A Forgotten History: East European Market Socialism

‘The alternative is still either Socialism or a market economy’ – these deceptive words come from Count Ludwig von Mises and they have haunted much economic thought concerning socialism and indeed communism ever since. They were initially uttered in 1932 in a moment of exasperation. Von Mises sought to respond to first successful communist revolution, in Russia, and what was then emerging as the Soviet Union, which was in the early stages of launching its ‘socialist offensive’ – the massive process of industrialisation and agricultural collectivisation. It would result in the Soviet Union’s leap into the modern era. However, in the rather different world after 1989, von Mises’s slogan of exasperation has become an apparent truism.

Why have the words of this slogan continued to haunt? In the now-faded triumphalism after the counter-revolutions in Eastern Europe, many – Marxists included – have clung onto the either-or dichotomy. You cannot have, they believe, a socialist system and a market economy. Such a combination is a hybrid, an oxymoron.

Why deceptive? Von Mises (and Count Friedrich von Hayek after him) restricted socialism to a fully planned economy, without any form of a market. And a ‘market economy’ was by definition a capitalist market economy. Deceptive, yes; persuasive, even more so. Today, it takes a significant mental effort for many to disconnect ‘market’ from ‘capitalism’, but the effort must be made.

The Initial Proposal

Over the last couple of months, I have been engaged in researching the various market socialist experiments in Eastern Europe, from the 195os to the 1980s. All of them – including the Soviet Union – attempted to develop versions of market socialism. Some were more tentative, such as the Soviet Union, Romania and Bulgaria, while some went much further, such as Poland, Hungary and Yugoslavia. The programs in these countries, which saw their role in the CMEA, or Comecon, as complementary rather than competitive, had distinct local variations, but they also evinced significant similarities that are still known as ‘market socialism’.

The initial model was proposed by Oskar Lange in the late 1930s (although there were stray precursors). He argued that under a market socialist system there would be neither a market in production nor in finance for enterprises, but individuals could select their own jobs and what they consumed. In this context, the Central Planning Board would set an initial price for products, to which enterprises would respond by two means: taking appropriate measures to minimise the average costs of production; levelling prices in relation to these costs of production and consumer preferences. Thus, while the state owned the means of production, workers would exercise freedom of choice in terms of where to work and what to consume, which would in turn influence the pricing mechanisms of the planning board. For Lange, this approach would achieve – through a perpetual cycle of trial and error – a viable form of socialist planning. This would overcome the inherent tendency of capitalist market systems to monopolies and state intervention, and enable the optimum outcome for the social good, as well as provide a way to make significant economic improvement. Lange’s proposal is usually seen in light of the ‘socialist calculation’ debate (including the two Austrian counts mentioned earlier), but this is to miss the profound impact of Lange’s model in Eastern Europe. There, it opened up crucial theoretical space for considering the role of markets within a socialist system, although each of the market socialist programs modified Lange’s proposal in various ways – particularly in terms of independent enterprises, the nature of prices and the law of value under socialism.

Lange was only the beginning, for in my research I have uncovered a significant trove of material that is mostly forgotten these days. For some, it is as though this important phase of economic theory and planning simply did not exist. But exist it did, particularly in in places like the GDR (East Germany), where a massive concentration of economic research opened up new paths in developing a Marxist political economy for the construction of socialism and a socialist economy. I do not need to go into all the material and references here (they are contained in a lengthy article which will be published in due time), but my focus is to draw out the most significant insights. I do so with an eye on the Chinese socialist market economy.

Economic Mechanism

There were three crucial insights that arose from Eastern European market socialism: the market as an economic mechanism; the relation between planning and market; and ownership, or what is really the connection between the relations and means of production.

The first breakthrough is often forgotten: a market economy is by no means equivalent to a capitalist market economy. Marx himself already points in this direction and historical analysis confirms Marx’s approach: market economies have existed in many different historical periods, and they have clearly not been capitalist market economies. Indeed, a market economy under a capitalist market system is but one historical form of a market economy.

How did the Eastern European economists see the market? It should be seen as an instrument rather than inherently capitalist. The favoured term was ‘economic mechanism’, which entailed that it was like a neutral piece of machinery. As for the workings of this economic mechanism, the most influential proposal came from the Hungarian economist, János Kornai. He argued that an economic mechanism such as the market could exist in different forms of organisation, including socialist ones, and the way one deploys such a mechanism is through direct and indirect levers. The direct levers were the direction of production, the allocation of production materials, the regulation of foreign trade, and the appointment of managers. All of these were centralised through the state, although the problem thus far had been overcentralisation and thus the dominance of direct levers. Kornai also proposed four indirect levers: investment, the monetary system, the price system, and the wage fund. These were indirect because the government would provide the necessary environment for appropriate forms of activity, but not control them directly.

However, there was a catch with the economic mechanism argument. By and large, Eastern European economists did not move beyond the idea of a neutral instrument that could be used in different contexts. Of all the economists, only Branko Horvat (from Yugoslavia) went a step further: ‘It is not the market that determines a social system; it is, on the contrary, the socio-economic system that determines the type of the market’. In other words, a market economy is not merely a neutral instrument that could be used in different contexts; its nature, its constellation of components, was also shaped by the socio-economic system in which it operated. But Horvat made this important point in 1989, already under the acknowledged influence of earlier developments in Chinese economic theory.

Between Planning and Market

A second important breakthrough was made in terms of the planning-market opposition. We have already seen that Count Ludwig von Mises had – deceptively – suggested that planning and the market were diametrically opposed to one another. Eastern European economist struggled with this question as well, often being tempted to see them in tension. This opposition was posed in various ways, such as centralisation and decentralisation, state control and worker (economic) democracy, or vertical and horizontal relations. Given these oppositions, many saw them as working against each other, so that the enhancement of one side undermined the other – most often in terms of the state refusing to allow or even actively blocking the decentralising impetus of market relations.

