, the United States loves firing missiles, dropping bombs and (more recently) using drones on all and sundry – Korea, Vietnam, Iraq, Afghanistan, Syria and so on – but when it sends in ground troops they fail again and again. Of course, the use of weaponry ensures that the military industry keeps humming along (as also the sale of such weaponry), but it is never able to win wars.

To be added here is the avoidance of getting too deeply involved in major conflicts – the two ‘world wars’ of the twentieth century being the best examples. In these cases, it has preferred to let others take the brunt and then step in afterwards to impose its will.

In light of all this, why do some people still play up United States military might? This is partly an old line, which follows a well-worn narrative. It is also relatively comfortable: under United States hegemony, the world is a bad place, but it provides a level of known comfort. And one can always feel a little better by harping on about the emperor’s evils. More significantly, it is a myth upon which the United States has relied for more than 70 years. The propaganda machine has been hard at work advancing this myth: Hollywood movies; museum displays for children of United States military hardware; pure spin dressed up as ‘history’ concerning its ‘pivotal role’ in the Second World War; a compliant ‘Western’ media; and so on.

The reality is somewhat different. As Wallerstein already put it some time ago: imperial hegemony works only when no one challenges it. As soon as someone does, one dare leads to another. A little later (2003), he observed that the United States is ‘a lone superpower that lacks true power, a world leader nobody follows and few respect, and a nation drifting dangerously’. These days, this is even more the case. In fact, it is no longer a ‘super’ power, but merely a power.

Perhaps it is time we realised – as the majority of the world has already realised – that the emperor really has no clothes.

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The socialist road of the reform and opening up (Deng Xiaoping)

In the 1980s, Deng Xiaoping made many statements concerning the reform and opening up, which had begun only a few years earlier. As he points out again and again, its core purpose was and is to liberate the forces of production – inescapable for socialism – in order to improve the socio-economic lives of everyone. And he is also clear that the reform and opening up is following the socialist road. For example, this talk from 21 August, 1985, points out:

People abroad are making two kinds of comments about China’s economic reform. Some commentators maintain that the reform will cause China to abandon socialism, while others hold that it will not. These last are far-sighted. All our reforms have the same aim: to clear away the obstacles to the development of the productive forces. In the past we carried out the new-democratic revolution. After the founding of the People’s Republic, we completed agrarian reform and conducted the socialist transformation of agriculture, handicrafts and capitalist industry and commerce, thus establishing the socialist economic base. All this was a great revolution, which lasted for more than three decades. But in the many years following the establishment of the socialist economic base, we failed to work out policies that would create favourable conditions for the development of the productive forces. As a result, they developed slowly, the material and cultural life of the people did not improve rapidly enough, and the country could not free itself from poverty and backwardness. Under these circumstances, in December 1978, at the Third Plenary Session of the Eleventh Central Committee of the Party, we were compelled to decide on a course of reform.

Our general principles are that we should keep to the socialist road, uphold the people’s democratic dictatorship, uphold leadership by the Communist Party and uphold Marxism-Leninism and Mao Zedong Thought. These principles have been written into China’s Constitution. The problem is how to implement them. Should we follow a policy that will not help us shake off poverty and backwardness, or should we, on the basis of those four principles, choose a better policy that will enable us to rapidly develop the productive forces? Our decision at the Third Plenary Session of the Eleventh Central Committee to carry out reform meant that we were choosing a better policy. Just like our past revolutions, the reform is designed to clear away the obstacles to the development of the productive forces and to lift China out of poverty and backwardness. In this sense, the reform may also be called a revolutionary change.

… Of course, the policies of invigorating the economy and opening to the outside may have certain negative effects, and we need to be aware of that. But we can cope with that; it is nothing serious. This is because from the political point of view, our socialist state apparatus can safeguard the socialist system. And from the economic point of view, our socialist economy already has a solid basis in industry, agriculture, commerce and other sectors. That is how we look upon the possible negative effects of our policy.

Our reform is an experiment not only for China but also for the rest of the world. We believe the experiment will succeed. If it does, our experience may be useful to the cause of world socialism and to other developing countries. Of course, we do not mean that other countries should copy our example. Our principle is that we should integrate Marxism with Chinese practice and blaze a path of our own. That is what we call building socialism with Chinese characteristics.

Book Outline: Friedrich Engels and the Basis of Socialist Governance

This work began as a chapter in my book, The Socialist State: Philosophical Foundations, but it eventually became a monograph in its own right. Why? Engels provides some of the key bases for understanding later developments of socialist governance. This is the outline of the book:

Friedrich Engels and the Basis of Socialist Governance

The argument of this book is that Friedrich Engels (more than Marx) provides the philosophical seeds for understanding the later development of socialist governance, if not the socialist state as such. The process of discovering these insights moves from reasonably familiar texts concerning states as they have existed thus far to quite unfamiliar and unstudied texts – especially from Engels’s later writings. The book covers the following topics: the state as a ‘separated public power’; socialist force (Gewalt) and the dictatorship of the proletariat; from abolition to the dying away of the state; the enmeshed apparatus of socialist governance.

The proposed work is significant not only because it will assist in identifying the philosophical origins of the historical reality of socialist governance, but also because such a detailed analysis of all the relevant texts by Engels has not – surprisingly – been undertaken before now. The closest that one finds is Hal Draper’s somewhat biased and incomplete five-volume work, Karl Marx’s Theory of Revolution (1977-2005). While Draper’s work is the most thorough in relation to textual analysis (as such material was available at the time), it is driven by an agenda that not only dismisses actual historical socialist states, from the Soviet Union to China, but also by a studied avoidance of important features of the texts. It also has a tendency to downplay the contribution of Engels and thus material that actually provides the philosophical basis for such forms of governance.

