As Roberts explains so well Xi’s capitalist ruling class in China has split the working class into two counterposed groups. In fact Xi’s officials refer to the hukou workers as the “low-end population” bringing to mind the old Nazi terms, ‘Untermench’ (the lower orders) as opposed to Übermensch (the ruling elite).

Introduction

On August 2019 B. Sivaraman wrote Whither Chinese Capitalism? [1] an 11,300 article in the Sri Lanka-based Marxist-Leninist New Democracy (ND) publication. On March 2020 Dexter Roberts published a book, The Myth of Chinese Capitalism, the worker, the factory, and the future of the world. [2] On November 6, 2020, the Bolshevik Tendency (BT, Tom Riley?) produced The Myth of Capitalist China, ‘Trotskyist’ impressionists can’t explain resurgent state sector. [3] We will refer to this as the BT DWS (deformed workers’ state) document. On October 15, 2022, BT wrote China in Africa, Debunking pseudo-Marxist falsifications re: ‘Chinese Imperialism’ [4] We will refer to this as the BT Africa document.

We agree with the ND and BT documents that China is not imperialist, although not at all for the reasons they give of President Xi Jinping’s supposed progressive and bountiful philanthropic actions. Both BT documents are very close politically to the ND one in many other respects as they are to those notorious apologists for Xi, the late Dennis Ether [5], and Trotskyist renegade John Ross. [6] Neither in that ND article nor in either of the BT’s articles, almost 54,800 words in total, is there any mention, let alone analysis of what Roberts centrally concentrates on; household registration (the hukou system), land tenure policies and inequality in education and the health care systems which all Xi apologists must rigorously avoid because these make second class citizens of upwards of half the population of China.

Dexter Roberts’ The Myth of Chinese Capitalism Arguments

We do not seek to deny the perspective from which Roberts writes his book. See the Asian Review of Books take on the publication. [7] In the blurb for the book on Amazon we are told that … Roberts focuses on the story of the Mo family (the young woman Mo Meiquan is the central character in his narrative), former farmers-turned-migrant-workers who are struggling to make a living in a fast-changing country that relegates one-half of its people to second-class status. [8]  At the end of his introduction, he sums up his political motivation for the book; revolution threatens:

“The myth China wants the world to believe … is that the country is on an inexorable path toward a vastly expanded middle class at home, with cutting-edge technology and powerful companies dominating markets abroad. Fuelled by continued economic growth, a much stronger and less brittle China is supposed to emerge. The myth says that China’s development path and the authoritarian system will become a model for countries around the world and perhaps replace the already battered Western one of freer markets and individual rights … China’s growth could seriously slow, shattering the expectations of millions of Chinese, very possible leading to social unrest.”  

As Roberts explains so well Xi’s capitalist ruling class in China has split the working class into two counterposed groups. [9] In fact Xi’s officials refer to the hukou workers as the “low-end population” bringing to mind the old Nazi terms, ‘Untermench’ (the lower orders) as opposed to Übermensch (the ruling elite). Deng Xiaoping had already begun this dirty work before the capitalist state was restored. Firstly, we have the urban group, some two thirds of the workforce at most, retaining many rights from the old ‘iron rice bowl’, Mao’s welfare state. Competing with them are the migrant rural workers, at least one-third of the workforce in the cities with almost no rights and terrible poverty for them and their families when evicted and forced to return to their rural homes, where some 50% of the population live.

This split between a privileged labour aristocracy and a mass of workers with few rights is classic capitalist divide-and-rule tactics. Of course, this super-exploited workforce also functions to put downward pressure on the wages and conditions of the established urban workforce. Xi, and Deng before him, have taken it to its extreme form; it operates far more efficiently there than in any developed imperialist metropolitan country, bourgeois democracies in Marxist terms. This is what attracted that flood of imperialist investments after Deng’s open-door policy was adopted by the CCP in late 1978. This sought economic growth through foreign capital and technology while hypocritically “maintaining its commitment to socialism”. This is explained well in Robert Campion’s WSWS article from 2017 and Willy Wo-Lap Lam’s Prime Asia News article here [10]. Dexter Roberts’ book explains all this in greater detail, particularly in his Introduction. This is the WSWS-SEP:

“Tens of thousands of Chinese rural migrant workers are being forcibly evicted by authorities in Beijing as part of the local government’s campaign against so-called over-population. With some given as little as 15 minutes warning, the most exploited workers in China are being expelled from the city in droves with their homes demolished behind them.” [11]

Of course, initially Mao’s hukou system, whilst it was a bureaucratic top-down measure, had a progressive aspect to it; it was designed to prevent the flood of rural workers to the cities creating the vast slums seen everywhere from the late 1950s from Mexico to the Philippines to South Africa and the favellas as in Brazil, where criminal gangs dominate the desperate populations. But capitalist roaders like Deng transformed it into a cheap labour system in the cities, so profitable for Chinese millionaires and billionaires and foreign investors.  

Similarly with land tenure policies. Initially expropriating the brutal semi-feudal landlord class and transferring ownership to the individual peasants after the 1949 revolution was very popular, as it was in Russia in that revolution. Then came the forced collectivisation of agriculture under the state, i.e., common ownership in theory, 1932-33 in the USSR and the 1958-61 Great Leap Forward in China. Bureaucratic though these were, they ultimately also became a great step forward, improving agricultural productivity and living standards despite its appalling beginnings (see below). But it turned into its opposite in practice once Deng’s capitalist roaders became dominant. Now the poor peasants could till a plot of land individually, but they did not own that land once more; the state did. And the capitalist state frequently simply evicted the peasant from the land without compensation when capitalist enterprises wanted it, resulting in many local uprisings against this brutal imposition.

