Since I now live in a regional area (when I am in China), I meet farmers like this everyday. Only a few minutes’ walk away is a local market, where I buy fresh fruit and vegetables, beans, spices, and freshly made tofu. These photographs come from Sichuan, but you can see similar scenes all across China. They concern a special early morning bus route for farmers so they can get to the markets with relative ease.
In an earlier piece, I proposed that the dominant narrative concerning China in a small number of former colonising countries (usually known as ‘the West’) is like believing in ghosts. What is the narrative? It is the pure fancy that the Communist Party of China is a ‘secretive’ and ‘paranoid’ outfit, which is terribly afraid of its own people whom it monitors all the time, and is scheming for world domination. Nothing new here, since the same was believed concerning the Soviet Union.
How is this like believing in ghosts? If you believe in ghosts, then you can fit all sorts of odd things into your narrative. It might be a weird dream, a creak in the corner, a door closing by itself, a misplaced set of keys, and so on. All of these and more become part of your belief, confirming what is clearly false. And if you run out of a few twisted facts, you can simply make them up.
In short, if you believe that the CPC is an ‘authoritarian’ bunch with ‘evil intent’, then there are spooks everywhere. Boo!
In that earlier piece, I gave a number of examples, from Xinjiang, through Huawei to the Social Credit System in China. But let me focus here on the recent drug-fuelled violence in Hong Kong, with significant financial and logistical support from outside.
The narrative promoted misleadingly in a few ‘Western’ media outlets and government agencies has had a number of intriguing phases.
Phase 1 of the Ghost Story: The false idea of a ‘groundswell’ of popular opposition to ‘authoritarian’ measures.
This phase turned on deliberate misrepresentation of a modest extradition bill. The bill itself was simply standardising procedures for crimes such as murder (a murder case, with the culprit fleeing to the island of Taiwan, was in fact the immediate trigger for the bill). But through social media and deliberate misinformation, the extradition bill was pumped up into a measure instigated by the ‘authoritarian regime’ in Beijing, so that anyone and everyone in Hong Kong could be whisked away at any moment.
Behind this phase were a couple of assumptions: first, the obvious one is a ‘Western’ liberal paradigm of ‘authoritarianism’, a loose term used for any country that does not fit into the mould of the ‘Western’ bourgeois state.
The second is that Chinese people, and especially those in Hong Kong, are supposedly longing for Western ‘freedoms’, bourgeois ‘democracy’, ‘human rights’ and … Facebook. There were desperate efforts to show that the majority of people in Hong Kong supported the riots, although this flew directly in face of the fact that the majority are resolutely opposed to the riots and see themselves very much as part of China.
However, this assumption that people everywhere hanker after Western ‘freedoms’ is so strong in parts of Western Europe and North America that it underlies what passes as foreign policy in these places. While trying to claim the high moral ground, they use it consistently to intervene in and disrupt the sovereignty of many countries around the world, with the result that such countries are singularly unimpressed.
Curiously, this assumption leads to profoundly misguided policies. As they say in China, ‘seek truth from facts’ (Mao Zedong and especially Deng Xiaoping promoted this one). And what are the facts? In international surveys, Chinese people show between 86 and 90 percent trust in government and public institutions, along with confidence in the direction in which the country is headed. The more educated and younger the respondents, the higher the level of trust and support.
Phase 2 of the Ghost Story: ‘Beijing’ is ‘pulling the strings’.
When it became clear that the one country – two systems policy was being followed strictly, and that the local government in Hong Kong, headed by Carrie Lam Cheng Yuet-ngor, was standing firm, another piece of the narrative came to the fore: ‘Beijing’ was ‘pulling the strings’ behind the scenes, making sure that the ‘puppet’ leader was doing its bidding.
Now it was time for pure fabrication. Supposedly, Carrie Lam Cheng Yuet-ngor (to use her full name) had her resignation turned down. This lie was swiftly shown for what it was. This did not stop the ‘pulling strings’ line, which now relied on a standard approach in some places: using gossip, propagated these days through social media. Thus, they promoted by whatever way possible the belief that every step taken by the Hong Kong local government and its police to quell the riots were directed from ‘Beijing’.
A few points are worth noting? First, this approach was taken since the PLA garrison in Hong Kong had not been deployed, and troops from the mainland had not moved in. This turn of events was disappointing to some anti-China ideologues, if not the rioters themselves, so they had to find another line.
Second, it was a classic case of ‘look over there’. There is more than ample evidence of systemic interference in Hong Kong by government agencies from the United States and the UK, at times through NGOs and at times by direct political interference. For some time now, significant funds have flowed to the rioters, as well as logistical support. For example, more than 1000 Hong Kong police officers have been ‘doxed’, with their names, addresses, phone numbers, bank information, and so on, hacked and then spread widely. The result had been significant harassment of their families. Doxing requires a high level of logistical support, along with the assistance of compliant social media outfits like Facebook. How to respond to these embarrassing facts? Cry ‘look over there’ and blame ‘Beijing’.
Third, let us ask what is actually taking place. Since tensions in Hong Kong society had risen to the surface, extensive research for the sake of informing policies began. This research focuses on – to name a few – the problematic educational system in Hong Kong, extremes in poverty and wealth (more than one million people in Hong Kong live in poverty, in a city of seven million), the flawed political structure bequeathed by the UK, in which vested interests have an inordinate say in the Legislative Council and any resolution must have a two-thirds majority. We can expect much more in-depth research and reforms in these and other areas.
Of course, the whole idea of ‘pulling the strings’ is based on the ‘authoritarian’ paradigm, which shows profound ignorance of what the one country – two systems policy entails.
Phase 3 of the Ghost Story: The lie of Hong Kong police ‘brutality’.
With the initial protests fading away as people woke up to themselves, smaller and smaller groups raised the level of violence on the streets. They would typically be dressed in black, wear face masks or gas masks, and take drugs to bring on a type of ‘beserk’ behaviour. In their armoury they had petrol bombs, bamboo spears with knives attached, batons, baseball bats, lethal slingshots that fired large ball-bearings, and some began carrying guns.
They set about vandalising, smashing and burning public transport facilities, banks, shops, police vehicles, the airport and many other facilities. They would beat up any isolated police officer (most recently setting an officer on fire with a Molotov cocktail) or indeed member of public that condemned their acts. As the Hong Kong Federation of Trade Unions has opposed the violence, service centres of the federation have been vandalised and forced to close for repairs. These service centres provide medical, welfare and other community services to workers, especially its members but also the wider public.
Obviously, none of this was reported in the biased media outlets or indeed statements from some ‘Western’ foreign ministers and even leaders. Instead, they focused on supposed police ‘brutality’. And of course, ‘Beijing’ was behind it all.
The facts are quite different. The Hong Kong police have been exceedingly restrained, using measures only where needed to counter the escalation of violence by a small minority. For example, the anti-face mask law, with stiff penalties for covering one’s face in any public gathering, came in to effect on 5 October, 2019. This is quite late in the piece, follows international practice, and was instigated in response to widespread urging in Hong Kong. Indeed, the police have widespread support in Hong Kong and the mainland, with ‘I support Hong Kong police’ being displayed on many shop windows, on social media and so on.
Phase 4 of the Ghost Story: Supposedly, people on the mainland are ‘denied’ information about Hong Kong.
This one really runs through the whole story, but it was revealed to me by a question while I was in Western Europe: ‘What about Hong Kong, do the people in China know what is going on?’
The assumption behind this question is obvious: Chinese people are supposedly ‘denied’ information about the world and their own country.
