A Tale of Two Systems: How to Deal with a Natural Disaster

The following reflections were prompted by a comment from my wife. She had been reading one of the Danish newspapers in regard to the Wuhan Coronavirus Pneumonia. A journalist asked a Danish medical expert why SARS (in 2003) or the Coronavirus were detected first in China. The specialist’s answer: because the Chinese have excellent and sophisticated methods for detecting such outbreaks very early. Indeed, they are now among the best in the world.

This observation leads me to reflect on the difference between two systems in dealing with a natural disaster. I should say that we also had a discussion concerning this matter at a recent branch meeting of the Communist Party of Australia.

System 1: Australia’s neo-liberal capitalist system. Australia is one of the last hold-outs for a defunct neo-liberal agenda, which most countries in the world have rejected. Come the present southern summer’s bushfire crisis (which is by no means over) and Australia was relying on a hopelessly under-resourced volunteer fire-fighting service in the countryside. The relatively small numbers did their absolute best, but they were hampered from the very beginning. Why? They were expected to protect ‘private property’ first. They simply did not have anywhere near the resources to do their jobs, and were forced to ‘crowd-source’ for basic items like smoke-masks. The regime’s response: they ‘want’ to be there, so the regime should not be in the business of assisting them. Add to this the prime minister’s holiday in Hawaii and you get the picture. Even more, the Australian fore-fighting services do not have even one air-borne water-bomber. They have to rent them, believe it or not, from the United States.

System 2: China’s socialist system. On 20 January of this year, a new virus was detected in Wuhan. It is called either Wuhan or Novel Coronavirus Pneumonia. Immediately, all the of the state’s resources swung into action. Even though the virus is classed in China as Level B, the decision was made to hit it early as though it were a Level A outbreak. Specialists focused their energy, detection kits were widely distributed, Chinese medical experts kept in close contact with the World Health Organisation, all those even suspected of having the virus were quarantined, all aircraft arriving in China are inspected before passengers disembark and have been checked for the virus. On it goes. Today, I read that Wuhan, a city of 10 million people and the capital of Hubei Province, has been locked down. Even the expert who first identified SARS in 2003, Zhong Nanshan who is a household name in China, has become involved, travelling to Wuhan to bring his 84 years of experience to bear. All of the actions by Chinese have been praised by the World Health Organisation as extremely efficient and contributing significantly to curbing the spread of the virus.

How can China do this and Australia not (or indeed any other of the small number of Western countries)? Simply put, China is a socialist country with extremely high levels of planning and state resources. One of the great myths since the beginning (in 1978) of the Reform and Opening Up is that China abandoned planning for the sake of a socialist market economy. This is rubbish: planning has been elevated to a whole new level, so much so that some are now arguing that China is achieving a dialectical transcendence of the old opposition between planning and market.

Washing Brains: How to Understand Chinese Marxist Research

Some foreigners say that our ideological reform is brainwashing. As I see it, they are correct in what they say. It is washing brains, that’s what it is! This brain of mine was washed to become what it is. After I joined the revolution, [my brain] slowly washed, washed for several decades. What I received before was all bourgeois education, and even some feudal education … At that time, none of us knew anything about how the Chinese revolution was to be promoted! (Mao, Zedong. 1957. ‘Speech to Chinese Students and Trainees in Moscow’ )

I begin with this text from Mao Zedong, since it expresses very well an experience of my own from the last decade or so. Mao was addressing Chinese students studying in Moscow, when he was part of a 1957 delegation to the Soviet Union.

How is this text relevant for my own experience? Whenever you dig into research material on China, you soon encounter two different frameworks, two different languages. On the one hand, there is whole language that has been developed and is used by ‘China watchers’. They are typically informed by the Western liberal tradition and use terminology and assumptions deriving from this tradition. On the other hand, we have the Chinese Marxist approach, which is informed by the reinterpretation of thousands of years of Chinese history and thinking in light of an overall Marxist framework. The differences between the two frameworks and languages becomes clear when we look at a few examples.

1. History of the Reform and Opening Up, from 1978.

Among ‘Western’ historians, there is an overwhelming tendency to divide the Reform and Opening Up into two periods, with 1989 and the Tiananmen incident being the fulcrum. This division applies particularly to economic and political history.