Again, inequality in education and the health care systems has created a nightmare world for some 50% of the population. The hukou system denies the rural population any extended access to education. Roberts cites the case of Mo Meiquan, the hero of his book, who at 18 was already in her second year of factory work in the year 2000. She had left school at 15 meaning she was one of the most educated in her village of Guizhou; others had left far earlier. She worked on her father’s farm for two years, as did most of the dropouts, and then in 1998 she travelled to Changan and then to Dongguan to seek urban employment. She worked there for 14 hours a day and was paid 12 cents an hour. She lived in a dormitory room attached to the factory, which was sweltering in the summer and bone-chillingly cold in the winter, shared with 14 others. Her cousin, Mo Yukai, spoke for the only ideology now guiding this semi-educated layer; “I want to go back and start some small business and never return to Dongguan”. [12] But opportunities to do this are vanishingly small. The hukou system largely denies the rural population free access to education and urban employment with equal rights to the existing city workforce.

In the fall of 2000 Roberts travelled the arduous journey to Mo Meiquan’s home village where she had returned (a twenty-nine-hour train ride) to help her parents with the harvest and to renew her expired identity card. Without it all migrants risked imprisonment by corrupt police who demanded one hundred yuan, a week’s wages, to get out of jail. She then also voiced her aspiration to set up a small business, as she was relatively well educated.

I need to note two other extracts from the book. In chapter 5, page 111, Roberts quotes a poem by Xu Lizhi, a 24-year-old Foxconn worker, [13] who committed suicide in September 2014. Remember Foxconn is the firm which put safety nets around its building to catch the frequent suicides of its workers after its treatment of its workers was exposed in 2010:

A screw fell to the ground
In this dark night of overtime
Plunging vertically, lightly clinking
It won’t attract anyone’s attention
Just like last time
On a night like this
When someone plunged to the ground.

The other extract is from Chapter 6, p 167 and recounts an official Chinese billboard with the following message welcoming home the city hukou workers to their rural village:

Poor and backward isn’t honourable

Eating well and being lazy is even more disgraceful

Returning to the village and working is much more advantageous

Reduce tiredness and avoid rushing about

Only the industrious aren’t impoverished

If you want to escape poverty, then act vigorously.

You could not get a more vicious capitalist ideology than that; poverty is caused by laziness and wealth by acting vigorously! A deformed workers’ state could not issue such a poster. Whilst the myth was that equality for all was the goal, by the late 1970s Deng had rubbished all socialist ideals in his infamous statements, “To get rich is glorious” and “Some must get rich first”. All must aspire to “the good life” now and forget all about that nasty class struggle stuff, is the message. “Chinese cities thus began to resemble large cities in most of the world, displaying those stark and painful contrasts between ostentatious wealth and grinding poverty that mark most contemporary capitalist societies.” [14]

Roberts tells us that China’s government is split into five levels, the central government in Beijing, provinces, cities, counties, and townships. The village administration is a possible sixth. There is no centralised funding by Beijing based on need and levels of poverty. David Cameron’s leaked speech to the Tory authorities has the same content as Xi’s China policy, most of the central funding goes to the richest provinces and cities. And even within provinces counties must raise their own funding, obviously from desperately poor people, who cannot help themselves out of poverty.  

There follows an extended quote from the Science Direct website from March 2017 which sets out in detail how the system operates and how the various ‘reforms’ to it over the last few decades only served to reinforce and strengthen its operation. These promises are as bogus as the Tories’ “levelling up” ones.

“This migration has been nominally formalized since 1985, when destination cities began to require migrants to register for temporary residence permits (TRP) which must be renewed after a defined period – from three months to two years depending on regulations in the issuing municipality (Chan and Zhang, 1999).

“Most recently, the decentralization of hukou administration and injunctions to many smaller cities to issue hukou to their non-registered or TRP-holding populations have been heralded as a sign that China may be “abolishing” the system. However, this decentralization has in fact lead to higher barriers to entry in China’s largest cities, and reforms aimed at increasing development in smaller cities through easy hukou transfer have been implemented alongside tightening restrictions in China’s largest cities, with Shanghai taking the lead in developing new legal technologies to manage which migrants are granted full legal status (Chan and Buckingham, 2008, Zhang and Tao, 2012, Goodburn, 2014).

“Myriad benefits and rights are contingent on hukou status, including access to most state-funded social programs, as well as those jointly funded through mandatory employer contributions and state funds: Public health insurance, state pensions, subsidized housing, and employment in state-owned firms (Fu et al., 2007, Zhang and Li, 2016). The non-portability of public health insurance is one important factor reinforcing spatial divides in healthcare outcomes (Li et al., 2016). Until recently, children without local hukou status were also forbidden from attending public school in urban areas; although recent policy changes have attempted to provide increased access for migrant children, many remain excluded as a result of a variety of official and semi-official factors (Goodburn, 2009, Lai et al., 2014). Research has also shown that in Shanghai, Shenzhen and Beijing, migrants are also significantly disadvantaged in terms of access to affordable housing when compared to local hukou holders, although in Shanghai this gap is somewhat less acute than in Beijing and Shenzhen, due to the relatively larger volume of private-sector housing (Hui et al., 2014, 1387).

