The struggle in China: Capitalist crisis versus planning
By Fred Goldstein
Mar 27, 2012
The following is Part 2 of a series on the leadership
struggle in China.
As contradictions mount in the global capitalist economy, they are reflected
in China. The factional struggle in the Chinese leadership can only be
understood as a struggle over which way to go forward and how to contain and
resolve the mounting economic and social contradictions arising out of
capitalist development.
The Chinese economy has been growing on a dual basis. First, it is based on
centrally planned guidance designed to develop the productive forces and the
material foundations for a society encompassing 1.3 billion people. However,
since the victory of Deng Xiaoping and the “capitalist road”
faction in 1978, planning has been increasingly based on the central government
fostering and attempting to manage capitalism and the capitalist market as the
means for national development.
The central government, through control of interest rates, credit, taxation
and vast state-owned enterprises, both guides the economy toward broad economic
and social goals and fosters capitalist development. The latter means class
exploitation, inequality and corruption. The present political struggle is over
which side of this contradiction to strengthen.
This complex subject will be discussed at length in subsequent articles. But
suffice it to say that the so-called “reform” groupings in China
— with the enthusiastic support of world imperialism and global finance
capital — want to move away from state intervention, planning and central
guidance and go further toward turning the fate of China over to the capitalist
market, both internally and externally.
In our last article we covered the fact that Bo Xilai was summarily ousted
from his post as Chinese Communist Party Secretary of Chongqing. This was a
blow against the growing forces in the CCP and throughout China who want to
combine the use of the capitalist market with social and economic planning and
state intervention in order to deal with growing inequality and who emphasize
the needs of the masses. In Bo’s case, this economic orientation was
combined with a popular attempt to revive Maoist culture and socialist
values.
In China today, the concept of planned guidance of the broad direction of
the economy and its various sectors is a drastic modification from the direct
economic planning initiated after the triumph of the great Chinese Revolution
in 1949. At the same time, it is an attempt to retain the planning principle as
the fundamental framework guiding the overall development of the Chinese
economy.
Consider just some of the goals and objectives outlined by the 12th Five
Year Plan for 2011-2015, and the antagonism between planning and the anarchy of
the capitalist market becomes utterly transparent. This plan was developed
beginning in October 2010 and was approved by the National People’s
Congress in March 2011.
The government is planning to devote 4 trillion renminbi ($158.7 billion) to
the development of seven Strategic Emerging Industries: biotechnology, new
energy, high-end manufacturing equipment, energy conservation and environmental
protection, clean-energy vehicles and next-generation internet technology.
(APCO worldwide, Dec. 10, 2010)
An article in the March 4, 2011, New York Times detailed the plan’s
goals, including:
* A 19.1 percent cut in the amount of energy used per unit of economic
growth and a rapid expansion of the service economy.
* Building a national nanotechnology research center, 50 engineering
centers, 32 national engineering laboratories and 56 other labs focusing on
technologies like digital television and high-speed internet.
* Laying 621,000 miles of new fiber-optic cable and adding 35 million new
broadband ports for a total of 223 million.
* A cap on total energy use, especially limiting the burning of coal.
* The development of well-equipped statistical and monitoring systems to
gauge greenhouse gas emissions.
* Accelerated construction of sewage treatment plants, the retrofitting of
coal-fired power plants with pollution controls, and the continuation of a
pilot project to develop low-carbon cities.
In the previous period the state had opened 3,100 miles of new railroads and
74,600 miles of highways, completed 230,000 sports and fitness projects for
rural residents, and built or renovated 891 hospitals and 1,228 health
clinics.
In the realm of social welfare, the broad goals are to increase consumption
from 35 percent of the gross domestic product to between 50 percent and 55
percent by increasing minimum wages, health care services and social welfare
payments of various kinds.
Of course, it goes without saying that under a genuinely socialist
government, workers would have their fundamental economic rights guaranteed as
political rights. But those rights were largely overturned by the reforms that
developed in China after 1978. Instead, in the environment of the capitalist
market — with its mountains of corruption of government and party
officials — the welfare of the workers and peasants has to be built up
slowly and painfully through an uphill battle, which happens only through the
intervention of the state. (More on this in future articles.)
