Friday, January 28, 2011
A very short history of the Communist Party
Review
By Robert Laurie
The Communist Party 1920-2010: 90 Years of struggle for the working class & humanity: Robert Griffiths & Ben Stevenson , London: Communist Party of Britain History Group, 2010 pp. 44. £3.00 from left bookshops or £4.00 including postage and packing from the CPB, Ruskin House, 23 Coombe Road, Croydon, London CR0 1BD.
Robert Griffiths and Ben Stevenson, General Secretaries of the Communist Party of Britain and its associated Young Communist League have produced this pamphlet to provide an outline history of the Communist Party in Britain. In the introduction the authors wisely disavow any ambition to produce a full official history as “There are already four substantial volumes on the Party’s history from 1920 to 1951”. In fact there have been another two volumes in this series published by Lawrence & Wishart: John Callaghan’s Cold War, Crisis and Conflict: the CPGB 1951-68 (2003) and Geoff Andrews’s End Games – New Times: the final Years of British Communism 1964-1991 (2004). As these are precisely the sort of “bourgeois, liquidationist and anti-communist accounts” mentioned it is regrettable that some space was not spent explicitly refuting them to show how misleading they are.
The structure of the pamphlet is strictly chronological with twelve chapters taking the reader from the foundation in 1920 to the present day. It is a pity that the first chapter did not devote even a little more space to the pre-history of the party and how a number of diverse groups were able to successfully come together and forge a new party. The chronological approach has advantages and disadvantages. While it gives a sense of how the party progressed and suffered setbacks over the decades it does make it hard to follow recurring themes over time. Relations with the Labour Party, both with its leadership and the left wing membership have fluctuated over time. These are mentioned at the appropriate points in the text, but it is difficult to keep track of when attitudes changed, and why. To give another example membership figures for every few years are mentioned in each chapter, but would be more useful if presented in a single table.
Generally speaking the pamphlet is at its best describing the work of communists in various fields and campaigns. One such is the 1926 General Strike when communists, despite many of the leaders being jailed, played a far more important role than their numbers would imply. The party’s role in the struggle against fascism in Spain when party members made up about half the British volunteers who fought against Franco is something all communists ought to be proud of despite smears from the bourgeois and ultra left. It is easy to forget that Communist opposition to imperialism (especially when British troops were involved) required far more courage than going on a present day demonstration. Less creditable episodes such as the ballot rigging in the Electrical Trade Union in 1961 are sensibly not ignored. As a whole the pamphlet is rather weaker in describing general policies and placing them in context. For instance the 1935 For Soviet Britain is usefully outlined but it is unclear how this differed other left wing views at the time.
There are many examples of anti-communism in this pamphlet, such as the vicious campaign attacking Jimmy Reid, leader of the Upper Clyde Shipbuilders work in, during the 1974 General Election. It is noticeable that many of them, as in this case, came from the Labour Party. Reid himself was to contribute to this genre a few years later.
There is one aspect of this pamphlet with which we have to register some dissent. Given the constraints of space it gives a useful outline account of the general history of the Communist Party of Great Britain but the account of the demise of the party leaves something to be desired. To this reviewer it is impossible to see how an organisation founded in 1988 as was the Communist Party of Britain can claim to be “re-established” when the Communist Party of Great Britain continued to exist, transforming itself into the “Democratic Left” at its final congress in 1991. This organisation later became the “New Politics Network” and if one looks hard enough lingers on as “Unlock Democracy” which merely wants to introduce some form of proportional voting. It is based at the same premises as the former CPGB and openly boasts of funding the campaign from renting former CPGB properties.
This is not a book for those with poor eyesight. Economy is all very well but a larger typeface ought to have been used even if that meant increasing the number of pages.
Along the British Road
By Eric Trevett
(a contribution to a discussion in the New Worker)
JOHN ANTHILL’S letter in the 1613 issue of the New Worker (7th January 2011) made the case for opposing the Labour Party in great detail. He argued that the Labour Party is not a party of the working class and that revolutionaries should oppose it in elections. And he argues that the New Communist Party strategy for working class unity is mistaken.
We believe that these arguments are wrong and an example of good people getting frustrated and angry at right-wing social democratic attacks on the working class and paves the way – as the Blair government did – for the return of a much more anti-working class government.
We believe this is a subjective approach and runs contrary to the efforts to promote working class unity in the day-to-day struggles and in the more profound struggles for revolution and socialism.
Before the Labour Party was formed the skilled working class tended to give its allegiance to the Liberal Party. When it became obvious that the party would not defend the interests of the trade union movement there was a struggle to establish the working class party.
The socialist parties in those days joined with the trade union leaderships and founded the Labour Party to represent the working class interests in Parliament.
The right wing was also involved in that struggle and from that day to this has been in the ascendancy for most of the time in both the Labour Party and trade union organisations.
The Labour Party is a reformist party but with all its weaknesses has, under pressure from the trade union movement, achieved a number of reforms beneficial to the working class.
There was revulsion at two world wars and the recognition of the role that imperialism played in the causes of the wars. After the First World War Clause Four – calling for the working class to take control of the means of production and distribution – was written into the Labour Party constitution in 1919. And after the Second World War a number of nationalisations were achieved. The essential housing programme was promoted and then the National Health Service was introduced.
Most of the trade union membership pay the political levy and are therefore affiliate members of the Labour Party, irrespective of whether they are communists or not.
The trade unions are the Labour Party’s main source of finance. Most of the trade unions and the Co-Operative party are affiliated to the Labour Party. This is the basis of why we say the Labour Party is a working class party but also that it has a reformist leadership whose policy is to perpetuate capitalism.
The labour movement organisationally is not divided into warring trade union groups and this is very important to maintain; it is an asset that the British working class should be proud of.
It is true that with the introduction of individual membership it has been easy for petty bourgeois elements to penetrate the party and advance their personal careers and this has reinforced the position of the right wing in the Labour Party and trade union movement.
But the way to counter this is to promote working class unity around working class policies. It is not for organisations to contest the Labour Party’s position in national and local elections. In truth we have seen in recent years that such efforts are futile. Both the Socialist alliance and George Galloway’s Respect Party have collapsed and so has Arthur Scargill’s Socialist Labour Party. The tragedy of that is that Arthur Scargill has isolated himself from the movement in which he was widely respected.
The Communist Party of Great Britain has from its earliest days tried to win the idea that it should stand in elections and maintain its backing of the Labour Party.
In hindsight we believe this policy to have been wrong even in the days when the party’s vote was high and Gallagher, Saklatvala and Phil Piratin were elected to Parliament.
Since then and in the post-war period the bankruptcy of standing against Labour was plain to see. Since the Second World War the emphasis in electioneering in the localities has undermined the industrial work. At one time factory branches were being closed and the major part of party resources were concentrated on localities.
