Has China Turned to Capitalism?—Reflections on the Transition from Capitalism to Socialism

Deng Xiaoping, Paramount Leader of the People's Republic of China, 1978-1989
Deng Xiaoping, Paramount Leader of the People’s Republic of China, 1978-1989

He [Deng Xiaoping] called on the Marxists to realize “that poverty is not socialism, that socialism means eliminating poverty.” He wanted one thing to be absolutely clear: “Unless you are developing the productive forces and raising people’s living standards, you cannot say you are building socialism.” No, “there can be no communism with pauperism, or socialism with pauperism. So to get rich is no sin.” Deng Xiaoping had the historic merit of understanding that socialism had nothing to do with the more or less egalitarian distribution of poverty and privation. In the eyes of Marx and Engels, socialism was superior to capitalism not only because it ensured a more equitable distribution of resources but also, and especially, because it ensured a faster and more equal development of social wealth, and to achieve this goal, socialism stimulated competition by affirming and putting into practice the principle of remuneration according to the quantity and quality of work delivered. . . .

“Poverty is not socialism, socialism means eliminating poverty.”

Deng Xiaoping

It is true that the reforms introduced by Deng Xiaoping spurred an economic boom unprecedented in history, with hundreds and thousands of millions of people liberated from poverty, but this is basically irrelevant for the populists.

Rural Poverty Rate in China, 1980-2015
Rural Poverty Rate in China, 1980-2015

Did the elimination of desperate and mass poverty happen at the same time as the worsening inequality? The answer to that question is less obvious than it may appear at first glance. Throughout history, the communist parties have won power only in countries that are relatively undeveloped economically and technologically; for this reason, they had to fight against not one but two types of inequality: 1) inequality existing on the global scale between the most and least developed countries; and 2) the inequality existing within each individual country. Only if we take into account both sides of the struggle can we adequately take stock of policy reform. With regard to the first type of inequality, there are no doubts: internationally, global inequality is leveling out sharply. Yes, China is gradually catching up to the most advanced Western capitalist countries. It is a turning point!

“The fight against global inequality is part of the struggle against colonialism and neo-colonialism.”

Domenico Losurdo

In the last years of the twentieth century, a prominent American political scientist noted that if the process of industrialization and modernization that started with Deng Xiaoping is to be successful, “China’s emergence as a major power will dwarf any comparable phenomena during the last half of the second millennium.” About 15 years later, again with reference to the prodigious development of this great Asian country, a no less illustrious British historian noted, “What we are living through now is the end of 500 years of Western predominance.” The two authors cited here share the same, emphatic, view of timing. About five centuries ago, the discovery/conquest of America took place. In other words, the extraordinarily rapid rise of China is ending or promises to end the “Colombian epoch,” a period characterized by extreme inequality in international relations: the distinct lead held by the West in economics, technology and military might has allowed it to subdue and plunder the rest of the world for centuries.

The fight against global inequality is part of the struggle against colonialism and neo-colonialism. Mao understood this well and, in a speech given on September 16, 1949, warned that Washington wants China reduced to relying “on US flour, in other words, to become a US colony.” In fact, the newly founded People’s Republic of China became the target of a deadly embargo imposed by the United States. Its objectives are clear from studies done by the Truman administration and the confessions and statements of its leaders. It started from the premise that the type of measure that could defeat and oust the communist government “is economic rather than military or political.” And so, they needed to ensure that China suffered or continued to suffer the scourge of a “general standard of living around and below the subsistence level”; Washington felt committed to causing “economic backwardness” and “cultural lag” and leading a country of “desperate needs” to “a catastrophic economic situation,” “toward disaster” and “collapse.” At the White House, one president succeeds another, but the embargo remains, and it is so ruthless as to include medicines, tractors, and fertilizers. In short: in the early 1960s, a collaborator of the Kennedy administration, Walt W. Rostow, pointed out that, because of this policy, the economic development of China was delayed for at least “tens of years.”

There is no doubt: Deng Xiaoping’s reforms greatly stimulated the fight against global inequality and thus placed the economic (and political) independence of China on a solid footing. High technology is no longer a monopoly of the West, either. Now we see the prospect of overcoming the international division of labor, which for centuries has subjected people outside the West to a servile or semi-servile condition or relegated them in the bottom of the labor market. It is thus outlining a worldwide revolution that the Western left does not seem to be noticing. Rationally, they consider a strike obtaining better wages or better working conditions in a factory as an integral part of the process of emancipation, or they discuss it in the context of the patriarchal division of labor. It is very strange, then, that the struggle to end the oppressive international division of labor that was established through armed force during the “Colombian epoch” is considered something alien to the process of emancipation.