Not long after I was asked this question, I returned to China. Not only are the news outlets regularly providing detailed and complete information about Hong Kong, but in everyday conversations people express their deep concern about what is happening. The foreign interference is clear, which they resent, and they are troubled by the overturning of central Chinese values, especially harmony, security and stability. Above all, they are not anti-Kong Kong, but instead feel for what ordinary people in Hong Kong are suffering (in light of the economic downturn in response to the riots) and hope that the situation will be stabilised soon.
I found that here one could gain a sense of the all the facts in relation to what was going on in Hong Kong. Thankfully, this is also the case in the vast majority of countries in the world, which increasingly do not listen to the biased material being pumped out of a few former colonising countries.
There is a saying very common in China these days: keep the mission firmly in mind, do not forget your original desire.
I begin with this saying since it is part and parcel of the momentous occasion of the 70th anniversary of the founding of the New China. I am currently in China, witnessing firsthand all of the preparations, anticipation, and then the day itself. Indeed, I write this on 1 October, when 70 years ago to this day Mao Zedong stood on the gate known as Tiananmen and announced the establishment of the People’s Republic of China. Today it was of course Xi Jinping who stood in the same place, acknowledging Mao and the leaders who followed. I watched the whole proceedings live on my computer, quite taken with the celebration of the diversity of China’s many nationalities, the recognition of its provinces and autonomous regions, and the emphasis on young people who hold China’s future in their hands. Of course, I was impressed by the relatively brief military part of the parade, for a socialist country has to be able to protect itself from those who would seek to undermine it. Representatives from many countries were there, especially from developing countries like China. They are increasingly taken with the ‘China paradigm’ as a way forward, and so turning their backs on the shattered neo-liberal project known as the ‘Washington Consensus’.
But let us step back for a moment and ask what does a foreigner who is somewhat familiar with China notice. What do everyday people say about the celebration of the 70th anniversary? I have had a month or so to talk with people to find out what they feel and think.
The most common observation is that today is a recognition of all the hard work that has gone into the last 70 years. Again and again, people say: ‘We have worked so hard; now we can celebrate and enjoy our achievements for a little’. The achievements are clear: realising the basic human right of socio-economic wellbeing for all people; lifting more than 800 million people out of poverty; building a prosperous and increasingly strong China, so that the people I know have a greater cultural confidence in speaking about and explaining what makes China tick; the reality that Marxism is even more now at the core of all China does. Indeed, the CPC and its history was a major feature of the parade in Beijing that I watched today.
But work? My sense at times is that people here work too hard. By contrast, they often say that they do not work hard enough. Alongside work there is struggle: the past 70 years have had a large dose of international opposition and the Chinese have struggled against the odds. They know full well that what has been achieved today is as much struggle as it is work. Perhaps I should rephrase that: from their experience, they know that work is struggle. And they are not afraid of struggle.
After all, they are very aware that much remains to be done. Tackling environmental problems has already made great headway, but they know that much more needs to be done. There are still a few million people living in poverty and this is unacceptable for any notion of a moderately prosperous and well-off society (xiaokang shehui). They are tackling the desperate efforts of a fractured ‘West’ (a handful of former colonisers) to contain China and tell it what to do. But they will not deviate from their own path and will certainly not let others dictate the terms.
But isn’t this all just a version of nationalism, a Chinese version of ‘America first and screw the rest’? Not at all. In the past, I have sought to understand a positive sense of nationalism in terms of how it was thoroughly reinterpreted, first in the Soviet Union and then later in many colonised countries that sought national liberation. In this light, nationalism became an anti-colonial desire, with a strong focus on sovereignty. This also entailed a respect for the sovereignty of others: in the same way that you do not want your own country to be dominated by another, you also do not want to do the same thing to others. Zhou Enlai and Mao Zedong’s ‘Five Principles of Peaceful Co-existence’ express this position most clearly.
As I have talked with people, another sense has begun to emerge. To begin with ‘nationalism’ is a bad translation of the Chinese term ‘ai guo’. Literally, it means ‘love of country’, with nothing of the ‘nation-state’ or ‘-ism’ about it. ‘Love of country’ is an inescapable identity, for all Chinese people anywhere in the world. It embodies 5,000 years of culture, history, tradition, philosophy and political forms. The most important point for me is that ‘love of country’ is not predicated on an ‘I win, you lose’ mentality, or ‘zero-sum’ as it is sometimes called (witness ‘America first’). Instead, it means that ‘love’ of my own country, my own cultural identity, is the basis for respecting, engaging with and promoting the identity of others. Thus, Chinese people see ‘love of country’ as a benefit to the globe, for as others also ‘love’ their country they have common project.
Still, a few may still feel that all the flag waving is an effort to find a replacement for Marxism in China. Not only does this assumption reflect a good deal of ignorance concerning Xi Jinping’s resolute focus on Marxism as the core and guiding principle of China’s path, let alone the 90 million strong CPC as a communist party clear in its mission, this suspicion also ignores the reality of the flag itself. In China, it is called the ‘five star red banner [wuxinghongqi]’. The red banner is of course a key communist symbol, as is the star. So every time someone waves a five star red banner, they are waving a communist flag.
And this brings me back to the saying with which I began: keep the mission firmly in mind, do not forget your original desire (laoji shiming, bu wang chuxin). Everywhere in China you find this saying, but it is one that immediately resonates with people. What is the original desire? Marxism. What is the mission? communism. And what does communism need for its realisation? More work and struggle.
The photos below were taken of my computer as I watched the parade live. You can find better quality pictures in many places, but I use these to give a sense of what unfolded as I watched. These are of course from Beijing, but all across the country events were held, including the area where I now reside in the northeast. The final picture is of a local version of the saying mentioned above.
Finally, here it is: keep the mission firmly in mind, do not forget your original desire.
While you may have been distracted by the way ‘Western’ countries (that is, a small group of former colonisers) are tearing themselves apart, China has quietly become a world leader in another area: bridge building.
You may know that the best and most advanced mobile phones are designed and contructed here (Huawei Mate 30), or that China is now the leading innovator and constructor of high-speed rail in more and more places throughout the world, or that China leads the world in re-afforestation and consistently wins awards for environmental protection, or that it offers a more stable model of governance, or that … the list could go on and on and it increases at a stunning rate.
But bridges? Given that most of China is quite mountainous, bridges are an absolute must (as are tunnels). And since a crucial feature of the poverty alleviation program, let alone the Belt and Road Initiative, is the construction of rail and road, bridges cannot be avoided. The outcome is that China is now the world leader in bridge technology and construction.
For example, China has recently constructed the world’s longest sea bridge in Fujian province connecting five islands and the mainland.
It will not be long before the island of Taiwan is connected with the mainland by such a bridge.
At the same time, the country’s bridge building is winning international awards. The showcase is Beipanjiang Bridge, on the border between the mountainous Guizhou and Yunnan provinces. More than half a kilometre above the gorge it spans, it required significant innovation to deal with complicated geographical conditions. It won the Gustav Lindenthal Medal in 2018 and the special merit award by the International Federation of Consulting Engineers (FIDIC) in 2019. Not a bad result in a country that in 1978 was one of the poorest in the world, with more than 95 percent below the poverty line. Not any more.
The following is the fourth part of the lecture on why foreign scholars are as yet unable to understand China’s socialist market economy. It deals with ‘state capitalism’, which is probably the most widely used term in both Marxist and non-Marxist traditions. As will become clear, what they mean differs considerably.
