Why China Is Not Capitalist: An Exchange

(Letter)

18 February 2007

Dear Workers Vanguard

In your article “Anti-China Protectionism: Poison for Workers” (WV no. 885) you claim that the imperialist powers are “aiming to restore capitalist rule in order to turn the Chinese mainland into a gigantic sweatshop”.

The reality is that China is already “a gigantic sweatshop”. Hundreds of millions of Chinese workers are ruthlessly exploited by local and foreign capital. Extremely long hours, physical punishment, fines and non-payment of wages are amongst the abuses suffered by many Chinese workers. (See the book “China’s Workers Under Assault: the Exploitation of Labor in a Globalizing Economy”, by Anita Chan.)

China has become the world’s biggest recipient of foreign investment. The transnational corporations (and the South Korean and Taiwanese contractors who do much of their dirty work) are attracted by the huge reserve army of labor created by the displacement of peasants from the land, and of workers from state-owned factories that have cut their workforce or closed down altogether. They are also attracted by the total absence of unions in many enterprises, and the tameness of the All-China Federation of Trade Unions where it exists.

Privatisation has proceeded very rapidly in recent years. The state sector’s share of industrial production has declined from 100 percent in 1978 to 31.6 percent in 2004. The private sector has risen from zero to 62.1 percent in the same period.

If you accept that Russia is now capitalist, despite the continued existence of some state-owned enterprises, why do you not recognise that China is now capitalist too?

Is it because the ruling party still calls itself “communist”? If so, you are judging on the basis of words, not social reality. You are also showing illusions in the party of the Stalinist bureaucracy as a defender of the workers state.

Trotsky had no such illusions in the Soviet bureaucracy. He said that if the bureaucracy was not overthrown by the working class it would eventually restore capitalism and convert itself into “a new possessing class” (he meant a newly-created capitalist class, not some hitherto-unknown type of possessing class).

Trotsky has been proven correct, not only by the experience of Russia, but also by that of China.

Chris Slee
Melbourne, Australia

WV replies:

Taken together, Chris Slee’s arguments amount to this: workers are mistreated in China, there has been significant privatization of formerly state-owned enterprises, international capital has penetrated the economy and, voilà, China is capitalist. Politically bankrupt from a Marxist standpoint, this is a convenient “theory” for those who seek to join their “own” bourgeoisies, the protectionist, anti-Communist labor lieutenants of capital in the trade-union bureaucracy and the leaders of mass reformist parties, such as the Australian Labor Party, in targeting China for internal counterrevolutionary machinations and external military threats.

Slee’s letter provides an opportunity to again underline our unconditional military defense of the Chinese deformed workers state in opposition to prevailing petty-bourgeois and pseudo-left public opinion. Few are better suited to bashing China while embellishing “democratic” imperialism than the Australian Democratic Socialist Perspective (DSP—formerly Democratic Socialist Party), of which Slee is a longtime member, a fact he omits in his letter.

Slee fails to even mention the 1949 Chinese Revolution, which overthrew capitalist/landlord rule and ripped China from the clutches of the imperialist powers that had long held that country in servitude. That revolution laid the basis for collectivizing the economy, resulting in enormous social progress for the workers and peasants. However, the workers state that emerged was deformed from its inception by the rule of a nationalist bureaucracy fundamentally similar to that which came to power in the Soviet Union through a political counterrevolution led by Stalin & Co. beginning in 1924. The Stalinist dogma of “building socialism in one country” meant accommodation to world imperialism, selling out revolutionary opportunities throughout the capitalist world.

Trotsky and his followers unflinchingly defended the Soviet Union against the forces of the class enemy while calling for proletarian political revolution to sweep away Stalin’s bureaucratic regime and return the Soviet Union to the revolutionary, internationalist principles that animated the October Revolution. Likewise, we in the International Communist League fought tooth and nail against capitalist counterrevolution in the former East Germany and USSR and for workers political revolution. Today we raise the same program in regard to China, the largest and most powerful of the remaining deformed workers states. The DSP stands on the other side of the barricades.