By contrast, this periodisation does not appear in Chinese scholarship. This is not due to some mythical ‘repression’ of information – a beloved trope of ‘Western’ China watchers – but simply because 1989 does not mark a major turning point. For example, in my recent research on the socialist market economy, a three-fold periodisation is more common: the breakthrough, in which socialism can also engage in a market economy (1979-1982); the transition, in which planning and the market are combined (1982-1989); and the establishment of a socialist market economy (1989-1993).

2. Socialist and Post-Socialist.

Related to the previous point, it is reasonably common in ‘Western’ literature to find a distinction between the ‘socialist’ and ‘post-socialist’ phases of China’s recent history. The terms are left suitably vague, but they often turn on the distinction between a planned economy and a market economy. In this respect, they assume the old 1932 slogan from Count Ludwig von Mises: ‘the alternative is still either Socialism or a market economy’. The Count was of course one of the godfathers of a now defunct neoliberalism, but his deceptive slogan influences the distinction between socialism and post-socialism: socialism inescapably entails a planned economy, while a market economy is by definition capitalist.

When dealing with Chinese approaches, it is very soon clear that this distinction simply does not work. To begin with, China has by no means abandoned a planned economy; instead, both planning and market are components, or institutional forms, of an overall socialist system that determines the nature of the components. In this light, it is misleading to speak of ‘post-socialism’.

There is a further problem with this distinction: it seeks to draw Chinese developments into a European framework, where Eastern Europe and Russia are now in a ‘post-socialist’ phase. Few indeed are the ‘Western’ researchers who realise that this effort to align China with European history is distinctly unhelpful.

3. Approach to Politics.

This one is fascinating: when ‘Western’ interpreters deal with Chinese politics, they inevitably focus on what is perceived to be ‘factional’ struggle within the CCP. Why? The overwhelming assumption is that politics is antagonistic, that it must involve struggle between opposing camps. Of course, the effort to examine the inner workings of the CCP relies on hearsay, unnamed ‘sources’ and so on.

Occasionally, a ‘Western’ interpreter is forced to admit that the CCP has remarkably little factional struggle and that it a rather stable political party. This admission moves a small step towards Chinese approach, for which we should use the terminology already developed by Marx and Engels. When envisaging what socialist governance might look like, they speak of ‘de-politicising’ governance. What does this mean? More and more dimensions of governance are no longer determined by class struggle and antagonism. This applies to policing, law courts, policies and even elections.

Yes, elections can be and indeed are de-politicised in China. From local village and city-district elections (direct) to election (indirect) of the president, these are all based on qualifications and merit for office and not through populist rhetoric by opposing political parties. Even more, China’s 9 political parties do not engage in class-based antagonisms, but work in a consultative and critically constructive manner.

4. Deformation of Language.

This deformation is an ongoing problem in ‘Western’ approaches, but let me focus on one example. It is common to speak of ‘conservatives’ and ‘reformers’, in which the ‘conservatives’ are those who hold the Marxist-Leninist line (from Deng Xiaoping onwards) and the ‘reformers’ are those who would turn China into a bourgeois state with a capitalist system.

Obviously, Chinese research provides a very different framework, between communists who ensure that China follows Marxist policies, and liberals who seek to turn China into the chaos and populism of a ‘Western’ system. That the latter are also potentially guilty of treason should be obvious.

I could offer many more examples of the differences between the two frameworks and languages, but the point should be clear. Of course, within each framework there are many debates and differences of opinion, but one must assume the framework to engage in such activities.

A question remains: do the proponents of the two frameworks actually listen to one another? It is more common for Chinese researchers to engage extensively with Western liberal scholarship, but it is criticised and appropriated within a Chinese Marxist approach.

