Workers Vanguard No. 850	10 June 2005

Why China Is Not Capitalist

Defend, Extend the Gains of the 1949 Revolution!

For Workers Political Revolution to Oust Stalinist Bureaucracy!

We print below an edited translation of an article that first appeared in Spartacist Japan No. 30 (April 2005), newspaper of the Spartacist Group of Japan, section of the International Communist League.

For the last several years, on a daily basis, at least one bourgeois newspaper, magazine, or nightly news program has had a special feature on China. We have been told that China's economy is growing by leaps and bounds, with no end in sight; that it has overtaken Japan in several important economic indicators, and will soon become a "superpower"; that it is in the process of "siphoning off" natural resources that "belong to the Japanese people"; that, while the Japanese economy has rebounded due to trade with China, the reason for the high level of unemployment in Japan is the "hollowing out" of industry, most of which relocated to China in search of higher profits; that soon China will replace Japan diplomatically, politically and militarily as the "most important and influential country in Asia." Accompanying the bourgeois propaganda campaign, last December Japanese imperialism released new defense guidelines, and it is in the process of re-stationing its military, and also has signed security agreements with the American imperialists, including one to defend Taiwan to "counter the Chinese military threat." (See "Joint Statement of the Spartacist Group Japan and Spartacist League/U.S.: Down with U.S./Japan Counterrevolutionary Alliance! Defend the Chinese and North Korean Deformed Workers States!" WV No. 844, 18 March.)

It is in this context that the so-called Trotskyist group Kakehashi has published a pamphlet claiming that capitalism has been restored in China. In this pamphlet, Kakehashi disappears the role that the Japanese zaibatsu and international finance capital have played in the exploitation of the Chinese workers and in undermining the gains of the 1949 Chinese Revolution. Japanese imperialism's direct foreign investment totaled more than $5.45 billion in 2004 (China Daily, 25 March). This investment is no longer confined to areas formerly colonized by Japan, such as Manchuria, but has expanded to the southern tip of China. They write nothing about Japan's military provocations against China, and they attempt to justify their betrayal of the class interests of the proletariat and their own reconciliation with capitalism by denying the working-class nature of the Chinese deformed workers state. In sum, what is missing is a proletarian internationalist perspective and the role of a conscious, i.e., Leninist, vanguard party to lead the proletariat.

China on the Brink

The 1949 Chinese Revolution was, despite profound bureaucratic deformations, a social revolution of world historic significance. Hundreds of millions of peasants rose up and seized the land on which their ancestors had been cruelly exploited from time immemorial. The rule of the murderous warlords and bloodsucking moneylenders, the rapacious landlords and wretched bourgeoisie was destroyed. The revolution enabled women to advance by magnitudes over their previous miserable status, historically symbolized by the barbaric practice of foot-binding. A nation that had been ravaged and divided by foreign powers for a century was unified and freed from imperialist subjugation.

Unlike the Russian October Revolution of 1917, which was carried out by a class-conscious proletariat guided by the proletarian internationalism of the Bolsheviks, led by Lenin and Trotsky, the Chinese Revolution was the result of peasant guerrilla war led by Mao Zedong's Stalinist nationalist forces. Patterned after the Stalinist bureaucracy in the USSR, Mao's regime preached the profoundly anti-Marxist notion that socialism—a classless, egalitarian society based on material abundance—could be built in a single country. In practice, "socialism in one country" meant opposition to the perspective of workers revolution internationally—for example in neighboring Japan—and accommodation to world imperialism.

In the 1950s, the People's Republic of China established a centrally planned, socialized economy and agriculture was collectivized. A state monopoly of foreign trade protected the socialized economy from being undermined by cheap imports from the far-more-developed capitalist-imperialist countries. In China under Deng Xiaoping, the bureaucracy moved toward "market socialism" following the examples of Yugoslavia and Hungary. Economic administrators and managers were rewarded or penalized on the basis of market profitability. The threat of plant closures and layoffs also served as a means of enforcing labor discipline among the workers. At the same time, agriculture was decollectivized and replaced by the "household responsibility system," i.e., peasant smallholdings.

Many of the gains of the Chinese Revolution are being obliterated. The pressures of market competition have inevitably resulted in the growth of a small class of wealthy farmers alongside tens of millions of poor peasants. As many as 130 million rural Chinese have migrated to the eastern and southern coastal areas in search of work. Education and medical care are no longer free. The workers no longer have their "iron rice bowl" which guaranteed a job and benefits for workers in state-owned enterprises. Unemployment has reached massive proportions as industries are closed or privatized. The number of women working as prostitutes has skyrocketed, and female infanticide is resurgent in the countryside.