This weakened the capability of the trade unions to exert pressure on the government of the day.
Our declared aim is to work to strengthen the working class and its political consciousness and fight for the right to affiliate to the Labour Party ourselves as communists.
That is the way we believe and demonstrate that we are genuinely concerned to participate in the struggles for full employment, peace and socialism in a manner that unites the working class and its allies, including the student bodies.
It would be wrong for us to stand candidates in national elections because it would be seen to be weakening the fight against the Tories and reaction.
Experience has shown that communists do best in industry and at the places of work because they are regarded as a genuine, integral part of the working class. It is there that we often get communists elected to leading union positions out of respect for their militancy, profound wisdom and practical understanding in the unending struggles with the employers.
To return to the question of elections and standing in localities, the CPGB at its congress in 1975 removed the aim of affiliating to the Labour Party. That was part of the revisionist concepts against working class unity.
We therefore ask J Anthill and others who think like him to re-evaluate their positions and support the struggle as we have outlined.
(a contribution to a discussion in the New Worker)
JOHN ANTHILL’S letter in the 1613 issue of the New Worker (7th January 2011) made the case for opposing the Labour Party in great detail. He argued that the Labour Party is not a party of the working class and that revolutionaries should oppose it in elections. And he argues that the New Communist Party strategy for working class unity is mistaken.
We believe that these arguments are wrong and an example of good people getting frustrated and angry at right-wing social democratic attacks on the working class and paves the way – as the Blair government did – for the return of a much more anti-working class government.
We believe this is a subjective approach and runs contrary to the efforts to promote working class unity in the day-to-day struggles and in the more profound struggles for revolution and socialism.
Before the Labour Party was formed the skilled working class tended to give its allegiance to the Liberal Party. When it became obvious that the party would not defend the interests of the trade union movement there was a struggle to establish the working class party.
The socialist parties in those days joined with the trade union leaderships and founded the Labour Party to represent the working class interests in Parliament.
The right wing was also involved in that struggle and from that day to this has been in the ascendancy for most of the time in both the Labour Party and trade union organisations.
The Labour Party is a reformist party but with all its weaknesses has, under pressure from the trade union movement, achieved a number of reforms beneficial to the working class.
There was revulsion at two world wars and the recognition of the role that imperialism played in the causes of the wars. After the First World War Clause Four – calling for the working class to take control of the means of production and distribution – was written into the Labour Party constitution in 1919. And after the Second World War a number of nationalisations were achieved. The essential housing programme was promoted and then the National Health Service was introduced.
Most of the trade union membership pay the political levy and are therefore affiliate members of the Labour Party, irrespective of whether they are communists or not.
The trade unions are the Labour Party’s main source of finance. Most of the trade unions and the Co-Operative party are affiliated to the Labour Party. This is the basis of why we say the Labour Party is a working class party but also that it has a reformist leadership whose policy is to perpetuate capitalism.
The labour movement organisationally is not divided into warring trade union groups and this is very important to maintain; it is an asset that the British working class should be proud of.
It is true that with the introduction of individual membership it has been easy for petty bourgeois elements to penetrate the party and advance their personal careers and this has reinforced the position of the right wing in the Labour Party and trade union movement.
But the way to counter this is to promote working class unity around working class policies. It is not for organisations to contest the Labour Party’s position in national and local elections. In truth we have seen in recent years that such efforts are futile. Both the Socialist alliance and George Galloway’s Respect Party have collapsed and so has Arthur Scargill’s Socialist Labour Party. The tragedy of that is that Arthur Scargill has isolated himself from the movement in which he was widely respected.
The Communist Party of Great Britain has from its earliest days tried to win the idea that it should stand in elections and maintain its backing of the Labour Party.
In hindsight we believe this policy to have been wrong even in the days when the party’s vote was high and Gallagher, Saklatvala and Phil Piratin were elected to Parliament.
Since then and in the post-war period the bankruptcy of standing against Labour was plain to see. Since the Second World War the emphasis in electioneering in the localities has undermined the industrial work. At one time factory branches were being closed and the major part of party resources were concentrated on localities.
This weakened the capability of the trade unions to exert pressure on the government of the day.
Our declared aim is to work to strengthen the working class and its political consciousness and fight for the right to affiliate to the Labour Party ourselves as communists.
That is the way we believe and demonstrate that we are genuinely concerned to participate in the struggles for full employment, peace and socialism in a manner that unites the working class and its allies, including the student bodies.
It would be wrong for us to stand candidates in national elections because it would be seen to be weakening the fight against the Tories and reaction.
Experience has shown that communists do best in industry and at the places of work because they are regarded as a genuine, integral part of the working class. It is there that we often get communists elected to leading union positions out of respect for their militancy, profound wisdom and practical understanding in the unending struggles with the employers.
To return to the question of elections and standing in localities, the CPGB at its congress in 1975 removed the aim of affiliating to the Labour Party. That was part of the revisionist concepts against working class unity.
We therefore ask J Anthill and others who think like him to re-evaluate their positions and support the struggle as we have outlined.
Twenty years ago this week...
...in the NEW WORKER
LEADERS of 180,000 low-paid hospital workers last Wednesday lodged a ten-point pay claim, seeking a flat £20 a week pay increase.
This would put the poorest paid on the same rate as their local government counterparts.
Current pay scales range from £101.38 a week (£2.60 an hour) to £131.35 a week (£3.37 an hour).
Groups covered by the claim include hospital cleaning staff, porters and gardeners telephonists and laundry workers.
Other key points of the claim include a review of the job evaluation system to establish a new evaluation system based on equal pay for work of equal value and increases in annual leave.
Union chief negotiator Roger Poole said: “vastly improved pay, conditions and opportunities for hospital workers are a perquisite for a more responsive service to patients”.
************
IRAQ continues to stand firm in the face of the US Air Force, which has been bombing Iraq night and day since they launched their attack on the 17th January.
Iraq air-defences are continuing to take their toll, though the US government only admits to losing 25 warplanes as we go to press.
The early confidence of the American hawks has gone, with predictions now of a long war one in which Washington’s top regional pawns, Saudi Arabia and Israel, have not escaped unscathed.
Iraqi missiles continue to get past the US defences hitting targets in Saudi capital of Riyadh and causing devastation in Israel.
In Tel Aviv the authorities admit that Iraqi missiles have destroyed over 6,000 apartments and put their casualties at over 200 including 4 deaths.
In the United States, already worried that Morocco may pull out of the American war-coalition, told the Israelis to take no unilateral action that may provoke greater anti-American feeling in Syria and Egypt, whose regimes support Bush.
LEADERS of 180,000 low-paid hospital workers last Wednesday lodged a ten-point pay claim, seeking a flat £20 a week pay increase.
This would put the poorest paid on the same rate as their local government counterparts.
