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China & World Revolution
From International Socialism (1st series), No.78, May 1975, pp.10-13.
IN AN imperialist dominated world, what does ‘economic development’ mean? In most economically backward countries, there are plenty of people. What is lacking are the means to put them to work. Even just putting people to work would mean there would be much more output, and so much more available for everybody. But to provide the tools requires capital equipment and it is just this desperate shortage of equipment which prevents even employing the people that there are.
What are the sources of capital? Men and women in work can be forced to ‘save’ if they are not allowed to consume all they produce. The resources ‘saved’ (unpaid labour) can be turned into investment and with that, even more can be produced. The more investment or ‘accumulation’ the larger the stock of equipment and machines, the more people can be not only employed but produce more and more for each hour of work: labour productivity increases.
As well as forced savings inside the country, resources are sometimes available from abroad – but on certain terms. Countries can trade and make a profit on exchanging the products of the labour of their people for those of other countries. Foreign governments may make capital grants or credits available for political reasons or to increase their own exports (what is called Aid). Foreign capitalist companies may be willing to supply capital, provided they can in due course take out the profits.
These are the sources of investment, and investment is the core problem of economic development. There are many things which drain investment however. Colonial control, the profits of private capitalism, the privileges of bureaucrats, all leech off the product of labour. In the case of China, imperialist domination over 150 years not only robbed the country directly, impoverished its people, it also savagely reduced the productivity of its people. In most of the countries of Asia, the people are now so poor that they have to consume the largest part of what they produce just to survive; many of them need to consume more than they produce.
This is not the end of the problem. In the past, ruling classes increased their investment not only by exploiting their own people, but also by expelling those they could not employ to their colonies and by robbing other countries through colonialism. There are no colonies now to which the ‘unproductive’ can be sent, nor countries which can easily be colonised and robbed. The economically backward countries were forced by the imperialists into trading in mainly raw materials where the profit is very small, so that the manufacturing monopoly of the industralised imperialist countries, was preserved. The advanced capitalist countries have such a stranglehold over the markets where profits are large that prevents other countries breaking in.
Furthermore, even more investment is required now to get economic development going. For example, to make steel at the lowest cost, requires much more equipment today than ever before-and a steel plant employs even fewer people. A one million ton plant used to be enough; now it is a six million ton plant, and soon it will be a twelve million ton plant. That means that the majority of countries cannot afford to manufacture cheap steel. But it is impossible to make the tools at home or compete in manufactured goods abroad or even have a defence programme without steel. So steel must be imported from the imperialist countries, and then paid for by exports. It is impossible to escape if the national borders are to be defended, and even the bare minimum of industrial jobs provided. Stalin knew this when he launched the industrialisation programme in the Soviet Union. In 1931, he put it:
‘We are fifty or a hundred years behind the advanced countries. We must make good this lag in ten years. Either we do it or they will crush us.’
In China, when the new regime came to power, it strictly enforced ‘savings’. In the First Five Year Plan, it introduced ‘compulsory savings’ first by controlling the level of wages and prices, by procuring foodstuffs from the peasants at artificially low prices, by taxing, and finally by conscripting the rural unemployed at very low real wages on large-scale road and irrigation projects. Furthermore, it received some assistance from the Soviet Union for key industrial projects.
The results were impressive. Nearly a fifth of China’s total output is reckoned to go into investment. In a very poor country, that is a high level indeed. But the kind of investment determines how fast the economy will grow in the future. That is where defence comes in. The external threats of first the United States, and latterly the Soviet Union, forces a large diversion of investment into defence projects – perhaps this is now over half the overall national investment level. Defence takes three and a half million men and women directly in the armed forces and perhaps another ten million civilians supporting them. Scarce steel is taken out of making the tools to assist the peasants and put into weapons. The nuclear programme draws on all the most scarce elements – it is prodigal in its use of expensive equipment, of the scarcest sorts of highly skilled labour, of desperately scarce electrical power. Maybe a quarter or more of China’s potential rate of economic growth has been taken off for military expenditure.
To cut costs, the regime stresses the need to increase labour productivity in the factories rather than increase the number of jobs. Those who are unemployed in the cities must be sent off to the countryside, to be absorbed there in ‘underemployment’. So, while output has increased quite fast, the number of jobs has not. When the regime came to power, the largest part of national output came from agriculture. Now only about a quarter of output comes from agriculture. But nevertheless, it is farming which provides employment for two-thirds of the population, just as it did before the regime came to power. Despite all the dramatic changes, the country has not been able to shift the balance of employment from low productivity agriculture to high productivity industry.