By 2008’s Atlantic financial crisis, or what is now called ‘The Great Recession’, the neoliberal project effectively came to an end. Since then, it has been in retreat, to the consternation of the true believers. The WTO is no longer setting the agenda in the way it used to do, for it is being changed from within, the ability of the United States to coerce others is in noticeable decline, the United States and Europe no longer see eye to eye, and a series of alternative international structures have gained significant influence, such as the Asia Infrastructure Investment Bank, the Shanghai Cooperation Organisation and the Belt and Road Initiative. How to make sense of these developments? On the back foot, more and more neoliberal true believers have begun once again to speak of the spread of ‘state capitalism’, with dire warnings as to its effects. By state capitalism they mean that the state is a large and influential corporation in its own right, a business enterprise and indeed core component that controls significant parts of a capitalist market economy.
But I have leapt ahead of myself, for the terminology of ‘state capitalism’ was developed mostly in the Marxist tradition, particularly in Lenin’s hands. The term itself may be older, used in relation to Bismarck’s project in Germany, but it is from the Marxist tradition that its most sophisticated sense arose. So let us consider Lenin’s contribution, after which I analyse a number of different paths that arose after Lenin.
Towards the end of his life, Lenin used ‘state capitalism’ on quite a number of occasions (Lenin 1918 -b, 1918 -b, 1918 -a, 1918 -a, 1921 -a, 1921 -a), but the fullest statement may be found in the key work, ‘The Tax in Kind’ (Lenin 1921 -b, 1921 -b). Lenin argued that in light of the sheer devastation and economic collapse caused by the First World War and the Civil War, as well as the very premature state of socialism in Russia, a measure of private enterprise was necessary to get the economy moving again. Peasants could sell the grain left over after paying the ‘tax in kind’, small private light-scale industry could be established, and concessions and leases would be given to foreign capitalist enterprises. All of this would entail the extraordinary dialectical point of building socialism through capitalism, or of private capital helping socialism. How so? It would enable the initial impetus for the ‘development of the productive forces’ (Lenin 1921 -b, 342-43, 345-46).
Of course, Lenin had to overcome ‘left-wing’ opposition to do so, making two crucial points. First, he mapped out a process of transition, since it was not possible to move from a backward, imperialist situation immediately to full-blown socialism. Thus, he envisaged a series of transitions, from petty-bourgeois capitalism (and later from ‘War Communism’), through state capitalism, to socialism itself, during which elements of capitalism would remain. Or, as he puts it more simply, from capitalism, through state capitalism, to socialism. Second, it all depends on the over-arching socio-economic and political system. His two examples are Germany (after Bismarck’s reforms) and Russia after the October Revolution. In Germany, this ‘state capitalism’ was firmly in the hands of ‘Junker-bourgeois imperialism’; by contrast, in Russia the socialist system already emerging was the key, with the nature of the socialist state and the proletarian dictatorship playing the major roles. Thus, argued Lenin, it would be highly advisable to learn from the German model and locate it within the Russian socialist system.
What has been the fate of Lenin’s insights? Four paths may be identified. First, some Western Marxists have sought to use ‘state capitalism’ to speak of socialist countries, albeit without acknowledging Lenin’s careful development of the idea. Thus, they have applied ‘state capitalism’ to both the Soviet Union and China in a purely negative sense. They do by ignoring Lenin’s key insights and understand ‘state capitalism’ as a system – with its new ‘bourgeoisie’ as exploiters – that is diametrically at odds with socialism, let alone communism (Cliff 1948 (2003); Pannekoek 1937; Norman 1955; Crump and Buick 1986; James 1986; Weil 1996, 26-27; Hooper 2017). Common to these works is a Western ‘betrayal narrative’, trying to find some moment when the Marxist tradition was ‘betrayed’ (see more below).
Intriguingly (and this is the second path), they also come close to a more recent group of non-Marxist scholars, who have begun to use ‘state capitalism’ in relation to a significant number of countries – including socialist ones – that have either refused or turned away from neoliberal approaches. In more detail, they see state capitalism as significant and long-term ‘intervention’ of the state in ‘the market’, by which they mean an entity separate from society and the state. They are also fond of using tired old categories, such as the opposition between ‘autocratic’ and bourgeois ‘democratic’, inefficient and efficient, so that state capitalism means inefficient ‘authoritarian’ capitalism and is contrasted with efficient ‘free-market’ capitalism. It should be no surprise that they see the spread of such state capitalism as a threat and hope to identify its shortcomings. Although they often focus on China as a favoured example (Haley and Haley 2013; MacDonald and Lemco 2015, 43-69; Naughton and Tsai 2015; Kurlantzick 2016; Chen 2015; Hundt and Uttam 2016, 189-220), this type of ‘state capitalism’ in certainly not restricted to China. The number identified is relatively large, whether one offers an analysis of the current situation or takes a historical perspective. In terms of the current context, the list includes most countries in East Asia, Central Asia, more and more Latin American and African countries, Russia and some Scandinavian countries. Historical surveys like to begin with modern state forms in Europe after the Peace of Westphalia of 1648, and then identify various forms of state capitalist ‘intervention’ in mercantilism, European colonialism, the Soviet Union and Eastern Europe, the welfare state in Europe (especially Scandinavia), many post-colonial states in Africa and Asia, and the Asian economic rise in the last 30 years or so, with particular focus on Singapore and South Korea (Kurlantzick 2016, 49-63; see also MacDonald and Lemco 2015, 17-42). One does begin to wonder whether ‘state capitalism’ has become a catch-all category that can be applied to all states to a greater or lesser degree. Ultimately, this tendency is less of a problem than the fundamentally flawed assumptions and its oppositions – state versus market, autocracy versus bourgeois democracy, efficiency and inefficiency – that arise from the Western European liberal tradition, a tradition that has for too long seen the rest of the world in its own image. Unable to think outside this tradition, unable to seek truth from facts, they have resorted to the category of ‘state capitalism’ to try to understand the global shifts that became apparent in 2008.
Third, a few foreign Marxist scholars have continued to use the term, and to their credit they do so through careful engagement with Lenin and the New Economic Policy (which ran for almost a decade in the 1920s). More specifically, they propose that China’s Reform and Opening Up is a longer version, developed in terms of specific conditions, of the NEP (Kenny 2007). This brings us to the fourth direction arising from Lenin’s work, concerning which I need to mention Chinese scholarship. These scholars have pointed out that part of the inspiration for Deng Xiaoping’s breakthrough with the Reform and Opening Up was precisely Lenin’s New Economic Policy (Yang and Li 1998; Le 2000; Wang 2001; Tao 2008). But there is one very important feature of this argument concerning the influence on Deng Xiaoping: the scholars in question rarely, if ever, use the term ‘state capitalism’. Let me put it this way: as we look back after a century, we can see certain shortcomings in Lenin’s approach. Notably, he assumed that private enterprise and market exchange were by definition capitalist, while public ownership and a planned economy were necessarily socialist. We now know that this is not the case, for market economies have existed under many different – and non-capitalist – conditions (as Marx already argued in his analysis of ancient Greece (Marx 1894 , 588-605; 1894 , 583-99)). At the same time, Lenin did make the crucial point that everything depends on the underlying system within which a market economy works. But in order to understand how this point remains relevant, we need to clarify the terms. Lenin called this ‘state capitalism’, in light of the evidence and knowledge available at the time, especially from Germany. But in light of subsequent historical research and current experience, especially in China, it would be better to speak of a market economy as a component of a larger socialist system (Huang 1994). Let me emphasise that this point is not made by foreign scholars, since they tend not to use Chinese sources for their work.
To sum up, state capitalism has an intriguing and complex history, with its initial development in the Marxist tradition through Lenin, its subsequent misuse by a number of Western Marxists in relation to the Soviet Union and China, its redeployment (without knowledge of the Marxist tradition) to try and understand the turn away from the neoliberal project, its Leninist sense by a small number of Marxists in relation to China, and then Chinese scholarship that fully acknowledges Lenin’s influence on Deng Xiaoping but then takes his insights a significant step further.