Most attempted to find the correct balance between the ‘invisible’ and ‘visible’ hands, which was described by Włodzimierz Brus as ‘central planning with a regulated market’. Thus, significant marketisation would be possible, all the way from individuals to enterprises, from supply-and-demand price mechanisms to an economic bottom line for an enterprise’s viability, from division of labour to wage differentials, without it being a version of laissez-faire or even the capitalist model of social democracy. At the same time, the state would continue to own the core means of production, engage not in micro-management but in overall planning and direction of the economy via indirect levers, engage in price control in crucial areas and to prevent speculation during shortages, focus on efficient allocation, calculation and valuation, and have primary control over many areas that simply cannot be ‘marketised’, such as the mitigation of inequalities, overcoming poverty, social care, fostering talents through education, and environmental concerns, which were already becoming apparent in the 1970s

While this ‘balance’ approach dominated, there was at least one effort to go a step further. It comes from Branko Horvat: ‘without market there is no self-management and therefore no socialism’. With all members of society as ‘share-holders’, his point is more dialectical rather than simply seeking a balance of opposing forces. Or, as he puts it even more sharply: ‘a market is a planning device; without planning a market cannot operate efficiently’. In other words, planning and a market are not diametrically opposed to one another, but work in a dialectical way to enhance the other. Again, Horvat was by this time influenced by Chinese economic thought, where we find that Chinese economic planning has taken on a whole new reality in light of the development of the socialist market economy. Let me be clear: China has certainly not abandoned economic planning, for it now works at a qualitatively higher and more sophisticated level. And it does so through the socialist market economy, which is in turn a planning device.

From Ownership to Liberating the Forces of Production

It should not surprise us that Eastern European economists focused extensively on ownership of the means of production. The Communist Manifesto makes it clear that one of the first acts after a proletarian revolution is to abolish bourgeois private property and give workers control over the means of production. But the Eastern Europeans also began to examine what happens after bourgeois ownership has been overcome, and so they began to distinguish between individual private property (deriving from the Roman legal tradition) and public-social ownership. Non-bourgeois private property was quite possible in a socialist system, so much so that it caused little debate. Most of the debate was focused on the transition from public (or state) ownership to social ownership.

However, this debate had one significant shortcoming: the tendency to focus too much on the relations of production, specifically by defining socialist economics in terms of the ownership of the means of production, an emphasis that led at times from economic democracy to misdirected emphases on political ‘democratisation’ with a distinctly bourgeois aftertaste. This emphasis relegates to second place or indeed neglects what is arguably the primary issue of liberating the forces of production under socialism (as Deng Xiaoping saw). So let us see how the question of ownership looks in light of a focus on productive forces.

After a successful revolution, the historical evidence is clear that all communist parties moved to liberate productive forces through full-scale nationalisation of enterprises, abolition of bourgeois private property, industrialisation in light of ‘backward’ economic conditions, collectivisation of agriculture, and moves to a fully planned economy. As the dictatorship of the proletariat and peasantry, the new state has had to act decisively to destroy the previous system and instigate the economic structures needed for the initial phase after a communist revolution. As Engels put it in 1890: ‘Gewalt (i.e. state power [Staatsmacht]) is also an economic force [ökonomische Potenz]!’ I know of no case where this approach did not propel productive forces forward, now that they were freed from the bonds of a capitalist-landlord system. Even more, it enabled Eastern European countries that were – due to a much longer history – on the periphery of Western European development to break out of this peripheral status. This process is particularly clear with the Soviet Union, Czechoslovakia and East Germany, which became highly industrialised and dynamic economies, but the others also made considerable breakthroughs and significant growth (in the 1950s averaging 11 percent per annum). These are quite stunning results of the first phase, especially in what were comparatively ‘backward’ countries.

However, this approach – full state ownership and planned economies – has turned out to be an initial phase of socialist economic construction.  With the development of productive forces, older tensions that formerly could be managed now become threatening, while new tensions arise between the forces and relations of productive, which hinder further development.[1] Fully planned socialist economies have found that they reach a limit-point for further liberation, with eventually stagnating economic performance, supply-side structural blockages, a dwindling of creative solutions to such problems, and increasing contradictions in the relations of production that threatened to become antagonistic.[2] In short, the forces of production need a new burst of life, another form of liberation.

Historically, the way these problems have been tackled – with less and more success – is the development of a market economy in a socialist framework. The implications for the relations of production were in terms of the rise and spread of private property, of increasing competition between enterprises (even state-owned enterprises), and even of new levels of creativity and competition. Not unexpectedly, this new phase gave rise to a whole new series of contradictions that were handled in less or more competent ways.

Concluding Assessment

How do we assess the whole experiment, with the advantage of hindsight? While the initial phases of planned economies did indeed liberate the forces of production, the problem was that the market socialist reforms did not seem to provide the hoped-for breakthroughs. Economic development, growth and wages evidenced initial improvements equal to and beyond those of Western Europe, but then began to fall behind by the late 1970s and 1980s. Herein lies the initial problem: the desire to show that socialism was better than capitalism, so much so that the former would ‘catch up’ to and ‘overtake’ the latter. Many factors were sidelined in such assessments, such as natural resources, global economic crises (especially in the early 1970s), hostile external forces, social structures, cultures, and especially the longer history of Eastern Europe over some five centuries. This economic, social and political history, characterised by a smaller population in relation to territory, the phenomenon of re-feudalisation on the way to capitalism, and persistence of pre-bourgeois modes of governance, led to a situation in the twentieth century in which Eastern Europe found itself on the periphery of and lagging behind Western European capitalism. In terms of economic analysis, the focus on growth, prices, wages, innovation and efficiency in one or more small country bracketed out both the global situation and crucial socio-economic indicators such as worker-focused medical care, education, retirement pensions, full employment of both women and men, and a sense of the common good.

All the same, the various efforts at market socialism in Eastern Europe remained tentative, achieving no more than a half-way house between centralised planning and market economies. They were of course feeling their way along a path no one had before travelled. And the fact that they were forced into ‘shock therapy’ in the 1990s, precisely when many expected that they would finally be able to achieve a fully function market socialism, has cast a pall over the whole effort.