Among other political atrocities, in the 1980s the DSP (then called the Socialist Workers Party) embraced counterrevolutionary Polish Solidarność, the only “union” beloved by the CIA, Vatican and Western bankers. In 1991, DSP leader Renfrey Clarke literally manned Yeltsin’s barricades during the imperialist-backed countercoup in Moscow, which signaled the ascendancy of capitalist counterrevolution in the Soviet Union. At home, the DSP played a leading role in mobilizing support for Australian imperialist troops to be sent to East Timor in 1999 and to this day refuses to call for their withdrawal (see “What Is the Democratic Socialist Party?” Australasian Spartacist No. 167, Autumn 1999).

Slee treats the key question of the state in classic social-democratic fashion. Behind his account of the extent of privatizations in China lies the hoary Laborite notion that “socialism” can be achieved by reaching a certain level of nationalization of the economy, presumably under such a “democratic” government as that of Clement Attlee’s Labour Party, which managed the affairs of declining British imperialism following World War II. In regard to China, Slee is running the film of reformism in reverse.

The 1949 Revolution smashed bourgeois rule in China, and that remains the case today. At some point, likely when bourgeois elements in and around the bureaucracy move to eliminate Communist Party (CCP) political power, the explosive social tensions of Chinese society will shatter the political structure of the ruling bureaucracy. And when that happens, the question will be starkly posed: either proletarian political revolution to open the road to socialism or a return to capitalist enslavement and imperialist subjugation.

Slee’s arguments to the contrary notwithstanding, state-owned enterprises remain dominant in strategic industrial sectors such as steel, nonferrous metals, heavy machinery, shipbuilding, telecommunications, electric power, oil extraction and refining. The nationalization of land has prevented the emergence of a class of large-scale agrarian capitalists socially dominating the countryside. The state’s effective control over the financial system has enabled the Beijing regime to insulate China from the volatile movements of speculative money-capital that periodically wreak havoc with neocolonial countries from East Asia to Latin America.

To the extent that the CCP regime has opened up sections of the country to capitalist investment, it acts as labor contractors for the imperialists and offshore Chinese bourgeoisie. But such does not equate to the rule of capital. The world’s bourgeois rulers understand this much, which explains their push for China to “open up” banking and privatize the core state-owned enterprises, as well as the military pressures exerted by the imperialists against China. A U.S.-Japan military pact signed two years ago that embraced capitalist Taiwan as “a mutual security concern”—a brazen provocation against China—has now been followed up by a pact sealed last month by Japan and Australia that aims to “contain” China and targets as well the North Korean deformed workers state.

Slee’s dragging the name of revolutionary leader Leon Trotsky into his arguments demonstrates utter cynicism, not least since his party explicitly repudiated Trotskyism back in 1984. Slee implies that Trotsky saw the Stalinist bureaucracy as simply a counterrevolutionary force. Not so. In The Revolution Betrayed (1937) and other works, Trotsky explained that the Stalinist bureaucracy was a parasitic caste that simultaneously is dependent on the collectivized property forms of the workers state and acts as the transmitting mechanism for the pressures of imperialism in undermining the workers state.

Here’s one clue to reality: during the incipient proletarian political revolution in China in 1989, the People’s Liberation Army initially refused to move against the workers of Beijing and the military leadership itself began to split, before new units were brought in to crush the rebellion. Such splits are hardly characteristic of the armed forces of capitalist class rule. But they do reflect the contradictions inherent in a workers state under bureaucratic rule. Such contradictions are also apparent in the economy. As we wrote in Part Two of “China’s ‘Market Reforms’: A Trotskyist Analysis” (WV No. 875, 1 September 2006):

“The People’s Republic of China today exhibits both the tremendous advantages that are a consequence of the overthrow of the capitalist system—centrally, a level of economic growth far outstripping that of capitalist neocolonies like India—as well as the profoundly negative fruits of Stalinist bureaucratic rule. The latter include sharply increased inequality, the growth of new bourgeois forces intertwined with the parasitic bureaucracy, and the looming threat of a capitalist counterrevolution that would destroy the gains made by China’s worker and peasant masses. A Leninist-Trotskyist party must be forged to lead China’s huge and powerful working class, at the head of the peasants and urban poor, in a proletarian political revolution.”