Chen, Zongshi. 2015. The Revival, Legitimization, and Development of Private Enterprise in China: Empowering State Capitalism. New York: Palgrave Macmillan.
Cliff, Tony. 1948 (2003). ‘The Nature of Stalinist Russia’. In Marxist Theory After Trotsky, Selected Writings, Vol. 3, 1-138. London: Boomarks.
Crump, John, and Adam Buick. 1986. State Capitalism: The Wages System Under New Management. New York: St. Martin’s.
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———. 1985 . ‘Gaige shi zhongguo fazhan shengchanli de biyouzhilu (1985.08.28)’. In Deng Xiaoping Wenxuan, Vol. 3, 136-40. Beijing: Renmin chubanshe.
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 It was in ‘The Tax in Kind’ – as noted earlier – that Lenin subsumed his earlier usage of ‘state monopoly capitalism’.
 In an insightful section, Lenin identifies the many components present in Russia at the time, in which petty-bourgeois production (mainly peasants with their patriarchal tendencies) and private capitalists were at war with a coalition between state capitalism and socialism (Lenin 1921 -b, 331; 1921 -b, 207). Indeed, Lenin argued frequently that many aspects of approaches first developed under capitalism would also have a proper function under socialism: ‘Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science. It is inconceivable without planned state organisation which keeps tens of millions of people to the strictest observance of a unified standard in production and distribution. We Marxists have always spoken of this’ (Lenin 1921 -b, 334; 1921 -b, 210).
 Earlier, I noted the effort by Kurlantzick to limit the meaning of state capitalism in terms of an implicit state monopoly capitalism.
 Deng Xiaoping hints at this influence in 1985: ‘What, after all, is socialism? The Soviet Union has been building socialism for so many years and yet is still not quite clear what it is. Perhaps Lenin had a good idea when he adopted the New Economic Policy’ (Deng 1985 , 143; 1985 , 140). Apparently, Zhou Enlai had advocated learning from the NEP already in the 1950s (Lüthi 2010, 36).
The is the third part of my lecture text on why foreign scholars as yet do not understand China’s socialist market economy. This part focuses on David Harvey’s influential yet deeply flawed book, A Brief History of Neoliberalism (2005).
The reaction to state monopoly capitalism was – as indicated already on a few occasions – the rise of neoliberalism at the end of the 1970s and its aggressive promotion in 1980s and 1990s. It may be defined as a ‘theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade’ (Harvey 2005, 2). I have taken this definition from David Harvey, since his work is the main focus of this section. The elaboration on this definition sounds very much like a reiteration of Adam Smith (1776 ) as interpreted through the neoclassical economists (Alfred Marshall, William Stanley Jevons, and Leon Walras): minimal state presence, except for guaranteeing the basic institutional environment for a capitalist market economy, the inherent value of ‘self-interest’ and so the primacy of the private individual, with the addition that any state with too many possessions should ‘privatise’ them. In fact, for Harvey the process of privatisation is enough to designate a government’s project as neoliberal.
A Brief History traces the way this liberalism was rediscovered as neoliberalism (Friedrich von Hayek, Milton Friedman and others) and applied with gusto first in the UK and the United States under Thatcher and Reagan, two of the places where Western liberalism itself first arose (Losurdo 2011). In the 1980s and 1990s it was copied by like-minded countries and forced on others not so like-minded, through the standard mechanisms of United States colonial power play – known as ‘regime change’. Of course, states enacting neoliberal policies are bound to be quite ‘interventionist’, as Harvey notes, as were the international bodies such as the IMF and World Bank, which were tasked with the authoritarian imposition of such policies on less-than-willing countries.
All this is reasonably well-known, although Harvey is keen to emphasise the regular crises generated by neoliberal policies. The book was published before the major Atlantic crisis of 2008, so he was unable to realise that the crises were not merely due to internal causes, but also external ones. I mean here the cumulative effect of China’s Reform and Opening Up, which was beginning to have a global effect by the 1990s. Countries following the neoliberal agenda could not help being affected by the Chinese return to being a global power of some weight. This point, of course, brings us to Harvey’s most wayward chapter, ‘Neoliberalism with Chinese Characteristics’ (2005, 120-51).
Before I engage with this chapter, we need to pause for a moment to identify some problems that have already arisen. The key problem is that Harvey refuses to countenance both Marx’s theory of labour value and the falling rate of profit in capitalist enterprises. He has been criticised for such omissions (Harvey 2017; Roberts and Harvey 2018; Das 2017), although I do not need to engage with such debates here. More significant is the ramification: what is the cause for the move to neoliberalism? For Harvey, it is nothing more than the result of the political will of the capitalist ruling class (Harvey 2005, 19; see also here). It is a voluntary act by the ruling capitalist class that makes such decisions in order to respond to economic challenges and threats from anti-capitalist opposition. Not only is this approach focused on relations of production and determined by political rather than economic factors, but I am reminded of Marx and Engels’s criticism of Bakunin. At one point, Marx observes: ‘Willpower [Der Wille], not economic conditions, is the basis of his social revolution’ (Marx 1875 , 633; 1875 , 518).
To be sure, Harvey likes to call his approach ‘uneven geographic development’, along with the invocation of multiple, complex and interwoven factors in the capitalist market relations. But he is unable to provide an adequate Marxist reason for the turn to neoliberalism and away from state monopoly capitalism (which he calls ‘embedded liberalism’). By contrast, had Harvey deployed the falling rate of profit (from Marx), he may have been able to account for the turn to neoliberalism. The earlier tendencies towards state monopoly capitalism – popular in the context of two World Wars with states becoming active players in social and economic life through widespread militarisation, capitalist welfare states, and a spate of nationalisations of banks, railways and public utilities – had run to its limit in terms of the ability to extract more profit. A response was needed from the Western liberal tradition: the state had to retreat so as to enable ‘private’ capital to seek new fields to generate profit. Already I have invoked another possible reason in light of the previous section: the tension between bourgeois state control of the capitalist economy and its retreat to enable private capital to come into its own for a while.
With this point in mind we come to the China chapter. Harvey espies a neoliberal turn with the Reform and Opening Up, launched by Deng Xiaoping in 1978. Why? The only answer I can find in Harvey’s work is that it was due to the political will of the CPC, which decided for some unaccountable reason to move to private enterprises alongside state enterprises. I have said enough on the inadequacy of such a voluntarist approach and have more criticisms to make, but let us pause for a moment to see how Harvey unfolds his hypothesis. To begin with, he explicitly connects the Reform and Opening Up with the neoliberal turn elsewhere in the world, although he is careful to point out that it may also have been due to issues internal to China (he does not elaborate).
Harvey is perfectly willing to admit that the result has been stunning, with one of the fastest periods of economic growth in human history, the lifting of hundreds of millions out of poverty, and China’s re-emergence as a major international power. He also notes problems that arose, such as socio-economic inequality, exacerbation of city-country differences, environmental pollution, and labour unrest (his information is limited to the period up to the early 2000s). And he notes that the government has been adept at dealing with new problems that arose. However, Harvey is committed to the idea that this is neoliberal capitalism.
Apart from the fact that Harvey neither cites any reputable Chinese language material on the topic, nor engages in careful study of what Deng Xiaoping actually said and did (apart from some decontextualized ‘sound bites’), the key problem here is that he assumes that a market economy is the same as a capitalist market economy. This may seem like a simple point, but it is fraught with implications. It is also – and unfortunately – quite common among Western economists, social scientists and philosophers – Marxists included. But it is wrong, since a market economy is not by definition a capitalist market economy. I will return to this issue later, save to point out here the multiplicity of different types of market economy is supported by Marx’s own work in Capital, historical investigation, and Chinese research. It is perfectly feasible to have a socialist market economy, which unleashes the forces of production and which is not a capitalist market economy. But Harvey is unable to make this point.