“Taken together, these legal exclusions represent a spatialized bifurcation of the urban population between migrants and locals that functions alongside but apart from other divides such as those that separate by class and income, party membership, and ethnic identity. Unlike these other impediments to the construction of the “harmonious society” that has been promoted by the central government since the mid-2000s, the hukou system operates on a purely spatial level, dividing residents of China’s largest cities according to their possession or lack of local hukou. Hukou administration is also spatially diverse in itself: Since the implementation of policies decentralizing hukou administration, the regulation of hukou transfers is implemented by local governments, rather than the central government. As a result, Shanghai – as a province-level municipality – has significant authority to regulate its own hukou policies and has led the way for other Tier 1 cities in reformulating the rules that define eligibility for hukou transfers (Zhang and Tao, 2012; discussed further in Section 3.2). In Shanghai and beyond, the rule generally holds that the larger the city, the higher the bar for obtaining local hukou (Zhang and Tao, 2012). Thus, the legal structure of the hukou system is closely linked to politics surrounding the gap between the fortunes of China’s largest cities and the rest of the country: Access to class status and economic advancement – the question of who, in Deng Xiaoping’s famous words, will “get rich first” – is upheld in part by the explicit legal categorization of who belongs where.” [15]

So not only are hukou workers sharply discriminated against compared to established non-hukou urban workers they are also divided amongst themselves by the fiendish measures recounted above. This describes a vicious, ongoing capitalist divide and rule strategy and those who deny it should examine their own motivation for so doing if they are not a bought-and-paid-for Xi ideological apologist.  

B. Sivaraman’s Whither Chinese Capitalism?

The first 25-odd pages, beginning on p 29, of B. Sivaraman’s Whither Chinese Capitalism? consists of an analysis of imperialism today in the light of Lenin’s five-part definition of imperialism in his 1916 classic, Imperialism, the Highest Stage of Capitalism and how that relates to today’s imperialisms. We have few differences with it; it seems to us to be as good as, if not better and more detailed than, most orthodox Leninist-Trotskyist analyses we have read. For instance, on p 38 he refers to imperialist foreign direct investment (FDI); China is both the second largest exporter of FDI and the second largest recipient of FDI, or, as he puts it China “is the second biggest imperialist power as well as the second biggest victim of imperialism at the same time”. But who in China are the victims?

And then we encounter the differences. He says on p 47 that, “for all its opening up, liberalisation, reforms and integration with the world economy, China has not abandoned its core national interests”. But “national interests” conflates the interests of the Chinese capitalist class with the interests of the Chinese working class, which the BT also does, both by studiously avoiding the terrible poverty and conditions endured by the “low-end population”, the second-class citizens of the rural provinces and the hukou workers in urban China described above. However, on pp 52-3 he points out that China’s gross national product per capita is 60^th in the world at $18,140 compared to the US at $63,390. So those who call China imperialist “must be reconciled to calling China a ‘developing country imperialism’, at the risk of sounding absurd!” He points out on pp 54-55 that “China’s low wage cost advantage is diminishing” and manufacturers are moving to Vietnam, Cambodia, Myanmar, Thailand, and Bangladesh. The average hourly wage in China in manufacturing in 2019 was $3.90 compared to $14.00 in the US and $0.92 in India, we learn. Hard to discern if he approves or opposed this advance for the Chinese working class, which might not be “in the national interest”.

Again, like the BT he takes the case of Lenin’s 1921 New Economic policy and says it “was extend for a protracted period under to “Mao’s New Democracy and which was enhanced for an entire historical course by Deng’s theory of indifference to the cat’s colour” (Deng: “it doesn’t matter if a cat is black or white so long as it catches mice.”). No better endorsement of Mao’s capitalist roaders than that; there is no difference between capitalism and socialism! Pragmatism rather than Marxism is the best policy!

Sivaraman must finish with the obligatory, if less than wholehearted, attack on Trotskyism on p 62, “like the Trotskyite ‘original sin’ theory of socialism in a single county, which paralyses revolutionary advance to socialism or post-capitalism (what that?) in individual countries, this version of ‘original sin’ also deprives the proponents of this view from having any concrete vision of post-revolutionary transition.” Observe the emphasis here on “individual countries”, we must not seek to spread our revolution regionally and certainly not globally; a commitment to world revolution by encouraging the working class in the US, EU or Japan to make socialist revolutions there would definitively render any compromise with the US and global imperialism impossible. And as we all know you can only kill the monster of global imperialism at its head not in isolated countries, however large, seeking to build “post capitalism” on their own. Of course, isolated revolutions face appalling difficulties, but the question is how to defend and deepen the revolution in such circumstances? Spread it or seek an unprincipled compromise with world imperialism, the US in the first place?  

In March 1936, Stalin had an interview with Roy Howard, president of Scripps-Howard Newspapers:

“Howard: Does this, your statement, mean that the Soviet Union has to any degree abandoned its plans and intentions for bringing about world revolution?

Stalin: We never had such plans and intentions.

Howard: You appreciate, no doubt, Mr Stalin, that much of the world has long entertained a different impression.

Stalin: This is the product of a misunderstanding.

Howard: A tragic misunderstanding?

Stalin: No, a comical one. Or, perhaps, tragicomic.” [16]

And then comes the standard attack on Trotsky’s Permanent Revolution. “Others in praxis cannot afford to wait until simultaneous revolution in all countries…” Of course, Trotsky or any of his orthodox followers never proposed such a silly scenario; the October 1917 revolution, which he co-led, did not wait for a revolution anywhere else. Revolutionaries break out in individual countries due to the dynamics of the class struggle there as part of the local manifestation of a global upsurge of working-class consciousness against imperialism and capitalism itself.