What have been the responses? One line was to retreat to the position that market socialism was a hybrid that would never work. This approach usually bifurcates along the old planned-market opposition. For pro-capitalists, only a capitalist market economy is viable. Thus, it matters not whether one has a fully planned economy or market socialism: they are both unviable. On the other side were Marxists who argued that socialism should never entertain any type of market economy, for only a planned economy is appropriate to socialism. Any effort at market socialism thus becomes an oxymoron, if not a ‘betrayal’ of Marxism – a narrative that is redolent with Western religious assumptions. The solution in this case is to enhance the efficiency and sophistication of such central planning. However, the problem with either approach is that it assumes the misleading slogan promoted by von Mises – ‘the alternative is still either Socialism or a market economy’.

The alternative is to grasp the dialectic: full marketisation – including the ‘hard budget constraint’ of bankruptcy – is a socialist project, and thus planning happens and is indeed enhanced through a market economy. It is not a case of either planning or markets, but a dialectical enhancement of both, with the attendant qualitative leap in the need for sophistication.[3] In this light should we understand Xi Jinping’s observation that China ‘resolved a major problem that other socialist countries had long failed to resolve’. Or, as Oskar Lange said at one point, ‘authentic free competition could only exist in socialism, because under capitalism monopolies put down all kinds of true competition’.

Thus far, I have mentioned China on rare occasions. This is a deliberate move, since the socialist market economy in China requires a distinct study on its own, since it is not really the same as East European market socialism and cannot be drawn into that historical path. Of course, as the Reform and Opening Up began, scholars and economists from China studied the Eastern European situations very carefully, with interchanges between China and Eastern Europe and even implementation of some early Chinese measures. While the Chinese learnt from Eastern European successes and failures, and while Eastern European scholars began to learn from China’s approach, the latter developed a distinct approach, designated by the term, ‘socialist market economy with Chinese characteristics’.

[1] Here Marx’s well-known insight from ‘A Contribution to the Critique of Political Economy’ (1859) also applies, although perhaps not quite in the way he expected during the construction of socialism: ‘At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production … From forms of development of the productive forces these relations turn into their fetters’. Stalin would, of course, develop this point much further in his long study of economic problems under socialism.

[2] Specific problems included the unevenness of development – in terms of talents and distribution of productive capacity – over a very short period of time; overspending of national incomes for the sake of increasing production to meet consumption demands, a situation that led to constant tensions between expanding or modernising production; the contradictions of engaging in foreign trade, where essentially complementary production processes had to deal with capitalist competition.

[3] Such detail and complexity is theoretically possible but in practice it proved immensely difficult, not least because the computational methods and extraordinary flexibility developed later – as with China – were not yet available.

From Germany embracing Huawei’s 5G to Chinese economic prowess

While I have been researching Eastern European market socialism, with its breakthroughs and logjams, have not posted so much recently. But there are some interesting recent developments.

First, despite all the hype about Huawei in small corners of the world, business is booming with company sales improving more than 25 percent compared to last year. Its new phone, the Mate 30, simply challenges you to do without the nefarious dealings of Google. For some time now, I have not been using any of the Google items, so this is good news. Further, Germany has decided that Huawei poses no risks whatsover, and indeed that it helpfully prevents US spying, so the company that has most global patents in 5G will be integral to Germany’s development.

On a related note, despite all the uncertainties of the global situation and with a new wave of US-driven nationalistic protectionism, the Chinese economy is moving ahead solidly. Chinese experts have have been predicting a gradual slowing of growth for some time, as China makes a transition from high volume to high quality, and with a focus on ecological civilisation (shengtai wenming). Then again, 6 to 6.5 percent growth now in China is equivalent to 15 percent 10 years ago, and it is way above standard levels elsewhere.

 

While you were looking elsewhere … China now builds the best bridges in the world

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.

On State Capitalism

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 [1965]-b, 1918 [1969]-b, 1918 [1965]-a, 1918 [1969]-a, 1921 [1965]-a, 1921 [1970]-a), but the fullest statement may be found in the key work, ‘The Tax in Kind’ (Lenin 1921 [1965]-b, 1921 [1970]-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.[1] How so? It would enable the initial impetus for the ‘development of the productive forces’ (Lenin 1921 [1965]-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.[2] 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.[3] 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).[4] 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 [1998], 588-605; 1894 [2004], 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.

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Norman, David. 1955. Marx and Soviet Reality. London: Batchworth.

Pannekoek, Anton. 1937. ‘State Capitalism and Dictatorship’. International Council Correspondence 3 (1):8-16.

Tao, Lin. 2008. ‘Liening de xin jingji zhengce jiqi shidai jiazhi xin tan—jian lun qi dui deng xiaoping lilun de yingxiang’. Ha’erbin xueyuan xuebao 2008 (4):11-18.

Wang, Lirong. 2001. ‘Liening de “xin jingji zhengce” he dengxiaoping lilun zhi bijiao’. Zhongnan caijing daxue xuebao 2001 (5):13-16.

Weil, Robert. 1996. Red Cat, White Cat. New York: Monthly Review Press.

Yang, Chengxun, and Zhusi Li. 1998. ‘Dengxiaoping lilun dui liening xin jingji zhengce sixiang de jicheng he fazhan’. Makesizhuyi yu xianshi 1998 (5):12-17.

[1] It was in ‘The Tax in Kind’ – as noted earlier – that Lenin subsumed his earlier usage of ‘state monopoly capitalism’.

[2] 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 [1965]-b, 331; 1921 [1970]-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 [1965]-b, 334; 1921 [1970]-b, 210).

[3] Earlier, I noted the effort by Kurlantzick to limit the meaning of state capitalism in terms of an implicit state monopoly capitalism.

[4] 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 [1993], 143; 1985 [2008], 140). Apparently, Zhou Enlai had advocated learning from the NEP already in the 1950s (Lüthi 2010, 36).

On David Harvey’s Neoliberalism (‘with Chinese Characteristics’)

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 [2000]) 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 [1973], 633; 1875 [1989], 518).[1]

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.