Current pay scales range from £101.38 a week (£2.60 an hour) to £131.35 a week (£3.37 an hour).
Groups covered by the claim include hospital cleaning staff, porters and gardeners telephonists and laundry workers.
Other key points of the claim include a review of the job evaluation system to establish a new evaluation system based on equal pay for work of equal value and increases in annual leave.
Union chief negotiator Roger Poole said: “vastly improved pay, conditions and opportunities for hospital workers are a perquisite for a more responsive service to patients”.
************
IRAQ continues to stand firm in the face of the US Air Force, which has been bombing Iraq night and day since they launched their attack on the 17th January.
Iraq air-defences are continuing to take their toll, though the US government only admits to losing 25 warplanes as we go to press.
The early confidence of the American hawks has gone, with predictions now of a long war one in which Washington’s top regional pawns, Saudi Arabia and Israel, have not escaped unscathed.
Iraqi missiles continue to get past the US defences hitting targets in Saudi capital of Riyadh and causing devastation in Israel.
In Tel Aviv the authorities admit that Iraqi missiles have destroyed over 6,000 apartments and put their casualties at over 200 including 4 deaths.
In the United States, already worried that Morocco may pull out of the American war-coalition, told the Israelis to take no unilateral action that may provoke greater anti-American feeling in Syria and Egypt, whose regimes support Bush.
Wednesday, January 26, 2011
Twenty Years Ago...
in the New Worker...
The United States, backed by its main NATO allies, has launched a bombing campaign against Iraq. As we go to press unconfirmed reports of the first land clashes are coming in and preparations for a naval attack are building.
The air offensive, which began on January 17 with waves of fighter-bomber aircraft and Cruise missiles, is continuing night and day against the Arab country which dared defy imperialism.
The capital, Baghdad, is being pounded around the clock and US, British, French and Italian airforce units are carrying out continuous raids against Iraq with the support of puppet Saudi and Kuwaiti units.
Iraq’s air defences appear to have survived the onslaught more or less intact, a result of careful and painstaking defensive preparations.
US military spokespersons have admitted that many of the Iraqi “bases” they have obliterated could be cardboard dummies. The US commander in chief has admitted that the western forces have lost 15 warplanes so far.
In Baghdad captured pilots from the US, Britain and Italy have appeared on television. One Iraqi diplomat commented that if the NATO allies had only lost the number of planes acknowledged at the time, these men could not possibly be prisoners of war. Iraq claims to have brought down a number of cruise missiles.
Iraq has responded to the attacks by firing rockets art targets in Israel. Iraqi missiles have hit Tel Aviv and Haifa, one narrowly missing the Defence Minister.
Israel has admitted last Tuesday night’s bombardment killed three women and injured many.
An attack on a US airbase Dhahran, in Saudi Arabia was countered by US missile defences.The Saudi oil refinery at Khafji has been knocked out by Iraqi artillery.
Huge demonstrations in support of Iraq are taking place throughout the Arab world.
The United States, backed by its main NATO allies, has launched a bombing campaign against Iraq. As we go to press unconfirmed reports of the first land clashes are coming in and preparations for a naval attack are building.
The air offensive, which began on January 17 with waves of fighter-bomber aircraft and Cruise missiles, is continuing night and day against the Arab country which dared defy imperialism.
The capital, Baghdad, is being pounded around the clock and US, British, French and Italian airforce units are carrying out continuous raids against Iraq with the support of puppet Saudi and Kuwaiti units.
Iraq’s air defences appear to have survived the onslaught more or less intact, a result of careful and painstaking defensive preparations.
US military spokespersons have admitted that many of the Iraqi “bases” they have obliterated could be cardboard dummies. The US commander in chief has admitted that the western forces have lost 15 warplanes so far.
In Baghdad captured pilots from the US, Britain and Italy have appeared on television. One Iraqi diplomat commented that if the NATO allies had only lost the number of planes acknowledged at the time, these men could not possibly be prisoners of war. Iraq claims to have brought down a number of cruise missiles.
Iraq has responded to the attacks by firing rockets art targets in Israel. Iraqi missiles have hit Tel Aviv and Haifa, one narrowly missing the Defence Minister.
Israel has admitted last Tuesday night’s bombardment killed three women and injured many.
An attack on a US airbase Dhahran, in Saudi Arabia was countered by US missile defences.The Saudi oil refinery at Khafji has been knocked out by Iraqi artillery.
Huge demonstrations in support of Iraq are taking place throughout the Arab world.
Friday, January 21, 2011
20 Years after the Gulf War -- Joint statement of communist and workers parties
Twenty years after the Gulf War
The importance of the struggle for peace, against imperialist exploitation and
oppression
Twenty years have elapsed since the beginning of the Gulf War. On January 17, 1991, the
armed forces of the USA, NATO and its allies unleashed - with the ratification of the
Security Council of the United Nations - their first large-scale war in the Middle East,
despite widespread anti war opposition in several countries .Being inseparable from the
profound and negative changes associated with the liquidation of Socialism in the Soviet
Union and in Eastern Europe, that war was a prelude to 20 years of large-scale
aggressions, invasions and imperialist interferences.
From the Gulf to Yugoslavia, from Afghanistan to Iraq, Lebanon and Palestine, imperialism
has tried to impose its domination in each country and over the globe, seeking to impose
the direct control of the world's main energy resources, to annihilate the peoples’
sovereign rights and to submit the entire planet to the exploitation and interests of the big
capital. This militarist and war-mongering offensive has been developed hand in hand with
the attacks against the workers’ and peoples' social, economic and political rights – even
in the centers of imperialism - and contributed to sharpen the contradictions among
imperialist powers.
Thanks to the peoples' resistance and struggle – first and foremost, that of the peoples
who were the victims of aggression – imperialism's offensive has faced obstacles and
suffered important setbacks. But the dangers for peace and the peoples have not
disappeared. On the contrary, capitalism's profound economic crisis, and the ruling
classes' powerlessness to overcome it, is leading – as in the past – to an attempt to
ensure their power through violence, authoritarianism, war and brutal offensives against
the workers’ and peoples' rights and living standards.
The threats of war and aggression are evident in the attacks against workers’ and peoples’
movements that struggle against imperialism, labeling it as an “internal enemy”; in the
recent NATO Summit and the new strategic concept of this militaristic and aggressive
imperialist organization– which the Lisbon Treaty considers its armed wing thus deepening
the process of affirming the European Union as an imperialist economic, political and
military block - ; in the constant imperialist threats of war, provocations and interferences
in numerous parts of the globe; in the increasing expenditure on military and security
apparatuses.
The signatory Parties call upon the workers and peoples of the world to strengthen the
struggle for peace and against imperialism's plans of war and aggression, to strengthen
the struggle against capitalist exploitation and in defense of sovereignty and of the rights
of all peoples of the world. They stress that the struggle for peace, cooperation and
progress is an inseparable element of the struggle for the overthrow of capitalism and the
construction of socialism.