He finishes with a pragmatic statement in p 63; “the Chinese leadership has not bothered to clarify what is socialist about it. The record miners’ deaths [17] and Foxconn suicides belie the image of not only of socialism but that of a civilised capitalism. … And moreover, as this note is more to initiate a discussion, we are not for giving China any label here. But still these above issues call for in-dept discussion and close tracking.”

In many ways this is a more serious leftist document that the two BT ones.

The BT’s Stalinoid documents

The BT has written two Stalinoid documents comprising 44,500 words, with the title of the first obviously referring to Roberts’ book, but neither document deals with the content of Roberts’ book. As the BT are clearly aware of the book and its arguments this is an omission of profound political dishonesty and opportunism. The ND article is a defence of President Xi, understandably so, because of their Stalinist heritage; the BT ‘Trotskyist’ articles are very similar, although a little less shameful, tacking on at the end the need for a ‘political revolution’ as a face-saving exercise. For example, the BT Africa document refers to the conditions faced by “the (undifferentiated) working class” in China today by telling us that:

“Marxists welcome China’s economic engagement with African and other semi-colonial countries to the extent that it improves infrastructure, raises living standards, increases economic output and expands the industrial working class. We do so without turning a blind eye to the appalling working conditions in some Chinese-owned enterprises, particularly in the private sector, nor making apologies for similar conditions in China.”

The BT obviously has a ‘blind eye’ for the hukou working class. Tacked on to the end of the article is the comment:

“An insurgent Chinese working class, armed with such a genuinely revolutionary internationalist perspective, would abandon all illusions in the possibility of long-term coexistence with global capitalism and instead seek to encourage and promote movements dedicated to promoting workers’ revolutions throughout both the semi-colonial world and the imperialist heartlands of Europe, Japan and North America.”

If you cannot champion the real conditions faced by the Chinese working class today as a result of the hukou system, how can you possible suggest you are for any kind of a revolution against Xi’s capitalist or deformed workers’ state tomorrow?

The BT DWS documents briefly mentions the ‘empirical’ evidence of capitalist restoration in China:

 “Yet the seemingly inexorable expansion of market forces, the emergence of a layer of Chinese billionaires, the establishment of a stock market and the country’s apparently seamless integration into the capitalist global economy as a cheap manufacturing platform led many to conclude that capitalist restoration was not only inevitable but imminent. Bourgeois commentators generally agreed that the collectivised property system established by the social revolution in 1949 was already in terminal decline and would soon disappear as China’s economy continued to grow.” [18]

But we must ignore all that because it is only pointed out by “bourgeois commentators” and their leftist followers. The truth is that President Xi is progressively developing the “deformed workers’ state” by expanding the nationalised state sector:

“Yet the Chinese deformed workers’ state has proved far more resilient than many anticipated. Jude D. Blanchette reported: “the nationalist writer Wang Xiaodong told me, ‘Westerners made the mistake of only talking to the intellectuals they liked or those intellectuals who thought [China] was doomed.’ Had we paid attention to the multitude of voices arguing for different and often competing paths to modernity, we might have better calibrated our expectations. Instead, we imposed our own understanding of where China should go, such that we missed the signs pointing to a much messier, more complex, and far more interesting journey.” —China’s New Red Guards, 2019 [19]

That above-class modernity and making a will

Ah, that above-class “modernity” we all seek; China’s Red Guard would not lie to us, would they?

Evidence of state control of the economy is taken as evidence of the continued existence of a deformed workers’ state. They do not consider that this is a simple empirical adjustment to pressure from the working class in private industry. They ignore facts like there are more billionaires in China now than in the USA, although they are nowhere near as wealthy. According to the Hurun Global Rich List 2022, China has 1,133 billionaires, the USA has 716.

There were no millionaires let alone billionaires in the USSR up to its abolition on December 25, 1991. Or in China until the late 1980s and early 1990s. “Millionaire Yang”, Yang Huaiding, was a steelworker-turned-winning-investor may have been the first millionaire. But millionaires and billionaires proliferated with the stock markets boom of 1991 and the restoration of capitalism in the state itself in October 1992. Stalin did not own millions and nor did Khrushchev, Brezhnev or even Gorbachev. They could not leave a will to pass on their private property to their children, relatives or friends because they had none. It is true that all Stalinist bureaucrats, including Stalin and Mao, had obscene privileges compared to the masses but private property had been abolished in all workers’ states, healthy (Russia up to 1924), degenerated or deformed. Lenin had threatened disciplinary action against an official who attempted to increase his salary. And Stalin could not make a will bequeathing anything to his relatives and friends. His daughter, the religious fruitcake Svetlana Alliluyeva, decamped to the US in 1967 but only made a living there by writing books and flogging her inside knowledge of the goings on in the Kremlin.

In its The Myth of Capitalist China the BT spectacularly shoots itself in the foot on this matter by reproducing the following quote from Trotsky’s The Revolution Betrayed:

“Privileges have only half their worth if they cannot be transmitted to one’s children. But the right of testament is inseparable from the right of property. It is not enough to be the director of a trust; it is necessary to be a stockholder. The victory of the bureaucracy in this decisive sphere would mean its conversion into a new possessing class.” [20]

The BT seem unaware that “the right of testament” was fully restored in China after October 1992 when the capitalist state reappeared following Deng’s earlier partial restorations. [21] Mao’s CCP abolished the entire legal system of the capitalist ROC after the 1949 revolution, including the old inheritance laws. President Xi is a billionaire, with ‘only’ $1.2 billion but his sisters and family are clearly millionaires with extensive property portfolios in Hong Kong and elsewhere, though whether they are billionaires is a state secret.