Bibliography

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 [1973]. ‘Konspekt von Bakunins Buch “Staatlichkeit und Anarchie”‘. In Marx Engels Werke, Vol. 18, 597-642. Berlin: Dietz.

———. 1875 [1989]. ‘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 [1973]. ‘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 [1976]. ‘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 [2000]. The Wealth of Nations. London: Modern Library.

[1] 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 [1973], 317; 1845-1846 [1976], 335). This is nothing more than the ‘domination of arbitrariness [Herrschaft der Willkür]’ (1845-1846 [1973], 317; 1845-1846 [1976], 335).

On State Monopoly Capitalism

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).[1] 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 [1968], 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 [1964], 1917 [1964]-b),[2] so much so that – and here he quotes a resolution – ‘monopoly capitalism is developing into state monopoly capitalism’ (Lenin 1917 [1964]-a, 305; 1917 [1969]-b, 443).[3]

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 [1964], 1916 [1969]). 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.[4] 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,[5] 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:

  1. 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)
  2. This ownership and control must be long-term and not during economic crises, as we found after 2008 in some countries.
  3. Direct government spending on items such as welfare is also excluded.
  4. 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.

Bibliography

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 [1985]. ‘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 [1964]. ‘Imperialism, the Highest Stage of Capitalism: A Popular Outline’. In Collected Works, Vol. 22, 185-304. Moscow: Progress Publishers.

———. 1916 [1969]. ‘Imperializm, kak vysshaia stadiia kapitalizma (Populiarnyĭ ocherk)’. In Polnoe sobranie sochinenii, Vol. 27, 299-426. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1964]-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 [1964]-b. ‘War and Revolution: A Lecture Delivered May 14 (27), 1917’. In Collected Works, Vol. 24, 398-421. Moscow: Progress Publishers.

———. 1917 [1965]. ‘The Impending Catastrophe and How to Combat It’. In Collected Works, Vol. 25, 323-69. Moscow: Progress Publishers.

———. 1917 [1969]-a. ‘Groziashchaia katastrofa i kak s nei borot’sia’. In Polnoe sobranie sochinenii, Vol. 34, 151-99. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1969]-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 [1969]-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 [1968]. Politico-Economic Problems of Capitalism. Moscow: Progress Publishers.

[1] 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).

[2] 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 [1964]-b, 403; 1917 [1969]-c, 83). For a comprehensive assessment of Lenin’s contribution, see Jessop (1982, 32-36).

[3] 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 [1965], 361-63; 1917 [1969]-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.

[4] 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)

[5] 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 [1985], 414-15).

Book outline: Socialism with Chinese Characteristics

This book arises from a contradiction in our time: Chinese scholars and indeed most people in China are well aware of the key arguments and developments that form the basis of socialism with Chinese characteristics (zhongguo tese shehuizhuyi); non-Chinese scholars are largely ignorant, even though I find that more and more want to know at least something. In China, many of the topics presented in this book were settled quite a few years ago, so much so that one finds relatively little debate today. Other topics have a renewed vigour – such as contradiction analysis and rule of law – but these rely on earlier debates. By contrast, one struggles to find even remotely adequate treatment of these topics in foreign materials – if they are studied at all. I will examine some of the reasons in the introduction to the book, but three may be identified here: first, some have a tendency to say they prefer to look at the practice and ignore the theory, but this is a profound abdication of not only proper research, but Marxism itself (where theory along with practice is crucial); second, the material that does appear stops with the death of Mao Zedong (some, especially by Knick Knight, is excellent); third, the vast bulk of available scholarship is in Chinese. Obviously, one needs to be able to research this Chinese-language material.

Even so, the primary purpose of this book not to engage in polemics (lunzhan – fighting theories), but to make available for a non-Chinese audience the sophisticated debates and conclusions in China concerning socialism with Chinese characteristics. Without knowing this material, one can come to superficial perceptions and profound misunderstandings; knowing it, one begins the first steps in understanding and thereby trust. The following begins with a careful philosophical analysis of Deng Xiaoping, and the implications of his core ideas and practices. This study is the basis of what the rest of the book: contradiction analysis; the Marxist philosophy of the Reform and Opening Up; the basis and nature of the socialist market economy; socialist modernisation; rule of law; sovereignty and human rights; minority nationalities and the anti-colonial project; and Xi Jinping’s thorough Marxism in a Chinese situation. I should say that I have about a year of further in-depth research before me, so some of the material below will be revised as the project develops.

Introduction

The introduction begins by tracing the idea that while Marxism has core principles, or sets of problems, the way it develops in different locations has distinct characteristics. While there are global commonalities, each region has its distinct history, culture and philosophical tradition. As a result, in each situation the problems are somewhat unique and require new answers – hence the specific ‘characteristics’ of Marxism in such a location. We may trace this idea back to the late writings of Marx and Engels, as they faced developments of socialism in other parts of the world. But it begins to appear more clearly with Lenin and Stalin, and of course with Mao Zedong and Deng Xiaoping. Obviously, the idea is not original to Deng, although he gave it a particular resonance in China.

The introduction also attempts to explain why there is precious little treatment in non-Chinese material of the Marxist basis of the Reform and Opening Up, with which ‘socialism with Chinese characteristics’ has been most closely associated. In order to understand this situation, I elaborate on the distinction between ‘before’ and ‘after’ October. In other words, a crucial divide in analysis appears between those who take the perspective of ‘before October’, before the communist revolution, and those who analyse Marxism ‘after October’, after the revolution and in the difficult period of the construction of socialism. As Lenin and Mao said repeatedly, gaining power in a communist revolution is relatively easy; by contrast, constructing socialism is infinitely more complicated. Obviously, this study is concerned with ‘after October’, with the project of constructing socialism.

Finally, the introduction presents the main features of Chinese scholarship on socialism with Chinese characteristics. This material is immense, so I introduce the main resources, journals and themes – with a distinct focus on the philosophical foundations as they are manifested in practice.