They express their solidarity with the peoples and to the national-liberation, revolutionary
and progressive anti-imperialist forces who are struggling against the imperialism's
aggressions, interferences and threats. In particular, they express their solidarity with the
communists and other anti-imperialist forces of the Middle East and especially with the
Palestinian people in their struggle for the right to establish an independent State of
Palestine in the pre-1967 borders, with East Jerusalem as its capital
January 2011
The Parties:
1. Algerian Part for Democracy and Socialism
2. Communist Party of Bangladesh
3. Communist Party of Brazil
4. Worker's Party of Belgium
5. New Communist Party of Britain
6. Communist Party of Canada
7. AKEL, Cyprus
8. Communist Party in Denmark
9. Communist Party of Finland
10.Communist Party of Greece
11.New Communist Party of the Netherlands
12.Hungarian Communist Workers Party
13.Communist Party of India (Marxist)
14.Communist Party of Ireland
15.Workers Party of Ireland
16.Party of the Italian Communists
17.Workers' Party of Korea
18.Lebanese Communist Party
19. Communist Party of Luxembourg
20.Communist Party of Mexico
21.Communist Party of Norway
22.Palestinian Peoples Party
23.Peruan Communist Party
24.Communist Party of Philippines
25.Portuguese Communist Party
26.South African Communist Party
27.Communist Party of the Russian Federation
28.Communist Party of Spain
29.Party of the Communists Catalonia, Spain
30.Communist Party Peoples of Spain
31.Communist Party of Turkey
32.Communist Party of Venezuela
33.New Communist Party of Yugoslavia
The importance of the struggle for peace, against imperialist exploitation and
oppression
Twenty years have elapsed since the beginning of the Gulf War. On January 17, 1991, the
armed forces of the USA, NATO and its allies unleashed - with the ratification of the
Security Council of the United Nations - their first large-scale war in the Middle East,
despite widespread anti war opposition in several countries .Being inseparable from the
profound and negative changes associated with the liquidation of Socialism in the Soviet
Union and in Eastern Europe, that war was a prelude to 20 years of large-scale
aggressions, invasions and imperialist interferences.
From the Gulf to Yugoslavia, from Afghanistan to Iraq, Lebanon and Palestine, imperialism
has tried to impose its domination in each country and over the globe, seeking to impose
the direct control of the world's main energy resources, to annihilate the peoples’
sovereign rights and to submit the entire planet to the exploitation and interests of the big
capital. This militarist and war-mongering offensive has been developed hand in hand with
the attacks against the workers’ and peoples' social, economic and political rights – even
in the centers of imperialism - and contributed to sharpen the contradictions among
imperialist powers.
Thanks to the peoples' resistance and struggle – first and foremost, that of the peoples
who were the victims of aggression – imperialism's offensive has faced obstacles and
suffered important setbacks. But the dangers for peace and the peoples have not
disappeared. On the contrary, capitalism's profound economic crisis, and the ruling
classes' powerlessness to overcome it, is leading – as in the past – to an attempt to
ensure their power through violence, authoritarianism, war and brutal offensives against
the workers’ and peoples' rights and living standards.
The threats of war and aggression are evident in the attacks against workers’ and peoples’
movements that struggle against imperialism, labeling it as an “internal enemy”; in the
recent NATO Summit and the new strategic concept of this militaristic and aggressive
imperialist organization– which the Lisbon Treaty considers its armed wing thus deepening
the process of affirming the European Union as an imperialist economic, political and
military block - ; in the constant imperialist threats of war, provocations and interferences
in numerous parts of the globe; in the increasing expenditure on military and security
apparatuses.
The signatory Parties call upon the workers and peoples of the world to strengthen the
struggle for peace and against imperialism's plans of war and aggression, to strengthen
the struggle against capitalist exploitation and in defense of sovereignty and of the rights
of all peoples of the world. They stress that the struggle for peace, cooperation and
progress is an inseparable element of the struggle for the overthrow of capitalism and the
construction of socialism.
They express their solidarity with the peoples and to the national-liberation, revolutionary
and progressive anti-imperialist forces who are struggling against the imperialism's
aggressions, interferences and threats. In particular, they express their solidarity with the
communists and other anti-imperialist forces of the Middle East and especially with the
Palestinian people in their struggle for the right to establish an independent State of
Palestine in the pre-1967 borders, with East Jerusalem as its capital
January 2011
The Parties:
1. Algerian Part for Democracy and Socialism
2. Communist Party of Bangladesh
3. Communist Party of Brazil
4. Worker's Party of Belgium
5. New Communist Party of Britain
6. Communist Party of Canada
7. AKEL, Cyprus
8. Communist Party in Denmark
9. Communist Party of Finland
10.Communist Party of Greece
11.New Communist Party of the Netherlands
12.Hungarian Communist Workers Party
13.Communist Party of India (Marxist)
14.Communist Party of Ireland
15.Workers Party of Ireland
16.Party of the Italian Communists
17.Workers' Party of Korea
18.Lebanese Communist Party
19. Communist Party of Luxembourg
20.Communist Party of Mexico
21.Communist Party of Norway
22.Palestinian Peoples Party
23.Peruan Communist Party
24.Communist Party of Philippines
25.Portuguese Communist Party
26.South African Communist Party
27.Communist Party of the Russian Federation
28.Communist Party of Spain
29.Party of the Communists Catalonia, Spain
30.Communist Party Peoples of Spain
31.Communist Party of Turkey
32.Communist Party of Venezuela
33.New Communist Party of Yugoslavia
Thursday, January 20, 2011
Why Did China's economic stimulus succeed?
by Theo Russell
In November 2008 the Chinese government announced a two-year economic stimulus package of 4 trillion yuan ($586 billion or £382 billion) to counteract the effects of the biggest global recession in 80 years.
Unlike similar efforts in Europe and the United States, China’s stimulus proved to be a spectacular success, and the recession hardly affected China at all. GDP growth was maintained at 10% per year in 2007-2009, generating over one trillion dollars, despite the fact that exports, the engine of China’s economic success for the last three decades, fell by over $120 billion as Western demand slumped.
Following the 2007 credit crunch many Western economists warned of threats to China’s economic stability, including property price bubbles, rising inflation and a fragile banking system. As yet none of these threats have materialised apart from inflation, which the government has already acted to bring down.
Some economists even predicted that the United States would be the first major economy to come out of recession, and China one of the last. The reality has been the exact opposite: China’s recession was brief and shallow, while these predictions turned out to be wildly optimistic about the US economy. So much for our highly-paid Western economists!