It is far less common for ‘Western’ researchers to engage with Chinese Marxist research. Instead, their typical approach is as follows: they begin with a brief mention of official government positions, which are quickly dismissed as mere ‘rhetoric’ and ‘ideology’; they suggest they are dealing with ‘actual’ conditions, and then perhaps cite newspaper articles, occasionally providing the Chinese title to give an impression of ‘serious’ research; they may also cite one or two scholars with Chinese names to give the piece some ‘credibility’, but who typically live outside China, write in English, and assumes the same framework and language. Obviously, this is a rather shoddy way to undertake scholarly research, indicated by both the method – if it can be called that – and the conclusions reached.

To return to Mao Zedong: it is precisely this whole Western liberal framework, with its in-group language, that needs to be washed out of one’s brain to approach the material afresh.

China’s Socialist Market Economy (final article completed)

After some years of reflection and research, I have finally completed a longish study of China’s socialist market economy. A little earlier, I posted a short version of my study of East European market socialism. This was necessary background work, but it became clear that the Eastern European experiments were very preliminary and qualitatively different from China’s socialist market economy. Hence the present study. Copied below is the introduction, which outlines the main points of the argument. Since I have now submitted the article to a journal for consideration, the link that was previously here has been removed. Later, it will form a chapter in my book on Socialism with Chinese Characteristics.

China’s Socialist Market Economy: Introduction

When one engages seriously with Chinese Marxist philosophy on China’s socialist market economy, one soon notices a distinct disjunction: in China, key issues in the debate have largely been settled some time ago, while outside China significant misunderstanding remains. A major reason for this ignorance is that non-Chinese researchers remain disconcertingly uninformed concerning Chinese-language scholarship. Thus, the purpose of this study is to present the major developments of this Chinese-language scholarship. My focus is expository, providing contextual explanations material where necessary, but keeping my own assessment to a minimum. And given that the idiom of Chinese scholarship is different to that familiar to English readers, most of whom have been saturated with the Western liberal tradition, the exposition requires a process of ‘translation’ from one idiom to another. Throughout, the underlying motivation is that one cannot engage in serious debate without the preliminary step of seeking understanding and thus trust with interlocutors. To use a metaphor: one begins with open eyes and ears, while keeping one’s mouth shut; only after gaining understanding can one open one’s mouth in a considered and constructive manner.

The following study begins with the need to de-link a market economy from a capitalist system, as also a planned economy from a socialist system. This entails an engagement with Deng Xiaoping, plus a historical survey – beginning with Marx – on market economies throughout human history. Second, I delve into Chinese scholarship and its deployment of Mao Zedong’s contradiction analysis. The concern is to identify the primary contradiction in the context of socialist construction; or, rather, the manifestation of the contradiction between the forces and relations of production. For Chinese researchers, this manifestation is in terms of the overall socio-economic system and its specific components, or what may be called institutional forms, which include planned and market economies. Given that the primary purpose of socialism is to liberate the forces of production, the question now concerns what institutional form enables such a liberation. Initially, a planned economy was able to liberate productive forces, but later and in light of its unfolding contradictions a market institutional form becomes necessary – although planning does not disappear. The third section concerns the dialectic of universality and particularity, in which a market economy has universal or common features but its nature is determined by the particular socio-economic system of which it is a component. This section also seeks to answer the question whether the market economy in the context of socialism is indeed socialist, an answer that also entails a return to Marx and Engels. The final section deals with more recent developments concerning the dialectical sublation or transformation of both market and planned economies. Obviously, planning has not been abandoned, but it has been transformed to a qualitatively new level – as has the socialist market economy. By now it should be obvious that the framework is resolutely Marxist – or more specifically Marxist philosophy – for this is the approach that Chinese scholars use and have developed further in light of China’s specific conditions.

Interpreting phase one of the China-United States trade deal

Yesterday, Xinhua News carried an announcement that phase one of a trade deal between China and the United States has been agreed, subject to lrgal review, checking and translation.

If you read the report, the initial impression might be that China has ceded more ground than the United States. While the latter agrees to stop raising tariffs and to begin the process of winding them down, the Chinese side agreed to the following:

‘Implementation of the agreement will help enhance intellectual property rights protection, improve the business environment, expand market access, better safeguard the legitimate rights and interests of all companies including foreign firms in China’.