Chapter 1. Reading Deng Xiaoping

‘Less talk, more deeds’ – Deng Xiaoping is mostly remembered as a leader of concrete acts rather than extensive theoretical reflection. In non-Chinese works, one may find biographies, studies of foreign policy, and scattered quotations taken out of context (albeit usually within a western European liberal framework). Few indeed are the studies of ‘Deng Xiaoping theory [lilun]’. Apart from Domenico Losurdo, no-one outside China has credited Deng with a sophisticated and insightful theoretical basis.

Through a careful study of Deng’s speeches and writings, along with relevant Chinese scholarship, I analyse the philosophical basis in two related ideas: liberating thought, and seeking truth from facts. While the terms seem simple enough on the surface, at a deeper level they identify the need to escape from the trap of Marxist dogmatism (as Mao also urged) and the need for careful analysis of the particular conditions of China in order to develop new answers in light of the Marxist tradition. From these two core ideas flow many of Deng’s positions: liberating the forces of production (see further the chapter on the socialist market economy), seeking a moderately well-off (xiaokang) society, to each according to work, and of course socialism with Chinese characteristics.

Chapter 2. Contradiction Analysis

Deng Xiaoping presented less of a break with Mao or indeed the Marxist tradition and more of a creative continuity within that living tradition. A significant element of this continuity was ‘contradiction analysis [maodun fenxi]’. This topic requires an initial step back to Mao Zedong (‘On Contradiction’) and how he developed a whole new phase in the Marxist tradition of dialectical analysis, via Lenin and Chinese conditions. Crucial for the construction of socialism is the idea of non-antagonistic contradictions: contradictions will appear under socialism, but the focus should be in ensuring they are non-antagonistic. Subsequently, from Deng Xiaoping to Xi Jinping, we find contradiction analysis at the basis of philosophical thought and government policy. For example, it appears in: class analysis in the primary stage of socialism; socialist market economy; poverty alleviation; education: medicine; workplace realities; core socialist value; and – of course – the crucial need to identify a primary contradiction as the basis of all policy (as Xi Jinping did at the nineteenth congress of the CPC in 2018).

Chapter 3. The Marxist Basis of the Reform and Opening Up

It is perhaps less realised than it should be that the Reform and Opening Up is not a compromise, but a distinctly Marxist project. As Deng Xiaoping pointed out repeatedly, the Reform and Opening Up provides a distinct path to socialism (and not, as some misguided foreigners suggested, to capitalism). To understand this emphasis, we need initially to go back to Lenin and his insight into the relationship between revolution and reform. Instead of seeing these two terms as an either-or, Lenin argued that reform is absolutely necessary, but it should always be undertaken in light of the communist revolution. During the era of constructing socialism, this means that reform must be undertaken by a communist party in power. In a Chinese context, I would like to focus on the following issue (until more have been identified in research): the tension between equality-justice and improving the quality of life for all. In many respects, the Reform and Opening Up may be seen as an effort to keep the two sides of the contradiction in a productive and non-antagonistic relationship. Finally, this chapter offers a brief survey of the leading Marxist philosophers during the forty years of the Reform and Opening Up.

Chapter 4. Socialist Market Economy

With the socialist market economy, we come to a question that was settled in China 25 years ago, but of which foreigners remain noticeably ignorant. After immense debates in the 1980s and early 1990s, the following was seen as the solution. First and following Stalin, the core contradiction of socialism is between the forces and relations of production. How is this manifested? It can be – and often is – seen in terms of the ownership of the means of production. Thus, workers and peasants need to seize ownership of the means of production from the former bourgeois and landlord owners. But what happens after such a seizure and the destruction of the former ruling class? The contradiction shifts to one between the underlying socio-economic system (zhidu) and its specific components (tizhi). In the first category, we find – for example – a capitalist system and a socialist system; in the second, there are political, social and economic components. Here the productive forces also appear, of which one manifestation is a market economy. To summarise a more detailed analysis: a market economy may form part of a larger socio-economic system, including socialism; a market economy is not  always the same and is not inherently capitalist, but is shaped and determined by the system in question (as found already in Marx and in historical analysis); the overall system not only determines the nature of a market economy, but also its purpose, whether profit (capitalist system) or social benefit and meeting the needs of all people (gongtongti fuwu) as in a socialist system. Finally, this approach to a socialist market economy entails a recalibration of the question of ownership. Initially, the ownership of the means of production was related to secondary status, with a mix between public and private ownership, albeit with the state owned enterprises (SOEs) as the drivers of the economy. However, since the 2010s, one may identify a new development: the very distinction between public and private has begun to ‘die away’ (to parse Engels). How this works is the focus of the final part of the chapter.

Chapter 5. Socialist Modernisation: Seeking a Xiaokang Society

Since Zedong and Zhou Enlai, ‘socialist modernisation [shehuizhuyi xiandaihua]’ has been a major feature of government policy and action.[1] But what does it mean? Let us begin with Deng Xiaoping’s famous observation in 1979: ‘By achieving the four modernizations, we mean achieving a “moderately well-off family [xiaokang zhi jia]” … a moderately well-off country [xiaokang de guojia]’. For Deng, this is modernisation with Chinese characteristics.

To understand this statement, we need to go back and forward in the Chinese tradition. Deng was the first to pick and reinterpret the old Confucian category – from the Books of Rights and Book of Songs – of xiaokang in light of Marxism, with the sense of being moderately well-off, healthy and peaceful. It is a more achievable aim than datong, the ‘Great Harmony’, at least in the foreseeable future, although both terms (through He Xiu and Kang Youwei) are intimately connected. If we move forward in the more recent tradition, Deng’s insightful move led to a ‘moderately prosperous society in all respects’ becoming central to the Chinese socialist project under Jiang Zemin, Hu Jintao and especially Xi Jinping. Indeed, the end of 2020 – following hints from Deng – was set as the ambitious but achievable goal for a xiaokang society. But what are the benchmarks? Xi Jinping has identified three: managing profound risks, poverty alleviation and environmental health. The last section of the chapter considers each of these items, with a focus on the impact of lifting 750 million rural and urban workers out of poverty since 1978 and the noticeable advances in achieving an ‘ecological civilisation’.