The Beijing bureaucracy essentially acts as a transmission belt for the pressures of the imperialist-dominated world market on the workers state. The brittle, contradictory character of this bureaucratic caste can be seen in the fact that, in the face of working-class unrest, the current regime has often reversed some of its economic "reforms" and occasionally put some of its own on trial for corruption, sometimes with a penalty of execution. In the face of massive peasant protests and riots over the last year, the recent National People's Congress announced that within two years all children of peasants in rural areas will receive a free primary education. Earlier this year, the bureaucrats promised that by year's end the basic agricultural tax in most of China's provinces will be eliminated.

In maintaining that China continues to be a deformed workers state, we do not deny or minimize the growing social weight in China of both the newly fledged capitalist entrepreneurs on the mainland and the old, established offshore Chinese bourgeoisie in Taiwan and Hong Kong. The fostering of capitalist-restorationist forces within the framework of a deformed workers state has already gone much further in China than in Tito's Yugoslavia or Gorbachev's Soviet Union. The Chinese bureaucracy itself is a major participant in joint ventures with foreign capitalists. It continues to invite overseas Chinese and foreign capital into the country, opening up entire areas to capitalist exploitation. The economic policies of the Beijing Stalinist regime that encourage capitalist enterprise (and the corresponding rightward shifts in the bureaucracy's formal ideological posture) have increasingly strengthened those social forces that will give rise to imperialist-backed, openly counterrevolutionary factions and parties when the CCP [Chinese Communist Party] can no longer maintain its present monopoly of political power. This can be clearly seen today in the capitalist enclave of Hong Kong, the one part of the PRC [People's Republic of China] where bourgeois oppositional parties exist. (See "Hong Kong: Expropriate the Bourgeoisie!" WV No. 814, 21 November 2003.)

Nonetheless, the political power of the main body of the Beijing Stalinist bureaucracy continues to be based on the core collectivized elements of China's economy. Furthermore, the economic policies of the CCP regime are still constrained by fear of social—especially working-class—unrest that could topple it. This came close to happening in 1989, when student-centered protests for political liberalization and against corruption triggered a spontaneous workers revolt that was suppressed with great bloodshed by regime-loyal army units.

The social revolution persists in property relations and in the consciousness of the toiling masses. Trotskyists give unconditional military defense to a deformed or degenerated workers state in order to prevent its military defeat by a capitalist power because these states are based on collectivized property. Simultaneously, we call for a proletarian political revolution that would oust the reactionary bureaucracy whose policies undermine the defense of the workers state and which has brought China close to the brink of internal capitalist counterrevolution. In place of bureaucratic autocracy, soviets (workers councils) must be created as the direct organizations of the workers, soldiers and peasants, the vehicles for them to organize and administer their own state in all aspects.

This is the most fundamental historic task of the Chinese proletariat. What is needed to realize this is to build a Leninist-Trotskyist party. This party would link the struggle of the workers in the state-owned enterprises with those in the private enterprises, with the struggles of the migrant workers, the poor peasants and women, and it would fight against Han chauvinism. The International Communist League is committed to bringing this Marxist program to Chinese workers and rural toilers.

Kakehashi vs. Trotsky

For some ten years, the Kakehashi group publicly debated the question of China in its newspaper: Is it still some kind of workers state, or has capitalism been restored? While members of Kakehashi may not have agreed on the class nature of China, in action their party sided with capitalist-restorationist forces—from the pro-capitalist China Democratic Party to the CIA-backed Dalai Lama. In 1999 they organized a march on the streets of Tokyo protesting the visit of former Chinese premier Jiang Zemin to Japan, a protest that could only have appealed to Japanese anti-Chinese chauvinists. Their debate was preceded and guided by a formal rejection of their own program—which they considered Trotskyist—and a negation of the Marxist conception of a class society:

"With the destruction of the Soviet Union and East European bloc, there has been a fundamental change of circumstances in the structure of the international revolutionary movement, and our program also needs to be changed.... Thinking in terms of fixed 'classes'... must be decisively considered as a past methodology."

—Sekai Kakumei, 30 October 1995 (Sekai Kakumei was Kakehashi's previous name.)