David Harvey has been profoundly influential through his lectures – worldwide – on Marx’s Capital. His method in such talks is simple yet profound: he offers a careful reading, an exegesis, of a few pages of Capital, which he invites the audience to study once again. But the problem of influence is twofold: while Harvey may have encouraged a good number to study Capital once again, this very same influence has encouraged the perpetuation of a number of profound mistakes.
Das, Raju. 2017. ‘ David Harvey’s Theory of Uneven Geographical Development: A Marxist Critique’. Capital and Class 41 (3):511-36.
Harvey, David. 2007. A Brief History of Neoliberalism. Oxford: Oxford University Press.
———. 2017. Marx, Capital, and the Madness of Economic Reason.
Losurdo, Domenico. 2011. Liberalism: A Counter-History. Translated by Gregory Elliott. London: Verso.
Marx, Karl. 1875 . ‘Konspekt von Bakunins Buch “Staatlichkeit und Anarchie”‘. In Marx Engels Werke, Vol. 18, 597-642. Berlin: Dietz.
———. 1875 . ‘Notes on Bakunin’s Book Statehood and Anarchy‘. In Marx Engels Collected Works, Vol. 24, 485-526. Moscow: Progress Publishers.
Marx, Karl, and Friedrich Engels. 1845-1846 . ‘Die deutsche Ideologie. Kritik der neuesten deutschen Philosophie in ihren Repräsentanten Feuerbach, B. Bauer und Stirner und des deutschen Sozialismus in seinen verschiedenen Propheten’. In Marx Engels Werke, Vol. 3, 9-530. Berlin: Dietz.
———. 1845-1846 . ‘The German Ideology: Critique of Modern German Philosophy According to Its Representatives Feuerbach, B. Bauer and Stirner, and of German Socialism According to Its Various Prophets’. In Marx and Engels Collected Works, Vol. 5, 19-539. Moscow: Progress Publishers.
Roberts, Michael, and David Harvey. 2018. Marx’s Law of Value: A Debate between David Harvey and Michael Roberts. In The Next Recession. thenextrecession.wordpress.com/2018/04/02/marxs-law-of-value-a-debate-between-david-harvey-and-michaelroberts.
Smith, Adam. 1776 . The Wealth of Nations. London: Modern Library.
 See also the earlier observation on Max Stirner. who was – write Marx and Engels – committed ‘to mere change of will [eine bloße Veränderung des Willens]’ (1845-1846 , 317; 1845-1846 , 335). This is nothing more than the ‘domination of arbitrariness [Herrschaft der Willkür]’ (1845-1846 , 317; 1845-1846 , 335).
This is the second part of a lecture I am preparing on why foreigners are still unable to understand a socialist market economy. This part examines state monopoly capitalism, which was a significant part of Soviet and European Marxist debates up to the end of the 1980. The text is as follows:
State monopoly capitalism is first and foremost a Marxist category, arising in Soviet thought (abbreviated as stamocap) and gaining widespread usage after the Second World War. Notably, in this tradition ‘state monopoly capitalism’ is used almost exclusively to speak of capitalist countries in light of the evolving stages of capitalism. With one exception: I have been able to find one example – an implicit one – where a certain type of state monopoly capitalism has been used more recently in relation to socialist countries (among others). I will deal with this exception towards the end.
State monopoly capitalism may be defined as a ‘distinct stage of capitalism characterised by the fusion of monopoly forces with the bourgeois state to form a single mechanism of economic exploitation and political domination’ (Jessop 1982, 32). I have taken this definition from Bob Jessop, who provides what is arguably the most comprehensive critical overview of the theory. The date of publication is also telling, for in 1982 the theory was still relatively widespread. There were two main components: a new stage of capitalism in light of its internal crises, which entailed a closer alignment of monopoly capital and the bourgeois state; a development of communist strategy to exploit the contradictions through popular front activities.
The theory initially arose in the Soviet Union (Varga 1964, 1964 , 1934) and became dominant from the 1950s to the 1980s, so much so that The Great Soviet Encyclopaedia has a major 1979 entry (Cheprakov 1979). The origins may be traced back to Marx and Engels, concerning the contradiction between competition and monopoly, and Lenin’s relatively undeveloped observation that imperialism entails the growth of state monopolies (Lenin 1916 , 1917 -b), so much so that – and here he quotes a resolution – ‘monopoly capitalism is developing into state monopoly capitalism’ (Lenin 1917 -a, 305; 1917 -b, 443).
During its heyday, the theory of state monopoly capitalism developed in a number of directions, depending on the emphasis and context. Jessop identifies four, with copious references:
1) General crisis approach, in which the capitalist world faced yet another stage of crisis, generated by the increasing number of socialist countries, the collapse of European colonialism in light of anti-colonial liberation struggles. The response of a decaying capitalism was to find new domination through the merging of the state and monopoly capitalism.
2) Monopoly-theoretical tradition (strong in the Soviet Union and Germany), in which the contradiction of competition and monopoly leads to a permanent domination of the latter. This was seen as a new stage of capitalism, beyond imperialism – as Lenin had initially argued (Lenin 1916 , 1916 ). Here too we find the challenge of socialism, but now seen primarily in class terms: the international challenge of socialism leads to the fusion of monopolies and state, with resultant militarism and a focus on technological development.
3) The capital-theoretical tradition (England, but also in Germany and the Soviet Union), which focuses on the basic laws of capitalist motion. This approach emphasises that state monopoly capitalism is a crisis-driven response to the contradiction between the increasing socialisation of the forces of production and private nature of the relations of production. The state’s active role at multiple levels effectively further socialises the relations of production through the state. On the British side (Fine and Harris 1979, 120-45), this entails not a new stage of imperialism (see above), but a third stage in the capitalist mode of production, after laissez-faire and monopoly capitalism. The state’s active role – through nationalisation, taxation, and state credit – not only negates working class access to real state power through direct control, but also internationalises productive capital by working with multi-national companies and establishing international organisations such as the World Bank and the International Monetary Fund.
4) The French ‘overaccumulation’ approach, which was framed in terms of the contradiction between private monopoly capital’s overaccumulation and its revalorisation through the state. Basing its approach on the cyclical crises of capitalism, which at times reach a crescendo so that structural changes are needed, the French approach identified the increasing role of the state in ensuring that the falling rate of profit (which leads to overaccumulation) is arrested for a time by comprehensive structural changes. Thus, state monopoly capitalism becomes a necessary development to ensure, through the state’s central role, that private monopoly capital is able to produce surplus-value. And it does so through reorganising the relations of production, with the resultant increase in exploitation and polarisation of classes.
To sum up, most approaches agreed on a few basics: state monopoly capitalism was a new stage, either beyond imperialism or a third stage in capitalism (after laissez-faire and simple monopoly); this new stage was yet another systemic effort to deal with unsolvable contradictions, whether in terms of the relations of production and globalised class conflict or in terms of the means of production; it entailed new types of exploitation for workers and efforts to suppress of socialism. But they also differed in many ways, with a core difference determined by whether the focus was primarily political or economic. Thus, those who saw the development in political terms (monopoly-theoretical) were keen to find new approaches to political agitation, but they ran the risk of determining the economic analysis through such an agenda. By contrast, those who preferred to focus on the internal laws of capitalism (capital-theoretical and overaccumulation approaches) at times seemed to come close to Marxist ‘book worship’ and thus a type of economism.