Chapter 6. Socialist Rule of Law

‘Governing the country according law [yifazhiguo]’ – this four-character phrase encapsulates a range of permutations, from the new Social Credit system, through core socialist values, to religious policy. However, it also has a distinct history that enables us to understand what it means in China, specifically as a socialist rule of law. Although traces of usage appear in much older texts, the key development is precisely during the Reform and Opening Up.

Initially (1978-1996), most of the debate centred around the opposition between ‘rule of human beings [renzhi]’ and ‘rule of law [fazhi]’, after which the latter became the agreed-upon position. Subsequently (1997-2011), the relationship between ‘rule of law’ and ‘legal system [fazhi]’ (sometimes misleadingly translated as ‘rule by law’) was debated, with the two clearly demarcated. Thus, while ‘legal system’ is the basis and concrete manifestation of ‘rule of law’, ‘rule of law’ is itself the ultimate framework and goal of the legal system. During this time, ‘governing the country according to law’ entered the 1999 revision of the Constitution. Finally (2012 to the present) we find increasing clarity of more and more aspects of rule of law, along with its consistent and impartial application. Tellingly, in 2018, the Constitution was revised further, replacing ‘improve the socialist legal system’ with ‘improve the socialist rule of law’.

Theory is crucial, but so is practice. The final part of the chapter examines some concrete manifestations of the rule of law in China: the Social Credit System as an effective and creative way to ensure rule of law at all levels; core socialist values as the positive side of the anti-corruption campaign; and ensuring that the long-standing laws on freedom of religion are strictly observed, especially in light of the revised Regulation on Religious Affairs (2018) and its emphases on self-government, self-support and self-propagation. In all of this, it should re remembered that we are speaking of a socialist rule of law, which is a crucial bulwark of China’s socialist system and is distinct from a capitalist rule of law.

Chapter 7. Sovereignty and Human Rights

This chapter offers a comparison between two traditions concerning human rights, through the prism of state sovereignty: the Western European liberal tradition and the Chinese Marxist tradition. It does so as follows. The first part introduces the distinction between false and rooted universals. A false universal forgets the conditions of its emergence and asserts that its assumptions apply to all irrespective of context, while a rooted universal is always conscious of and factors into analysis contextual origins, with their possibilities and limitations. With this distinction in mind, the next part deals with state sovereignty. In a Western European context, the standard narrative of this development has two main phases: the initial Westphalian definition (1648) and its significant restriction after the Second World War. The main problem with this narrative it that it largely neglects what drove the shift: the success of anti-colonial struggles in the first half of the twentieth century (the last phase through the United Nations under the inspiration of the Soviet Union). In light of this global perspective, it becomes clear that in formerly colonised and semi-colonised countries the very definition of sovereignty is transformed into an anti-colonial and non-theological definition. It is not simply an extension of the Westphalian definition, an assumption that entails a false universal. The next two parts of the argument deal directly with human rights. Initially, it focuses on the Western European tradition, which is predicated on the identification of human rights as private property and their restriction to civil and political rights. Here is the risk of another false universal: the assertion that this specific tradition applies to all, irrespective of context and of anti-colonial sovereignty. The final topic is the Chinese Marxist tradition of human rights, which arises from the intersections of Confucianism and Marxism. In this tradition, anti-colonial sovereignty is a prerequisite but does not determine human rights, and the core human right is the right to socio-economic wellbeing, through which civil, political, cultural and environmental rights arise.

Chapter 8. Minority Nationalities and the Anti-Colonial Project

The main topic of this chapter – minority nationalities policy –arises from the Chinese Marxist approaches to human rights. In brief, the comprehensive minority nationalities (which are sometimes called ‘ethnic groups’) emphasises the core human right to socio-economic wellbeing. Before we get to that point, we need to engage in historical analysis. The Soviet Union was the first socialist country to develop a comprehensive minorities policy, so much so that it was crucial in the very formation of the Soviet Union and was embodied in government structures. Much was learned, from both successes and failures. The Soviet Union was also the first country to see the intrinsic connection between an internal minorities policy and the international anti-imperialist and anti-colonial struggle. It supported most of them, from logistics and weapons to initiating declarations in the United Nations (especially the 1960 ‘Declaration on the Granting of Independence to Colonial Countries and Peoples’, which forced France, the UK, Denmark and the Netherlands, among others, to give up their colonies for the sake of independence).

But what did the minority policy entail? Here I turn to China, which – like other socialist countries – adopted the Soviet policy, adapting it and strengthening it in light of their own conditions. This ‘preferential policy [youhui zhengce]’ fosters minority languages, cultures, education, governance, and – above all – economic development as the basis for all the others. After the collapse of the Soviet Union, in the 1990s the policy was strengthened in a dialectical manner; minority rights and incentives were enhanced significantly, precisely as way of ensuring the inviolability of China’s borders. To give a sense of how this policy works, I deal with two pertinent case studies: Tibet and Xinjiang. In both cases, we find short-term and long-term programs. Short-term: enhanced fostering of security (anquan), stability (wending) and harmony (hexie), in order to counter the effects of separation, extremism and terrorism. Long-term: renewed and revised projects to improve the socio-economic wellbeing of all who live in Tibet and Xinjiang. At this point, the Belt and Road Initiative (BRI) plays a significant internal role, with marked results in the six years or so of its implementation.

The BRI brings us finally to the question of international relations. Here we find a distinct development: while material from the 1950s and 1960s still used the terminology of anti-colonial struggle, it substantially disappears from use thereafter. Why? Already in the late 1950s, Mao Zedong and Zhou Enlai had proposed the ‘Five Principles of Peaceful Coexistence’, which was taken up with enthusiasm by Deng Xiaoping as China sought not confrontation but peaceful development (although he was also quite clear that China would always have closer connections with formerly colonised countries due to a shared common history). The more recent manifestation of this emphasis appears with Xi Jinping’s promotion of a ‘community of shared future for humankind [renlei mingyun gongtongti]’, concretely manifested in the BRI, and the policy – as an alternative to the Western European liberal emphasis on ‘zero-sum’ – of ‘both win, many win, all win’. Or simply, ‘win-win’.