Other works on Marxist approaches to the state not only focus on Marx and largely ignore Engels, but do so with an agenda that stresses the Paris commune and ignores material on dictatorship of the proletariat and the use of force. Further, many such works assume – based on partial and selective reading – that both Engels and Marx held to the view that immediately after a communist revolution, the state would wither or ‘die away’, with the consequent assumption that the historical development of socialist governance goes against the theoretical view of Marx and especially Engels. This book begins to show that such a view is partial and thus mistaken.

The method deployed is simple but profound: careful and close attention, in original languages and translation, of all the relevant texts. Only by this method is one able to develop a complete analysis.

Chapter Outline

Introduction

The introduction has two main tasks. The first is to provide an overview of Marx’s reflections on the Paris Commune and the dictatorship of the proletariat. Based on an earlier study (Boer, ‘Marx’s Ambivalence: State, Proletarian Dictatorship and Commune’. International Critical Thought), it presents a tension in Marx’s thought between the two, a tension he began to resolve in terms of a narrative from the dictatorship of the proletariat to the commune. He began to do so, but never resolved it, so the task fell to Engels. The second task of the introduction outlines the argument of the four chapters of the book.

Chapter 1: From ‘Separated Public Power’ to Gewalt

The first chapter deals initially with Engels’s programmatic observations on hitherto existing states, which would set the subsequent agenda not only for Marxist studies of such states, but also the Weberian tradition (Weber’s definition of the state borrows heavily from Engels). Apart from noting the key features of this analysis, which involves the core idea of the state as a ‘separated public power’, the chapter focuses on Engels’s shifts between seeing such states state as semi-autonomous, as instruments of a particular class in power, or as shaped in their very nature by the class in question. Engels moves between these three overlapping approaches, depending on the point he seeks to make, but he tends in more detailed work to opt for the third: that the nature of the state is determined by the class in power. This position emerges particularly in a relatively ignored work, ‘The Role of Force in History’. Here Engels offers an analysis of Bismarck in Germany that is a close companion to Marx’s ‘Eighteenth Brumaire’, with the specific point that the bourgeoisie was able to shape the state in its image indirectly, even when it did not hold the reins of power. Even more important is the emergence of a core category, Gewalt. The word is difficult to translate, so a study of Engels’s texts reveals the senses of force, power and violence. This provides a rather new angle, not only on his proposal that hitherto existing states may be defined as a ‘separated public power [Gewalt]’, but that ‘The Role of Gewalt in History’ is vitally important.

Chapter 2: Socialist Gewalt and the Dictatorship of the Proletariat

The key finding of this chapter is Engels’s emphasis on proletarian Gewalt, in both the revolutionary process and in the early stages of the construction of socialism when power is gained through a revolution. The concrete manifestation of this socialist Gewalt is the dictatorship of the proletariat, which Engels (like Marx) defines carefully not as an individual dictatorship (as with Bakunin) or by a small band (Blanquist), but as a collective dictatorship by the majority, the workers. On this basis, Engels’s important contribution was to go beyond Marx in identifying the Paris commune with the proletarian dictatorship. Although suggested in the early 1870s, he does so clearly in the 1890s. The context was a struggle with the moderates of the increasingly large German Social Democratic Party, which tried to dispense with the dictatorship of the proletariat in its program and work within bourgeois democracy. In light of later tendencies in European communism to downplay the proletarian dictatorship and idealise the Paris commune (for example, with ‘Eurocommunism’ and the tendency among some European Marxists), Engels explicit argument that the commune was the exercise of the proletarian dictatorship, even that it did not go far enough in exercising such a dictatorship, is a timely warning. The chapter concludes by analysing Engels’s explicit usage of ‘socialist Gewalt’ itself, both before and after a revolution. Crucially, Engels points out that political power also has economic influence and potency (Potenz).

Chapter 3: From Abolition to the Dying Away of the State

Engels is responsible – in the third edition of Anti-Dühring – for coining the phrase, ‘dying away’ of the state (often translated as ‘withering away’). This chapter analyses how this emphasis arose, an emphasis that is also described as the eventual dissolution or gradual disappearance of the state as a spearated public power. The chapter has three parts. To begin with, it examines how Engels (like Marx) shared the view of ‘primitive anti-statism’: the idea that the state would need to be actively ‘abolished [abschaffen]’ as one of the first acts after a revolutionary seizure of power. The second part analyses the life-and-death struggle with Bakunin and the Anarchists, whose position was clarified only in the 1870s. A key component of their platform was the abolition of the state as the first revolutionary act, which Bakunin attempted in Lyons in 1870. Indeed, the incident at Lyons – in which Bakunin decreed the abolition of the state only to be arrested shortly after and bundled out of town – was a key moment when both Engels and Marx realised that such abolition was futile. Thus, the third part of the chapter examines how the emphasis on the dying away of the state arose, with Engels clearly indicating that it would be one of the final outcomes of socialism in power, after the proletarian dictatorship had transformed economic and social structures. Only then – eventually and gradually – would the state as a separated public power dissolve as a natural process. This may take a long time indeed.

