An insight into the socialist market economy

This year marks the 40th anniversary celebrations of the reform and opening up and the development of the socialist market economy (which is different from a capitalist market economy). As part of the celebrations, 100 people who have contributed significantly to the reform and opening up were nominated for awards. As the People’s Daily reports:

The award candidates come from a wide range of professions, including scientists, economists, grass-roots Party cadres, model workers, state firm managers, and private entrepreneurs.

Feedback is being sought until 30 November, after which the final list will be announced. Nothing remarkable in such an exercise, although some attention has been directed to the nomination of the drivers of China’s world-leading e-commmerce, such as Ma Yun (also known as Jack Ma) of Alibaba. Everyone in China knows that he is a long-standing member of the communist party, so nothing new there.

More significantly, the award exercise opens a window into the functioning of China’s socialist market economy. Although proper research goes much deeper, engaging with Marxist economists in China, the following, from the People’s Daily, is a helpful start. It concerns what may be called an enmeshed economy, where state, society and economy are so intertwined that it is almost impossible to speak of separate entities.

Party not meddling in running of firms: experts

The Communist Party of China (CPC) branches inside private companies help enhance corporate management and improve teamwork without meddling in decision-making processes, and concerns over any executive affiliated to the Party reflect a lack of knowledge about how the Party functions at the grass-roots level, experts said on Tuesday.

Jack Ma Yun, founder of Chinese e-commerce giant Alibaba Group, was identified as a Party member on Monday, which sparked heated discussions online. Some media reports said it was an example of how the Party penetrates into every aspect of Chinese business.

This is actually not the first time it has been revealed that Ma is a Party member, media reports said. When the Zhejiang Merchants Association was first established in October 2015, Ma was appointed as the first head of the organization and introduced as a Party member.

Those who are worried that growing Party branches and committees inside private companies might jeopardize the interests of shareholders or affect decision-making have no basic knowledge about how grass-roots Party cells operate and what their roles really are, Su Wei, a professor at the Party School of the CPC Chongqing Municipal Committee, told the Global Times on Tuesday.

“Before the CPC implemented the ‘Three Represents’ and allowed private entrepreneurs who had met the requirements to join the Party back in 2001, the number of private businessmen who were Party members accounted for a large proportion of the total number of private entrepreneurs. And many had already become Party members even before they started their own business,” Su said.

It is unknown whether Ma joined the Party before he started Alibaba. The e-commerce firm was contacted by the Global Times but did not comment on this matter by press time on Tuesday.

Membership of the Party and corporate management are two unrelated things, Su noted. “The board of shareholders is in charge of decision-making and daily operations, while Party cells are set up to make sure the company’s operations are in line with the principles and policies of the CPC,” he said.

China recently released a trial regulation for Party branches stating that Party cells inside private firms can help guide and supervise enterprises to follow the country’s laws and regulations and safeguard the legitimate interests of all parties, according to a document released on Sunday.

The cells will also contribute to team building inside companies and boost corporate development, the document showed.

“It’s crystal clear what role Party branches play in private companies,” Su said, noting that Party cells are not established with the aim of replacing management teams or meddling in decision-making processes.

Party benefits

Alibaba established its Party branch in 2000 and upgraded it to a Party committee in 2008 due to the company’s growing number of Party members, according to media reports. Alibaba now has nearly 200 Party branches and about 7,000 Party members. Ma highlighted the importance of Party construction work with younger generations, pledging to explore Party building inside high-tech firms in the new era.

Over the past few years, more and more private companies, especially tech start-ups, have set up Party branches and committees to improve management and enhance team building. Some entrepreneurs also admitted that Party members, who are usually hardworking employees, have become role models at workplaces.

“We hire graduates every year and some of them are Party members, who usually work hard and are eager to learn, creating a positive work environment,” Liu Ren, vice general manager of Dailywin Watch Group, told the Global Times Tuesday.

Tech firms such as iFlytek and smartphone maker Xiaomi have been strengthening their Party construction work. “The rapid development of iFlytek is thanks to the correct guidance of the CPC and the hard work of Party comrades, who are also the backbone of our management team,” Wu Dehai, Party chief of the CPC committee of the company, told the Global Times in a recent interview.