Improvements in wages and conditions are a result of workers’ struggles against Xi

Improvements in wages and conditions in China are a result of workers’ struggles and in opposition to the bogus All China Federation of Trade Unions. Their goons assault and assassinate striking worker militants whenever needed to protect the Chinese capitalist state against the working class. The only genuine trade unions were those like the Workers Autonomous Union at the time of Tiananmen square events of 1989. After capitalism was restored in October 1992 these were all suppressed.

The instances of Xi curtailing the private sector and arresting corrupt officials simply ignores the blossoming of the millionaires and billionaires inside and outside the CCP. Managing capitalism in the interests of these is the prime function of the Xi leadership-for-life. Concessions to the working class are made to prevent local uprisings and strikes assuming a national form with an internationalist perspective.  

Significantly missing in the BT documents is demands for the expropriation of the billionaires, whose existence the BT and the whole Spart ‘Family’ ignore are it is in obvious contradiction to the norms of a workers’ state of any form. Socialist revolution is the proper perspective with the proviso that we recognise that neither China nor Russia are imperialist (far better case for China than Russia, in opposition to the IBT/BT btw) and therefore we must defend both against imperialist aggression via the perspectives of the anti imperialist united front.

SOEs and the capitalist mode of production

The BT quote from the IMT (Grantites)

“The IMT offered the following explanation for the disparity between the improving conditions for industrial workers in China and the continued decline of those in the advanced capitalist West:

“The state leans on working-class anger in an attempt to manage the contradictions of capitalism, especially as it wants to see workers getting higher wages in order to boost domestic demand in the economy. It also needs to show that it responds to their grievances, since its claim to legitimacy in building capitalism is that it is raising the living standards and improving the lives of the masses. But it will tolerate no independent activity of the working-class.” —Marxist.com, 30 November 2017

The IMT did not explain why China’s “capitalists” should be so eager to respond to grievances and boost wages at a time when those in Germany, France, the U.S., Britain, etc., were imposing austerity and pushing wages down. The answer is simple: China’s SOEs do not operate in accordance with the principle of profit maximisation. Indeed, the preferential treatment they enjoy tends to impede capitalist development, as the Wall Street Journal observed:

“One reason Chinese companies often flout global norms is that the rules at home make life hard for private firms. Cutting regulatory corners, often with the blessing of local officials, is sometimes necessary to survive. That’s why Beijing’s recentralization of power under committed statist Mr. Xi has been so damaging to private enterprise: space for local ‘experimentation,’ particularly finding ways to work around the calcified state banking system, has disappeared.” [22]

Remember Ted Grant has deformed workers’ states everywhere in the third world where the degree of nationalisation was the only criterion. They have reversed that now, correctly so. The BT argument here is that the system operated by Xi is not the same as western, neo-liberal capitalism, it responds far more to the pressure from the working class, therefore it must be a deformed workers’ state. Their central argument is that the State Owned Enterprises (SOEs) do not put profit first and that again proves it is a deformed workers’ state.

But maintaining the privileges of the Stalinist bureaucracy is their priority so they are forced to do this. And following the BT’s description of how the SOEs operate it is clear they operate purely on capitalist principles; fire and hire at will, delay payment to outsourced private companies, all in accordance with neo-liberal norms. Except they must make sure that US companies in particular do not gain a dominating foothold in key sectors of the economy vis their Non-Government Organizations (NGOs) from which they could orchestrate a colour revolution, as they did in Ukraine in 2014 and in many other countries like Egypt and Haiti. Self-preservation and not socialist principles motivates the maintenance of the SOEs under their control when they do not seek maximum profits.

Keynesian economics

Keynesian economics also worked in that way, contrary to what Michael Roberts says:

“Michael Roberts noted that Beijing’s investments were neither speculative nor merely aimed at stimulating demand, unlike those advocated by Labour lefts around Corbyn: “Indeed, the Wren-Lewis’s of this world [Simon Wren-Lewis was a senior economic adviser to former Labour leader Jeremy Corbyn] never advocate or even mention the idea of the nationalisation or socialisation of capitalist sectors. For them, Keynesian policy is government spending to ‘stimulate demand’.

“China’s policy in the Great Recession was not just ‘fiscal stimulus’ in the Keynesian sense, but outright government or state investment in the economy. It actually was ‘socialised investment’. Investment is the key here—as I have argued in many posts—not consumption or any form of spending by government. The Great Recession in the US economy was led and driven by a fall in capitalist investment, not in personal consumption or caused by ‘austerity’. In Europe, 100% of the decline in GDP was due to a fall in fixed investment.” —Thenextrecession.wordpress.com, 6 August 2018

Roberts is wrong because many capitalist economies post WWII carried out the extensive nationalisations, formed healthcare systems like the NHS, improved education which became free later, and placed restrictions on capital flows which regulated the power of global capitalism and its ability to dominate the markets as they do now. This all shifted the balance of wealth from the rich to the poor and this did not begin to reverse itself until Thatcher’s defeat of the great miners’ strike in 1985. By the criteria set out by Michael Roberts this ‘socialised investment’ meant that Britain and many other capitalist economies were deformed workers’ states back then.