Chapter 4: The Enmeshed Apparatus

The final chapter analyses how Engels envisaged the construction of socialist governance – with the caveat that he had never experienced this process directly and could draw only from the brief experiment of the Paris commune. It begins by studying Engels’s extensive work on ‘pre-state’ formations, where he identifies complex structures of governance, elections, representative bodies, sovereignty and Gewalt. Further, the chapter offers a careful analysis of the important text, ‘The Mark’, which dealt with the German tradition of the Markgenossenschaft. This tradition influences German law today, in which common rights still apply to farmland. For Engels, this practice is a relic of ‘pre-state’ formations, in which land was held in common, although it was modified in light of subsequent developments. The important argument – directed at peasant farmers – is that the communism of the future would entail a dialectical transformation (Aufhebung) of what is sometimes called ‘primitive communism’. But what should this organisation of the future be called? Given Engels’s definition of the state as a ‘separated public power’, he cannot call it a ‘state’. Instead, he uses the terminology of ‘social organisation’ and ‘administrative functions’, which may also be called the ‘enmeshed apparatus’. In other words, many functions of governance would be needed, a situation that can be described as the need for the apparatus of governance without separation from society. Or, as Engels puts, the organs of social organisation and governance ‘stand in the midst of society [steht eben mitten in der Gesellschaft]’. This means that a socialist state would not be alienated from society but thoroughly enmeshed within it, so much so that one cannot speak of ‘state’ and ‘society’ as distinct elements. In this light, the term ‘socialist governance’, or perhaps ‘enmeshed state’, are to be preferred.

Conclusion

The conclusion to the book outlines the way Engels’s contribution provides the philosophical basis for future developments of socialist governance, or what is now called the ‘socialist state’. This process entails drawing out philosophical insights from historical and anthropological studies, which has been the concern of the book as a whole. These insights include: the need for socialist Gewalt (dictatorship of the proletariat, which is one with communist society) in constructing socialist society and economics; the dying away of the state as a long-term and gradual process; the enmeshment of the apparatus of governance within society, so that it is no longer possible to distinguish state from society or indeed from the economy. Implicit in these points is a progression, with a strong socialist Gewalt as the means for transforming economic and social realities, as well as providing the basis for beginning the process of the dying away of the state as a separated public power. This process is gradual and long-term, entailing that as hitherto known forms of the state fade away, new types of governance arise, types that are enmeshed within society rather than separated from it. This may be seen as a socialist Aufhebung of the state. Subsequent historical developments in actual constructions of socialism – from the Soviet Union to China – would be faced with new problems, for which new solutions were and are needed. But Engels’s contribution was to provide some important bases for such developments. Or, as Engels put it in 1890, ‘So-called “socialist society” is not, in my view, to be regarded as something that remains crystallised for all time, but rather being in process of constant change and transformation like all other social conditions’.

Important Texts by Engels

Note: For the sake of rapid identification, English titles are provided here, although the book works with original texts.

1872. ‘The Congress of Sonvillier and the International’. MECW 23: 64-70.

1872. ‘The General Council to All Members of the International Working Men’s Association’. MECW 23: 205-10.

1872. ‘The Congress at The Hague (Letter to Enrico Bignami)’, MECW 23: 271-76.

1872-1873. ‘The Housing Question’. MECW 23: 317-91.

1873. ‘On Authority’. MECW 23: 422-25.

1873. ‘The Bakuninists at Work: An Account of the Spanish Revolt in the Summer of 1873’. MECW 23: 581-94.

1873-1874. ‘Varia on Germany’. MECW 23: 599-610.

1877-1878. Anti-Dühring: Herr Eugen Dühring’s Revolution in Science. MECW 25: 3-309.

1880. ‘The Socialism of Mr. Bismarck’. MECW 24: 272-80.

1880. ‘Socialism: Utopian and Scientific’. MECW 24: 281-325.

1882. ‘On the Early History of the Germans’. MECW 26: 6-57.

1882. ‘The Frankish Period’. MECW 26: 58-107.

1882. ‘The Mark’. MECW 24: 439-56.

1883. ‘Engels to Philipp Van Patten in New York (Draft). London, 18 April 1883’. MECW 47: 9-11.

1883. ‘On the Death of Karl Marx’. MECW 24: 473-81.

1884. The Origin of the Family, Private Property and the State. In the Light of the Researches by Lewis H. Morgan. MECW 26: 129-276.

1884. ‘The Decline of Feudalism and the Emergence of National States’. MECW 26: 556-65.

1887-88. ‘The Role of Force in History’. MECW 26: 453-510.

1891. ‘Introduction to Karl Marx’s The Civil War in France’. MECW 27: 179-91.

1891. ‘A Critique of the Draft Social-Democratic Programme of 1891’. MECW 27: 217-32.

1894. ‘On the Association of the Future’. MECW 26: 553.

1894. ‘The Peasant Question in France and Germany’. MECW 27: 481-502

1895. ‘Introduction to Karl Marx’s The Class Struggles in France’. MECW 27: 506-24.

Works by Marx and Engels:

1872.  ‘Preface to the 1972 German Edition of The Manifesto of the Communist Party’. MECW 23: 174-75.

1872. ‘Fictitious Splits in the International. Private Circular from the General Council of the International Working Men’s Association’. MECW 23: 79-123.

1872. ‘To the Spanish Sections of the International Working Men’s Association’. MECW 23: 211-13.

1872. ‘Resolutions of the General Congress held at the Hague from the 2nd to the 7th September, 1872’. MECW 23: 243-253.

1873. ‘The Alliance of Socialist Democracy and the International Working Men’s Association. Report and Documents Published by Decision of The Hague Congress of the International’. MECW 23: 454-580.

The Socialist Market Economy: Philosophical Foundations

This is the text of a paper, to be delivered at a conference in a month or so. It is the fullest expression of my thoughts on a socialist market economy, forming the framework for an eventual monograph.

A personal example, to begin with: in 2018, I purchased a Xiaomi laptop and a second Xiaomi phone. It soon became apparent that the laptop was far superior to my earlier Apple Macbook (that I had unfortunately come to use) and that the phone was simply a better device than any Apple or indeed other phone you can find. But who or what is Xiaomi? It is a Chinese hi-tech company that aims at producing the best quality products at reasonable prices. Most will probably have heard of Huawei, which now leads the world in its technological prowess. But Xiaomi is arguably better still. And both are increasingly better than anything you can find elsewhere.[1] At a Marxist philosophical level, this development may be described not as mere ‘catching up’, but as one element of a dialectical leap into the future.