In the summer of 2004, Shin Jidai Sha, the publishing house for Kakehashi, published a pamphlet titled, "Boiling 'Capitalist China'; Will It Have a Successful Soft Landing on Its Way to Becoming a Normal 'Imperialist Power'?" The basic premise of this pamphlet is the following: The Trotskyist analysis of the Stalinist bureaucracy is outdated and the period of the "anti-bureaucratic political revolution is over." Following discussions with their Hong Kong comrades, the Pioneers, Kakehashi became convinced that under the rule of the Communist Party, the Chinese bureaucracy had restored capitalism during the 1990s, a process that, according to them, took a while. Workers in China noticed the danger of capitalist restoration in the mid '90s. But by that time, the workers had lost control of production and therefore were unable to put up any resistance, i.e., it was too late. In addition, Kakehashi cites three main reasons for capitalist counterrevolution: During the 1990s, the bureaucracy began the process of "primitive accumulation of capital"; capitalists were allowed to become members of the Communist Party; and the constitution was amended to guarantee protection of private property. Today, according to Kakehashi, the Chinese Communist Party is a capitalistic peoples political party, and what is now required in China is a socialist revolution.

Later on we will explain why Kakehashi's position has nothing in common with Marxism and is in fact deeply social-democratic. For now, we will note that two of the reasons they mention for China becoming capitalist in the last century actually occurred during this century. It was in 2002 that the Communist Party officially recognized that some of their members had been capitalists for many years. And last year, at the March 2004 party conference, the constitution was amended to recognize private property.

It is not this or that resolution that the bureaucracy passes, although these are dangerous developments, that determines where China is going, but social conflict. To premise one's conclusion about the class character of the Chinese deformed workers state exclusively on the actions of the bureaucracy relegates the working class to merely a passive object of either the bureaucracy or imperialism. What Kakehashi has done is written off the Chinese proletariat as a contender in the battle against capitalist counterrevolution.

But Kakehashi and the Pioneers actually thought it was the Chinese Stalinist bureaucracy that would bring socialism to China. Under the subhead, "Abandonment of the Fight Toward Socialism," a representative of the Pioneers wrote, "In 1979, after Deng came to power, the stage of the 'planned economy' went to 'market socialist economy' (read: changed to 'capitalism'). The socialist outlook was completely abandoned" (Kakehashi, 21 March). But the bureaucracy, from Mao to Hu Jintao, never did and does not now have a "socialist outlook." Up until 1946, Mao was still seeking a coalition government with the bourgeois-nationalist KMT [Guomindang] regime of Chiang Kai-shek. After the revolution, Mao sought to transform impoverished China into a "socialist" world power through economic autarky within the framework of a bureaucratically centralized economy, based on the anti-Marxist dogma of "socialism in one country." Contained in this nationalist perspective were the seeds of the bureaucracy's implementation of "market reforms" under Deng, called "socialism with Chinese characteristics." It was under Mao that China consummated an alliance with U.S. imperialism during the Vietnam War and betrayed revolutionary struggles from Indonesia to Africa. It contributed to the victory of capitalist counterrevolution in the Soviet Union by supporting, for example, the CIA-backed Afghan mujahedin against the Soviet Red Army. The bureaucracy continues to preserve state property, not out of a subjective identification with socialism but, as Trotsky wrote, "only to the extent that it fears the proletariat."

How is a gradual, decade-long, bourgeois counterrevolution possible? Real Trotskyists would not have let this historic defeat occur without fighting against it—or even noticing it until years later. Trotsky did not live to see capitalism restored in the Soviet Union, and his prognosis of how that would occur—through civil war—did not happen. But Kakehashi members have lived through the counterrevolutionary destruction of the Soviet Union and East Europe and know there was nothing gradual about those.

The unprecedented economic and social implosion taking place in the former Soviet Union and East Europe is the real measure of just how historically progressive the planned, collectivized economy really was, despite bureaucratic deformities. Trotsky's prediction of what capitalist restoration would look like was correct. The laws of capitalism have resulted in total economic collapse and all-sided nationalist fratricide. Life expectancy has fallen dramatically, with the lifespan of an average Russian male dropping to 57½ years. In fact, the number of deaths exceeded the number of births during the first six years following counterrevolution in the Soviet Union. Malnutrition has become the norm among schoolchildren. The infrastructures of production, technology, science, transportation, heating and sewage have disintegrated. The gross domestic product fell more than 80 percent from 1991 to 1997.