I would like to close with two final questions. First, are there any abiding insights from this material? At a deeper level, it was very useful in identifying the inescapable role of the bourgeois state within a capitalist economy. Debates may continue as to the changing ways this happens, but it is a useful corrective to the neo-classical (and indeed neoliberal) approach which sees the market as a separate entity, within which the state intervenes from time to time. One way of seeing the tensions within capitalist economics is in light of these two theoretical approaches: while the state is deeply and structurally involved, there are at the same time constant moves to delink the state, to privatise state assets and seek a ‘small state’. Periodically – such as during wartime or extensive economic crises – one approach dominates, but then we find a reactive move in the other direction.
This point brings me to the second question: why did state monopoly capitalism as a theory virtually disappear among foreign Marxists after 1989 and the counter-revolution in the Soviet Union and eastern Europe? One reason is that it was due to the tensions within capitalism outlined above: the drive to state monopoly capitalism produced a reaction in the 1980s, with the revival of laissez-faire economics under the label of ‘neoliberalism’. Another reason is that many of the theorists saw a major contradiction at a global level between capitalism and socialism. The latter was growing at the time, with successful revolutions in Asia, anti-colonial struggles and national liberation in Africa, Asia and elsewhere, while the capitalist world was shrinking. The counter-revolution in Eastern Europe seemed to suggest that this analysis was wrong. Instead, socialism seemed to be in retreat and capitalism was gaining momentum.
Or that is how it seemed to Western eyes in the 1990s and early 2000s. Since then, of course, much has changed. Socialist countries, especially China, are now more powerful and influential than they have been for a very long time. Many formerly colonised countries have found that the economic models borrowed from the West have not worked and they are looking for alternative models adapted to their own conditions. And these countries have also been active in international bodies, from the United Nations to the World Trade Organisation, transforming them from within to suit the conditions of a rapidly changing world.
Indeed, I suspect that ‘state monopoly capitalism’ may make a comeback as a category of analysis, albeit in a different way. Thus far, state monopoly capitalism has not been applied to socialist countries, but there is a beginning of efforts to do so, albeit without any awareness of the Marxist origins and development of the term. Let me give one example, although it is implicit rather than explicit. It appears in the recent work by the neo-classical economist, Kurlantzick, who works within the framework of state capitalism but seeks to delimit its application. Realising that ‘state capitalism’ potentially applies to all states, he offers this definition: ‘countries whose government has an ownership stake in or significant influence over more than one-third of the five hundred largest companies, by revenue, in that country, a situation that gives these governments far greater control over the corporate sector than a government in a more free-market oriented nation like the United States or the United Kingdom’ (Kurlantzick 2016, 9). This definition is extremely intriguing, for Kurlantzick must work very hard to exclude a number of countries – such as France, Japan and the United States – from his list. In order to so, he adds:
- The ownership and control of key enterprises must be direct and not indirect (since the United States provides massive indirect subsidies to its military and automobile industries)
- This ownership and control must be long-term and not during economic crises, as we found after 2008 in some countries.
- Direct government spending on items such as welfare is also excluded.
- Sovereign wealth funds are excluded.
Only in this way can he focus on what are implicitly seen as state-monopoly capitalist countries. A major reason for the restrictions is that Kurlantzick is desperate to save mostly Western countries from being versions of state (monopoly) capitalism, for he sees their ‘free market’ approach and its attendant liberalism as under severe threat and failing. But even with these restrictions, the number of state monopoly capitalist countries is quite large, as the following table indicates (Kurlantzick 2016, 28):
More monopolised Hybrid Less monopolised
Two socialist countries make the list, China and Vietnam, although they are by no means the most ‘monopolised’ according to Kurlantzick’s criteria. The question arises as to why this implicit state monopoly capitalism should be recurring now, albeit without awareness of the Marxist tradition. Has the effort to revive laissez-faire economics under the label of ‘neoliberalism’ run its course? I will say more on this question in the section on state capitalism.
Bollana, Primo. 1981. ‘Some Characteristics of State Monopoly Capitalism in the Soviet Union’. In Soviet Revisionism and the Struggle of the PLA to Unmask It, edited by Institute of Marxist-Leninist Studies at the CC of the PLA. Tirana: “8 Nëntori” Publishing House.
Cheprakov, V.A. 1979. ‘Gosudarstvenno-monopolisticheskiĭ kapitalizm’. In Bolʹshaia sovetskaia ėntsiklopediia. Moscow: Izdatel’stvo Sovetskaia Entsiklopediia.
Fine, Ben, and Laurence Harris. 1979. Rereading Capital. London: Macmillan.
Herzog, Phillippe. 1972. Politique économique et planification en regime capitaliste. Paris: Editions sociales.
Hoxha, Enver. 1978 . ‘Imperialism and the Revolution’. In Selected Works, 358-707. Tirana: “8 Nëntori” Publishing House.
Jessop, Bob. 1982. The Capitalist State: Marxist Theories and Methods. Oxford: Martin Robertson.
Kurlantzick, Joshua. 2016. State Capitalism: How the Return of Statism is Transforming the World. New York: Oxford University Press.
Lenin, V.I. 1916 . ‘Imperialism, the Highest Stage of Capitalism: A Popular Outline’. In Collected Works, Vol. 22, 185-304. Moscow: Progress Publishers.
———. 1916 . ‘Imperializm, kak vysshaia stadiia kapitalizma (Populiarnyĭ ocherk)’. In Polnoe sobranie sochinenii, Vol. 27, 299-426. Moscow: Izdatel’stvo politicheskoi literatury.
———. 1917 -a. ‘Speech in Favour of the Resolution on the Current Situation, April 29 (May 12), 1917’. In Collected Works, Vol. 24, 305-8. Moscow: Progress Publishers.
———. 1917 -b. ‘War and Revolution: A Lecture Delivered May 14 (27), 1917’. In Collected Works, Vol. 24, 398-421. Moscow: Progress Publishers.
———. 1917 . ‘The Impending Catastrophe and How to Combat It’. In Collected Works, Vol. 25, 323-69. Moscow: Progress Publishers.
———. 1917 -a. ‘Groziashchaia katastrofa i kak s nei borot’sia’. In Polnoe sobranie sochinenii, Vol. 34, 151-99. Moscow: Izdatel’stvo politicheskoi literatury.
———. 1917 -b. ‘Rech’ v zashchitu rezoliutsiia o tekushchem momente, 29 aprelia (12 maia)’. In Polnoe sobranie sochinenii, Vol. 31, 443-46. Moscow: Izdatel’stvo politicheskoi literatury.
———. 1917 -c. ‘Voina i revolutsiia: Lektsiia 14 (27) maia, 1917g’. In Polnoe sobranie sochinenii, Vol. 32, 77-102. Moscow: Izdatel’stvo politicheskoi literatury.
Varga, Evgenii. 1934. The Great Crisis and its Political Consequences: Economics and Politics, 1928-1934. London: Modem Books.
———. 1964. Ocherki po problemam politékonomii kapitalizma. Moscow: Gospolitizdat.
———. 1964 . Politico-Economic Problems of Capitalism. Moscow: Progress Publishers.
 Compare the definition in The Great Soviet Encyclopaedia: ‘new, more developed form of monopoly capitalism, characterized by the joining of the forces of capitalist monopolies with the power of the state to preserve and strengthen the capitalist system, enrich the monopolies, suppress the workers’ and national liberation movements, and unleash aggressive wars’ (Cheprakov 1979).
 Lenin speaks of ‘the beginnings of state-controlled capitalist production, combining the colossal power of capitalism with the colossal power of the state into a single mechanism and bringing tens of millions of people within the single organisation of state capitalism’ (Lenin 1917 -b, 403; 1917 -c, 83). For a comprehensive assessment of Lenin’s contribution, see Jessop (1982, 32-36).
