The Character Of State Capitalism In China – OpEd

The social landscape of the contemporary Third World is defined by the existence of the following classes: a super-exploited urban proletariat; a large peasantry; a landlord group; a white-collar petty bourgeoisie occupying administrative positions; and comprador capitalists closely aligned with multinational interests. China has attempted to delink from this system of dependency, pursuing a path of sovereign development, partially free from the criteria of economic rationality that emerges from the global domination of capitalism. This complex process has demanded the creation of a national economy based on the development of sectors aimed toward mass consumption and capital goods, which further means consolidating society’s productive forces – knowledge, technology, and machinery – for which education is important. 

China’s steadfast construction of an independent project has come under criticism from bourgeois ideologists and sections of the Left. In both cases, “state capitalism” is used as a powerful tool in categorizing and hierarchizing the spaces of world politics, generating a simple narrative of competition between two easily identifiable protagonists – Western democratic free-market capitalism and its deviant “other”, Eastern authoritarian state capitalism. To dispel these misconceptions, we need to examine the specific character of this state capitalism to locate it within the multi-sided trajectory of socialism with Chinese characteristics. 

Mao Zedong once said: “Communists are Marxist internationalists, but Marxism must be realized through national forms. There is no such thing as abstract Marxism, there is only concrete Marxism. The so-called concrete Marxism is Marxism that has taken national form”. The nationalization of Marxism fundamentally involved the use of Vladimir Lenin’s ideas. Lenin recognized the impossibility of an immediate transformation from a backward, peripheral situation to full-blown socialism. Thus, he envisaged a series of phases, from petty-bourgeois capitalism and “War Communism”, through state capitalism, to socialism, during which elements of capitalism would remain.State capitalism was a transitional road to socialism, not an end in itself.

Lenin gave the examples of Germany after Bismarck’s reforms and Russia after the October Revolution to explain the historical specificity of state capitalism. In Germany, state capitalism was subordinated to “Junker-bourgeois imperialism”; in Russia, state capitalism was shaped by socialist imperatives. In April 1921, Lenin wrote: “Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science. It is inconceivable without planned state organisation which keeps tens of millions of people to the strictest observance of a unified standard in production and distribution…At the same time socialism is inconceivable unless the proletariat is the ruler of the state.” 

In the same month, he elaborated: 

“Of course, a free market means a growth of capitalism; there’s no getting away from the fact. And anyone who tries to do so will be deluding himself. Capitalism will emerge wherever there is small enterprise and free exchange. But are we to be afraid of it, if we have control of the factories, transport and foreign trade? Let me repeat what I said then: I believe it to be incontrovertible that we need have no fear of this capitalism…The Soviet government concludes an agreement with a capitalist. Under it, the latter is provided with certain things: raw materials, mines, oilfields, minerals…The socialist state gives the capitalist its means of production such as factories, mines and materials. The capitalist operates as a contractor leasing socialist means of production, making a profit on his capital and delivering a part of his output to the socialist state. Why is it that we badly need such an arrangement? Because it gives us, all at once, a greater volume of goods which we need but cannot produce ourselves. That is how we get state capitalism. Should it scare us? No, it should not, because it is up to us to determine the extent of the concessions.”

Hence, the nature of state capitalism is fundamentally influenced by the presence of a proletarian state. In an economic formation like this, there exists – in the words of Samary Catherine – “a fundamental distinction between the existence of ‘market categories’ (prices, wages, etc.) and the domination of the law of value, the first not being the ‘proof’ of the second.” The exercise of the domination of the proletariat in all areas – economic, political, and ideological – deeply affects the status of market relationships, money, and prices. Systematic supervision of market relations reduces commodity exchange to the mere fact of sale and purchase, creating a society in which goods are exchanged for money but do not have an independent life of their own; and in which persons do not exist for one another merely as representatives of commodities. 

The contradictions of capitalism are impacted in a particular way under a proletarian state heading a regime of state capitalism. Louis Althusser once noted: “the ‘contradiction’ is inseparable from the total structure of the social body in which it is found, inseparable from its formal conditions of existence, and even from the instances it governs; it is radically affected by them, determining, but also determined in one and the same movement, and determined by the various levels and instances of the social formation it animates; it might be called over-determined in its principle.” The overdetermination of state capitalism means that the various components of this social formation don’t merely exist as indices of an underlying essence (surplus extraction); they are actively re-structured by the political characteristics of the socialist state. 

In China, the establishment of the dictatorship of the proletariat – involving the crucial role of a strong planning system – has allowed the country to keep hold of a sizeable chunk of overall surplus value and to create partnerships with multinationals that enable it to acquire modern technology. This development of superior techno-industrial capabilities is conducive to the structural changes necessary to insulate the economic system from intense international, low-cost competition, and hence to resist the downward movement of wages. Between 1988 and 2008, China’s average per capita income grew by 229%, 10 times the global average of 24%. In 1994, a Chinese factory worker made $500 a year, only a quarter of the wage of her counterpart in Thailand. In 2020, the average annual income in China exceeded $10,000 – three times the figure for Thailand. All these dynamics are turning China more and more to its domestic market. As is evident, state capitalism in China is part of a wider project of autocentric expansion whose end goal is socialism.