That is what capitalist counterrevolution looks like. The former Soviet Union was a global industrial and military power. And because China is so much behind where the Soviet Union was economically, capitalist restoration in China would be much worse. It would lead to widespread impoverishment of the population, and bring not only economic collapse, but the danger of the breakup of the country and bloody political chaos. In addition, because the Chinese economy is somewhat integrated into the world economy, workers around the world would be adversely affected. The current Japan-U.S. alliance against China could fracture, as each hungry imperialist beast competes for the spoils.

Capitalism Is a Brake on Further Development, Not an Accelerator

The Marxist revolutionary program is not based on moral repugnance against war, social oppression, class exploitation and inequality. It is based on the objective fact that capitalism arrests the development of the productive forces and must be superseded by a superior economic system, which will eliminate the basis for all the evils which are inherent in capitalist society.

Kakehashi locates counterrevolution in China during the same period when China has been experiencing its highest growth rate and has been convulsed by labor struggles and peasant unrest. In the past five years, from the northeast down the coast and into the heart of the country, workers have been protesting in defense of collectivized property, which they consider to be theirs. Only those who are completely blinded by their own defeatism could have missed this.

For the past two decades, China's economy has been growing at about 7 to 9 percent a year, unmatched by even the main imperialist powers. Between 1998 and 2001, government spending in China increased from 12 to 20 percent of the country's gross domestic product. The largest and fastest-growing component of government expenditure has been investment in infrastructure, which increased by 81 percent over these three years. Moreover, this has been happening at a time when the entire capitalist world has been pursuing fiscal austerity. China navigated successfully through the 1997-98 East Asian financial/economic crisis and then through a generalized world capitalist recession. If China is capitalist and its economy has been growing without cyclical contractions (which are inherent in capitalism), this would negate the fundamental Leninist understanding that we are living in the epoch of capitalist reaction and decay. If there exists today a capitalist system which ensures the rapid and steady growth of productive forces, this calls into question the necessity and progressive character of proletarian revolution in the capitalist countries and of working-class rule.

The CCP leadership officially describes China as a "socialist market economy." It is the "socialist" (i.e., collectivist) aspects that are responsible for the positive economic developments in China in recent years. And it is the market aspects of China's economy that are responsible for the negative developments—the ever-widening gap between rich and poor, the immiseration of a large and growing fraction of the populace, tens of millions of workers laid off from state-owned enterprises, the army of impoverished migrants in the cities who can no longer make a living in the countryside.

In China today, it is the core collectivized elements of the economy which continue to be dominant, though not in a stable, coherent manner. In 2003, state-owned and partly state-owned enterprises (shareholding corporations) employed half of China's 750 million workers and accounted for 57 percent of the gross value of China's industrial output (McKinsey Quarterly, 2004). But this simple statistical figure obscures the strategic centrality of state-owned industry.

The private (including foreign-owned) sector consists for the most part of factories producing light manufactures by labor-intensive methods. Heavy industry, the high-tech sectors, and modern armaments production are overwhelmingly concentrated in state-owned enterprises. It is these enterprises that have enabled China to put a man in space. Far more importantly, it is state-owned industry that has enabled China to build an arsenal of nuclear weapons and long-range missiles to ward off the imperialists' threat of a nuclear first strike.

All major banks in China are state-owned. Almost the entirety of household savings—estimated at $1 trillion—is deposited in the four main state-owned commercial banks. Government control of the financial system has been key to maintaining and expanding production in state-owned industry and to the overall expansion of the state sector. Continued state ownership of the financial system has enabled the Beijing regime, up to now, to effectively (though not totally) control the flow of money-capital in and out of mainland China. China's currency is not freely convertible; it is not traded (legally) in international currency markets. The restricted convertibility of the yuan has kept China insulated from the volatile movements of short-term capital which periodically wreak havoc on the economies of Third World neocolonial countries from Latin America to East Asia. Furthermore, the Beijing regime has maintained an increasing undervaluation of the yuan (in "free market" terms), much to the displeasure of American, Japanese and European capitalists. It is precisely these core collectivist elements of China's economy which the forces of world imperialism want to eliminate and dismantle. Their ultimate goal is to reduce China to a giant sweatshop under neocolonial subjugation.