Whether or not the government achieves the precise goals set out is not the
issue. The point is that such sweeping social and economic goals could not
possibly be handed over to profit-driven capitalists and the anarchy of the
commodity market. The bosses would seek the highest rate of profit. They would
never voluntarily raise wages, improve working conditions, build hospitals,
clinics, rural fitness centers or anything that did not bring a profit.
China’s response to 2008-09 world capitalist
crisis
To grasp the seriousness of the proposals to further limit planning and
intervention by the state, it is only necessary to consider what happened
during the world capitalist financial and economic crisis of 2008 and 2009,
when the global crisis of capitalist overproduction and the financial collapse
invaded China.
More than 20 million workers lost their jobs, mainly in manufacturing and
predominantly in coastal provinces such as Guangdong, where special economic
zones had been set up so imperialist corporations, companies from Taiwan, Hong
Kong and South Korea, and other exploiters could take advantage of low-wage
migrant labor flooding in from the rural interior.
During this period production of world capitalism dropped more than it had
in 70 years. Tens of millions of workers worldwide were thrown onto
unemployment lines. Most of them are still there. Bankruptcy followed
bankruptcy, and the capitalist system has still not recovered.
What happened in China? When the crisis hit, China’s central planners
went into motion. Plans drafted as far back as 2003 to go into effect in future
years were pushed forward and implemented.
Nicholas Lardy, a bourgeois China expert from the prestigious Peterson
Institute for International Economics, describes how consumption in China
actually grew during the crisis of 2008-09, wages went up, and the government
created enough jobs to compensate for the layoffs caused by the global
crisis:
“In a year in which GDP expansion [in China] was the slowest in almost
a decade, how could consumption growth in 2009 have been so strong in relative
terms? How could this happen at a time when employment in export-oriented
industries was collapsing, with a survey conducted by the Ministry of
Agriculture reporting the loss of 20 million jobs in export manufacturing
centers along the southeast coast, notably in Guangdong Province? The
relatively strong growth of consumption in 2009 is explained by several
factors. First, the boom in investment, particularly in construction
activities, appears to have generated additional employment sufficient to
offset a very large portion of the job losses in the export sector. For the
year as a whole the Chinese economy created 11.02 million jobs in urban areas,
very nearly matching the 11.13 million urban jobs created in 2008.
“Second, while the growth of employment slowed slightly, wages
continued to rise. In nominal terms wages in the formal sector rose 12 percent,
a few percentage points below the average of the previous five years (National
Bureau of Statistics of China 2010f, 131). In real terms the increase was
almost 13 percent. Third, the government continued its programs of increasing
payments to those drawing pensions and raising transfer payments to China's
lowest-income residents. Monthly pension payments for enterprise retirees
increased by RMB120, or 10 percent, in January 2009, substantially more than
the 5.9 percent increase in consumer prices in 2008. This raised the total
payments to retirees by about RMB75 billion. The Ministry of Civil Affairs
raised transfer payments to about 70 million of China's lowest-income
citizens by a third, for an increase of RMB20 billion in 2009 (Ministry of
Civil Affairs 2010).” (“Sustaining China's Economic Growth
after the Global Financial Crisis,” Kindle Locations 664-666, Peterson
Institute for International Economics)
The Ministry of Railroads introduced eight specific plans, to be completed
in 2020, to be implemented in the crisis. The World Bank called it
“perhaps the biggest single planned program of passenger rail investment
there has ever been in one country.” In addition, ultra-high-voltage grid
projects were undertaken, among other advances.
The lesson is that while the anarchy of production of world capitalism
invaded China, the rational and meticulously developed plans drawn up for
social use overcame the anarchy of the capitalist market. This not only
protected the masses from a protracted, massive unemployment crisis, but it
actually continued the process of raising the standard of living during a time
when hundreds of millions of workers throughout the entire capitalist world
were left helpless and traumatized by the crisis of capitalist
overproduction.
In Marxist terms the principle of planning, established by the Chinese
socialist revolution of 1949 — even though it has been watered down to
the practice of “guidance” — overcame what Marx called the
law of labor value, the very law that governs the operation of capitalism
itself. The Chinese leaders were compelled, and had the capability, to use
rational planning based on satisfying human need to overcome the disaster
brought about by their own policy of relying on the world capitalist
market.
To be continued.
Goldstein is the author of “Low-Wage
Capitalism” (2008) and “Capitalism at a Dead End” (2012)
published by World View Forum. Both books as well as his articles and speeches
can be found at lowwagecapitalism.com.