“It is very clear which weapons will be used to fight in the country that has emerged from the greatest anti-colonial revolution in history to engage in a long-term process of building a post-capitalist and socialist society. Which side will the Western left take?”

Domenico Losurdo

In any case, those who condemn China today as a whole due to its inequalities would do well to consider that Deng Xiaoping also promoted his reform policies as a part of the fight against planetary inequality. In a conversation on October 10, 1978, he noted that the technology “gap” was expanding compared to more advanced countries; these were developing “with tremendous speed,” while China could not keep up in any way. And, 10 years later, “High technology is advancing at a tremendous pace”; so that there was a risk that “the gap between China and other countries will grow wider.” . . .

Social and political destabilization can also come from another front. How long will the new rich continue to accept a situation in which they can quietly enjoy their economic wealth (accumulated legitimately) but cannot turn it into political power?

Mao was aware of this problem. In 1958, he responded to criticism from the Soviet Union regarding the persistence of capitalist areas in the Chinese economy by saying, “There are still capitalists in China, but the state is under the leadership of the Communist Party.” Almost 30 years later, to be exact, in August 1985, Deng Xiaoping made a remark we should ponder: “Perhaps Lenin had a good idea when he adopted the New Economic Policy.” Here is an indirect comparison between the Soviet NEP and the reform policies adopted by Deng Xiaoping in China. It is obvious what the two have in common: total political expropriation of the bourgeoisie does not equal total economic expropriation. Of course, there are also differences. The NEP involved a very small part of the private economy and was primarily intended as a temporary “retreat.” In other words, what was driving the Soviet NEP was the need to find some way out of an economically hopeless situation. There was no comprehensive reflection on which economic model to pursue: not surprisingly, according to Benjamin’s testimony, which we have already seen, the rich NEP man, who was also expected to contribute to developing the productive forces, was facing a “terrible social isolation.” The policy adopted by Deng Xiaoping, on the other hand, leaves behind a clear historic toll: experience has shown that the totally collectivist economy erases all material incentives and motives for competition, paving the way (as previously seen) for mass disaffection and absenteeism; moreover, the populism that saw wealth and gain as such a sin hindered the development of entrepreneurship and technological innovation.

Deng Xiaoping
Deng Xiaoping

While initiating his policies of reform and openness, Deng was aware of their inherent risks. In October 1978, he cautioned, “We shall not allow a new bourgeoisie to take shape.” This goal is not contradicted by tolerance granted to individual capitalists. Of course, they must be given much consideration. However, one point is constant: “the struggle against these individuals is different from the struggle of one class against another, which occurred in the past (these individuals cannot form a cohesive and overt class).” Although there are residues of the old class struggle, on the whole, with the strengthening of the revolution and the communist party’s power, a new situation was created. “Is it possible that a new bourgeoisie will emerge? A handful of bourgeois elements may appear, but they will not form a class,” especially as there is a “state apparatus” that is “powerful” and able to control them. Besides the power of the state, ideology plays an important role: many of the new rich, although not communists, feel patriotic and share the horror at the “century of humiliation” that began with the Opium Wars and ended with the victory of the revolution, so these new rich also share the dream of “rejuvenation of the Chinese nation.”

And yet, precisely as a result of the success of policy reforms and the extraordinary economic growth of China, the number of millionaires and billionaires is growing dramatically; will the wealth accumulated by the new capitalists have an influence on politics? It is in light of this concern that you may fully comprehend the on-going campaign against corruption. The clean-up process does not aim only to consolidate social consensus on the Communist Party of China and the government; it means to implement Deng Xiaoping’s recommendation and thus prevent the “bourgeois elements” from forming a class that is ready to take power. . . .

It is very clear which weapons will be used to fight in the country that has emerged from the greatest anti-colonial revolution in history to engage in a long-term process of building a post-capitalist and socialist society. Which side will the Western left take?”

Excerpts from Losurdo, Domenico. 2017. “Has China Turned to Capitalism?—Reflections on the Transition from Capitalism to Socialism.” International Critical Thought 7(1): 15-31, DOI: 10.1080/21598282.2017.1287585. [Click here for the full .pdf.]

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