How and why has this happened? Most obviously, it is the result of forty years of the reform and opening up, which has followed its own path and continues to do so. At a deeper level, it is but one manifestation of a socialist market economy. Given that developments in this economy are rapid indeed, and that specific analyses of the situation will be out-of-date in a year or two, this paper seeks the enduring philosophical foundations of the socialist market economy. This task entails a number of steps, beginning with Marx’s third volume of Capital, moving through some historical examples of market economies, to principles of the Chinese socialist market economy.[2]

Let us begin with a number of theses, which will be explicated in what follows:

1. Market economies may be found throughout human history, taking the form – to name a few – of tax, slave, feudal, capitalist and socialist market economies.

2. Thus, it is a form of economics imperialism to equate ‘market economy’ (minus the epithet) with a ‘capitalist market economy’.

3. The purpose of the market economy in question is crucial, for this determines the arrangement of its components.

3. A socialist market economy entails:

a. The need to develop a Marxist economic analysis, since neo-classical economic theory is inadequate.

b. The enmeshment of state and economy, to the extent that one cannot distinguish these two realms.

c. The increasing disappearance or dying away of the distinction between ‘private’ and ‘public’ enterprises.

d. Instead of being an alternative to a planned economy, a socialist market economy may be seen as another form of a planned economy, in which parameters are set.

e. A central role in the continued unfolding of the anti-colonial project.

f. The purpose of ‘all under heaven is as common [tianxia wei gong]’.

History: From Marx in Capital III to Economics Imperialism

As Chinese political economists do, we begin with Marx (not least because neo-classical economics is woefully inadequate). Over a few important pages in the third volume of Capital, Marx examines the market economy of ancient Rome (Marx 1894 [1998], 588-605; 1894 [2004], 583-99). His concern is to trace the effects of ‘usurer’s capital’. Found in the ‘most diverse economic formations of society’, in Rome a portion of this capital leads to commodities, money, trade, borrowing, surplus and profit. In other words, we have some of the core components of a ‘market economy’. But is it a capitalist market economy? Not at all. It is a slave market economy, for its primary purpose was to find, transport and buy the labour of others as slaves. The whole market economy of ancient Rome (and indeed ancient Greece) was geared for and subordinated to this purpose. Marx subsequently outlines the way some of these components worked: usury, interest, surplus, money, labour and so on, were arranged quite differently and functioned in ways that are far from a capitalist market economy.[3] Or, if they do at times seem similar, they function in ‘altered conditions’, without a capitalist market economy (Marx 1894 [1998], 592, 595; 1894 [2004], 587, 590). Marx moves on to outline how some elements of feudal market economies worked, and then how the different constellation of a capitalist mode of production overturned and reconfigured many of these earlier features (especially usury), but the point should now be clear.

In light of subsequent research, we may add that in light of the slave market economy, the Romans invented in the late second century BCE the legal-economic category of ‘absolute private property [dominium]’. The primary reference was the ownership of thing (res), except that the object in question was a slave. The category would later be lost and recovered in a fascinating history, becoming eventually a core component of the very different arrangements of a capitalist market economy .

One could make similar points regarding other market economies throughout history, such as the tax market economy of the ancient Persians in the first millennium BCE (Boer 2015), or the feudal market economy with its prime focus on the estate’s own production, to which peasants were bound (Kula 1976 [1962]). By contrast, a capitalist market economy is geared for the production of surplus value, to which all is subordinated.

Now for the philosophical point that arises from these historical analyses: a market economy – without an epithet – is not to be equated with a capitalist market economy. To divest ourselves of this assumption, fostered as it is in so many ways, is perhaps the most difficult. If we do not so divest ourselves, we end up with ‘economics imperialism’, in which the assumptions of a capitalist market economy (and its attendant neo-classical economic theory) are de-historicised, universalised and superimposed on any historical market economy, thereby skewing analysis (Milonakis and Fine 2009; Fine and Milonakis 2009).

Instead, market economies have appeared in different forms throughout much of human history, each with a distinct focus or purpose. They may have some common components, but the way they are arranged and how they function depends upon the purpose in question. It may be tax, slaves, estate production or profit (surplus value): all else is subordinated to the purpose. This historical reality raises the possibility of a market economy under socialism, one that is geared to yet another purpose distinct from those mentioned thus far.

Principles of a Socialist Market Economy

In analysing a socialist market economy (with Chinese characteristics), let elaborate on each of the propositions mentioned earlier.[4]

  1. The enmeshment of state and economy, to the extent that one cannot distinguish these two realms.

It has become increasingly clear that state and economy cannot be separated from one another in China. This is not a case of state ‘interference’ in the economy (as the EU interprets ‘socialist market economy’), but that the idea of distinct and autonomous realms does not work. Instead, they are enmeshed with one another in many complex ways.

A significant philosophical reason for this reality reason may be found in the Chinese tradition of dialectics, which may be summarised with the common saying, ‘things that oppose each other also complement one another [xiangfan xiangcheng]’. This rich tradition was appropriated and transformed by Mao Zedong (1937 [1965], 1937 [1952]), with the eventual elaboration not only of ‘contradiction analysis’ that is even more relevant today (Xi 2017b, 2017a), but also of the crucial role of non-antagonistic contradictions (Mao 1957 [1992], 1957 [1999]).

This situation has led to immense frustration among a small number of other countries, which thought that China’s accession to the World Trade Organisation in 2001 would push China towards a capitalist market economy (which they interpreted as a ‘market economy’). But China will not be moved from its own path, insisting that it is a market economy, albeit a socialist market economy in which state and economy are enmeshed with one another.

