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China and Socialism: Introduction

China and socialism…during the three decades following the 1949 establishment of the People’s Republic of China (PRC), it seemed as if these words would forever be joined in an inspiring unity. China had been forced to suffer the humiliation of defeat in the 1840–42 Opium War with Great Britain and the ever-expanding treaty port system that followed it. The Chinese people suffered under not only despotic rule by their emperor and then a series of warlords, but also under the crushing weight of imperialism, which divided the country into foreign-controlled spheres of influence. Gradually, beginning in the 1920s, the Chinese Communist Party led by Mao Zedong organized growing popular resistance to the foreign domination and exploitation of the country and the dictatorship of Chiang Kai-shek. The triumph of the revolution under the leadership of the Chinese Communist Party finally came in 1949, when the party proclaimed it would bring not only an end to the suffering of the people but a new democratic future based on the construction of socialism.

There can be no doubt that the Chinese revolution was a world historic event and that tremendous achievements were made under the banner of socialism in the decades that followed. However, it is our opinion that this reality should not blind us to three important facts: first, at the time of Mao’s death in 1976, the Chinese people remained far from achieving the promises of socialism. Second, beginning in 1978 the Chinese Communist Party embarked on a market-based reform process that, while allegedly designed to reinvigorate the effort to build socialism, has actually led in the opposite direction and at great cost to the Chinese people. And finally, progressives throughout the world continue to identify with and take inspiration from developments in China, seeing the country’s rapid export-led growth as either confirmation of the virtues of market socialism or proof that, regardless of labels, active state direction of the economy can produce successful development within a capitalist world system.

As much as we were also inspired by the Chinese revolution, we have for some time believed that this continuing identification by progressives with China and its “socialist market economy” represents not only a serious misreading of the Chinese reform experience but, even more important, a major impediment to the development of the theoretical and practical understandings required to actually advance socialism in China and elsewhere.

As we will argue in this book, it is our position that China’s market reforms have led not to socialist renewal but rather to full-fledged capitalist restoration, including growing foreign economic domination. Significantly, this outcome was driven by more than simple greed and class interest. Once the path of pro-market reforms was embarked upon, each subsequent step in the reform process was largely driven by tensions and contradictions generated by the reforms themselves. The weakening of central planning led to ever more reliance on market and profit incentives, which in turn encouraged the privileging of private enterprises over state enterprises and, increasingly, of foreign enterprises and markets over domestic ones. Although a correct understanding of the dynamics of China’s reform process supports the Marxist position that market socialism is an unstable formation, this important insight has largely been lost because of the continuing widespread belief by many progressives that China remains in some sense a socialist country. This situation cannot help but generate confusion about the meaning of socialism while strengthening the ideological position of those who oppose it.

Many other progressive scholars and activists dismiss arguments about the meaning of socialism as irrelevant to the challenges of development faced by people throughout the world. They look at China’s record of rapid and sustained export-led growth and conclude that China is a development model, with a growth strategy that can and should be emulated by other countries. We believe, and argue in this book, that this celebration of China is a serious mistake, one that reflects a misunderstanding not only of the Chinese experience but also of the dynamics and contradictions of capitalism as an international system. In fact, an examination of the effects of China’s economic transformation on the region’s other economies makes clear that the country’s growth is intensifying competitive pressures and crisis tendencies to the detriment of workers throughout the region, including in China.

Our differences with leftists and progressives might never have produced a book about China if it were not for our May 2003 trip to Cuba to attend an international conference on Marxism.1 While in the country we sought to learn what we could about how Cuba was responding to its economic difficulties, and how the government’s understanding of and commitment to socialism was shaping that response. We were told repeatedly that many Cuban economists looked to the Chinese “market socialist” growth strategy as an attractive model for Cuba.

We hoped that this was not true. But at the conference itself, when the discussion turned toward the challenges facing Cuba, several Cuban economists publicly endorsed the Chinese experience of rapid export-led growth based on foreign direct investment (FDI) as offering the only hope for Cuba to sustain its socialist project under current international conditions. Although these economists were only repeating arguments we had heard from progressives in other countries, they were especially jarring to hear at a conference concerned with the contemporary relevance of Marxism and in a context where there was little gain to be imagined for the economists making them. Fidel Castro was also at the conference and the Cuban government had already firmly rejected market socialism.