The US economy has spectacularly failed to take off, in spite of a $787 billion stimulus package in 2009, and a staggering $1.6 trillion spent on quantitative easing in 2009 and 2010. By the 3rd quarter of 2010, US GDP was 0.8% below its peak in the 4th quarter of 2007. This month’s figures show that US unemployment is still stuck at 9.4 percent.
Our experience in Britain has been similar to that of the US. The government spent or loaned £550bn in bank bail-outs, and £200bn in quantitative easing in 2008/09. Britain’s bank bailout equaled 19.8% of GDP, a higher proportion than in any other country, reflecting the huge influence of the financial sector.
The UK’s GDP growth collapsed from an annual rate of about three percent in early 2007 to minus five percent in the spring of 2009. It has gradually returned to 2.8%, but unemployment is still close to 3 million or 8%, mortgage lending is at its lowest level since 2000 and has fallen 10 per cent in the past year,
and repossessions are rising and are expected to continue rising in 2011.
So what explains the success of China’s economic stimulus in comparison to the leading capitalist countries? The answer apparently lies in the structure of the Chinese economy and the Communist Party of China’s so-called “market socialist” economic model.
Research by Professor John Ross, visiting Professor at Shanghai’s Jiao Tong University and editor of the internet blog Key Trends in Globalisation, has identified that the key factor in the success of China’s policies as the level of private fixed investment.
In the US, the GDP fell by $103bn during the recession – or “Great Recession” as Ross calls it - yet exports actually grew by $46bn and private inventories by $103bn, while personal consumption only fell by $8bn.
The single factor which wiped out all the other growth factors was the $409bn collapse in US private fixed investment (residential and non-residential).“In short, the fall in fixed investment accounted for the entire decline in US GDP. Indeed, the fall in US fixed investment was four times the total drop in US GDP,” says Ross.
In China during the same period exports fell by 0.8 trillion yuan, inventories increased only slightly (0.1 trillion yuan), and personal consumption grew by 2.6 trillion yuan. But fixed investment leapt by a massive 5.3 trillion yuan, equivalent to 67% of the increase in GDP, and this counteracted the effects of the recession. This was the exact opposite of the US experience and as Ross says “China’s avoidance of recession, and its rapid economic growth, was driven by the rise in fixed investment.”
The steep increase in fixed investment in China was possible because the stimulus programme combined investment by state-owned banks, with government directives to private banks to invest in the domestic economy. China’s financial sector was directed by the state to invest in new technologies such as water treatment, AIDS prevention, computer chips, wireless technology and energy extraction.
In Britain, a hallmark of our post-credit crunch experience has been the collapse in lending. The British banks have falsely claimed that this has been caused by a collapse in demand for loans. But this is flatly contradicted by the Bank of England, which said in a report in December that the real reason for the lending collapse is that the banks had “reduced the supply” of loans.
In other words, the banks have imposed a squeeze on credit, in the midst of the biggest economic recession since 1929. Taken together with the biggest government spending cuts since 1945, it’s hard to see what the growth being predicted by David Cameron in 2011 will be based on.
Since the bank bail-out both the Labour and coalition governments have endlessly debated the possibility of imposing lending targets on the banks. In response, the banks offered to set up a "Big Society Bank", codenamed “Project Merlin,” with a £1.5 billion fund for small businesses.
But by December 2010, when coalition ministers met the bank chiefs, the banks had backtracked. Now they were offering to lend £200 million to UK businesses, of which a paltry £70 million would be for small businesses.
It’s a similar story with bonuses and the “banking levy”. In October the coalition introduced a £2.5bn a year levy on bank profit sheets, but in 2010 alone bank bonuses are expected to be £7bn. It is now clear, after months of promises, that no action is going to be taken on bonuses.
British bank profits have actually gone up since 2007, according to the Bank of England, as if the recession had never happened! They reached £15.5bn in the first six months of 2010 alone and will probably hit £30-35 billion for the whole year, so a £2.5bn levy is just small change for the banks.
They’re not short of funds either. The UK financial sector owns foreign assets worth almost 600 percent of the country’s GDP. But they want to hang on to every penny, so they can carry on business as usual exploiting workers in Britain and the world over.
So in China while the government’s stimulus funds are being transferred into productive capital in domestic enterprises, in Britain and the US the banks are taking vast amounts of government cash and not passing them on to the real economy. They claim this is because their finances are in a fragile state, due to the “credit crunch” which they themselves created.
In November the US Federal Reserve announced a further $600 billion injection of quantitative easing into the US economy, but according to Professor Ross this is unlikely to have the same effect as China's stimulus, as long as US private fixed investment does not return to growth. With Republican control of the House of Representatives, and the growth of “anti-statist ideology”, the rise of the Tea Party and the Republican Right, Ross says an investment programme able to generate real growth is politically impossible.
This is perfectly normal: capitalists will only invest in the domestic economy when it is growing and profitable to do so. The capitalist class will only resort to Keynesian social investment when faced with the threat of revolution, and that is clearly not the case now.
Ross predicts that “the US economy will therefore continue to be strongly outperformed by China's”, adding: “It is therefore clear why Hu Jintao stated that China’s high performance in the financial crisis was due to the superiority of its economic structure.”
The success of China’s economic stimulus and its development model are of practical and theoretical importance for Marxists, adding new pages to the historical experience of building socialism and the application of Marxist economic theory.
In an article in the London Guardian, Professor Ross stresses that China’s economic model is not “market capitalist”, but a "socialist market economy". Quoting from Keynes’ General Theory that "a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment", he points out, quite correctly, that this is “impossible in a private sector-dominated economy.”
China has, in the current phase of its economic development, permitted strictly regulated capitalist ventures to operate in certain economic sectors, but the state has maintained control of the commanding heights of the economy, and most importantly of the financial sector.
All land in China is owned by the state or in rural areas collective farms. Mineral resources including coal, oil and gas, arms companies, the energy and petrochemicals sectors, telecommunications, airlines and shipping remain, by law, under "absolute state control and public ownership”. Foreign joint ventures cannot be wholly owned by foreign investors, and just under three quarters have agreements recognising a trade union, including the US giant Wallmart.
On the other hand, three of China’s 128 state-owned enterprises, were listed among the top 10 most valuable companies in the world by the Financial Times in 2009 (the China National Petroleum Corporation, China Mobile and the Industrial and Commercial Bank of China). This is an unprecedented achievement for a socialist state.
This “market socialist” model allows China to benefit from the continuing dynamism of the capitalist model. The vast financial and human resources at the disposal of the capitalist countries enable them to continue to make remarkable scientific and technological advances. But at the same time China can avoid becoming in any way dependent on imperialism, and strictly limit the capacity of foreign investors to exploit its resources.
But we need to bear in mind that “market socialism” is not a scientific term but extremely imprecise and open to many interpretations. A better description for the Chinese model might be “a socialised economy with market elements and regulated foreign capital investment”.