  1. The increasing disappearance or dying away of the distinction between ‘private’ and ‘public’ enterprises.

The old opposition between public (or state) and private ownership is dying (or withering) away – the allusion to Engels should be clear. This opposition has been for some time a leitmotiv of those who try to determine whether an economy is more or less ‘socialistic’, so much so that a ‘socialist’ turn involves ‘nationalising’ key industries. This model is simply unusable in China, if not misleading. Thus, the percentage of public or private ownership is not a marker of whether a national economy is more or less socialistic, nor indeed is the percentage of economic output by state-owned or private enterprises.[5]

In China, the state-owned enterprises – the backbone of the economy – are undergoing a process of eradicating old inefficiencies by learning from ‘private’ enterprises and even entering into partnerships with those enterprises. At the same time, every enterprise, whether ‘private’ or ‘public’ – or rather the many enterprises which are part ‘private’ and ‘public’, village or local government owned enterprises, ‘new economic organisations’, start-ups and so on – with more than three CPC members must engage in party building. This means that they develop a party organisation with an elected party secretary. The larger the company, the larger the party membership. For example, the world’s leading online retailer, Alibaba, has more than 7,000 CPC members, with significant party building as part of its core mandate. At one level, these party organisations do not interfere with management decisions, but at another level ensure that the company adheres to CPC principles. Further, every foreign enterprise or multinational working in China must also have CPC workers and a unit within. If I add that the CEOs of China’s biggest companies are often members of the CPC (for example, Ma Yun or Jack Ma of Alibaba), then we begin to see that the distinction of ‘public’ and ‘private’ no longer works. This situation is leading to a number of creative efforts to rethink a socialist market economy, to the point of appropriating and transforming the European notion of the ‘common’ in terms of a reality that is fostered by and part of governance itself.

  1. Instead of being an alternative to a planned economy, a socialist market economy may be seen as another form of a planned economy, in which parameters are set.

Another opposition that is losing traction in China is between a planned economy and a socialist market economy. In its old form, a planned economy was seen as a distinct and socialist alternative to a capitalist market economy. With careful and rational planning, the chaos, vagaries and crises of a capitalist market economy would be overcome with a planned economy. If one follows this suggestion, then a socialist market economy is a betrayal of the planned economy. This is not the case.

Two approaches may be distinguished in determining their relationship. The first proposes that both planned and socialist market economies are two possible forms of economies under socialism. Depending on conditions, a more planned economy may be needed at some points, while at others a socialist market economy is required. The second – and more preferable – approach is to see the two working together. Thus, while China moved only a few years ago to identifying market mechanisms as the foundational logistic reality of economic activity, it continues to set five-year plans. In their current form – as Ken Surin points out – these plans set parameters for the socialist market economy – most notably in in the last couple of years to focusing foreign investment in countries that are part of the Belt and Road Initiative.

  1. A central role in the continued unfolding of the anti-colonial project.

The socialist market economy must also be seen as part of the much larger anti-colonial project, which may be dated in China from the efforts in the nineteenth century to repel colonial powers. Many components may be adduced, from a distinct approach to sovereignty (which entails a rejection of foreign interference at any level), through China-Africa cooperation (for almost two decades), the Shanghai Cooperation Organisation, Asia Infrastructure Investment Bank, to the Belt and Road Initiative. Let me take the BRI as a test-case.

Instead of seeing it as a form of ‘creditor colonialism’ (concerning this type of propaganda the old Danish saying is pertinent: a thief always thinks everyone else is a thief), the BRI should be seen as the latest unfolding of the anti-colonial project (Losurdo 2013). How so? First, it offers a distinctly different model of international engagement, in which the construction of infrastructure – from rail and roads to telecommunications – is central. To be added here is the simple fact that Chinese technology increasingly outstrips that found elsewhere. This approach contrasts sharply with the old model of aid, which was essentially bribery to a ruling class in exchange for compliance and altering internal political and social structures. The BRI approach – even as it deals with inevitable problems such avoiding local corruption – has become distinctly popular in Latin America, Africa, Central Asia, Eastern and Southern Europe and the Pacific, so much so that the old colonial cabal (including Australia)[6] has changed its tune and is now offering ‘Western aid with Chinese characteristics’ – which is welcomed by China.

Why focus on infrastructure? I cannot go here into the Chinese tradition or the Marxist tradition in which liberating the forces of production is the core component of socialism in power. Instead, let us ask: what is the purpose? Is it to make these countries subservient to a new master? No, it is predicated on the position that one needs to develop basic and advanced infrastructure to improve the socio-economic condition of those involved. Or, as the Chinese Marxist approach to human rights would have it, the basic human right is the right to economic wellbeing (Sun 2014; Boer In press).

  1. The purpose of ‘all under heaven is as common [tianxia wei gong]’.

The previous point brings us to the basic purpose of a socialist market economy. A four-character phrase (chengyu) is apposite: all under heaven is as common (tianxia wei gong). It comes from none other than the Confucian Book of Rites (1885, 364-66).[7] Subsequently, it became a favourite phrase of Sun Zhongshan (Yat-sen) and the CPC.

How does it work? Many are the aspects, but let me focus here on two. The first concerns company aims and reports. Of course, they need to be economically viable to ensure their continued functioning, but profit is not the primary purpose. Instead, the companies focus on social benefit, poverty alleviation,[8] environmental improvement, education, guidance and improvement of public opinion, core socialist values,[9] party construction, and contribution to socialism with Chinese characteristics. These are now known as ‘social responsibility reports’ and are core to any enterprise’s activities.[10]

The second example is initially more mundane, for it concerns my pay in China and restrictions on moving money out of China. When I mentioned this situation to someone in Australia, he exclaimed, ‘but it is your money; you have a right to do with it what you want’. But when I mentioned it to a colleague in China, pointing out that I would prefer to spend the pay in China, she said: ‘of course, so you should’. In other words, even one’s pay is not simply a private matter, for it should be spent in a way that contributes to ‘all under heaven is as common’. The larger point here is that the components of a market economy (which are also not constant) are arranged in quite distinct constellations depending on its prime purpose. Thus, money, commodities, labour, even stock markets,[11] and so on, relate to one another and function quite differently.