The main weapon available to a nationally isolated and relatively economically backward workers state against the intervention of cheaper goods is the state monopoly of foreign trade, i.e., the strict control of imports and exports by the government. The Beijing bureaucracy's abandonment of the strict state monopoly of foreign trade serves to facilitate imperialism's plans. Despite its rapid growth in recent years, the Chinese economy is backward relative to even the lesser capitalist-imperialist powers. While China's exports continue to increase at record levels, these largely consist of low-wage, low-value light manufacture and consumer goods like clothing, toys and household appliances. China's increase in gross industrial output between 1993 and 2002—from $480 billion to $1,300 billion—has been nearly completely offset by the increase in its gross purchases of industrial products, i.e., machinery and capital equipment. The ultimate answer to China's economic backwardness and the only road to a socialist, i.e., classless, egalitarian society, lies in world socialist revolution and China's integration into an internationally planned economy.

"Primitive Accumulation of Capital"

According to Kakehashi, during the 1990s the bureaucrats who had become managers of privatized enterprises were pocketing the profits, getting rich from buying and selling stock, and also buying and selling the usage rights to agricultural land, and are laying off workers. In an attempt to give a Marxist veneer to their political appetites, Kakehashi describes this process as the "primitive accumulation of capital."

On a much smaller scale, the situation which Kakehashi describes is similar to that of the bureaucracy of several trade unions in Japan. Take for example Jichiro [civil servants union]. The misleaders of this one-million-strong trade union have been taking the dues money that their members pay every month and enriching themselves. They have set up "subsidiaries" of the union, whose profits do not go back into the trade union to be used to better the conditions of the members or to prepare for future class battles against the government. Some of the profits go into the pockets of the union bureaucracy. In addition, it is the bureaucracy which oversees the management of the subsidiaries, controls production, and lays off and fires the workers. Is Kakehashi now going to argue that Jichiro is a capitalist organization and not a real trade union; that this union, whose leadership is completely pro-capitalist, should not be defended against the government?

What the bureaucrats in China are doing is certainly criminal from the standpoint of the workers, but it is not what Marx meant by "primitive accumulation of capital." Marx used the term, primitive accumulation of capital, to refer to the initial phase of capitalist development in West Europe when the massive economic surplus appropriated by the bourgeoisie did not yet derive from wage labor but rather from the peasantry and slave labor in the colonies. This wealth was then transformed into capital and used for the initial financing of European industrialization. (See Capital and Theories of Surplus Value.) To get a sense of what Marx meant by the primitive accumulation of capital, think about the 1873 Land Tax that was enacted during the early Meiji period. At that time, the Meiji leaders maintained an exceptionally high level of exploitation of the peasantry and channeled the resulting economic surplus into the rapid construction of an industrial-military complex.

Insofar as the economic surplus appropriated by the Chinese bureaucrat-turned-entrepreneur is used for his personal consumption or speculation, for example in real estate, this is the antithesis of the accumulation of capital. Rather it is the squandering of the existing productive wealth of society, a form of social parasitism. In China, over the past two decades a large fraction of state-owned industry—whether measured by number of enterprises, labor force or volume of production—has been privatized. Most small enterprises were simply sold off to individuals, typically the managers who had been running them. The larger enterprises, however, were "privatized" through a shareholding scheme. When, a decade or so ago, China opened its first stock market, much of the bourgeois media hailed this as proof that "communist" China had taken a decisive step on the road to capitalism. But what has actually happened?

Of the 1,253 companies listed on China's two main stock exchanges, in some cases the government holds a majority of shares, in others a substantial minority. But even the latter remain effectively government-controlled because the CCP has retained a monopoly of political power. According to the 28 March Financial Times, "Only one-third of issued shares in listed companies form the free float for trading on the exchanges. The rest are mostly owned directly by the state or its companies.… Permission for initial public offerings is given first and foremost to state companies, leaving private enterprises without an easy funding route." There is no workers democracy in China—but neither is there shareholders' democracy. Shareholders in China's corporations do not have ownership rights in the capitalist sense. They have the right to income from their financial assets and they can sell their shares. But they cannot determine, or even influence, the management and corporate policies. These are determined by various and often conflicting political as well as economic pressures.