Those of us of a certain age recall Harold Wilson promising socialism in a few short decades at seaside conferences in the early 70s, just as President Xi promises now. And who can forget Denis Healey pledging to “squeeze property speculators until the pips squeak” in a speech in Lincoln on 18 February 1974. We saw him collapsing before the IMF dictats in the infamous return from Heathrow airport on September 26, 1976.  But his 1974 outburst, recalling a version of a communist conscience forged in his former youthful membership of the CPGB from 1937 to 1940, [23] was a far more radical suggestion than Xi has ever made, because it would involve squeezing his billionaire self; vacuous left-pitching bullshit from Healey as is Xi’s ‘socialism with Chinese characteristics’.

And let us also remember that the rate of tax for top earners was 83% under Tony Blair with Gordon Brown as chancellor and in his own premiership with Alistair Darling as chancellor. New Tory Chancellor Geoffrey Howe reduced it to 60% in 1979, and Nigel Lawson to 40% in 1988. Under Liz Truss Kwasi Kwarteng reduced the then top rate from 45p to 40p on earnings of more than £150,000. Liz Truss quickly reversed the cut when the markets exploded and hypocritically sacked Kwarteng for doing her bidding. Rishi Sunak’s chancellor, Jeremy Hunt, reduced the entry level to £125,000 on November 17. There is no separate capital gains tax in China; capital gains (and losses) of companies generally are combined with other operating income and taxed at the corporate income rate of 25%. The top rate of income tax in China is 45%, making Tony Blair and all post WWII Prime Ministers definite candidates for leading a deformed workers’ state, according to the BT criteria.

Some complain that the USSR and east Europe under Stalin was just as bad as China today. Of course, the Great Purges of the mid to late 1930s were worse than anything Deng or Xi have done. And we are aware that post WWII the Stasi in East Germany recruited heavily from former Gestapo members and crushed the uprising in 1953 in a most brutal manner, recalling Hitler’s atrocities.

The BT quote extensively from the Left Opposition on the post 1921 New Economic Policy of limited capital freedoms up to 1925 as a justification for China today. But we must recall that Stalin, having allied in the opportunist triumvirate of Kamenev and Zinoviev against Trotsky and the Left Opposition in 1924-26 later allied with the right Bolshevik capitalist restorationist Nicholai Bukharin against Trotsky and the Joint Opposition of Trotsky, Kamenev, and Zinoviev in 1926-27. Stalin, as the classic centrist he was, used the right wing to crush the left and then crushed the right.

Trotsky did not ally with Bukharin

Some have charged Trotsky with tactical stupidity for nor allying with Bukharin against Stalin in defence of democratic rights. But had he done so he would have abandoned his defence of the remaining gains of the Russian revolution in the nationalised property relations. And he would have been unable to maintain his revolutionary programme in the Spanish Revolution. Remember the Workers’ Party of Marxist Unification (POUM) was formed in 1935 by the fusion of the Communist Left of Spain, supporters of Trotsky, and the Workers and Peasants’ Bloc (BOC, affiliated to Bukharin’s the Right Opposition) against the opposition of Trotsky, with whom the former broke.; this destroyed that party as a revolutionary alternative to Stalinism and counterrevolution. [24] This unprincipled fusion of the left and the right against the middle was exactly what Trotsky rejected in 1928.

Bukharin was the first major Bolshevik leader to be formally rehabilitated by Gorbachev in 1988. Trotsky was never rehabilitated. China today is what would have happened had the Stalin-Bukharin alliance led to the restoration of capitalism in 1928 or so. The continued over-reliance on the NEP rather than initiating a centrally planned state economy had brought the NEPmen in the cities and the rich peasant Kulaks in the countryside to the brink of leading a counterrevolution, which Trotsky and the Left Opposition continually warned against.

The Left Opposition programme was centralised planned industrialisation and voluntary collectivisation of agriculture by pilot schemes that showed how successful they could be, but Stalin did it in such a bureaucratic, top down, brutal way from 1929 that it resulted in the Holodomor, the famine that cost up to five million lives in Ukraine and in other agricultural regions, from 1932 to 1933. Mao repeated the exercise in the Great Leap Forward in 1958 to 1961, resulting in a far greater famine there.  But nevertheless, the USSR remained a degenerated workers’ state and, post WWII, new workers’ states, deformed from the beginning in imitation of the USSR, came into being under Red Army occupation. Nationalised property relations and the economy planned for human need and not profit, despite the bureaucratic anti-democratic distortions, allowed the welfare state to operate; no homelessness, full employment, guaranteed holidays, and sick pay, all reflected in the big increase in life expectancy and the Human Rights Index in general.

Six indices of a capitalist state

Let us list the capitalist features of the Chinese and Russian economies and states:

1.       The Chinese “iron rice bowl” of Chairman Mao is basically gone. His welfare state has been abolished apart from in a few places.

2.       There is a thriving capitalist sector in China with its own class differentiated bourgeoisie and working class.

3.       There is a Stock Exchange and capitalist banks in both Russia and China, although, a la Bismarck, Stolypin, and Keynes, they are state-controlled (unlike in Britain under Blair and Brown) to ensure the better development of capitalism. All deformed and degenerated workers’ states had/have no stock exchanges. This is not neo-liberal capitalism, but it is capitalism, nevertheless.

4.       The monopoly of foreign trade collapsed in 1991 in Russia, but it was also gone in theory in China since the 1992 restoration but far more so since China joined the World Trade Organisation in 2001.

5.       Few now doubt that Russia was a capitalist state after August 1991, even if the attack on the parliament of October 1993 was the last attempt of the Stalinist bureaucracy to reverse the process. The scramble by the state functionaries for privatised state assets doled out by Yeltsin was obscene; these wealthy oligarchs emerged almost overnight.