Conclusion: How Did the Socialist Market Economy Arise?

By now it should be obvious that a number of approaches to the Chinese economy are superficial and mistaken. These include categories such as ‘state capitalism’, ‘neo-liberalism with Chinese characteristics’, ‘authoritarian capitalism’, a version of the Soviet Union’s ‘New Economic Program’, a borrowing from Yugoslavia’s ‘market socialism’,[12] if not simple hypocrisy in which one can ignore the very sophisticated debates in China today (Kluver 1996; Harvey 2007; Amin 2006, 30-34; Huang 2008). Not only are such hypotheses empirically wanting, but they are also philosophically untenable (leading to betrayal narratives, conspiracy theories and versions of Orientalism).

Instead, let us consider a number of Chinese proposals as to how the socialist market economy arose. These are samples of the extensive debate in China, upon which I have drawn for this paper.

The first suggests that the market economy in China differs little from capitalist market economies, save in one important respect: the role of the government in the economy. It should be clear by now that this suggestion does not hold up in light of further analysis.

The second is to resort to Deng Xiaoping’s breakthrough proposal that a market economy is a neutral instrument and can be used for the construction of socialism. This proposal was based on the understanding that socialism is of no worth if everyone is equal in poverty, but that it must liberate the forces of production to improve everyone’s socio-economic wellbeing.

The third draws upon the old adage, ‘seek truth from facts’. Conditions change, new problems arise for which new solutions must be sought – hence the reform and opening up, and the socialist market economy.

The fourth is that the socialist market economy draws on the increasing symbiosis (especially with Xi Jinping) of Chinese traditional cultures and Marxism. I have addressed a number of features of this symbiosis earlier, including the approach to non-antagonistic contradictions and the Confucian four-character saying, ‘all under heaven is as common’.

The fifth is intriguing: the development of a socialist market economy is as much accidental as it was planned. Thus, it arose out of the period (first decade of the twenty-first century) when neo-liberal economic policies seemed to be gaining traction. Many were the debates and warnings in China at the time, as Marxist economists warned of a drift to a capitalist market economy (against which Deng Xiaoping warned many times). That decade is decisively over with Xi Jinping’s clear rearticulation of Marxist political economy as the basis for China’s development. But the response is intriguing: instead of reverting to an outmoded planned economy, the contours of a socialist market economy arose.

The final proposal is that market economies have historically taken very different shapes and forms, determined by a primary purpose. This has been the preferred approach of this paper, although each of the preceding proposals (barring the first) also has merit. In this light, a socialist market economy constitutes a distinctly new form of a market economy. To engage successfully with China in the current situation , it is necessary to understand how this socialist market economy works.

Bibliography

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Boer, Roland. 2015. The Sacred Economy of Ancient Israel, Library of Ancient Israel. Louisville: Westminster John Knox.

———. In press. ‘The State and Minority Nationalities (Ethnic Groups) in China’. In The Palgrave Handbook of Ethnicity, edited by Steven Ratuva. Singapore: Palgrave Macmillan.

Fine, Ben, and Dimitris Milonakis. 2009. From Economics Imperialism to Freakonomics: The Shifting Boundaries between Economics and Other Social Sciences. London: Routledge.

Harvey, David. 2007. A Brief History of Neoliberalism. Oxford: Oxford University Press.

Huang, Yasheng. 2008. Capitalism with Chinese Characteristics: Entrepreneurship and the State. Cambridge: Cambridge University Press.

Kluver, Alan. 1996. Legitimating the Chinese Economic Reforms: A Rhetoric of Myth and Orthodoxy. Albany: State University of New York Press.

Kula, Witold. 1976 [1962]. An Economic Theory of Feudalism: Towards a Model of the Polish Economy, 1500-1800. Translated by Lawrence Garner. London: New Left Books.

Legge, James. 1885. The Sacred Books of China: The Texts of Confucianism. Part III: The Li Ki, I-IX. Oxford: Clarendon.

Losurdo, Domenico. 2013. ‘Le libéralisme, ennemi le plus acharné du droit à vivre à l’abri’. l’Humanité (16 August, 2013).

Mao, Zedong. 1937 [1952]. ‘Maodunlun’. In Maozedong xuanji, Vol. 1, 299-340. Beijing: Renmin Chubanshe.

———. 1937 [1965]. ‘On Contradiction’. In Selected Works of Mao Tse-Tung, Vol. 1, 311-47. Beijing: Foreign Languages Press.

———. 1957 [1992]. ‘On Correctly Handling Contradictions Among the People’. In The Writings of Mao Zedong 1949-1976, Vol. 2, edited by John K. Leung and Michael Y. M. Kau, 308-51. Armonk: M. E. Sharpe.

———. 1957 [1999]. ‘Guanyu zhengque chuli renmin neibu maodun de wenti’. In Maozedong wenji, Vol. 7, 204-44. Beijing: Renmin Chubanshe.

Marx, Karl. 1894 [1998]. ‘Capital: A Critique of Political Economy, Vol. III’. In Marx and Engels Collected Works, Vol. 37. Moscow: Progress Publishers.

———. 1894 [2004]. ‘Das Kapital. Kritik der politischen Ökonomie. Dritter Band. Hamburg 1894’. In Marx Engels Gesamtausgabe, Vol. II:15. Berlin: Akademie Verlag.