Capitalists in a Communist Party

Ever since the Deng regime introduced market-oriented economic "reforms" in the early 1980s, bourgeois opinion and some leftists have maintained that the Communist Party itself is gradually restoring capitalism in China while keeping a tight grip on political power. This position was widely and loudly trumpeted in 2002 when the 16th Congress of the CCP legitimized party membership for capitalist entrepreneurs. In fact, this Congress did not introduce a significant change in either the social composition of the CCP, which has 66 million members, or its functional ideology. According to an official survey, of China's two million private business owners, 600,000 are party members and have been for some time. The overwhelming majority of these were longtime CCP managerial cadre who took over the small state-owned enterprises they were running when these were privatized over the past several years.

Kakehashi claims that, "The Chinese Communist Party has officially become a capitalistic peoples political party, and under the one-party rule of the Communist Party, the Chinese state has officially become a bourgeois state." Many in the bureaucracy may aspire to a place in the ruling class of a capitalist China for themselves and their children. But this would require a social counterrevolution that destroys the workers state and creates a new bourgeois state. In East Europe and the Soviet Union, the bureaucracy as a caste did not transform itself into a capitalist class. It disintegrated, as did its political instruments, the ruling Communist parties. Various elements of the bureaucracy then regrouped into hostile political factions, and in many cases united with former anti-Communist "dissidents" whom they had previously suppressed. The new capitalist classes in East Europe and the former Soviet Union derive, with differing weight in different countries, from elements of the bureaucracy and also the intelligentsia, many of whom were not at all privileged, at least not economically. A capitalist counterrevolution in China would be accompanied by the collapse of Stalinist bonapartism and the political fracturing of the ruling Communist Party.

China's high rate of economic growth in recent years has produced a certain triumphalist mood among the CCP leadership and cadre and affiliated intelligentsia. One would certainly encounter a very different mood among the millions of workers laid off from state-owned enterprises, impoverished migrants from the countryside and poor peasants barely eking out a living toiling on tiny plots with rudimentary equipment. Hu and his cohorts are driven by delusions of grandeur exceeding the wildest imaginings of Chairman Mao.

The present CCP leaders believe that they can modernize China, transforming it into a great world power—indeed, the global superpower of the 21st century—through ever-greater integration into the world capitalist economy. They truly believe they can control and manipulate Citibank, the Bank of Tokyo-Mitsubishi and the Deutsche Bank, to help build up China so that in a generation or two it will surpass the United States, Japan and Germany. Believing they are transforming China into a global superpower, they are actually clearing the path for returning China to the pre-revolutionary era of untrammeled imperialist subjugation.

Constitutional Amendments Cannot Change the Class Nature of a State

During the National People's Congress which took place in 2004, the bureaucrats amended the Chinese constitution to read: "Citizens' legally obtained private property shall not be violated." In an attempt to appease the populace, the Chinese government announced that the amendment would help prevent state officials from requisitioning private property and possessions. This amendment is surely a dangerous development, which a section of the workers in China understands. It was first proposed two years earlier at the 16th Congress and provoked something of a popular backlash.

This amendment is one reason that Kakehashi has decided that capitalism has been restored in China. In a disingenuous attempt to give itself an orthodox Trotskyist covering, Kakehashi even quotes from Trotsky's Revolution Betrayed. This was disingenuous because the chapter in Revolution Betrayed that immediately follows the quote they use deals with the 1936 Soviet constitution, which incorporated inheritance rights and the "guaranteeing of personal property." Trotsky understood that this new provision in the constitution would be used to benefit the bureaucrats and not the Soviet working masses:

"… a protection by law of the hut, cow and home-furnishings of the peasant, worker or clerical worker, also legalizes the town house of the bureaucrat, his summer home, his automobile and all the other objects of 'personal consumption and comfort,' appropriated by him on the basis of the 'socialist' principle.… The bureaucrat's automobile will certainly be protected by the new fundamental law more effectively than the peasant's wagon."

Trotsky went on to warn that, "By juridically reinforcing the absolutism of an 'extra class' bureaucracy, the new constitution creates the political premises for the birth of a new possessing class." But he added:

"If these as yet wholly new relations should solidify, become the norm and be legalized, whether with or without resistance from the workers, they would, in the long run, lead to a complete liquidation of the social conquests of the proletarian revolution. But to speak of that now is at least premature. The proletariat has not yet said its last word." [our emphasis]

The new amendment is a reflection of already existing reality. Private property has existed in China for years. Inheritance has existed since 1982. With this amendment, the bureaucracy is trying to ensure their privileges through the legal recognition of private property and the right to inherit. By late November 2003 there were 2.97 million private firms with capital exceeding $40.5 billion (Chinese embassy Web site). While this sounds like a lot of money, broken down it is $13,636 per company. Most workers in Japan have many times this amount in their postal retirement account.