Chapter 9. Xi Jinping on Marxism

Xi Jinping has confounded those international observers who ignored much of what I have discussed in the previous chapters and concluded that China had abandoned Marxism. But Xi Jinping’s resolute emphasis on Marxism makes perfect sense if we keep these developments of socialism with Chinese characteristics in mind. At the same time, it is true that Xi Jinping has also re-emphasised Marxism at its many levels, so much so that the CPC has been noticeably strengthened. Older members are once again proud of the party and what it has achieved, while young people are once again keen to join and study Marxism.

How did this happen? While Xi Jinping’s many writings and speeches (in the good tradition of communist leaders, he is also a thinker and writer) cover a wide range of topics, my focus is on his direct engagement with Marxism. The core piece for analysis is his major speech on the 200th anniversary of Marx’s birth, delivered on 5 May, 2018. While the speech deals with Marx’s biography (as an engaged intellectual), the basic premises of Marxism, its history as a living tradition and its emergence to sustained leadership in China, the main part of the speech elaborates on nine topics of relevance to China’s situation. Calling on all the ‘study Marx’ once again, he begins each sub-section with quotations from Marx and Engels and then elaborates on what they mean for the time after the communist revolution, during the complex and often difficult process of constructing socialism. The topics are: development of human society; sticking to the people’s standpoint; productive forces and relations of production; people’s democracy; cultural construction; social construction; human-nature relationship; world history; and Marxist party building. These topics open out to a series of other dimensions of Xi Jinping’s writings, with which I deal when analysing each section.

Conclusion

Given that most of the material in this book concerns material already known in China, it may be of interest to Chinese readers who wish to see what a foreigner engaged with and working in China thinks about socialism with Chinese characteristics. But I anticipate that it will mostly be of use to non-Chinese readers whose minds may already be open, or perhaps should be opened, to what such a socialism actually means in theory and practice.

Note

[1] The original four modernisations are: shaking off China’s poverty and backwardness [pinqiong luohou]; gradually improving the people’s living standards; restoring a position for China in international affairs commensurate with its current status; and enabling China to contribute more to humankind.

The Silk Road is active again: Thousands of trains now run the route

Many centuries ago, the routes of the ‘Silk Road’ used camels and whatnot for covering the thousands of kilometres between east and west on the Eurasian landmass. In more recent times, when Chinese planners were thinking about the reincarnation of the Silk Road – what is now known as the Belt and Road Initiative (BRI) – they took into consideration a number of factors: trains, even slower ones, are faster than ships; the US navy likes to bully others on the high seas; Central Asia, Russia and Europe will become more and more keen on Chinese products as the latter move to high quality production. One of the key solutions was actually a relatively old one: trains.

I am a great lover of trains, taking them whenever possible. And China is now the world leader in train innovation, technology and implementation. But the development of long distance cargo trains on the Eurasian landmass has largely gone under the radar. From a modest beginning back in 2011, when the first cargo train left Chongqing in China for Duisburg in Germany, it was the beginning of a monumental shift. Back then, there were perhaps a couple of routes trains could follow. Now there are many indeed and they keep increasing exponentially.

Every few days in the Chinese newspapers (for example, here and here), I read of yet another service that has opened, so much so that now there are now 65 routes between 48 cities in China and 40 in Europe. For example, in 2108 alone, 6300 trains with cargo made the journey to Europe, an incease of 70 percent from the previous year.

More detail in this recent article from Xinhua News, the largest and most reliable news service in the world.

The game is up: you cannot install and run 5G without Huawei

For some time now, Huawei has been quietly confident that no-one else has the ability to install and deploy 5G technologies without involving Huawei itself.

Now the new figures are out from the World Intellectual Property Organisation (WIPO). In 2018, Huawei’s had 5,405 PCT (Patent Cooperation Treaty) applications, which – as Francis Gurry, the director of WIPO observed – is “an all-time record by anyone.” By comparison, the runner-up was Mitsubishi, in Japan, with 2,812.

And the vast majority of Huawei’s patents relate to 5G, to which the company has been devoting world-leading investment in research and development, backed strongly by the Chinese government.

Let me add that Gurry also pointed out that “Asia is now the majority filer of international patent applications via WIPO, which is an important milestone for that economically dynamic region and underscores the historical geographical shift of innovative activity from West to East.” WIPO statistics showed that 50.5 percent of all Patent Cooperation Treaty (PCT) applications filed in 2018 came from Asia, with Europe and North America accounting for about a quarter each.

What does all this mean for the future of 5G technologies? As a recent article from the People’s Daily: points out, Huwaei has ‘absolute competitive advantage’ in 5G, with 1,529 standard essential patents. Behing them come Nokia, with 1,397, and Ericsson with 812. Already in Europe, the big 3 in 5G are working closely together. They have ignored the politically-motivated efforts of a small number of former colonisers and already signed up to work with Huawei.

Why is the debate concerning the socialist market economy settled in China?

When I asked a Chinese colleague recently about the socialist market economy, he said ‘why would you be interested in that? The debate is settled and no-one is much concerned with it’. I did point out that some international observers still do not understand the socialist market economy. For example, the EU acknowledges that China has a socialist market economy, but then misunderstands it: for the EU, it entails state ‘intervention’ in an autonomous ‘market’. Nothing could be further from the truth, for they use the framework of a capitalist market economy.

In my ongoing research, I have come across what is widely recognised as the most influential study on the socialist market economy, one that largely settled debates and defined the breakthrough. It is by Huang Nansen and entitled (in English translation), ‘The Philosophical Foundations of the Theory of the Socialist Market Economy’ (Marxism and Reality, 1994, pp. 1-6). Huang identifies two philosophical questions that lie at the basis of the theory and practice of a socialist market economy: contradiction analysis of socialist society; the relationship between universality (pubianxing) and particularity (teshuxing).