6.       China and Russia seek to become imperialist powers; their investments in Africa, South America and Sri Lanka etc. are for purely commercial and strategic/military purposes. This is unlike the practice of the USSR where support for national liberation movements and investment were to strengthen their hand and give them more pawns in the chess game of achieving peaceful cooperation and compromise with world imperialism. The Chinese bureaucracy, under both Mao and Deng, sought to conciliate US imperialism by Mao’s theory of three worlds, where the first was the ‘great powers’, US and USSR who were ‘imperialists’, the second was the other advanced capitalist nations and the third world was China and the semi-colonial countries. Neither China nor Russia can become fully fledged imperialist powers in the Marxist sense as long as the USA remains the global hegemonic imperialist power. [25]

China now has three stock exchanges: Hong Kong, Beijing, and Shenzhen (shadowing Hong Kong). The Beijing stock exchange was abolished in 1949 and restored in November 1990, the year after the crushing of the failed political revolution in Tiananmen square. Shenzhen was founded at the same time. Vietnam, Laos, and Cambodia all have stock exchanges, but Cuba and the Democratic People’s Republic of Korea (DPRK), North Korea, the only remaining deformed workers’ states, do not. The special economic areas and measures of capitalism in both countries are heavily controlled and do resemble the NEP in the USSR from 1921 to 1928 in many ways. Or at least they have not morphed over into the controlling project of the state, meaning they are not yet capitalist states. But they are moving strongly in that direction but in very different ways.

Conclusion

The overall conclusion is that the three documents, the two from the BT and the one from the ND, make almost no attempt to address the condition of the working class in China and its appalling bifurcation. We think that all genuine communists should adhere to the first principle we have adopted in the Socialist Fight Where We Stand:

“1. We stand with Karl Marx: ‘The emancipation of the working classes must be conquered by the working classes themselves. The struggle for the emancipation of the working class means not a struggle for class privileges and monopolies (Xi and his billionaires!) but for equal rights and duties and the abolition of all class rule’ (The International Workingmen’s Association 1864, General Rules). The working class ‘cannot emancipate itself without emancipating itself from all other sphere of society and thereby emancipating all other spheres of society’ (Marx, A Contribution to a Critique of Hegel’s Philosophy of Right, 1843).” [26]

The BT’s abject failure to take this matter seriously makes their two documents Stalinoid, making major unprincipled concessions to the Stalinist milieu. In our document on the International Communist League, The Spartacists’ collapse into Strasserite Trumpism [27] we analysed its collapse and detailed their degeneration. The BT’s Alan Gibson has assured me they have no intention of analysing this latest degeneration of the mothership. However, the ICL in their Spartacist magazine (No 67, August 2022) do outline their opposition to the hukou system, which the BT has never managed:

“In the countryside, many regions do not have even basic medical infrastructure, and the hated hukou household registration system means the vast majority of migrant workers in the cities receive little or no treatment where they work. China has a very low number of doctors (in 2017, 2 per 1,000 people compared with 2.6 in the U.S. and 4.9 in the European Union [EU]); a low number of nurses (2.7 per 1,000 compared with 15.7 in the U.S. and 9.1 in the EU); and a low number of critical care beds (3.6 for 100,000 compared with 25.8 in the U.S. and 11.5 in the EU). In 2019, China spent $535 per capita on health care, compared with almost $12,000 in the U.S. and $3,500 in Europe. … For the revision of the planned economy from top to bottom in the interests of producers and consumers! This must ensure the establishment of free health care and education for all, as well as quality housing for working people. Away with the hukou system!” [28]

In fact, the ND document is better than them in analysing imperialism. As we have shown above they are far from uncritical of the present regime in Beijing, and refuse to dogmatically characterise it as socialist and they are somewhat equivocal in their condemnation of Trotskyism.  

Previously we have charged the whole Spart family with capitulating to imperialism in their ‘interpenetrated peoples’ anti-Marxist theory which allowed them to take a neutral stance in the conflict in the north of Ireland from 1969 on the basis that we had two populations who had gotten accidently mixed up together, it was a sectarian conflict between Catholics and Protestants and it had nothing to do with a struggle against British imperialism and its proxies by an anti-imperialist uprising. Shamefully they took the same stance on the conflict between the Zionists and the Palestinians from 1948. Marx, Engels, Lenin, or Trotsky never entertained any of that nonsense, in fact they took the exact opposite position, championing the cause of oppressed peoples unequivocally.

The book that tells the brutal truth in great detail is Dexter Roberts, The Myth of Chinese Capitalism, even if he tells in from the perspective of advising the Xi leadership to make enough concessions to the migrant workers and the inhabitants of the poverty-stricken rural regions lest his treatment of them provokes a socialist revolution. But we must seek the truth where we can find it.