Milonakis, Dimitris, and Ben Fine. 2009. From Political Economy to Economics: Method, the Social and the Historical in the Evolution of Economic Theory. London: Routledge.

Sun, Pinghua. 2014. Human Rights Protection System in China. Heidelberg: Springer.

Xi, Jinping. 2017a. Juesheng quanmian jiancheng xiaokang shehui, duoqu xinshidai zhongguo tese shehuizhuyi weida shengli (2017.10.18). Beijing: Renmin chubanshe.

———. 2017b. Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era: Report to the 19th National Congress of the Communist Party of China, October 18, 2017. Beijing: Foreign Languages Press.

[1] Given their increasing obsolescence and decreasing market share, why do people still buy Apple products? As an Indian observer put it recently: ‘I am sick of the United States forcing obsolete and ridiculously expensive technology on the rest of the world at gunpoint’

[2] The present paper provides a basic outline of a monograph to be written on the socialist market economy. Some areas are based on earlier research (especially the historical material), while other areas have slowly developed over the last few years. Obviously, most topics require further in-depth research, predicated on taking Chinese scholarship on such matters seriously.

[3] Or, as Kula points out: ‘in the pre-capitalist economy, market phenomena are governed by completely different laws in many cases, and … these phenomena have an altogether different effect on the remaining sector of the economy’ (Kula 1976 [1962], 17).

[4] Although comparisons with the practices of the Soviet Union are helpful to some extent, they are also fraught with traps, not least because of the different historical and cultural context of China, as well as the fact that China has developed well beyond what happened in the Soviet Union.

[5] In his occasional posts on China, the Marxist economist, Michael Roberts, pursues this line. See https://thenextrecession.wordpress.com.

[6] This old colonial club, made up of about a dozen countries, has been fostering a ‘China threat’ line for the last few years, all the way from Huawei as a ‘security threat’ to deliberate misinformation concerning the highly successful de-radicalisation programs in Xinjiang Autonomous Region. The vast majority of countries in the world – including Muslim-majority countries – are singularly unimpressed with this effort.

[7] The text may also be found at https://ctext.org/liji/li-yun.

[8] They are thus part of the comprehensive poverty alleviation campaign, which has lifted more than 700 million people out of poverty over the last forty years, with another 20 million to go by 2021. Not only has this created a whole new socialist ‘middle class’ (the term is not the best, given its associations) and increasing recognition as the major human rights achievement of the twentieth and twenty-first centuries.

[9] As part of party rebuilding under Xi Jinping, as well as society as large, the core socialist values continue to be assiduously promoted at all levels. They appear in adjectival form: prosperous and strong (fuqiang); democratic (minzhu); civilised (wenming); harmonious (hexie); free (ziyou); equal (pingdeng); just (gongzheng); rule of law (fazhi); love of country (aiguo); dedicated (jingye); honest and trustworthy (chengxin); friendly (youshan). Needless to say, they should be understood within a socialist framework and not twisted in terms of liberalism.

[10] In some quarters, some noise has been raised concerning Chinese billionaires in a socialist society, with relation to the Gini coefficient. These social responsibility reports should indicate the role of such billionaires, and it is worth noting that the Gini coefficient, or ratio between rich and poor, has been steadily falling in China for over a decade.

[11] A more detailed examination of stock markets in China would reveal that it is common to distinguish between fluctuations on the stock markets and the ‘real economy’. The reason: the Chinese economy is not ‘financialised’, as in the United States, where the ultimate fetish of capitalism may be found – money produces money of its own accord (Marx 1894 [1998], 388-97; 1894 [2004], 380-88). In short, the stock market is not determinative of the enmeshed economic situation as a whole.

[12] Yugoslavia, in its break with the Soviet Union, developed what they called ‘market socialism’. In this case, enterprises were collectively owned but they sold products – internally to Yugoslavia and externally to a capitalist Europe – in a capitalist framework. Hence ‘market socialism’. Some suggest that the Chinese borrowed this model for their own approach, but this is not the case. As is their custom, they studied various approaches and came up with their own.

Is the kidnapping of Meng Wanzhou (from Huawei) a turning point?

Is the kidnapping of Meng Wanzhou, a senior executive of Huawei, a turning point?

Let us leave aside the cowardly Canadians bending to the capricious will of a declining United States, or the increasingly ineffective sanctions that the USA slaps on all and sundry, and consider what I have elsewhere called China’s dialectical leap into the future.

Huawei’s technological breakthroughs are only one – albeit important – aspect of a much larger process. Having been the first to test successfully a 5G communication, Huawei has developed a whole process that enables it to roll out a complete network in countries keen to get hold of it. 5G will make wifi and national broadband networks obsolete. How has it been able to achieve this, along with superior technology all the way from smart phones to undersea cables? Of its 180,000 employees, more than half are involved in research and development. Has it done so through ‘intellectual property theft‘? Not at all, but through the active incentives of a communist party in China that knows such developments take place only with significant government support.

Yet, Huwaei is only one example of a whole range of technological breakthroughs that have been happening in China over the last few years. I will not go into the full range of these here, but will focus on wider social and political questions. This is because the dialectical leap is taking place not merely on a technological level.

Socially, the symbiosis – as many are now recognising – between traditional China culture and Marxism means that Chinese culture today means Marxist Chinese culture. The old Confucian four-character saying, ‘all under heaven is as common [tianxia wei gong]’ has been appropriated and reinterpreted in light of communism’s focus on the ‘common’. This has massive implications at all levels, from the share economy through a Chinese Marxist approach to human rights (in which economic wellbeing is the basic right) to core socialist values.