Various ideologues have been banging upon about the mythical ‘forced technology transfer’ to China, as well as breaches in intellectual property rights. I have commented earlier on how a thief always thinks someone else is a thief, as well as asking how a country that is now ahead in so many areas can ‘steal’ backward technology from someone else.

But as Sunzi said in ‘The Art of War’ quite some time ago, know your enemy better than he knows himself. The Chinese are happy to let the United States continue with its delusions, so that what seem like like concessions are not concessions at all. China has already taken the lead in intellectual propert rights (Alibaba, for instance, has won international awards for its stunningly high  levels of security), and when you use a Chinese-made phone – for instance – your privacy is protected far more than anywhere else in the world. If you see a paradox here, then you are right at one level: a communist state can protect your privacy far better than a bourgeois state. Indeed, all of the items mentioned above are part of the standard process in China, so no surprises.

But there are some items worth noting. To begin with, any discussion of state owned enterprises has been dropped from the agreement. China will simply not budge on its socialist model, so the US side has clearly backed down. Further, the agreement explicitly states that there will be ‘bilateral assessment and dispute settlement’. Earlier, the United States had insisted that it would adjudicate on whether China had honoured its side of the agreement. No-one would accept this in an agreement, so this has clearly been dropped in favour of a bilateral process. Finally, a crucial sentence points out that the agreement will ‘protect the legitimate rights and interests of Chinese firms in their economic and trade activities with the United States’. This is a major move, since – if implemented and followed – arbitrary targetting of Chinese enterprises on bogus ‘national security’ issues will be far more difficult.

Worth noting also is the point that China has agreed to import more US goods, not merely agricultural goods but also high-quality goods. The United States does have a few high-quality goods left to sell, but for some time now China has been leaping ahead, and the trade war of the last two years has enhanced that process. The direction will increasingly be the other way.

There is one last point that the agreement makes clear: China no longer needs the United States for prosperity, while the United States clearly needs China. How so? The United States has suffered double the economic damage compared to China, which has withstood the stress test remarkably well. So the United States has increasingly been keen to settle a deal. For example, Chinese trade with the United States is now about 10 percent of China’s total. Yes, 10 percent. Before the trade war began, it was 20 percent, but China has adeptly diversified, with countries involved in the Belt and Road Initiative, Africa and Europe. Of course, China would like smooth trade relations with all countries, but the time of reliance on the United States is over. No wonder the United States wanted a deal.


A Forgotten History: East European Market Socialism

This article – ‘Socialism and the Market: The East European Experiment’ – is now in the final stages before publication in New Proposals, so I have removed the initial post and provide here the abstract:

This study reassesses a body of research that has largely been forgotten: Eastern European market socialism of the 1960s-1980s. It does with the objective of recovering important insights and also identifying problems that need to be addressed. Thus, the study begins with an overview of the practices of market socialism, which was pursued to varying degrees in the 1960s. While some (USSR, East Germany and Czechoslovakia) turned back to centrally planned economies in the 1970s, others (especially Yugoslavia and Hungary) pursued further reforms. This material provides the back for analysis of three theoretical breakthroughs and their attendant problems: the market as a neutral “economic mechanism,” as a crucial effort to detach a market economy from its assumed integral connection with a capitalist socio-economic system; the tensions between planning and market, where I seek a more dialectical formulation; and the ownership of the means of production, which risked ignoring the liberation of productive forces. Although there occasional references to Chinese practices and theory, a full study of a socialist market economy with Chinese characteristics is the subject of a follow-up article.

Keywords: market socialism; Eastern Europe; economic mechanism; planning and market; ownership of the means of production; liberation of productive forces.

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 (updated)

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.

Since 2008’s Atlantic financial crisis, or what is now called ‘The Great Recession’, the neoliberal project has been in disorganised retreat. Most countries in the world have rejected the neoliberal model and its global enforcers (WTO, IMF and World Bank) have increasingly lost the ability to impose their agenda as they are transformed from within. In this context, the term ‘state capitalism’ has made a significant comeback in an effort by some to describe these developments. We initially analyse two groups, the first being non-Marxists and liberal true believers, and the second a smaller group of Marxist scholars. Both assume that under state capitalism 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. However, nearly all of them either avoid the most important work on state capitalism, by Lenin.