Notes

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[1] Marxist-Leninist New Democracy, August 2019, B. Sivaraman, Whither Chinese Capitalism? They explain in a footnote that B. Sivaraman “is a reputed Indian journalist, and political analyst, is a member of the CPI (ML) Liberation, India, and the views expressed here are personal”, https://www.bannedthought.net/SriLanka/NDP/MLND-70.pdf

[2] Dexter Roberts lived in Beijing for two decades working as a reporter on economics, business and politics for Bloomberg Businessweek. https://www.goodreads.com/en/book/show/45046730-the-myth-of-chinese-capitalism

[3] Bolshevik Tendency, 11/6/2020, The Myth of Capitalist China, ‘Trotskyist’ impressionists can’t explain resurgent state sector, https://tinyurl.com/yhd9zvs5

[4] Bolshevik Tendency, 15/10/2022, China in Africa, Debunking pseudo-Marxist falsifications re: ‘Chinese Imperialism’ https://tinyurl.com/2p82d85

[5] Dennis Etler 15/6/2020, The Long March Of New China, “China is Confirmed as one of the Most Democratic Countries in the World! 73% of Chinese people think their country is democratic, while 84% think democracy is important, for a “democracy deficit,” of 11%, one of the lowest “democracy deficits” in the world. By comparison, only 49% of people in the US think their country is democratic, while 73% think democracy is important, for a “democracy deficit” of 24%, falling within the lower half of countries surveyed. Only 10% of Chinese feel they do not have enough democracy, while 36% of the US feels that way. 47% of Chinese say that the US impact on global democracy is negative, the highest percentage in the world. Yet, ironically China is classified as “Not Free” by Dalia Research, https://latana.com/democracy-perception-index/ And more Dennis Etler for his even worse grovel: Xi Jinping – China’s Exceptional President: https://www.facebook.com/groups/688430344583422/

[6] See John Ross’s Facebook page for its grovelling to Xi, US-China Trade War Updates & Global Implications. https://www.facebook.com/groups/2402598116446581/

[7] Asian Review of Books, Jonathan Chatwin, 29/12/2020, “The Myth of Chinese Capitalism: The Worker, the Factory, and the Future of the World” by Dexter Roberts, https://tinyurl.com/mrxbmp7c

[8] https://p-y3-www-amazon-in-kalias.amazon.in/Dexter-Roberts/e/B07TVBVPCN

[9] Socialist Fight, 23/10/2021, What is China Today? https://socialistfight.com/2021/10/23/what-is-china-today/

[10] Prime Asia News, Willy Wo-Lap Lam, 12/11/2017, Xi Jinping’s false promises and the expulsion of the “low-end population” (untermench!) from Beijing, https://tinyurl.com/yc2at479

[11] WSWS, Robert Campion, 11/12/2017, Mass eviction of rural migrant workers from Chinese capital, https://www.wsws.org/en/articles/2017/12/11/chin-d11.html

[12] Roberts, The Myth of Chinese Capitalism, Introduction, p XXIV.

[13] Wired, 18/11/2010, Foxconn Rallies Workers, Leaves Suicide Nets in Place (Updated), https://www.wired.com/2010/08/foxconn-rallies-workers-installs-suicide-nets/

[14] Maurice Meisner, Mao’s China and After: A History of the People’s Republic (New York: Simon and Schuster, 1999), p 455

[15] Sincere Direct, Leif Johnson, March 2017, Pages 93-102, Bordering Shanghai: China’s hukou system and processes of urban bordering, https://www.sciencedirect.com/science/article/abs/pii/S0016718515302311

[16] Socialist Fight, 6/6/22, Stalin’s Third Period and Lawrence Parker’s Third Camp, https://socialistfight.com/2022/06/06/stalins-third-period-and-lawrence-parkers-third-camp/

[17] BBC News, Olivia Lang 14/10/2010, The dangers of mining around the world. “China has the world’s largest mining industry, producing up to three billion tonnes of coal each year. But while the country accounts for 40% of global coal output, it is responsible for 80% of mining deaths around the world each year. In places like China and Russia, says Mr Baxter, the reason for the fatalities is simple: money. “They are maximising revenue, and the mentality is that life is cheaper than it is here and no-one is going to kick up a fuss if they lose a few lives. “People are not able to speak freely. If you make a nuisance then you won’t have a job,” he says. https://www.bbc.co.uk/news/world-latin-america-11533349

[18] BT, The Myth of Capitalist China, Opus cit.

[19] Ibid.

[20] Ibid.

[21] China Justice Observer, 30/3/2021, In China, Who Have the Right to Inheritance?, In China, the children, spouse, parents, siblings, paternal grandparents, and maternal grandparents of the heir have the right to inheritance. https://www.chinajusticeobserver.com/a/in-china-who-have-the-right-to-inheritance

[22] BT, The Myth of Capitalist China, Opus cit

[23] Wikipedia Denis Healey, Healey joined the Communist Party in 1937 during the Great Purge, but left in 1940 after the Fall of France, they tell us. That would mean he joined and left the CPGB for anti-communist motives. https://en.wikipedia.org/wiki/Denis_Healey

[24] Wikipedia, POUM, https://en.wikipedia.org/wiki/POUM 

[25] See Socialist Fight, Gerry Downing,  14/06/2019, The Marxist Theory of the State; the Formation and Destruction of Workers States, https://socialistfight.com/2019/06/14/the-marxist-theory-of-the-state-the-formation-and-destruction-of/ Although we now view Yeltsin’s bombardment of the parliament on October 1993 not as the moment when the capitalist state came into being but as the last attempt by sections of the Stalinist bureaucracy to reverse the process.

[26] Socialist Fight, Where We Stand,  https://socialistfight.com/contact-us/platform/

[27] Socialist Fight, The Spartacists’ collapse into Strasserite Trumpism, https://socialistfight.com/2022/09/20/no-more-fucking-lockdowns-let-the-bodies-pile-high-in-their-thousands/

[28] Spartacist magazine (No 67, August 2022), Trotskyism vs. Stalinism, Pandemic in China, https://www.spartacist.org/english/esp/67/china/