Politically, all of this is taking place precisely under the strong leadership of Xi Jinping. Call it what you will, but the reality is that a good dose of communist authoritarianism is precisely what China has needed in the last six years. The result: on average, 90 percent of people in China are confident of the direction in which the country is headed, and 84 percent of people at all levels have trust in the government and public institutions (as the Ipsos and Edelman poll agregates indicate). This entails confidence to innovate and take risks, with quite stunning results.

Back to the kidnapping of Meng Wanzhou: this is an extraordinarily clumsy move that will backfire in so many ways. Only time will tell, but this may well be the moment when countries like the United States, the UK, Canada, Australia and New Zealand (a small gaggle that once upon a time called the shots) really do begin to fall behind in a very noticeable way. By contrast, those keen to engage with and make use of Chinese breakthroughs may well begin to leap ahead as well. The candidates are many indeed, from Russia through Africa and Central Asia to Latin America. Now that would be a different world.

 

Two (of three) articles on Chinese Marxist approaches to human rights

In the process of writing a series of three articles on Chinese Marxist human rights, two pre-publication versions have been posted on – of all things – the website of the Australian Academy of Humanities. I do not quite understand why they asked for them, given the other items, but there you go:

1. The State and Minority Nationalities in China

2. ‘We Have Freedom of Religion’: Understanding Chinese Marxist Approaches to Human Rights

3. Sovereignty and Human Rights: A Chinese Perspective (this one will be complete by January)

An effort to understand Australian Sinophobia

Since I spend my holidays in Australia, I find a need to understand the extraordinarily vicious Sinophobia thereabouts. In our time, perhaps New Zealand is the only country where it is worse, but that is not by much. Russophobia is part of the picture as well, but not as bad as in that very weird country, the United States.

So let me suggest the following:

1. The weakness of Australian governance, especially at a national level. No matter what party has been in power over the last decade or more, it has characteristically been weak and torn by inner strife. They spend most of their time turfing out one leader and finding another, so much that elections are a waste of time and money. When a government is weak, it likes to find an external threat.

2. There are two caveats here. To begin with, the general populace is largely positive with regard to China. Survey after survey indicates around 65 percent are positively disposed. Further, the political subclass is split, with significant portions across the limited political spectrum engaging with China. For now, the Sinophobic element is able to set the agenda, making use of a gaggle of rabid ‘commentators’ and ‘advisors’ who do not realise they are being used. Australia also has a compliant corporate and state-owned media (ABC and SBS) playing the same tune.

3. At a deeper level, the Sinophobic narrative – with its distortions and deliberate misinformation – taps into a vast storehouse of Australian racism from the past. This comes form a time when the population was less than 10 million and was largely descended from British immigrants. In this context, the ‘yellow peril’ was invoked, an obviously racist trope and part of the white Australia policy. This is really nasty material, which many of us thought had been left behind.

4. The Sinophobic propaganda is a signal of an ongoing identity crisis. Since 1972 and the end of the white Australia policy, Australia has seen British descendants become a minority. Western European descendants (like myself) will also soon be a minority. Most immigrants come from East Asia, the Subcontinent and Africa. For example, Chinese is the second most spoken language in Australia now. As this shift happens, with about 200,000 immigrants per year, the demographics and culture have been changing. In this context, the racist invocation has become more shrill as Australia makes the transition to a Eurasian nation. That it alienates a significant portion of the population should be obvious.

5. The rampant Sinophobia may also be seen as a symptom of the difficulty of figuring how to deal with a declining United States. That the USA is in decline is obvious to everyone. Asian countries have by and large figured this out and have been working to solve their own problems. But Australia is trapped. It gambled on alliance with the United States after the Second World War, but the governing bodies know full well that the USA today would neither want nor be able to lift a finger to help Australia. Further, for some time now, Australia’s number one economic partner has been China, which has enabled Australia to avoid a recession for 27 years. Australian policy setters, along with the woeful media, are unable to manage this situation. Either break with the United States or break with China. The latter option would have severe economic and social consequences, while the former would simply challenge the whole political culture of the last 70 or more years.

6. At the deepest level, this Sinophobia is part of the long-standing colonial and anti-colonial struggle. The anti-colonial project I have in mind is the one that came to the fore in the twentieth century. As the Soviet Union realised (in the 1930s) that the Russian Revolution was in part an anti-colonial revolution, and as it began to support at many levels the global anti-colonial struggle in the name of opposing capitalist imperialism, the century was determined at many levels by this struggle.

With its immense economic power and socialist political structures, China has now taken the lead in the anti-colonial project. We see this with the world-changing Belt and Road Initiative, Africa-China Cooperation, the Asia Infrastructure Bank and the Shanghai Cooperation Organisation. The latest element of this is the shift away from the US dollar in international transactions and reserves (for example, China plans in March to trade oil in Renminbi, the most significant shift from the last item that is still almost exclusively done in US dollars).

In response, a small number of countries – 15 at most – have made an effort to counter this anti-colonial project. Of course, they are former colonial powers, pushing a tired agenda that is too little, too late. The catch is that some of the former colonies have joined this new colonial bandwagon. These are not the countries that achieved independence in the twentieth century, but earlier. The United States, Canada, New Zealand and Australia are the culprits. While we may think this is perverse, it is useful to recall that each of them has been a colonial power on their own. Australia, for example, was for long a colonial master of Papua New Guinea and still sees itself as a master. That China has now engaged with Papua New Guinea and is doing what Australia never did – improve the basic infrastructure in Papua New Guinea so that it may actually develop economically – is seen as an affront to Australia’s continuing colonial arrogance.

 

Political weakness, a storehouse of racism, an identity crisis, a declining and angry United States, and the anti-colonial project – these are the factors that seem to be important. There may be more, but none are particularly pleasant. No wonder, then, that in 2017 and 2018, Australia was voted the least friendly country by Chinese surveys.