Slee simply equates the Chinese workers state with the CCP bureaucracy, whose rule undermines the defense of that state and the social gains embodied in it. With its program of “socialism in one country” and its corollary—“peaceful coexistence” with imperialism—the Mao Zedong regime forged an alliance with the U.S. against the former Soviet Union, a betrayal of the world working class. Within China, a very backward society, Mao pursued policies of economic autarky and supposed egalitarianism (exempting, of course, the bureaucrats). Following Mao’s death in 1976, the regime of Deng Xiaoping moved to decollectivize agriculture and opened China to direct capital investment from the offshore bourgeoisie in Taiwan and Hong Kong and from Western and Japanese corporations. Sworn enemies of workers democracy, which is necessary for the healthy operation of a planned economy, Stalinist regimes turn to “market reforms” as a whip to increase productivity, attempting to correct the imbalances of the command-planned economy.

As for the investment by “transnational corporations” to which Slee refers, revolutionary Marxists do not oppose China’s extensive economic relations with the capitalist world through trade and joint ventures. The key question is the political program of the regime that administers the workers state. In 1921, the Bolsheviks introduced the New Economic Policy (NEP), which made significant concessions to small traders and invited foreign investment. They undertook this program as a temporary measure to spur production in a backward, largely peasant country that had been devastated by World War I and by the Civil War following the October Revolution, during which 14 capitalist countries invaded the workers state.

At the same time, the Bolsheviks fought for the extension of socialist revolution to the advanced capitalist countries, an essential prerequisite for development toward socialism. Under the regime of proletarian democracy, the Soviet workers were guaranteed trade-union rights and other protections in any capitalist-financed plant. And Lenin and Trotsky insisted on maintaining a state monopoly of foreign trade as a means to protect the Soviet economy from imperialist pressures.

In contrast to the Bolsheviks, the Chinese Stalinists from Mao’s time on have excluded the working class from political power and opposed the perspective of international proletarian revolution. Conditions are indeed brutal in capitalist plants in the “Special Economic Zones” and elsewhere. There is indeed rising social inequality. On the other hand, economic expansion has had the effect of proletarianizing millions of former peasants, and the country has seen massive struggles by both peasants and workers in defense of their livelihoods. Last month, 20,000 peasants in Hunan province confronted the police in protest against a sharp rise in bus fares. The government eventually reinstated the original fares and suspended the bus company while arresting protest leaders—actions characteristic not of a possessing class but of a brittle and parasitic caste that deeply fears social protest. The thousands of struggles by workers and peasants that occur yearly in China indicate the raw material for proletarian political revolution, which requires the leadership of a Leninist-Trotskyist vanguard party.

Slee claims a direct identity between now-capitalist Russia and today’s China. This is utterly false. When capitalist counterrevolution destroyed the former Soviet Union, all the “new class theories” propounded by social-democratic fake Trotskyists could not explain the devastation that resulted. Life expectancy in Russia has plummeted, women have been thrown back, murderous nationalism runs rampant. U.S. imperialism, unfettered by what had been the industrial-military powerhouse of the non-capitalist world, feels free to launch military adventures abroad, while capitalist governments the world over accelerate their attacks on workers and the oppressed at home.

Should China succumb to counterrevolution, the results would be catastrophic: the return of imperialist subjugation, the dismantling of the gains of the 1949 Revolution, the deepening of “death of communism” ideology internationally. This is an outcome we seek to combat. And in such a showdown, the DSP will stand on the side of counterrevolution, as it has done and is doing. Thus, even before its formal January 1999 declaration that China was a capitalist state, the DSP embraced such counterrevolutionary causes as independence for capitalist Taiwan and “Free Tibet!” while promoting pro-imperialist “trade-union activist” Han Dongfang, editor of the China Labour Bulletin, Christian convert and darling of anti-Communist circles in Washington.

The DSP last year attempted to draw a blood line against our communist political criticisms, which we exposed throughout the left and labor movement (see “Condemn DSP Thug Attack on Spartacist Woman at Union Rally,” WV No. 876, 15 September 2006). Does the timing of Slee’s letter, only some months later, have anything to do with this? We don’t know. What we do know is that Chris Slee, and the DSP, are “little Aussie” nationalist social democrats, bashing China in lockstep with their jackal imperialist rulers, the chauvinists at the helm of the Australian Labor Party and the petty-bourgeois swamp in which they swim.