 Lenin is, however, not entirely consistent in his usage and the theory remains somewhat undeveloped. Before the October revolution, he saw state monopoly capitalism as a development, especially in the context of war, to a new level of capitalism itself, although even here it was already seen as a step towards socialism (Lenin 1917 , 361-63; 1917 -a, 191-93). Later, he quotes from this 1917 text – ‘The Impending Catastrophe and How to Combat It’ – in ‘The Tax in Kind’ from 1921, where he argues for the need for a muted verison of state capitalism during the New Economic Policy. In other words, he subsumed state monopoly capitalism under state capitalism (see below), which he saw as a (major) step towards socialism. This inconsistency is most likely due to different circumstances: the initial proposal was made before the October Revolution during the last phase of Russia’s engagement in the First World War, while his later development of the idea took place after the revolution and Civil War, particularly in light of the need to develop the New Economic Policy.
 Indeed, one of the debates over state monopoly capitalism concerned the relation between state and economy: were they fused under state monopoly capitalism, distinct, or did they function in terms of ‘contradictory separation in unity’ (Herzog 1972, 125)
 One does find very occasional accusations internal to the former Eastern Bloc that the Soviet Union and Yugoslavia had descended, from the time of Khrushchev, to a type of state monopoly capitalism (Bollana 1981; Hoxha 1978 , 414-15).
I am preparing the text for an invited lecture on why foreigners are still unable to understand the socialist market economy in China. The main focus will be on a number of concepts that have been applied to China, but which are mistaken. The first of these concerns ‘bureaucratic capitalism’, which has an intriguing history. The concept arises from Max Weber, who saw it specifically in terms of the peculiar developments in Western Europe. The small number who apply ‘bureaucratic capitalism’ to socialist countries, such as China, are simply unaware of Weber’s work and indeed the realities of these countries. The text is as follows:
Let us begin with ‘bureaucratic capitalism’. The term derives particularly from Max Weber, who made it a central category of his analysis of the rise of capitalism and the modern European bourgeois state (Weber 1921 ; 1947, 324-40; 1968, 956-1005). Bureaucracy is the key, which Weber sees as a detailed and often hierarchical division of labour in which all follow objective and explicit rules that are applied impersonally. A bureaucracy is staffed by full-time professionals, who have developed the necessary skills but who live from a salary and do not in any way own the ‘means of administration’ or make a profit. This is, of course an ‘ideal type’ favoured by Weber, an abstract category used for analysis rather than a concrete description of a real life bureaucrat.
For our purposes, two features are important in Weber’s analysis: bureaucracy as a manifestation of rationalisation; and bureaucracy as crucial for the rise of capitalism in Europe. As for rationalisation, Weber speaks of three types of legitimate authority: rational, traditional and charismatic (Weber 1947, 328-29). Charismatic authority is derived from the Christian tradition and designates a system in which followers are devoted to a gifted or heroic leader. Traditional authority also entails being subject to an individual leader, but now because of tradition itself and its assumed duties. Whoever occupies the position of chief is regarded as legitimate due to tradition. By contrast rational authority is not personal but impersonal. It relies on a distinct set of laws that have their own moral legitimacy or are socially agreed to be legitimate. Weber calls this ‘legal authority’ and it is based on the Western approach to rule of law.
This ‘rational authority’ obviously relies on reason, but what type of reason. Weber (1947, 115) identifies two types:
- Goal-rationality (Zweckrationalität]’, with Zweck meaning end, purpose or goal. Thus, one’s behaviour is rational if it works appropriately towards achieving a specific purpose or purposes. For Weber, this includes the careful weighing up of different purposes, considerations of the best means to achieve the purpose, and the relationships between the means and ends. Thus, if one’s purpose is the pursuit of profit, then one will – where reason is the assumed framework – seek to identify the most appropriate means to achieve this end. By contrast, if the goal is to serve the good of the community (gongtongti fuwu), then the very nature of the means will shift to enable this outcome.
- Value-rationality [Wertrationalität]’, in which behaviour is determined by ‘some ethical, aesthetic, religious, or other form of behaviour, entirely for its own sake and independently of any prospects of external success’ (1947, 115). Contrary to one’s initial impression, this too is a rational approach, but now predicated on an absolute value that determines the appropriate action. For example, if an absolute value is Western liberal ideology and its attendant capitalist system, then one will engage in a series of actions to realise this value. By contrast, if the absolute value in question is communism, then the nature of rational actions will come out very differently.
Obviously there is an overlap between the two types of rationality, and Weber is not always clear about their relationship (with rationality often coming to mean efficiency), but I have deliberately used economic examples since they lead to the second implication: for Weber, bureaucracy was crucial to the growth of capitalism in Western Europe. The reason is that a bureaucracy based on rational authority, on the impersonal observation of a code of laws, and so it is more efficient than other forms of organisation. As Weber observes:
‘The decisive reason for the advancement of bureaucratic organizations has always been the purely technical superiority over all other administrative forms … A strictly bureaucratic administration produces an optimal efficiency for precision, speed, clarity, command of case knowledge, continuity, confidentiality, uniformity, and tight subordination. This is in addition to minimization of friction and the costs associated with materials and personnel’ (Weber 1921 , 96; see also Weber 1947, 337).
He finds this new form of bureaucracy dominating across many fields, whether army, state, church, political parties, clubs, private associations, and – crucially – economic enterprises. It is nothing less than the ‘most crucial phenomenon of the modern Western state’ (Weber 1947, 337). In other words, for Weber, bureaucracy plays the foundational role in the development of the bourgeois state, bourgeois civil society and capitalism. It may be compared to Adam Smith’s focus on division of labour and Marx’s surplus value, although it also raises a number of questions.
First, Western analyses of Weber tend to focus on his influential work, The Protestant Ethic and the Spirit of Capitalism (1904-1905 ), in which the vanishing mediator of capitalism was Reformed Protestantism. This focus is rather imbalanced, since for Weber the religious dimension was a means for achieving a rational bureaucratic organisation. Second, I have emphasised that Weber saw modern rational bureaucracy as the most efficient form developed thus far. He also balances this appreciation with the other side, in which rational bureaucracy dominates to the exclusion of all other, higher concerns (Adler 2012). However, critics too often stress the negative dimension and miss the balance of Weber’s analysis. Third, a more fundamental problem concerns the cause of the rise of rational bureaucracy. By now it is clear why one can speak of bureaucratic capitalism in light of Weber’s work, but it begs the crucial question: from where does such a system arise? Weber is willing to admit that ‘capitalism is the most rational economic basis for bureaucratic administration and enables it to develop in the most rational form’ (Weber 1947, 338; Stanisevski 2004). But Weber does not provide the type of systemic analysis of capitalism that we find in Marx.
Weber’s focus was strictly on Western Europe, particularly when he was analysing rationality, bureaucracy and capitalism. Thus, when he speaks of bureaucratic capitalism (to use a shorthand), he speaks of the Western European context for capitalism. And despite his misgivings over rationality and bureaucracy, he saw it as the highest form of political, social and economic organisation. As for socialism, it ‘would, in fact, require a still higher degree of formal bureaucratization than capitalism’ (Weber 1947, 339; see also Weber 1968, 224).
This final point brings us to a question I will ask on each occasion: has ‘bureaucratic capitalism’ been applied to socialist countries, including China? It has, but – crucially – without awareness of Weber’s balanced insights. One example is Cornelius Castoriadis, who follows a Trotskyite line (Trotsky 1937 ) in hypothesising that the Soviet Union during Stalin’s time became a form of ‘bureaucratic capitalism’ (Castoriadis 1956 ). Here ‘bureaucracy’ has only a negative sense (unlike Weber) and the use of ‘capitalism’ indicates a sneering dismissal of the Soviet project to the construct the world’s first socialist system.