Contradiction Analysis

In terms of the first, he draws on an assumed approach that has much depth in Chinese Marxism: contradiction analysis. Briefly put, in his 1937 Yan’an lectures on dialectical materialism, one of Mao’s major breakthroughs was the necessity of contradictions after a communist revolution and during the long construction of socialism. The key text would later, with revisions, appear as ‘On Contradiction’ (1937), to be followed by ‘On Correctly Handling Contradictions Among the People’ (1957). For Huang, the important points are, first, that Mao identified the basic contradiction as one between the forces and relations of production, or between the economic base and the superstructure, and, second, that such contradictions should always be managed in a way that is non-antagonistic (feiduikangxing de maodun). While the second point is a given and remains a cornerstone today, Huang faults Mao for his misdirected application of the first. Thus, Mao felt that the manifestation of this contradiction appeared in terms of ownership: if the basic contradiction of capitalist society is between socialised production and private ownership of the means of production, then socialism should overcome this contradiction through public ownership of all means of production. The result, argues Huang, was a decline in production.

Instead, the way the forces-relations of production contradiction appears is not in terms of productive forces and ownership, but between productive forces and economic structure (jingji tizhi). With this breakthrough – enabled by the circle around Deng Xiaoping – it was possible to develop a socialist market economy. To find out how, and indeed what ‘economic system’ means, we need to wait until the next section, for he now addresses the relationship between a planned economy and a socialist market economy. Was the former a mistake? No, for it is appropriate immediately after a communist revolution, but only for a specific period. A planned economy works initially to liberate and develop productive forces, but eventually its limits appear and further development requires a shift to a socialist market economy. I am not sure this temporal argument is the best way to see the relationship between planned and socialist market economies, for they both continue to work together (more later).

Finally (for this section on contradiction analysis), does this argument entail a shift away from public ownership? Not at all, but once ownership is not seen as the primary contradiction, both public and private may develop in a symbiotic relationship, albeit with private ownership in a recognised but subordinate role. Let me add here that twenty-five years later this question takes on a whole new dimension, so it requires further work.

Universality and Particularity

The second philosophical problem concerns universality (pubianxing) and particularity (teshuxing), or what he also calls commonality (gongxing) and individuality (gexing). Succinctly stated, Huang’s argument is while a market economy is a universal or common reality, its integration with a capitalist or socialist socio-economic system evinces the particularity of each type of market economy.

This argument is based on a crucial terminological distinction, between a structure and a system. The Chinese terms are tizhi (体制) and zhidu (制度), which are somewhat difficult to translate in a way that indicates their differences, for they are often rendered with the same words in English. Tizhi in this case is a specific organisation, arrangement, method or structure. For the sake of conciseness, I use ‘structure’. For example, Huang speaks of a ‘market economic structure [shichang jingji tizhi]’ In his argument, this structure is clearly a component or part of a larger system. The term for this overall and foundational system is zhidu, which embraces the realms of politics, economics and society. To make his usage clear, Huang refers to the ‘basic economic system of society [shehui de jiben jingji zhidu]’, which may – in this context – be either capitalist or socialist. It follows that a specific structure, whether a planned economic structure or a market economic structure, may be a universal, while the overall system is a particularity.

With this distinction, Huang points out that in the past it was not common to distinguish between the two, for reasonably good historical reasons. Thus, the market economic structure was seen as inseparable from a capitalist system, while a planned economic structure was part and parcel of a socialist system. But historical developments since the Second World War have indicated the increased tendency in capitalist systems for planned structures, while in socialist systems – he notes Yugoslavia – some elements of a market economic structure began to emerge. These developments enabled the awareness of the distinction between specific structure and overall system. The outcome: it is quite possible, if not necessary, for a basic socialist socio-economic system to make use of a market economic structure. This was, he points out, the distinct insight of Deng Xiaoping and his comrades.

Of course, this raises the question: is a market economy neutral, like machinery or the natural sciences. Not at all, for as a market economy is integrated within the overall system, its nature is shaped by that system. Thus, a socialist market economy is qualitatively different from a capitalist market economy. Now the relationship between universality and particularity takes another turn: while a market economy may have a basic commonality, in terms of the means and basis for the logistic functions of a market economy, it also takes on the specificity of the system in which it is shaped, whether socialist or capitalist. The conclusion is that one may therefore speak of a socialist market economic structure (tizhi) within a socialist system (zhidu).

The final matter concerns what distinguishes the socialist market economy. Huang identifies five features: 1) It contains a multiplicity of components, but public ownership remains the core economic driver; 2) While enterprises in a socialist market economy must be viable, their main purpose is not profit at all costs, but social benefit (gongtongti fuwu) and meeting the needs of all people; 3) It deploys the old socialist principle of from each according to ability and to each according to work, limiting exploitation and wealth polarisation, and seeking common prosperity; 4) The guide for action (to parse Engels) always remains Marxism; 5) The primary value should always be socialist collectivism (shehuizhuyi de jitizhuyi) rather than individualism.

Huang closes with a timely warning: the shift to a socialist market economy is by no means easy, for it entails profound social transformation, which will entail many unforeseen problems and challenges ahead.

I have taken some time with this contribution, since Huang’s sophisticated analysis effectively summed up debates and established the philosophical foundations for a socialist market economy. Many of his insights remain valid and one can see how they have been and are implemented, albeit not without a few significant problems on the way. At the same time, it is twenty-five years since Huang’s study and Chinese socialism, let alone the socialist market economy, have taken some major steps. The tell-tale signal is the awareness that China has almost achieved the ‘great leap [weida feiyue]’ to socio-economic wellbeing, and that it is embarking on the leap to become a strong socialistically modernised society. Or, as it was put at the nineteenth congress of the CPC, China has entered a ‘new era [xinshidai]’.

At least three questions remain from Huang’s analysis, especially in light of developments in the last two decades: 1) The delinking of ‘market economy’ from a capitalist system, in light of Marx’s analysis (in Capital, vol. 3) and historical examples; 2) The issue of ownership and the withering away of the distinction between ‘public’ and ‘private’; 3) The shift in a socialist market economy from being a component to basic logistical device. These are the subjects of further analysis.