We begin with the non-Marxist scholars, who have begun deploying ‘state capitalism’ to speak of a significant number of countries – including socialist ones – that have either refused or turned away from neoliberal approaches. Apart from seeing an ‘interventionist’ state as the major controller of ‘the market’, 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 (Gittings 2006, 3, 217; Haley and Haley 2013; Chen 2015; MacDonald and Lemco 2015, 43-69; Naughton and Tsai 2015; Kurlantzick 2016),[1] 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 – in short, most of the world. 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). But what is the purpose of seeing ‘state capitalism’ at almost every point in modern history or today in most parts of the world? They clearly see that their beloved ‘free market’ approach and its attendant liberalism are under severe threat and even failing, so they uniformly attempt to find ways to respond, often with suggestions as to internal weaknesses in state capitalism.

With regard to a few Marxist scholars, the term ‘state capitalism’ has a longer history. Initially applied to the Soviet Union during Stalin’s tenure, it has since the 1980s also been applied to China (Cliff [1948] 2003; Pannekoek 1937; Norman 1955; Buick and Crump 1986; James 1986; Weil 1996, 26-27; Hooper 2017). The hypothesis: in a ‘betrayal’ or retreat from socialism, the state with its new ruling class imposed capitalist forms on a population that seems curiously to have lacked a voice. Already a number of problems arise, including the voluntarist approach to political power, an inability to account for why such a decision should be made, and the old ‘betrayal’ narrative. These problems we have found to be common to the previous hypotheses, and we will address them more fully in the conclusion.

Two problems need to be addressed in a little more detail. The first is an assumption that ‘global capitalism’ is a uniform and irrepressible force, into which aspiring socialist countries cannot avoid being drawn (Brink [2008] 2014; Buick and Crump 1986). Slightly more sophisticated is the ‘varieties of capitalism’ approach, which at least recognises significant differences but still assumes a global capitalism  (Gallagher 2005; Coffey and Thornley 2009; Hundt and Uttam 2016). Seriously missing in these proposals is a dialectical approach to modes of production, in which different modes of production – historically or indeed current – can be included within a dominant mode (Boer 2017). Thus, it is feasible for a socialist market economy to engage with capitalist market economies without being transformed into the latter.[2]

Second is a refrain among some: what about the workers? Assuming a narrow definition of socialism as concerned with the urban working class, the favoured approach is to focus on the disruptive changes of the 1990s as sluggish State-Owned Enterprises were broken up or began the long process to efficiency and innovation (they now drive innovation and remain the core of China’s economy). Workers lost their jobs, the ‘iron rice bowl’ connected with SOEs was dismantled, and new labour laws were met with frequent unrest (Whyte 1999; Li 2008, 2016; Gallagher 2005; Hart-Landsberg and Burkett 2005). Again, these developments were not a turn to a capitalist market economy, but internal contradictions arising from the Reform and Opening-Up. The Chinese answer: not a retreat from reform, but a need to solve these problems through further reform. In other words, the Reform and Opening-Up follows and is understood as a dialectical process in a Marxist framework. So, we find later that the workers dismissed were subsequently compensated, a more efficient and comprehensive welfare system – based on economic strength – is gradually being instituted, and more than 800 million workers (both rural and urban) have been lifted out of poverty (World Bank 2018). This point has a direct bearing on the voluntarism that plagues all of the hypothesis examined here: they are unable to explain why Deng Xiaoping, the CPC and the government purportedly took the ‘capitalist road’, apart perhaps from hinting at the desire for private gain. The answer is obvious: political decisions related to liberating the forces of production, with profound consequences and not a few mistakes on the way, were and are guided by Marxism – as Deng Xiaoping repeatedly made clear (Deng [1979] 1995, 239; [1980] 1995b, 261-62; [1980] 1995a, 337; [1990] 1994, 351).

Through most of the ‘state capitalist’ literature there is a glaring omission: an adequate engagement with Lenin. Not unexpectedly, the non-Marxists scholars avoid Lenin, but the Marxists who deploy ‘state capitalism’ struggle over Lenin’s material. Significantly, Chinese scholars do not refer to recent developments in such terms, since they understand ‘state capitalism’ in its specific Leninist sense. So let us consider Lenin’s contribution in a little more detail.