Hu Jintao, Chinese President and general secretary of the Communist Party of China, told the party’s 2007 congress: “the current reality is that China is still in the primary stage of socialism, and will remain so for a long time to come,” and added that the Party's tasks had become more difficult than ever due developments globally, nationally and in ‘intra-Party’ conditions. But he also stressed that the party would continue to uphold and improve “the basic economic system in which public ownership is dominant”.
The CPC’s long-term aim remains to lay the foundations for creating a socialist society. Its policy puts national development and the interests of the working class and peasants, not of domestic or foreign capitalists, at the forefront.
It is important to understand that the current Chinese model is not cast in stone, but is best seen as a temporary adaptation to the enourmous tasks of development, at a time when capitalism is still the overwhelmingly dominant system in the world economy.
This is all the more so after the collapse of the Soviet Union and its allies in Comecon, which formed a significant industrial, commercial and financial counterbalance to the capitalist system up until 1990.
We also have to remind ourselves that there is no magic formula for achieving economic development in China and raising the whole population to a standard of living, education and culture comparable with the advanced capitalist countries.
To quote Deng Xiaoping, the architect of China’s economic reforms: “In building socialism we must do all we can to develop the productive forces and gradually eliminate poverty, constantly raising the people’s living standards.
“In the second stage, or the advanced stage of communism, when the economy is highly developed and there is overwhelming abundance, we shall be able to apply the principle of from each according to his ability, to each according to his needs.”
Such enourmous transformations take place very over long periods, and it will be many years in the future before that “second stage” is reached.
It would also be a fundamental mistake to conclude that there is a gradual trend towards the growing influence of the capitalist sector in China, although many in the West like to entertain such delusions. The capitalist sector is a significant, but minor one which remains firmly under the control of the Chinese state, and that is not going to change.
China’s “market socialist” policy is responsible for the vast sums being invested in the national infrastructure, in developing the poor interior and Western regions, and in entirely new sectors such as high speed railways, solar energy and electric cars. An example of the incredible speed of this development is that China already has the largest network of high-speed railways in the world.
The capitalist countries are well aware of the fact that the Chinese economic model is fundamentally socialist, and after bringing down socialism in the Soviet Union their number one aim is to do the same in China.
The real objective of ceaseless campaign for “democratic reforms” is to end China’s “socialised investment” policy as soon as possible, to divert the fruits of China’s growth into private profit, and to gain unrestricted access to China’s human and natural resources. But the CPC has no intention of following the example of the Soviet Union and allowing domestic or foreign capitalists to sieze control of the state.
It is worth considering what would happen if bourgeois democracy and capitalism were to be restored in China. Its workers would be ruthlessly exploited and millions would be unemployed, and the country would face being physically carved up, as we can see from the Western-backed separatist movements in Tibet and Xingjiang.
A capitalist China would be far closer to the examples of India or Brazil, countries which also have large scale foreign investment, but unlike China have enourmous economic and social problems and human suffering on a vast scale.
China’s economic model, based on the creative application of Marxism-Leninism, also reflects the ruling party’s analysis that although the world transition from capitalism to socialism has begun, the capitalist model is still extremely dynamic and creative, and this creativity can be utilised while restricting the rapacious nature of capitalism, first and foremost the diversion of profits and wealth into private hands.
What we are seeing today in China is a new contribution to the practical experience of building socialism. It is also similar in many ways to the controlled, or “civilised”, capitalist model which left of centre Western liberals dream of, but which will only ever be a utopian fantasy under capitalism.
This model has enabled China to play the capitalists at their own game, and effectively beat them. It is accumulating large-scale capital while resisting American pressure to revalue its currency. Where other countries would have succumbed to such bullying, China can do this because the US economy is now dependent on China’s US government bonds holdings, the profits from manufacturing in China, and China’s growing domestic market.
It is the first time in history that a socialist state, a formerly backward and semi-colonised country, has been able to even give advice on economic policy to the US government which the latter could not afford to ignore.
In March 2009 prime minister Wen Jiabao said at the end of the annual National People's Congress in Beijing: "We have lent huge amounts of money to the United States. Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried. We would like the United States government to honour its word and remain a credible nation and ensure the safety of Chinese assets."
Wen also added at that time confirming China’s long-term economic strategy: "We already have plans ready to tackle even more difficult times. To do that, we have reserved adequate ammunition, which means that at any time we can introduce new stimulus policies."
It would of course be a mistake to look at China through rose-tinted glasses and ignore the negative aspects and problems arising from China’s economic model. The CPC is well aware of the widespread corruption which is a reminder that China is a huge developing Asian country which still lags behind the developed capitalist countries in overall education and living standards. As Deng Xiaoping famously warned when the reforms were introduced in China, “When you open the window to let in fresh air, you have to expect some flies to blow in.”
But these problems have to be seen in the context of the enourmous tasks confronting the CPC leadership. Since the economic reforms were introduced in the 1980s rural poverty in China has fallen from 250 million to around 20 million, but 20 million is still a very large number.
On the one hand, income inequality has rocketed, creating widespread resentment, but on the other hand, the government has implemented rural subsidies, lower taxes and higher pensions.
It is also true that a considerable amounts of wealth are going to individuals and to foreign investors, but in 2002-2009 average workers’ wages increased by 8 percent a year in real terms (after… inflation. Of course this was from a relatively low level, but it shows that ordinary working people in China have benefited from economic growth.
China is currently experiencing problems with inflation, especially in food prices, a by-product of its economic success. But the government has acted swiftly, and raised interest rates twice leading to a sharp fall in food price rises.
With this spectacularly successful strategy China is laying the groundwork for the next stage of economic restructuring, developing its capacity for technological innovation, producing sophisticated manufactured goods and building its own global marketing capability.
China has no intention of remaining an “assembly line” economy for foreign companies, and its enterprises are already buying up manufacturing companies and banks around the world to lay the basis for exporting its own-brand products such as solar panels and electric and internal combustion cars.
For Marxist-Leninists the real significance of China’s spectacular successes is that it is creating a better life for its people and laying the groundwork for a future socialist society, and since the revolution there has been a significant increase in the size, influence and confidence of the Chinese working class.
Professor Ross’s analysis has identified the key element of its current economic model: utilising capitalist methods and financial resources, while channelling the capital created into social investment rather than private profit.
In November 2008 the Chinese government announced a two-year economic stimulus package of 4 trillion yuan ($586 billion or £382 billion) to counteract the effects of the biggest global recession in 80 years.
Unlike similar efforts in Europe and the United States, China’s stimulus proved to be a spectacular success, and the recession hardly affected China at all. GDP growth was maintained at 10% per year in 2007-2009, generating over one trillion dollars, despite the fact that exports, the engine of China’s economic success for the last three decades, fell by over $120 billion as Western demand slumped.