The Chinese leadership has been consistently aware of the central problem of accumulation, It is this preoccupation of the leadership which underlies the twists and turns of policy as they desperately search for some means to push along the process of economic development. In the First Plan, the government tried to prevent any increase in consumption in order to shunt the maximum output into investment. They made the core of their investment programme the development of heavy industry so that they could shorten the period before they had steel and engineering available to provide the tools for mass development and the weapons for defence. By 1956, the country was cracking under the pace. ‘Savings’ took so much, consumption was so low, people were losing all incentive to work. The 1956 Party Congress had to notice:
‘the need to increase consumption, for otherwise there would be a serious contradiction between the Party and the masses which would lead to unforgivable errors’.
But before any relaxation could be introduced – that is, a cut in the savings level and an increase in consumption-Chairman Mao on his own authority launched a further massive attempt to break the bottleneck by the ‘Great Leap Forward’. Instead of concentrating on building a heavy industry which takes a lot of capital and produces in the short term very few jobs, capital should be dispersed round the country so that the masses of unemployed could be brought into work. Instead of concentrating savings in the hands of the centre, local communes would be forced to raise their own savings to finance local investment. Masses of small-scale foundries would produce the iron, not great steelworks. It was heroic, but catastrophic. It plunged China into a major crisis. For the small foundries were extremely wasteful in their use of resources. They used extravagantly very scarce supplies of iron ore, coal and transport, to make iron of poor quality. By 1960, most of the small industrial units had been scrapped or amalgamated. There were only some 300 of the thousands of smelters left.
The economy dumped, driven down both by the dislocation of the industrial economy and three years of disastrous harvest (also partly the result of the Great Leap’s changes in agriculture). The crisis was deepened still further by the unilateral suspension of Soviet aid and the withdrawal of Russian technicians in 1960.
The regime had no alternative but to relax the drive to increase savings, and let consumption rise. Slowly, they put the bits back together again. By 1965, output was getting back to the levels of 1956-7. But the years had taken their toll. The mass Party membership had got used to ‘relaxation’, to eating more and saving less, to using their privileges as the local authority. They were not prepared for yet another struggle to increase national savings, to curb consumption. This was the problem that the ‘Cultural Revolution’ was designed to overcome. It was a major attempt to refashion the Party for its central task. Yet before the dust from that explosion had settled, the threat of a Soviet invasion (following the direct military clash between China and the Soviet Union in 1969) reversed all the priorities. Now, as a matter of supreme urgency, the regime had to ensure its capacity to ward off a Soviet attack. It could not afford the discontents inside China arising from any sustained effort to increase savings and lower consumption. The regime relaxed as it had done in 1959-60, allowing worker and peasant consumption to increase. It ‘decentralised’ financial responsibility in a number of areas in order to cut central costs and concentrate on expanding defence capacity. Yet all of this lowers savings, and makes more difficult achieving the central drive of the regime, that capital accumulation which will make possible a role for China in the world commensurate with its size.
Where people are very poor, much of their time and energy is taken up with keeping body and soul together. They will not willingly sacrifice the meagre livelihood of themselves and their families for some distant aim. They will certainly not be willing voluntarily to save when they are still hungry. To ensure that there is savings, the regime must compel it. That makes it impossible to have any genuine democracy, any real popular control, when economic development is being pursued in national isolation.
China has a great deal of ‘popular participation’, but its regime cannot afford democracy. The National People’s Congress, China’s parliament, is not elected; its delegates are nominated by the local party organisations. It is supposed to meet at least every four years, but in practice since the People’s Republic was inaugurated in 1949, it has met only three times – in 1956, 1958 and 1965. Perhaps there is democracy inside the Communist Party? But the Party Congress rarely meets. It has met only in 1958, 1969 and 1973. Even when these bodies meet, their deliberations are not publicised, so it is impossible for the mass of people to know what is being decided in their name. Take for example, the Five Year Plans, supposedly embodying the aims and strategy of the regime. The National People’s Congress formally approved the Second Plan, but then – without consulting the Congress – it was scrapped, and Chairman Mao launched the Great Leap Forward. There was no plan thereafter until the Third (1966-70). To avoid the embarrassment of the Second, the National People’s Congress was not invited to approve it. Indeed, it was not even published, so very few people could know what it proposed. As a prominent economist, working in China and sympathetic to the regime, commented:
‘For the first time in a socialist regime, a whole people was ordered to embark on a Five Year Plan without being informed of the targets ...’ (Deleyne, p.29)
But in any case, the regime had published no set of figures on any sector of the economy since 1959, and no estimates of the size of population since the census of 1956. How could the mass of people make an intelligent choice of the alternatives without even the minimum basic information?