Lenin used ‘state capitalism’ on a number of occasions (1918 [1965]-b, 1918 [1965]-a, 1921 [1965]-a), but the fullest statement may be found in the key work, ‘The Tax in Kind’ (Lenin 1921 [1965]-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 premature state of Russian socialism, a measure of private enterprise was necessary to get the economy moving. Peasants could sell the grain left over after paying the ‘tax in kind’, small private light-scale industry could be established, and concessions and leases would be given to foreign capitalist enterprises. All of this would entail the extraordinary dialectical point of building socialism through capitalism, or of private capital helping socialism. How? It would enable the initial impetus for the ‘development of the productive forces’ (Lenin 1921 [1965]-b, 342-43, 345-46).

Lenin had to overcome ‘left-wing’ opposition to do so, making two crucial points. First, he mapped out a transition process, since it was not possible to move from a backward, imperialist situation immediately to full-blown socialism. He envisaged a series of transitions, from petty-bourgeois capitalism (and later from ‘War Communism’), through state capitalism, to socialism, during which elements of capitalism would remain.[3] More simply: from capitalism, through state capitalism, to socialism. Thus, state capitalism for Lenin was, in that specific historical situation, a transitional form to socialism, not an end in itself. 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, it would be highly advisable to learn from the German model and locate it within the Russian socialist system.

Apart from a few who struggle over Lenin’s legacy,[4] one occasionally finds a non-Chinese Marxist scholar who engages in detail with Lenin’s justification for the 1920s New Economic Policy, and argues that the Reform and Opening-Up is a longer Chinese version of the NEP (Kenny 2007). On this question, some Chinese scholars differ to some extent: they have pointed out that part of the inspiration for Deng Xiaoping’s breakthrough was precisely the NEP (Yang and Li 1998; Le 2000; Wang 2001; Tao 2008).[5] At the same time, these scholars also stress the specific historical conditions in Russia at the time, where such a transitional policy was necessary, but that Chinese conditions were and are quite distinct – and clearly now not state capitalist. But let us stress the second of Lenin’s insights, that everything depends on the underlying system within which a market economy works. There may be universal features of market relations, although not all are found in every market economy, but there is also a distinct particularity of each market economy since its nature is determined by the over-arching socio-economic system of which it is a component.

Clearly, ‘state capitalism’ has widely divergent uses, whether by liberalism’s true believers to speak of a world gone awry, some Marxists who dismiss the Soviet Union and China, Lenin’s own careful usage as a transitional phase in a specific historical situation, or Chinese scholars who understand the term in its Leninist sense and thus see more recent capitalist developments as Keynesian.


Boer, Roland. 2017. ‘Shehuizhuyi maodunlun xintan’. In Qimeng, Lishiguan yu makesi bianzhengfa, edited by Fengyu Zang, 140-56. Guizhou: Guizhou renmin chubanshe.

Brink, Tobias ben. [2008] 2014. Global Political Economy and the Modern State System. Leiden: Brill.

Buick, Adam, and John Crump. 1986. State Capitalism: The Wages System Under New Management. New York: St. Martin’s.

Chen Zongshi. 2015. The Revival, Legitimization, and Development of Private Enterprise in China: Empowering State Capitalism. New York: Palgrave Macmillan.

Cliff, Tony. [1948] 2003. ‘The Nature of Stalinist Russia’. In Marxist Theory After Trotsky, Selected Writings, Vol. 3, 1-138. London: Boomarks.

Coffey, Dan, and Carole Thornley. 2009. Globalization and Varieties of Capitalism: New Labour, Economic Policy and the Abject State. Houndmills: Palgrave Macmillan.

Deng Xiaoping. [1979] 1995. ‘We Can Develop a Market Economy Under Socialism (26 November, 1979)’. In Selected Works of Deng Xiaoping, Vol. 2, 235-39. Beijing: Foreign Languages Press.