We are certainly not the first social scientists to criticize developments in China from a Marxist perspective.2 But it seems clear to us that the importance of China in shaping debates about development and socialism has only grown. And we feel that the confusion surrounding China’s post-reform experiences signifies a deeper theoretical and political confusion about Marxism and socialism that greatly hurts our collective efforts to build a world free from alienation, oppression, and exploitation. Thus, we have ventured to offer our own contribution to the study of China and socialism, focusing our critique on the economic dynamics, social consequences, and political implications of China’s market reform process. Despite the fact that our work focuses on China, we hope and intend that the issues raised and considered will also have significance for people concerned with social developments and struggles in countries other than China.

Our book begins, in chapter 1, with a discussion of the rise of China as a positive reference point for development economists, with explanatory emphasis on the collapse of the Soviet Union and its satellite economies, the 1997–98 Asian crisis, and the tendency of both mainstream and left economists to formulate and rationalize their national policy visions by appealing to the apparently successful development experiences of individual “poster countries” rather than to the uneven development of accumulation and class conflict on a world scale.

In chapter 2, we critically examine the basic dynamics of China’s market socialist reform process, showing how each step in China’s transition—from planning to market, from domestic- to export-oriented production, and from state to private and increasingly foreign control—moved the system further away from any meaningful progress toward socialism in the sense of a system centered on grassroots worker-community needs and capabilities. This examination also makes clear that each step was a logical outcome not of any objective requirements for further development of human, natural, and social productive forces, but of the contradictions generated by previous reforms. We further show that the rapid economic growth that accompanied the reforms was largely due to factors other than efficiency gains from marketization and privatization. The arguments in this chapter undercut the widespread image of wise Chinese policymakers carefully and deliberately engineering a relatively stable, low-cost transition to a more productive market-driven regime.

In chapter 3, we focus on the main domestic contradictions of China’s reform process. We show that the considerable costs of the pro-market transition (rising unemployment, economic insecurity, inequality, intensified exploitation, declining health and education conditions, exploding government debt, and unstable prices) are not transitional side effects but rather basic preconditions of economic growth cum rapid capital accumulation under Chinese conditions. We also highlight the growing (though somewhat fragmented) struggles of Chinese workers to defend the rights purportedly guaranteed to them by the pre-reform regime, and to protect themselves from some of the worst forms of exploitation under the new system in the face of ongoing government repression of all independent worker and community organizing.

In chapter 4, we argue that China’s economic experience cannot be fully understood in isolation from the broader dynamics of global capitalism, especially uneven development and overproduction. In exploring these dynamics we highlight how China’s economic transformation has benefited from as well as intensified the contradictions of capitalist development in other countries, especially East Asia. This perspective makes clear that China’s foreign investment driven, export-led growth cannot be treated as simply a positive sum experience replicable by other nations.

We conclude by first summarizing the main lessons of our work, highlighting the continuing relevance of Marxist theory and the importance of building movements for change based on principles of international solidarity and through engagement with worker-community struggles against capitalist imperatives. Then we outline an alternative, worker-community centered approach to socialist development that treats exports and foreign investment as vehicles of grassroots needs and capabilities and of international solidarity.

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Notes for Introduction: China and Socialism

  1. The “Conference on the Work of Karl Marx and Challenges for the 21st Century” was held in Havana, Cuba, May 5–8, 2003. Papers can be found at
  2. See, for example, William Hinton, The Great Reversal: The Privatization of China, 1978–1989 (New York: Monthly Review Press, 1990); Maurice Meisner, The Deng Xiaoping Era: An Inquiry into the Fate of Chinese Socialism, 1978–1994 (New York: Hill and Wang, 1996); Robert Weil, Red Cat, White Cat: China and the Contradictions of “Market Socialism” (New York: Monthly Review Press, 1996); Gerard Greenfield and Apo Leong, “China’s Communist Capitalism: The Real World of Market Socialism,” in Leo Panitch (ed.), Socialist Register 1997: Ruthless Criticism of All That Exists (New York: Monthly Review Press, 1997); Barbara Foley, “From Situational Dialectics to Pseudo-Dialectics: Mao, Jiang, and Capitalist Transition,” Cultural Logic (2002),; Liu Yufan, “A Preliminary Report on China’s Capitalist Restoration,” Links, No. 21 (May–August 2002); Richard Smith “Creative Destruction: Capitalist Development and China’s Environment,” New Left Review 222 (March–April 1997); Eva Cheng, “China: Is Capitalist Restoration Inevitable?,” Links 11 (January–April 1999).
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