The major changes of line and leading personnel have never been discussed publicly, let alone subject to democratic decision. The Great Leap Forward was Launched and stopped; Chairman Mao was dropped as head of State and Marshall Peng as Defence Minister during a major disagreement among the leadership in 1959; the Party was turned upside down during the Cultural Revolution; Liu Shao-ch’i, Head of State and for thirty years second in command of the Party, and numerous other very prominent figures were dropped as ‘capitalist-readers’ in 1967-8; the Politbureau was superseded by a group of people personally nominated by Mao, the Cultural Revolution Group; and all this, without a vote or even a discussion by the National People’s Congress or a Party Congress. The man elected at the Ninth Party Congress in 1969 as heir to Chairman Mao, Defence Minister Lin Piao, was then removed from office, and fled with the top leadership of the armed forces and the third leading member of the Party, Chen Po-ta. Apart from these bodies, the institutions do not exist which could focus a democratic decision on these events. Those that might – for example, the All-China Trade Union Federation – are subject equally to the power of the choice of the national leadership; this particular body was just suspended in 1967 without any form of consultation with its mass membership or indeed explanation.
It might, of course, be argued that these institutions are irrelevant to real democracy. Mass movements operate through their own logic, regardless of the institutional forms, However, not only did the mass of Chinese not know about the changes until after event, they had no means of opposing or even varying the decisions made. The mass movements were conjured to support the leadership after the event, not before.
The personal rivalries of the central leadership of the Party match the zigzags, the contradictions in policy. ‘Self-reliance’ is stressed at one moment, only to be attacked at the next. Workers should ‘take control’ in one year, but in the next it is managerial authority that is applauded; the People’s Daily attacks ‘factory anarchy’ and those who criticise factory discipline. Western capitalist technology is deplored, but then the regime purchases the most advanced foreign products (China’s imports between 1972 and 1974 included 21,366 vehicles, 85 medium and long-range aircraft and 23 helicopters; the aircraft included orders for Boeing 707s, Tridents and Concordes). Beethoven, whose music Lenin liked, is at one moment attacked as a ‘German capitalist composer’ (People’s Daily, 14 January 1973), and at another is being played in Peking by a foreign concert orchestra at the official invitation of the Chinese government.
The shifts and changes show the need for campaigns to mobilise a people who do not control the broad direction of policy. The same factor accounts for the way in which the leadership stresses the need for sacrifice, for moral not material incentives. The regime does not possess the resources to change the reality which faces the average Chinese. The best it can do is try to change people’s attitudes to poverty, to get them to tolerate the intolerable. Workers in the West know what it means when there are calls from the government for greater sacrifice, we must tighten our belts, we need more moral devotion instead of material greed etc.; it means defending profits at the expense of wages.
As the crisis grows more severe, the Chinese leadership has less and less recourse to the traditions of Marxism-Leninism. It appeals increasingly to the ancient national cultural traditions. Confucius, dead for two and a half thousand years, has to be disinterred and thrashed all over again, even though the number of Chinese familiar with Confucius must be far fewer than the number of English familiar with Shakespeare.
To China’s crisis is now added the crisis of world capitalism. With all the struggles and sacrifices of the past quarter of a century, the majority of people are still close to the subsistence level. Yet now, with a downturn in world capitalism, it is the poorest countries which are most savagely victimised. China is more protected than many smaller countries by its sheer size. It also has large resources of oil. But nevertheless, the markets for its exports other than oil are shrinking, while its need for expensive imports – of industrial and technical goods as well as grain – remains high. Above all, the threat of the Soviet Union, itself reacting to the military threat of the United States, locks China into the central military technological competition of world imperialism. It imposes upon its people a crippling level of defence expenditure. What is the way out?
China & World Revolution
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Last updated: 2.3.2008