—.      [1980-1981] 1995. ‘Remarks on Successive Drafts of the “Resolution on Certain Questions in the History of Our Party Since the Founding of the People’s Republic of China”‘. In Selected Works of Deng Xiaoping, Vol. 2, 290-309. Beijing: Foreign Languages Press.

—.     [1980] 1995a. ‘On the Reform of the System of Party and State Leadership’. In Selected Works of Deng Xiaoping, Vol. 2, 319-41. Beijing: Foreign Languages Press.

—.     [1980] 1995b. ‘The Present Situation and the Tasks Before Us’. In Selected Works of Deng Xiaoping, Vol. 2, 241-72. Beijing: Foreign Languages Press.

—.     [1985] 1994. ‘Reform is the Only Way for China to Develop Its Productive Forces (28 August, 1985)’. In Selected Works of Deng Xiaoping, Vol. 3, 140-43. Beijing: Foreign Languages Press.

—.     [1990] 1994. ‘Seize the Opportunity to Develop the Economy (24 December, 1990)’. In Selected Works of Deng Xiaoping, Vol. 3, 350-52. Beijing: Foreign Languages Press.

Gallagher, Mary. 2005. Contagious Capitalism: Globalization and the Politics of Labor in China. Princeton: Princeton University Press.

Gittings, John. 2006. The Changing Face of China: From Mao to the Market. Oxford: Oxford University Press.

Haley, Usha, and George Haley. 2013. Subsidies to Chinese Industry: State Capitalism, Business Strategy, and Trade Policy. New York: Oxford University Press.

Hart-Landsberg, Martin, and Paul Burkett. 2005. China and Socialism: Market Reforms and Class Struggle. New York: Monthly Review Press.

Hooper, Michael. 2017. ‘Opposite Directions: The NEP and China’s Opening and Reform’. Australian Marxist Review: Journal of the Communist Party of Australia 64 (April).

Hundt, David, and Jitendra Uttam. 2016. Varieties of Capitalism in Asia: Beyond the Developmental State. London: Palgrave Macmillan.

James, C.L.R. 1986. State Capitalism and World Revolution. Chicago: Charles H. Kerr.

Kenny, Thomas. 2007. ‘Lessons for the “Socialist Market Economy” of People’s China from the Soviet “New Economic Policy”‘. Nature, Society & Thought 20 (1):80-90.

Kurlantzick, Joshua. 2016. State Capitalism: How the Return of Statism is Transforming the World. New York: Oxford University Press.

Le Chengyao. 2000. ‘Deng Xiaoping lilun shi dui Liening xin jingji zhengce de jicheng he chaoyue’. Ningxia dangxiao xuebao 2000 (3):11-16.

Lenin, V.I. 1918 [1965]-a. ‘”Left-Wing” Childishness and the Petty-Bourgeois Mentality’. In Collected Works, Vol. 27, 323-54. Moscow: Progress Publishers.

—.      1918 [1965]-b. ‘Session of the All-Russia C.E.C., April 29, 1918’. In Collected Works, Vol. 27, 279-313. Moscow: Progress Publishers.

—.     1921 [1965]-a. ‘Report on the Tax in Kind Delivered at a Meeting of Secretaries and Responsible Representatives of R.C.P.(B.) Cells of Moscow and Moscow Gubernia, April 9, 1921’. In Collected Works, Vol. 32, 286-98. Moscow: Progress Publishers.

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[1] A fashionable variation is to speak of ‘red capitalism’, with even more apocalyptic warnings of China’s imminent ‘collapse’ (Lin 1997; Walter and Howie 2011).

[2] Lin Chun (2013) comes close to this approach.

[3] Although Lenin assumed – mistakenly – that all types of market relations were inherently capitalist (Deng [1980-1981] 1995, 308-9), he also argued frequently that many 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).

[4] For example, C.L.R. James (1986, 18-22) ignores the transition argument in Lenin and emphasises an intensification of crisis in state capitalism; by contrast, Buick and Crump (1986, 111-17) suggest that Lenin and the Bolsheviks were not socialist and undertook a state capitalist ‘revolution’.

[5] 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] 1994, 143). Apparently, Zhou Enlai had advocated learning from the NEP already in the 1950s (Lüthi 2010, 36).