We find similar, if not more extreme and unrealistic, proposals from a small group who inhabit the ‘grey zone’ of the internet. Self-described ‘activists’, they feel they are changing the world one blog post at a time. Their core approach is not merely to hypothesise that China turned towards capitalism with the Reform and Opening Up (itself a profound misinterpretation), but to deny that China has ever been socialist at all (La Botz 2012; Yu 2009; Yu et al. 2012; Lin 2017, 2019). This entails an all-out denial that the Communist Party of China is communist, a denial that the Liberation was in any sense communist, a denial that Mao Zedong was a Marxist, and a denial that China at any stage has attempted to construct socialism. How is this fanciful narrative constructed? It is based on the assumption that CPC is an evil and secretive organisation, terribly afraid of its own people and seeking world domination. ‘Bureaucracy’ thus means for them absolute control by the CPC – a position that is empirically wrong as well as being profoundly voluntarist and thus at odds with the Marxist dialectic. With this assumption – much like believing in ghosts – they can construct a narrative of bureaucratic control over the many phases of the New China of the last 70 years that is based on speculation, twisting of information and simple falsehoods.
To sum up, for Max Weber bureaucratic capitalism described the highly efficient yet ambivalent nature of capitalism in Western Europe and its attendant bourgeois state and society. He certainly did not apply the idea to other contexts, except to point out that socialism would require a whole new level of rational organisation. By contrast, a small number of ‘grey zone’ internet ‘activists’ apply the term in a purely negative way to speak of China – albeit without any sense of Weber’s work and without seeking truth from facts.
Adler, Paul. 2012. ‘The Sociological Ambivalence of Bureaucracy: From Weber via Gouldner to Marx’. Organization Science 23 (1):244-66.
Castoriadis, Cornelius. 1956 . ‘The Proletarian Revolution Against the Bureaucracy’. In Political and Social Writings, Vol. 2, 57-89. Minneapolis: University of Minnesota Press.
La Botz, Dan. 2012. ‘China: From Bureaucratic Communism to Bureaucratic Capitalism’. New Politics 2012 (20 November). https://newpol.org/china-bureaucratic-communism-bureaucratic-capitalism.
Lin, Kevin. 2017. ‘Remoulding the State Sector: Back to the 1990s?’. In Made in China Yearbook 2016: Disturbances in Heaven, edited by Ivan Franceschini, Kevin Lin and Nicholas Loubere, 20-23. Canberra: ANU Press.
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 We should remember the different senses of the term ‘bureaucracy’ in English and Chinese. The English term ‘bureaucracy’ has two parts, ‘bureau’ (desk) and ‘cracy ‘from the classical Greek kratia, rule). Thus, ‘bureaucracy’ is rule conducted from a desk or office, that is, by the writing and sending or receiving of written documents – now their electronic equivalent.
I have begun wondering why – for example – the European Union has not developed its own type of computer chips or operating systems. Instead, they have simply ceded dominance to US-based systems, which have the explicit agenda of controlling the global internet. Thus far, it is only China that has the wisdom, brainpower and economic basis to do so.
When we come to navigation systems, the EU does have Galileo, despite the efforts by GPS to dominate. And we also have GLONASS in Russia and Beidou in China. I prefer to use Beidou navigation on my phone, since it is more stable and accurate than GPS-based maps. But now a new step has been taken, with comprehensive collaboration and synergy between Beidou and GLONASS – as the following article from the People’s Daily reports. Good move, as far as I am concerned, not least because it will eventually knock GPS off its perch.
BeiDou-GLONASS synergies will offset dominance of US GPS
China and Russia will soon put in place an agreement involving their respective satellite navigation systems, aiming to promote the compatibility and interoperability of the BeiDou and GLONASS systems.
As synergies between the two navigation systems are in full swing, industry observers said that such an alliance, which would yield more accurate positioning and have wider applications, could rival the US-based global positioning system (GPS) navigation system’s dominant positions and safeguard nations’ security in the face of US bullying practices that may extend to the navigation sector.
The agreement on cooperation in the use of the GLONASS and BeiDou Global Navigation Satellite Systems for Peaceful Purposes was confirmed by the two sides during the sixth meeting of the committee of the Russia-China Project Committee on Important Strategic Cooperation in Satellite Navigation (RCPCISCSN) over the weekend. The agreement will take effect soon, according to an official press release for the event.
Industry insiders have hailed the agreement as a major step that provides a legal framework for deeper cooperation between China and Russia, signaling a transition to real and comprehensive bilateral cooperation not only in application promotion but also within navigation systems.
The agreement, which was signed in November 2018, specifies bilateral cooperation between China and Russia in the development and manufacturing of civil navigation equipment that supports both the BeiDou and GLONASS systems, according to media reports.
Under the agreement, each country will deploy three monitoring stations within their own territories for the other country to correct navigation signals, according to Russian news site sputniknews.cn in August.
During the meeting, the two sides also considered reports by four working groups involving compatibility and interoperability, satellite-based augmentation systems, the building of stations, supervision and assessment, and combined applications. Major development in these areas has been achieved.
China and Russia also signed an inspection certificate regarding the location of monitoring stations and approved a feasibility study report on agricultural projects.
They agreed on the text of the cooperation agreement on the timing compatibility of BeiDou and GLONASS during the meeting. Multi-modal, multi-frequency radio frequency chips that support both BeiDou and GLONASS were also released during the meeting, with the two sides jointly analyzing the business prospects of more chip application and cooperation in research.
The two countries will maintain close communication on development plans and the project implementation of both systems. They will also actively explore new cooperation areas and projects to promote result sharing and cooperation for mutual benefit between BeiDou and GLONASS.
Rivaling US GPS
The deeper synergies have far-reaching implications for the US GPS navigation system amid a US crackdown on China’s technology rise, observers said. GPS has for decades claimed a monopoly in the global satellite navigation market and it now accounts for the largest market share.
“Bilateral cooperation between China and Russia will create a larger, broader, more stable and more robust satellite network, with more accurate positioning to challenge GPS,” Cao Chong, a Beijing-based industry analyst, told the Global Times on Monday.
The basic composition of navigation signals in BeiDou and GLONASS network is similar, which means users could switch seamlessly from one system to another, Li Ning, member of the Precision Application Committee under Global Navigation Satellite System and Location Based Service Association of China, told the Global Times.
While the GLONASS network mostly serves high-latitude regions, China’s BeiDou navigation system mainly focuses on providing networks for the low-latitude areas, analysts said. The combination would give birth to the optimal world navigation system.
China has launched 46 satellites in the BeiDou constellation. Russia has put 26 satellites for GLONASS into orbit. The GPS had 31 satellites operational as of April 2019.
The partnership will also give China and Russia an advantage in pushing forward the landing of massive applications to compete head-to-head with the US GPS, Cao added.
Some industry insiders also view the tie-up as a way for both China and Russia, traditional partners with mutual trust, to jointly defend national security and counter US hegemony.
“The US has been using its national power to suppress China’s technology rise. What if US suspends GPS service to rising economic powers, just like it ordered Google to cut Android supplies to Huawei? What if GPS sends wrong signals to disrupt normal economic activities?” an industry insider, who spoke on condition of anonymity, told the Global Times.
“China and Russia cannot give up their location rights to the US and they must have something in hand that can replace the GPS if needed for national security concerns.”
In 2015, China and Russia set up the committee of RCPCISCSN to establish a government-level mechanism and platform for deeper synergies between their respective navigation systems.
For those interested in a useful overview of China’s extraordinary poverty alleviation project the following documentary series is worth viewing.