Following the 2007 credit crunch many Western economists warned of threats to China’s economic stability, including property price bubbles, rising inflation and a fragile banking system. As yet none of these threats have materialised apart from inflation, which the government has already acted to bring down.
Some economists even predicted that the United States would be the first major economy to come out of recession, and China one of the last. The reality has been the exact opposite: China’s recession was brief and shallow, while these predictions turned out to be wildly optimistic about the US economy. So much for our highly-paid Western economists!
The US economy has spectacularly failed to take off, in spite of a $787 billion stimulus package in 2009, and a staggering $1.6 trillion spent on quantitative easing in 2009 and 2010. By the 3rd quarter of 2010, US GDP was 0.8% below its peak in the 4th quarter of 2007. This month’s figures show that US unemployment is still stuck at 9.4 percent.
Our experience in Britain has been similar to that of the US. The government spent or loaned £550bn in bank bail-outs, and £200bn in quantitative easing in 2008/09. Britain’s bank bailout equaled 19.8% of GDP, a higher proportion than in any other country, reflecting the huge influence of the financial sector.
The UK’s GDP growth collapsed from an annual rate of about three percent in early 2007 to minus five percent in the spring of 2009. It has gradually returned to 2.8%, but unemployment is still close to 3 million or 8%, mortgage lending is at its lowest level since 2000 and has fallen 10 per cent in the past year,
and repossessions are rising and are expected to continue rising in 2011.
So what explains the success of China’s economic stimulus in comparison to the leading capitalist countries? The answer apparently lies in the structure of the Chinese economy and the Communist Party of China’s so-called “market socialist” economic model.
Research by Professor John Ross, visiting Professor at Shanghai’s Jiao Tong University and editor of the internet blog Key Trends in Globalisation, has identified that the key factor in the success of China’s policies as the level of private fixed investment.
In the US, the GDP fell by $103bn during the recession – or “Great Recession” as Ross calls it - yet exports actually grew by $46bn and private inventories by $103bn, while personal consumption only fell by $8bn.
The single factor which wiped out all the other growth factors was the $409bn collapse in US private fixed investment (residential and non-residential).“In short, the fall in fixed investment accounted for the entire decline in US GDP. Indeed, the fall in US fixed investment was four times the total drop in US GDP,” says Ross.
In China during the same period exports fell by 0.8 trillion yuan, inventories increased only slightly (0.1 trillion yuan), and personal consumption grew by 2.6 trillion yuan. But fixed investment leapt by a massive 5.3 trillion yuan, equivalent to 67% of the increase in GDP, and this counteracted the effects of the recession. This was the exact opposite of the US experience and as Ross says “China’s avoidance of recession, and its rapid economic growth, was driven by the rise in fixed investment.”
The steep increase in fixed investment in China was possible because the stimulus programme combined investment by state-owned banks, with government directives to private banks to invest in the domestic economy. China’s financial sector was directed by the state to invest in new technologies such as water treatment, AIDS prevention, computer chips, wireless technology and energy extraction.
In Britain, a hallmark of our post-credit crunch experience has been the collapse in lending. The British banks have falsely claimed that this has been caused by a collapse in demand for loans. But this is flatly contradicted by the Bank of England, which said in a report in December that the real reason for the lending collapse is that the banks had “reduced the supply” of loans.
In other words, the banks have imposed a squeeze on credit, in the midst of the biggest economic recession since 1929. Taken together with the biggest government spending cuts since 1945, it’s hard to see what the growth being predicted by David Cameron in 2011 will be based on.
Since the bank bail-out both the Labour and coalition governments have endlessly debated the possibility of imposing lending targets on the banks. In response, the banks offered to set up a "Big Society Bank", codenamed “Project Merlin,” with a £1.5 billion fund for small businesses.
But by December 2010, when coalition ministers met the bank chiefs, the banks had backtracked. Now they were offering to lend £200 million to UK businesses, of which a paltry £70 million would be for small businesses.
It’s a similar story with bonuses and the “banking levy”. In October the coalition introduced a £2.5bn a year levy on bank profit sheets, but in 2010 alone bank bonuses are expected to be £7bn. It is now clear, after months of promises, that no action is going to be taken on bonuses.
British bank profits have actually gone up since 2007, according to the Bank of England, as if the recession had never happened! They reached £15.5bn in the first six months of 2010 alone and will probably hit £30-35 billion for the whole year, so a £2.5bn levy is just small change for the banks.
They’re not short of funds either. The UK financial sector owns foreign assets worth almost 600 percent of the country’s GDP. But they want to hang on to every penny, so they can carry on business as usual exploiting workers in Britain and the world over.
So in China while the government’s stimulus funds are being transferred into productive capital in domestic enterprises, in Britain and the US the banks are taking vast amounts of government cash and not passing them on to the real economy. They claim this is because their finances are in a fragile state, due to the “credit crunch” which they themselves created.
In November the US Federal Reserve announced a further $600 billion injection of quantitative easing into the US economy, but according to Professor Ross this is unlikely to have the same effect as China's stimulus, as long as US private fixed investment does not return to growth. With Republican control of the House of Representatives, and the growth of “anti-statist ideology”, the rise of the Tea Party and the Republican Right, Ross says an investment programme able to generate real growth is politically impossible.
This is perfectly normal: capitalists will only invest in the domestic economy when it is growing and profitable to do so. The capitalist class will only resort to Keynesian social investment when faced with the threat of revolution, and that is clearly not the case now.
Ross predicts that “the US economy will therefore continue to be strongly outperformed by China's”, adding: “It is therefore clear why Hu Jintao stated that China’s high performance in the financial crisis was due to the superiority of its economic structure.”
The success of China’s economic stimulus and its development model are of practical and theoretical importance for Marxists, adding new pages to the historical experience of building socialism and the application of Marxist economic theory.
In an article in the London Guardian, Professor Ross stresses that China’s economic model is not “market capitalist”, but a "socialist market economy". Quoting from Keynes’ General Theory that "a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment", he points out, quite correctly, that this is “impossible in a private sector-dominated economy.”
China has, in the current phase of its economic development, permitted strictly regulated capitalist ventures to operate in certain economic sectors, but the state has maintained control of the commanding heights of the economy, and most importantly of the financial sector.
All land in China is owned by the state or in rural areas collective farms. Mineral resources including coal, oil and gas, arms companies, the energy and petrochemicals sectors, telecommunications, airlines and shipping remain, by law, under "absolute state control and public ownership”. Foreign joint ventures cannot be wholly owned by foreign investors, and just under three quarters have agreements recognising a trade union, including the US giant Wallmart.
On the other hand, three of China’s 128 state-owned enterprises, were listed among the top 10 most valuable companies in the world by the Financial Times in 2009 (the China National Petroleum Corporation, China Mobile and the Industrial and Commercial Bank of China). This is an unprecedented achievement for a socialist state.