The trial regulation for Party branches said that if there are at least three Party members in an organization, it should set up a Party branch.

The private sector is a key part of China’s reform and opening-up, and it has been developing with Chinese characteristics, Su noted.

“The interests of shareholders of listed private companies do not contradict the core interests of the CPC, as the Party also wants to pursue opening-up and economic growth,” he said.

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Enmeshment: An Effort to Understand Chinese Socialism

In the aftermath of workshop on the ‘Socialist State’, I have been thinking about the category of enmeshment in order to understand Chinese socialism. It came up at various points in the workshop.

For example, in a discussion over the issue of public and private ‘ownership’ in economic matters, one of the Chinese participants pointed out that the opposition does not make sense in a Chinese context. Instead, the reality of a ‘socialist market economy’ is one way to think about the situation differently.

What does this mean? To begin with, it indicates that ‘market economy’ does not necessarily mean ‘capitalism’ or indeed a ‘capitalist market economy’. As I have pointed out earlier, most market economies throughout history have not been capitalist. So the possibility arises that a socialist market economy is different from a capitalist market economy – even in the context of a global dominance of a capitalist market economy.

One might point to the fact that most of the franchises for KFC in China are government owned. Or to the fact that many of the leaders of ‘private’ companies are members of the CPC. Or that the fostering of ‘start-ups’ have government backing. Or that the development of the internet in China is inescapably tied to governmental involvement. Or to Deng Xiaoping’s statement that there is no necessary contradiction between socialism and capitalism. Or indeed Mao’s quotation of an old Chinese proverb: ‘Things that oppose each other also complement one another’. The list goes on.

But this is only a beginning. Enmeshment has many other levels, well beyond economic matters. A key feature on a political level is the enmeshment between state and civil society. The problem here is that this is a rather perverse and very European way of putting it. Why? In a European – or, rather, North Atlantic – mode of understanding, the state is alienated from civil society, something ‘out there’ that imposes its will from time to time, intervening in society and the economy. On this understanding, civil society becomes the focus of new ideas and possible opposition to the state.

But what if you have a very different situation in which these features are enmeshed with one another in all manner of complex ways? This means that the very idea of ‘civil society’ is a very bourgeois invention. Indeed, the original German is ‘bourgeois society’ and not ‘civil society’. This would mean that civil society in this sense does not exist in China, which is a good thing.

A further feature of enmeshment is what is called non-antagonistic contradictions. The term originally arose in the Soviet Union, especially in the 1930s with the achievement of socialism, albeit in ways that were not expected. Mao for one found the idea extremely useful in the context of socialism in power (as we see in his crucial essay, ‘On Contradiction’). For example, classes will continue to exist under socialism, but now in a non-antagonistic fashion. In the Soviet Union, this meant workers, farmers and intellectuals. In China, this means workers, farmers and a ‘middle class’, although we need a new term here. Why? These are the vast number of people that have benefitted from the 40-year anti-poverty campaign. Their lives have become secure (anquan) in a way not imagined before. But they realise very well that their situation is due to the long project of the CPC.

The upshot: Deng Xiaoping’s category of the ‘people’s democratic dictatorship’ (one of his four Cardinal Principles) includes this new class. A very new interpretation of the ‘dictatorship of the proletariat and peasants’ that includes everyone in what can only be called socialist democracy. Jiang Zemin’s ‘Three Represents’ (2002) is the clarification of this position.

My thoughts are only at their early stage of thinking about enmeshment, but let me add one more point. The appropriation of the idea of ‘the common’ in China now takes a distinct turn. In a North Atlantic situation, ‘the common’ is an effort to rethink communism, even though it comes from a very theological idea in which the world was created by God, with everything in common. In a Chinese situation, the common includes the crucial role of governance. The government is involved in and directs the common, not in the sense of censorship but in the sense that any function of the common is enmeshed with governance.

My perception is that all of this makes sense of the old Confucian category of datong, the Great Peace or Great Harmony, which has been reinterpreted in terms of communism. Datong is not an overcoming of contradictions but rather a form of existence in which contradictions function in a non-antagonistic fashion. Of course, a datong society lies in the distant future, perhaps 500 or 1000 years away. Meanwhile, the aim for 2021 is for a xiaokang shehui, a moderately prosperous, peaceful and secure society.