Private property in China is as unstable as the bureaucracy itself. Private property and capitalists exist in China today to the extent the bureaucracy, acting under the pressures from imperialism on the one hand and the proletariat on the other, has allowed them to exist. Whether or not private property will be "inviolable" will not be decided by the constitution, but by social conflict. It is possible that "inviolable" private property would be violated by the bureaucracy under the impact of proletarian struggle and/or open counterrevolutionary threats from the imperialists and the bourgeoisie, or, more fundamentally, by an ascendant working class struggling for political power.

Those who argue that China is capitalist must reject one or another fundamental element of classic Marxism, usually the theory of the state. If a workers state, however deformed, can become a capitalist state through amending a constitution, which Kakehashi claims, then logically the reverse would also be true. That is, a capitalist state, such as Japan, could be transformed into a workers state by making changes to the Japanese constitution. This would mean that there is no need for a workers revolution that smashes the capitalist state apparatus—the police, courts, military—expropriates the zaibatsu and the other capitalists, and creates organs of workers rule. Therefore, there is no need for a party similar to the one that Lenin and Trotsky built which can lead the proletariat. This is the historic position of social democracy, in which Kakehashi can now be completely welcomed, now that it has thrown off its last pretenses to Trotskyism.

The Fight for Authentic Trotskyism

For the past four decades, the ICL has exposed the impostors who masquerade as Trotskyists as they abandon every principled position Trotsky stood for, above all the fight for an independent Trotskyist vanguard. Those who cheered the forces of anti-communist counterrevolution share the responsibility for selling out the gains for which the working class fought so hard. They have openly shown themselves for what they are: not Trotskyists, but traitors to the October Revolution.

Kakehashi's international organization, the United Secretariat [USec], supported every counterrevolutionary and nationalist movement in the USSR and East Europe. They hailed clerical-nationalist Polish Solidarność as a model of a revolutionary working-class movement. The USec embraced the fascistic fringe of the Baltic nationalist movements, which sought capitalist restoration in the guise of "independence." A key battlefield of the capitalist counterrevolution was the struggle over East Germany [DDR] in 1989-90. What was immediately posed was: either proletarian political revolution linking up with socialist revolution in West Germany, or capitalist reunification leading to an imperialist Fourth Reich. At this critical juncture, the USec was politically paralyzed. They were unable to agree whether capitalist reunification should be greeted with champagne or aspirin. In contrast, we fought with everything we had for proletarian political revolution in the DDR before it was too late, as the only way to defend the anti-capitalist conquests of the world proletariat from Berlin to Beijing. We lost, but the lessons of that struggle will be important for future struggles of the international proletariat.

The central event of the Russian counterrevolution was Yeltsin's August 1991 "countercoup" against the inept "perestroika coup" by the Stalinist has-beens of the "Emergency Committee." Yeltsin's consolidation of his imperialist-backed power grab for "democracy," in the absence of mass resistance to the encroaching capitalist counterrevolution by a working class atomized and demoralized by decades of Stalinist rule, spelled the destruction of the Soviet degenerated workers state. On this question, the USec was united: they were first on the barricades of counterrevolution. The Japanese USec organization even went so far as to support the anti-Communist red purge directed against the Soviet Communist Party. "The CPSU should be disbanded and must be disbanded, which is the starting point for struggles to establishing minimum political democracy" (Sekai Kakumei, 16 September 1991).

The fate of the People's Republic of China—proletarian political revolution or capitalist counterrevolution—is of huge importance to the working class throughout the world. The Chinese workers and peasants have waged many struggles in the past ten years, but they are atomized and without a leadership whose perspective is to overthrow the political rule of the bureaucrats and place power in the hands of the workers, soldiers and peasants soviets. In addition to coordinating and leading the spontaneous and localized workers struggles, an international Trotskyist party would link the fight against the corrupt bureaucracy in China with that of the North Korean and Vietnamese workers against their Stalinist rulers. Such a party would work in concert with their comrades in Japan fighting for a workers revolution, and together with the class struggles of the militant Philippine and South Korean workers against their capitalist rulers. Only through a socialist revolution in imperialist Japan will the basis be laid for the development of a socialist Asia.