This “market socialist” model allows China to benefit from the continuing dynamism of the capitalist model. The vast financial and human resources at the disposal of the capitalist countries enable them to continue to make remarkable scientific and technological advances. But at the same time China can avoid becoming in any way dependent on imperialism, and strictly limit the capacity of foreign investors to exploit its resources.
But we need to bear in mind that “market socialism” is not a scientific term but extremely imprecise and open to many interpretations. A better description for the Chinese model might be “a socialised economy with market elements and regulated foreign capital investment”.
Hu Jintao, Chinese President and general secretary of the Communist Party of China, told the party’s 2007 congress: “the current reality is that China is still in the primary stage of socialism, and will remain so for a long time to come,” and added that the Party's tasks had become more difficult than ever due developments globally, nationally and in ‘intra-Party’ conditions. But he also stressed that the party would continue to uphold and improve “the basic economic system in which public ownership is dominant”.
The CPC’s long-term aim remains to lay the foundations for creating a socialist society. Its policy puts national development and the interests of the working class and peasants, not of domestic or foreign capitalists, at the forefront.
It is important to understand that the current Chinese model is not cast in stone, but is best seen as a temporary adaptation to the enourmous tasks of development, at a time when capitalism is still the overwhelmingly dominant system in the world economy.
This is all the more so after the collapse of the Soviet Union and its allies in Comecon, which formed a significant industrial, commercial and financial counterbalance to the capitalist system up until 1990.
We also have to remind ourselves that there is no magic formula for achieving economic development in China and raising the whole population to a standard of living, education and culture comparable with the advanced capitalist countries.
To quote Deng Xiaoping, the architect of China’s economic reforms: “In building socialism we must do all we can to develop the productive forces and gradually eliminate poverty, constantly raising the people’s living standards.
“In the second stage, or the advanced stage of communism, when the economy is highly developed and there is overwhelming abundance, we shall be able to apply the principle of from each according to his ability, to each according to his needs.”
Such enourmous transformations take place very over long periods, and it will be many years in the future before that “second stage” is reached.
It would also be a fundamental mistake to conclude that there is a gradual trend towards the growing influence of the capitalist sector in China, although many in the West like to entertain such delusions. The capitalist sector is a significant, but minor one which remains firmly under the control of the Chinese state, and that is not going to change.
China’s “market socialist” policy is responsible for the vast sums being invested in the national infrastructure, in developing the poor interior and Western regions, and in entirely new sectors such as high speed railways, solar energy and electric cars. An example of the incredible speed of this development is that China already has the largest network of high-speed railways in the world.
The capitalist countries are well aware of the fact that the Chinese economic model is fundamentally socialist, and after bringing down socialism in the Soviet Union their number one aim is to do the same in China.
The real objective of ceaseless campaign for “democratic reforms” is to end China’s “socialised investment” policy as soon as possible, to divert the fruits of China’s growth into private profit, and to gain unrestricted access to China’s human and natural resources. But the CPC has no intention of following the example of the Soviet Union and allowing domestic or foreign capitalists to sieze control of the state.
It is worth considering what would happen if bourgeois democracy and capitalism were to be restored in China. Its workers would be ruthlessly exploited and millions would be unemployed, and the country would face being physically carved up, as we can see from the Western-backed separatist movements in Tibet and Xingjiang.
A capitalist China would be far closer to the examples of India or Brazil, countries which also have large scale foreign investment, but unlike China have enourmous economic and social problems and human suffering on a vast scale.
China’s economic model, based on the creative application of Marxism-Leninism, also reflects the ruling party’s analysis that although the world transition from capitalism to socialism has begun, the capitalist model is still extremely dynamic and creative, and this creativity can be utilised while restricting the rapacious nature of capitalism, first and foremost the diversion of profits and wealth into private hands.
What we are seeing today in China is a new contribution to the practical experience of building socialism. It is also similar in many ways to the controlled, or “civilised”, capitalist model which left of centre Western liberals dream of, but which will only ever be a utopian fantasy under capitalism.
This model has enabled China to play the capitalists at their own game, and effectively beat them. It is accumulating large-scale capital while resisting American pressure to revalue its currency. Where other countries would have succumbed to such bullying, China can do this because the US economy is now dependent on China’s US government bonds holdings, the profits from manufacturing in China, and China’s growing domestic market.
It is the first time in history that a socialist state, a formerly backward and semi-colonised country, has been able to even give advice on economic policy to the US government which the latter could not afford to ignore.
In March 2009 prime minister Wen Jiabao said at the end of the annual National People's Congress in Beijing: "We have lent huge amounts of money to the United States. Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried. We would like the United States government to honour its word and remain a credible nation and ensure the safety of Chinese assets."
Wen also added at that time confirming China’s long-term economic strategy: "We already have plans ready to tackle even more difficult times. To do that, we have reserved adequate ammunition, which means that at any time we can introduce new stimulus policies."
It would of course be a mistake to look at China through rose-tinted glasses and ignore the negative aspects and problems arising from China’s economic model. The CPC is well aware of the widespread corruption which is a reminder that China is a huge developing Asian country which still lags behind the developed capitalist countries in overall education and living standards. As Deng Xiaoping famously warned when the reforms were introduced in China, “When you open the window to let in fresh air, you have to expect some flies to blow in.”
But these problems have to be seen in the context of the enourmous tasks confronting the CPC leadership. Since the economic reforms were introduced in the 1980s rural poverty in China has fallen from 250 million to around 20 million, but 20 million is still a very large number.
On the one hand, income inequality has rocketed, creating widespread resentment, but on the other hand, the government has implemented rural subsidies, lower taxes and higher pensions.
It is also true that a considerable amounts of wealth are going to individuals and to foreign investors, but in 2002-2009 average workers’ wages increased by 8 percent a year in real terms (after… inflation. Of course this was from a relatively low level, but it shows that ordinary working people in China have benefited from economic growth.
China is currently experiencing problems with inflation, especially in food prices, a by-product of its economic success. But the government has acted swiftly, and raised interest rates twice leading to a sharp fall in food price rises.
With this spectacularly successful strategy China is laying the groundwork for the next stage of economic restructuring, developing its capacity for technological innovation, producing sophisticated manufactured goods and building its own global marketing capability.
China has no intention of remaining an “assembly line” economy for foreign companies, and its enterprises are already buying up manufacturing companies and banks around the world to lay the basis for exporting its own-brand products such as solar panels and electric and internal combustion cars.
For Marxist-Leninists the real significance of China’s spectacular successes is that it is creating a better life for its people and laying the groundwork for a future socialist society, and since the revolution there has been a significant increase in the size, influence and confidence of the Chinese working class.
Professor Ross’s analysis has identified the key element of its current economic model: utilising capitalist methods and financial resources, while channelling the capital created into social investment rather than private profit.
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